Aaron YelowitzApplied economist · University of Kentucky
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Historical

ECO 725 · Fall 2024

Health Economics

Historical syllabus; policies and dates reflect this term.

Archived syllabus. Policies, dates, assignments, and readings reflect Fall 2024.

Course information

ECO 725-001: Health Economics University of Kentucky Fall Semester 2024 3.0 Credits TR/12:30 pm – 1:45 pm Eastern Time/B&E 235

Instructor Information

Professor Aaron Yelowitz Office: 225H B&E Building Email: aaron@uky.edu; if possible, please communicate with me through the Canvas email interface as it is easier for me to keep track of communication. Under normal circumstances, I will respond within 24 hours. Office hours: Tuesday/Thursday, 2:30 pm – 4 pm Eastern Time (also, usually available one-on-one by Zoom, on other days; please schedule in advance).

Course Description

This course rigorously examines the organization, financing, and management of the US health care system and programs and emphasizes economic analysis contemporary health policy concerns. By the end of the semester, students should have the institutional knowledge and analytic tools needed to contribute to current public policy debates about health and medical care.

This course and ECO 724 (Environmental Economics) are the two courses that are the basis for the area in Environmental and Health Economics in the Ph.D. program in Economics.

Course Prerequisites

ECO 601 and 703 or consent of instructor.

Required Materials

  1. Readings: Peer-reviewed articles (available on JSTOR for UK subscribers) will form the core readings of this course. Some articles come from the Handbook of Health Economics (HPE) and are typically available on NBER’s website.
  2. In addition, supplemental handouts and PowerPoint slides will be distributed.

Student Learning Outcomes

After completing this course, the student will be able to:

  1. Identify the major features of the health care system in the United States.
  2. Contrast how health care markets differ from other economic markets.
  3. Apply data to examine how health care markets operate.
  4. Analyze whether empirical findings from data application are consistent with theory.
  5. Integrate economic theory and empirical analysis to understand health care markets.
  6. Assess whether health care policy proposals will have the intended consequences.

Activities, Exams, and Grading Scheme

Course Assignments

  • Research Paper (50%)
  • Final Exam (35%)
  • In-Class Presentation (15%)

Summary Description of Course Assignments

  1. 50 points: All students will use publicly available data of their choosing (i.e., HCUP, BRFSS, NHIS, NIS, CPS, ACS, SIPP, PSID, NLSY, GSS, NSAF, HRS, AHEAD, Vital Statistics, Census PUMS, Google Trends, SafeGraph, etc.) to ask and answer a research question related to health economics. Much of this data can be found on NBER, Census, ICPRS, or www.data.gov.

Students will provide data, programs, log files and write-up in electronic form. All programming must be done in Stata and the write-up must be in Word. The write-up must not exceed 2000 words (approximately 12 manuscript pages), including diagrams, figures, tables, and references. The word count will be strictly enforced, and the overall goal is to have a paper that conforms to the guidelines for short papers from both health policy and economics journals.

Your research paper proposal will be due by Thursday, 10/10/2024, by 4 pm EST. I will give you feedback by Friday, 10/18/2024. The research paper (and programs, log files, data) will be due on 11/26/2024, by 4 pm EST.

  1. 35 points: There will be an online final exam during final exam week, on Tuesday, 12/17/2024 from 10:30 am - 12:30 pm. The exam will be closed book / closed note and used Respondus Monitor.
  2. 15 points: The field of health economics is vast, and the goal of the in-class presentation is to teach the entire class about an unexplored aspect of public economics. Several recent winners of the John Bates Clark medal have made recent, important contributions to the field. The presentations will be around 15-20 minutes each (including questions) and will be conducted in two sessions (12/5/2024 and 12/10/2024). You must have the topic approved by me. The topics should focus on timely issues in health economics. Presentation proposals will be due by 10/31/2024, by 4 pm EST.

Technology concerns: Although proctored Canvas exams with Respondus Monitor will likely work for almost all students enrolled in ECO 725, if your situation makes this arrangement infeasible, please contact me as soon as possible so that we can make alternative arrangements. I can be reached at aaron@uky.edu.

Submission of Assignments

Any assignments will be submitted via Canvas or other online means that will be detailed later. For students with an excused absence, alternative arrangements will be made if submission cannot be met by the deadline. For students with an unexcused absence, late assignments will not be accepted.

Grading Scheme

A grading curve will be applied; historically, approximately 70% of students earn an A; 30% earn a B or lower.

Attendance Policy

Students are strongly encouraged to attend every lecture and review the assigned lecture notes in advance. Many of the readings – especially the academic readings – will be easier to understand with attendance. However, no credit will be given for attendance.

Academic Policy Statements A full list of UK academic policies is available at https://provost.uky.edu/proposals/guidancecourse-proposals/standard-academic-policy-statements (updated link). This covers Excused Absences and Acceptable Excuses, Religious Observances, Verification of Absences, Making Up Graded Work, Excused Absences for Military Duties, Unexcused Absences, Prep Days and Reading Days, Homework During Finals Week, Accommodations Due to Disability, Non-Discrimination Statement and Title IX Information, and Regular and Substantive Interactions.

Academic Offenses (Cheating, Plagiarism, and Falsification or Misuse of Academic Records) UK policies on academic offenses are available at https://provost.uky.edu/proposals/guidance-course-proposals/academic-offenses. For a thorough description of “plagiarism,” see https://ombud.uky.edu/students/what-plagiarism. For a thorough description of “cheating,” see https://ombud.uky.edu/students/what-cheating.

Resources The university offers a variety of resources available to students. Visti the Office of Student Success ( https://studentsuccess.uky.edu/get-help )to access the full list.

