Topics in Health Economics

Graduate program of the Department of Economics UC3M

Prof. Matilde P. Machado

Syllabus PDF

1.     Introduction - issues

·        Arrow, Kenneth, J. (1963). “Uncertainty and the Welfare Economics of Medical Care.” American Economic Review, 53: 941-73. 

2.     Demand for Health Care

2.1 Moral Hazard

·       Manning, W. G. et al. (1987). “Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment.” American Economic Review. 77: 251-277.

·       Pauly, Mark (1968): “The Economics of Moral Hazard: comment,” AER, vol 58, issue pp 531-537. http://www.jstor.org/stable/1813785

·        Barros, Pedro P., Machado, Matilde P., and Sanz-de-Galdeano, Anna: “Moral hazard and the demand for health services: a matching estimator approach,” Journal of Health Economics, vol 27, July 2008, pp 1006-1025.

2.1 Adverse Selection and Risk Selection

·        Rothschild, Michael and Joseph E. Stiglitz (1976). “Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information.” Quarterly Journal of Economics 90(4): 630-49.

·        Vera, Marcos, Olivella, Pau: “Testing for Adverse Selection into Private Medical Insurance” IFS Working paper WP06/02.

3.     Supply of Health goods and services

3.1. The Effect of Health Insurance Mandates

·        Gruber, Jonathan (1994): “The Incidence of Mandated Maternity Benefits,” The American Economic Review, Vol. 84, No. 3 (Jun., 1994), pp. 622-641

3.2. Comparing the performance of Health Care Providers

·        Gowrisankaran, Gautam and Town, Robert (1999) – “Estimating the Quality of Care in Hospitals using Instrumental Variables,” Journal of Health Economics, 18, pp 747-67. (doi:10.1016/S0167-6296(99)00022-3 )

·        Machado, Matilde, Mora, Ricardo, and Romero-Medina, Antonio – “Can we Infer Hospital Quality from Medical Graduate’s Residency Choices?,” Journal of the European Economic Association, forthcoming.

If time allows:

·        Ackerberg, Machado, and Riordan, “Benchmarking for Productivity Improvement: a Health Care Application,” International Economic Review, vol 47, nº1, pp 161-201 February 2006.

3.2. Competition and Information

·        Dranove, David, Kessler, Daniel P., McClellan, Mark, and Satterthwaite, Mark (2003). “Is More Information Better? The Effects of ‘Report Cards’ on Health Care Providers,” Journal of Political Economy, 111(3): 555-588.

3.4. Reaction of Suppliers to financial Incentives

·      Mullen, K.J., Frank, Richard G., and Rosenthal, Meredith B. (2010): “Can you get what you pay for? Pay-for-performance and the quality of healthcare providers,” The Rand Journal of Economics, Vol. 41, Nº 1, 64-91. [not in Jstor yet]

List of papers for class presentations from which students can select: 

(1)              Feldman and Dowd (1991): “New Evidence on the Welfare Loss of Excess Health Insurance,” AER 81, 297-301.4

(2)              Chiappori, Pierre-André, Durand, Frank, Geoffard, Pierrez-Yves (1998): “Moral Hazard and the Demand for physician services: First Lessons from a French Natural Experiment,” European Economic Review, 42, pp 499-511.

(3)              Vera-Hernandéz, Marcos (1999): “Duplicate Coverage and Demand for Health Care. The case of Catalonia,” Health Economics vol 8 pp 579-598.

(4)              Glazer, Jacob, McGuire, Thomas G., and Joseph P. Newhouse (2007): “Using Performance Measures to Motivate ‘report-adverse’ and ‘report-loving’ agents,” Journal of Health Economics, 26, 1170-1189.

(5)              Beakley, Hoyt (2007): “Disease and Development: Evidence from Hookworm Eradication in the American South,” QJE, February 2007.

(6)              Chandra, Amitabh and Staiger, Douglas O. (2007): “Productivity Spillovers in Health Care: Evidence from the treatment of heart attacks,” JPE, vol 115(1), pp 103-140. This paper was the Arrow Award winner for the best published paper in Health Economics in 2007.

(7)              Finkelstein, Amy (2007): “The aggregate effects of Health Insurance: Evidence from the Introduction of Medicare,” QJE, February 2007

(8)              Iizuka, Toshiaki (2007): “Experts’ agency Problems: Evidence from Japan” RAND Journal of Economics, 38(3), 844-862.

(9)              Card, David, Dobkin, Carlos and Nicole Maestas (2008): “The Impact of Nearly Universal Insurance Coverage on Health Care Utilization: Evidence from Medicare” AER, 98(5), 2242-2258.

(10)          Brown, Jeffrey and Amy Finkelstein (2008): “The Interaction of Public and Private Insurance: Medicaid and the Long-Term Care Insurance Market” AER 98(3) pp 1083-1102.

(11)          Fang, Hanming, Keane, Michael P., and Dan Silverman (2008): “Sources of Advantageous Selection: Evidence from the Medigap Insurance Market,” JPE, 116(2), 303-350. This paper was the Arrow Award winner for the best published paper in Health Economics in 2008.

(12)          Lakdawalla, Darius, and Neeraj Sood (2009): “Innovation and the Welfare effects of Public Drug Insurance,” Journal of Public Economics, 93, 541-548.

(13)          Currie, Janet, Neidell, Matthew, and Johannes F. Schmieder (2009): “Air Pollution and Infant Health: Lessons from New Jersey,” Journal of Health Economics, 28, 688-703.

(14)          Propper, Carol and Van Reenen, John (2010): “Can Pay Regulation Kill? Panel Data Evidence on the Effect of Labor Markets on Hospital Performance”, Journal of Political Economy, 118(2), 222-273. This paper was the Arrow Award winner for the best published paper in Health Economics in 2010.

(15)          Almond, Douglas, Doyle, Joseph J., Kowalski, Amanda E., Williams, Heidi (2010): “Estimating Marginal Returns to Medical Care: Evidence from at-risk Newborns,” The Quarterly Journal of Economics, May 2010

(16)          Einav, Liran, Finkelstein, Amy, and Cullen, Mark R. (2010): “Estimating Welfare in Insurance Markets using Variation in Prices,” The Quarterly Journal of Economics, 125(3), 877-921. 

(17)          Miller, Grant and B. Piedad Urdinola (2010): “Cyclicality, Mortality, and the Value of Time: The Case of Coffee Price Fluctuations and Child Survival in Colombia,” The Journal of Political Economy, vol 118, No. 1, 113-155.

Complementary reading/references:

(1)             Bound, John, Jaeger, David A., and Baker, Regina (1993): “The cure can be worse than the disease: A cautionary tale regarding instrumental variables”, NBER Technical Paper, #137.

(2)               Train, Kenneth E. (2002): Discrete Choice Methods with Simulation, Cambridge University Press, chapters 2, 3, 4.

(3)               Cameron, A. Colin, Gelbach, Jonah B., Miller, Douglas L. (2006): “Robust Inference with Multi-Way Clustering,” NBER Technical WP Series 327.

(4)               Abadie, Alberto and Javier Gardeazabal (2003): "The Economic Costs of Conflict: A Case Study of the Basque Country", American Economic Review, 93(1), 112-132.

(5)               Abadie, Alberto, Diamond, Alexis, and Jens Hainmueller (2007): “Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program,” forthcoming in the Journal of the American Statistical Association.

Handouts: