Economics 970: Buying More Life: Ethics and Economics in Health
Economics 970: Buying More Life: The Ethics and Economics of Health
Instructor: Adam Block
Email:
Phone: 617-388-1269
Office Hours: By appointment (anytime)
Section I: Tuesday/Thursday: 2:30-4:00pm Littauer M-34/36
Section II: Tuesday/Thursday: 4:00-5:30pm Littauer M-34/36
Course Description
“That any sane nation, having observed that you could provide for the supply of bread by giving bakers a pecuniary interest in baking for you, should go on to give a surgeon a pecuniary interest in cutting off your leg, is enough to make one despair for political humanity.” (G.B. Shaw, The Doctor’s Dilemma, 1911)
There are ethical problems in creating a perfectly efficient health care system and there are efficiency problems in creating a perfectly ethical one. In health care, our internal cold-hearted economist, who wants efficient medical markets guided by Adam Smith’s “invisible hand,” is often second guessed by our (gasp!) sense of justice. This course will use current issues in health economics to discuss more classical market failures in health economics and the ethical dilemmas surrounding them. For example, we will look at the tradeoff between maximizing the total health of the population while sacrificing the health of the sickest versus maximizing the health of the sickest and reducing the total health of the population. We will also discuss what comes under the purview of “health?” Does it include in vitro fertilization? Viagraä? (And if so, how many tablets per month?) Finally we will move on to international issues such as prevention versus treatment of AIDS in Africa and the impact of multi-drug resistant strains of viruses and bacteria.
If medical care were free for everyone, demand for medical care would be infinite. Therefore, in a world of limited resources, societies must find a way to limit demand. Traditional markets, such as the television market, use price to limit demand. Few would object to a wealthy person buying a giant plasma television, while a poor person buys a small used television. However, most would object if a wealthy person had access to an MRI machine to detect brain cancer while a poor person only had access to an X-Ray machine.
Quantitative Level 1
(but Intellectual Stimulation Level 3)
Course philosophy:
Your goal is to balance the cold-hearted economist with horns and a tail perched on your right shoulder, with the whiny ethicist with a halo and a harp on your left shoulder. All of the issues to be discussed are complicated involving both ethical and economic components. By applying a base knowledge of both ethics and economics simultaneously, we can come to public policy conclusions that we consider acceptable, (as budding economists, you should already know that finding the “first best” is definitely out of the question)
Readings:
Readings will be a diverse mixture of classic articles in health economics, political philosophy and more contemporary news articles. In each class, we will discuss one contemporary health policy issue, along with the classic market failure and ethical issues behind it. For example, we will read the Hippocratic Oath as we discuss whether the role of physicians is purely to act as a patient’s agent or to partially ration care to maximize social welfare.
Classes:
Class will be mostly discussion. For the first half of the course, we will be discussing theoretical components of health economics and justice, and there will be a short lecture followed by discussion. The second half of the course will focus on applying the concepts learned in the first half of the course to contemporary issues and will be exclusively discussion. Many of our economic solutions will require us to decide how much equity is acceptable to trade off for the sake of efficiency. Based on the ethical dilemmas and economic evidence, we hope to shed light on optimal health policy solutions.
Assignments:
§ Class Participation: Students are responsible for doing all readings and actively participating in class discussion. Again, students are responsible for doing all readings. (20%).
§ Weekly Reading Responses: Students will provide a one page response to the reading each week. Please write 2-3 sentences about your initial opinion on the issue. Then, after doing the readings, write the rest of the response. Remember, response papers are responses to the readings, not summaries. This means, the reader should know your opinion on the issue and with which authors you agree and disagree. Because there are two classes per week, the class will be divided into two parts, one responding to Tuesday’s reading and the other responding to Thursday’s reading. One page responses must be posted to the website by 5pm the day before class. (20%)
§ Short Essay: One 4- to 6-page paper on a current issue. You will prepare a brief testimony arguing in favor or opposed to real or hypothetical legislation, applying your knowledge of health economic theory, empirical evidence and ethics. Due Feb 27 (15%)
§ Empirical Exercise: One 6-page empirical exercise where you will analyze a health issue based on empirical evidence. Racial disparities, impact of pay changes on physician practice, macroeconomic comparison of the health plans of different countries etc are potential areas. Due March 17 (10%)
§ Term paper: Related topic of your choice to be approved in Part I.
§ Part I: A one to two page proposal/outline (counts as a response paper)
Due Thursday, March 23
§ Part II: A 12-15 page term paper. (25%)
Due Thursday, April 20 th
§ Part III: Revise and Resubmit: In economics, you will see those words often. (10%)
Due Thursday, May 4th
Late Policies:
Response Papers: You can miss exactly one response paper during the semester without penalty. Papers submitted after 5pm the day before class will be counted as late and will receive a ½ grade penalty. Papers submitted after 10pm will not be counted.
General Assignments: You have 3 one day no-fault extensions for the semester. These three days can be used at your discretion for any of the major written assignments and can be used consecutively or separately. After these days used up, you will receive a 1/3rd grade penalty (ie. A à A-) for each late day.
Section I: Introduction
Thursday, February 9, 2006
Introduction
Thought Question: Is Arrow’s concept of “moral hazard” related to morality?
§ Kenneth Arrow, "Uncertainty and Welfare Economics of Medical Care," American Economic Review 58(1963), pp. 941-973
Tuesday, February 14, 2006
Normative vs Postive Economics
Thought Questions: Write one positive question about health. Write one normative question about health? Write one question that is both positive and normative?
How do your opinions of health policy stack up against health economists, physicians and economic theorists? How will they change over the course of the semester?
§ Friedman, Milton, “The Methodology of Positive Economics,” in Essays in Positive Economics, Chicago, Il. The University of Chicago Press, 1953. Pp. 3-16.
§ Fuchs, Victor, “Economics, Values and Health Care Reform,” The American Economic Review. Vol 86(1), March 1996, pp. 1-24.
Thursday, February 16, 2006
Definition of Health:
Thought Questions: Should a two year old receive more health services than an 80 year old? Should a wheelchair bound person be lower on a kidney waiting list than a person in full health? Can society treat resource entitlement differently at different ages?
Key Concepts: 1) Ethics of Age Discounting: 2) Ethics of Disability Discounting
§ Preamble to World Health Organization Constitution
§ Richard Morrow and Bryant John, "Approaches to measuring and valuing human life: conceptual and ethical issues," American Journal of Public Health 85(10) Oct 95, 1356-1360.
§ David Cutler, Your Money or Your Life. , New York, Oxford University Press, 2004. Chapter 2: pp. 10-21.
§ Eric Nord et al, "Maximizing health benefits versus egalitarianism" Social Sciences and Medicine, 41(10), pp. 1429-1437.
§ Johannesson and Johannesson, "Is the valuation of a QALY gained independent of age? Some empirical evidence" Journal of Health Economics 1997 16(5), pp. 589-599. (conclusion only!)
§ Williams, Alan. 1997. "Intergenerational Equity: An Exploration of the Fair Innings Argument." Health Economics 6:117-132.
Tuesday, February 21, 2006
The Rich Win Again: The Correlation Between Income and Health
Thought Questions: What determines health? Genetics? Income? Something Else?
Key Concepts: Social Determinants of Health and Equality
§ Pritchett, L. and Summers, L. 1996. “Wealthier is Healthier”. Journal of Human Resources, 31(4): 844-68.
§ David Bloom and David Canning, “The Health and Wealth of Nations” Science. Vol 287, Issue 5456, 1207-1209 , 18 February 2000
§ Michael Marmot, George Davey Smith, Stephen Stansfeld, Chandra Patel, Fiona North, J. Head, Ian White, Eric Brunner, and Amanda Feeny.. “Health Inequalities among British Civil Servants: The Whitehall II Study.” Lancet. June 8, 1991 pp. 1387-1393.
Thursday, February 23, 2006
Distributive Justice or Rewarding the Lazy?
Thought Questions: What are our welfare rights? What are we entitled to by the state?
Key Concepts: 1) Liberatarianism 2) Rawlsian Utility Function
§ John Rawls, "A Theory of Justice" 1971. pp. 52-65.
§ Peter Singer , “The Right to Be Rich Or Poor,” review of Robert Nozick’s Anarchy State, and Utopia. Published in The New York Review of Books. March 6, 1975. http://www.nybooks.com/articles/9252
§ Will Kymlicka, Contemporary Political Philosophy. Oxford University Press, New York, 1990. pp. 95-108.
§ Kenneth Arrow, “Some Ordinalist-Utilitarian Notes on Rawl’s Theory of Justice” Journal of Philosophy. May 10, 1973, pp. 245-263.
Tuesday, February 28, 2006
Life, Liberty and Free Health Care:
Thought Questions: Is health a human right? Is health care? How is it different than other resources considered human rights (ie. food)? Can there be social justice without equal access to health (via health care)?
§ Daniels, Norman, "Justice Health and Healthcare", American Journal of Bioethics 1(2), pp. 2-16.
§ Cohen, Josh, “Review of Amartya Sen’s Inequality Revisited” Journal of Philosophy. Vol 92(5), May 1995, pp. 275-288.
Section II: Health Care Systems
Thursday, March 2, 2006
What is Health Insurance for Anyway?
What do we want from an ideal health care delivery system? What are we trying to maximize? Is managed care an ethical way to deliver health care?
Key Concepts: 1) Insurance Theory 2) Managed Care 3) Patient Satisfaction
§ William Hsiao, “Toward a Theoretical Model of Health Systems” (unpublished manuscript)
§ Olsen, Jan Abel, “Theories of Justice and Their Implications for Priority Setting in Health Care,” Journal of Health Economics. Vol 16(6)997, pp 625-639.
§ Victor Fuchs and Ezekiel Emmanuel, “Health Care Reform: Why? What? When?” Health Affairs, Volume 24(6), pp. 1399-1414.
Tuesday, March 7, 2006
Outsmarting Hillary Clinton
Thought Questions: What was the Clinton Health Plan? Why did it fail? Would it be ethical? Would it be efficient?
§ Walter Zelman, “The Rationale Behind The Clinton Health Care Reform Plan,” Health Affairs. Spring, 1994, pp. 9-29.
§ Reinhardt Uwe, "The Predictable Managed Care Kvetch On The Rocky Road From Adolescence To Adulthood" Journal of Health Politics, Policy and Law 24(5) 897-911. (the introduction is supposed to be funny!)
§ Brock, Dan and Norman Daniels. 1994. Ethical Foundations of the Clinton Administration’s Proposed Health Care System. Journal Of The American Medical Association 271(15):1189-1196. Reprinted in Competing Frameworks or Health Care Reform. Pages 593-606.
Thursday, March 9, 2006
It Might Be Cancerous. See You in 10 Weeks: Waiting Lists and Rationing in Other Developed Nations
Key Question: What are the merits of using waiting lists as a tool to ration care equitably among rich and poor?
Key Concepts: Price Discrimination
§ Albert Nichols and Richard Zeckhauser, “Targeting Transfers through Restrictions on Recipients,” American Economic Review Vol 72(2), May 1982, pp. 372-377.
§ Morgan et al, “Analysis of Deaths While Waiting for Cardiac Surgery Among 29,293 Consecutive Patients" Heart. 79: 345-349.
§ Krauss, Clifford, “In Blow to Canada’s Health System, Quebec Law Is Voided,” New York Times. June 10, 2005, p. A3.
§ “Unsocialized Medicine,” The Wall Street Journal. June 13, 2005, p. 12.
Tuesday, March 14, 2006
I’m Sorry, Our Health Plan Does Not Insure Illness: Health Savings Accounts and Rebalancing Moral Hazard with Risk Spreading
Key Question: What is the optimal tradeoff between risk spreading and moral hazard? Why is moral hazard particularly acute in health economics?
Key Concepts: Health insurance causes overuse of health care and why.
§ Manning W, "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment" American Economic Review, 77(3), pp. 251-277.
§ Martin S. Feldstein, “The Welfare Loss of Excess Health Insurance.” The Journal of Political Economy. Vol 81 (2), 1973, pp. 251-280. (introduction and conclusion)
§ Howard Gleckman, “Your New Health Plan,” Business Week 11/8/04, pp88-96.
§ Optional: Joe Newhouse, “Consumer-Directed Health Plans And The RAND Health Insurance Experiment” Health Affairs. Nov/Dec 2004, pp. 107-113.
Thursday, March 16, 2006
HMO Member # GTCA: DNA Discrimination, Adverse Selection and Imperfect Information
Thought Questions: What are the tradeoffs between privacy and adverse selection? How can we make adverse selection go away?
Key Concepts: 1) Adverse Selection!!!!
§ George Akerlof, "The Market for Lemons: Quality Uncertainty and the Market Mechanism", QJE Vol 84, 1970, pp237-249.
§ Joe Newhouse:"Reimbursing Health Plans and Health Providers: Efficiency in Production Versus Selection" Journal of Economic Literature Vol 34(3), 1236-1263, 1996.
§ Robin Cook, “Decoding Health Insurance,” The New York Times. May 22, 2005, p 13. (Robin Cook is a medical science fiction author)
§ Hudson et al, "Genetic Discrimination and Health Insurance" Science. Oct 1995 Pp393-397.
Section III: Rational Rationing and Cost Control
Tuesday, March 21, 2006
Homo Economicus or Homo Sapiens
Thought Questions: Why are non-economists so dumb? (I mean irrational) Should we base public policy on Homo Economicus or Homo Sapiens?
Key Concepts: 1) Humans behave irrationally in systematic, predictable ways. 2) Humans behave particularly irrationally when making health decisions.
§ Amos Tversky; Daniel Kahneman, "Judgment under Uncertainty: Heuristics and Biases" Science, New Series, Vol. 185, No. 4157. (Sep. 27, 1974), pp. 1124-1131.
§ Amos Tversky and Daniel Kahneman, "Belief In The Law of Small Numbers", Psychological Bulletin, 1971(2), 105-110.