Classroom Emergency Preparedness and Response

Please see the following link for information related to emergency reporting and action: https://provost.uky.edu/curriculumproposals/syllabus-information.

Course Schedule, ECO 725-001, Fall 2024

Module 1: Overview, Data Orientation, Empirics

  • Part 1 o Overview of syllabus, papers, and goals of course. o Lay out expectations with respect to turning in paper (i.e., Word) and statistical programs (i.e., Stata, log files, do files). Objective: 2000-word paper potentially publishable in economics or public health journal.
  • Part 2 o Yelowitz video on online data sources. Objective: be fast and correct with data sources, and in very short order, figure out whether there is sufficient potential with a dataset to move forward of a topic.
  • Yelowitz PowerPoint/video on using data - “Data Sources for Economics Students” o Examples of data sources: (a) Publicly available, pros/cons, (b) Data scraping (i.e., Diamonds), (c) Non-public, expensive data (i.e., Nielsen data, College of Pharmacy), (d) “Free” data with severe hoops (i.e., Census RDC, IRB approval, process of getting findings approved), (e) “Free” data with “buy-in” – i.e., data from employer. o Discussion of data sources (HCUP, Safegraph, Neilsen) where training is needed. o Documenting data, internet data, data presentation.
  • Gentzkow, Matthew and Jesse M. Shapiro, 2014. “Code and Data for the Social Sciences: A Practitioner’s Guide.” University of Chicago mimeo.
  • Edelman, Benjamin. 2012. “Using Internet Data for Economic Research.” Journal of Economic Perspectives 26 (2): 189-206.
  • Schwabish, 2014. “An Economist’s Guide to Visualizing Data.” Journal of Economic Perspectives, 28(1): 209-34.
  • Varian, Hal R. 2014. “Big Data: New Tricks for Econometrics.” Journal of Economic Perspectives 28 (2): 3-28.
  • Mason, Winter, and Siddharth Suri. 2012. “Conducting Behavioral Research on Amazon’s Mechanical Turk.” Behavior Research Methods 44 (1): 1-23. o Difference-in-differences handout, Standard error corrections
  • Yelowitz difference-in-differences handout & examples
  • Gruber, Public Finance and Public Policy, “Empirical Tools of Public Finance,” 2005, Chapter 3.
  • Bertrand, M., E. Duflo, and S. Mullainathan. 2004. “How Much Should We Trust Differences-In-Differences Estimates?” The Quarterly Journal of Economics 119 (1): 249-75.
  • Cameron, A. Colin, Jonah B. Gelbach, and Douglas L. Miller. 2011. “Robust Inference with Multiway Clustering.” Journal of Business & Economic Statistics 29 (2): 238-49. Cameron, A. Colin, Jonah B. Gelbach, and Douglas L. Miller. 2008. “Bootstrap-Based Improvements for Inference with Clustered Errors.” Review of Economics and Statistics 90 (3): 414-27.

Module 2: Overview of US Health Care System, Health & Economy

  • Part 1 o Overview of health care system
  • Gruber, Public Finance and Public Policy, “Health Insurance I: Health Economics and Private Health Insurance,” 2005, Chapter 15.
  • Gruber, Public Finance and Public Policy, “Health Insurance II: Medicare, Medicaid, and Health Care Reform,” 2005, Chapter 16.
  • Part 2 o How does health vary with economic conditions?
  • Ruhm, C. J. 2000. “Are Recessions Good for Your Health?” The Quarterly Journal of Economics 115 (2): 617-50.
  • Ruhm, C. J. 2015. “Recessions, Healthy No More?” Journal of Health Economics 42: 17-28.
  • Chetty R, Stepner M, Abraham S, Lin S, Scuderi B, Turner N, Bergeron A, Cutler D. The Association Between Income and Life Expectancy in the United States, 2001- 2014. JAMA. 2016;315(16):1750-1766.

Module 3: Demand for Medical Care, Identification

  • Part 1 o Demand for medical care
  • Manning, Willard G., et al. 1987. “Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment.” American Economic Review, 77:251-277.
  • Aron-Dine, Aviva, Liran Einav, and Amy Finkelstein. 2013. “The RAND Health Insurance Experiment, Three Decades Later.” Journal of Economic Perspectives 27 (1): 197-222.
  • Finkelstein, Amy N, Sarah L Taubman, Bill J Wright, Mira Bernstein, Jonathan Gruber, Joseph P Newhouse, Heidi L Allen, Katherine Baicker, and Oregon Health Study Group. 2012. “The Oregon Health Insurane Experiment: Evidence from The First Year.” Quarterly Journal of Economics 127 (August (3)): 1057-1106.
  • Part 2 o Identification of interventions
  • McClellan, M, B J McNeil, and J P Newhouse. 1994. “Does More Intensive Treatment of Acute Myocardial Infarction in the Elderly Reduce Mortality? Analysis Using Instrumental Variables.” JAMA: The Journal of the American Medical Association 272(11): 859-66.
  • Angrist, Joshua D, and Jörn-Steffen Pischke. 2010. “The Credibility Revolution in Empirical Economics: How Better Research Design Is Taking the Con out of Econometrics.” Journal of Economic Perspectives 24 (2): 3-30.

Module 4: Medical Malpractice

  • Part 1 o Medical Malpractice
  • Kessler, Daniel, and Mark Mcclellan. 1996. “Do Doctors Practice Defensive Medicine?” The Quarterly Journal of Economics 111 (2): 353-90.
  • Currie, Janet, and W Bentley MacLeod. 2008. “First Do No Harm? Tort Reform and Birth Outcomes.” Quarterly Journal of Economics 123 (2): 795-830.

Module 5: Managed Care & Organizational Form and Performance

  • Part 1 o Managed Care
  • Marton, J., Yelowitz, A. and Talbert, J., “A Tale of Two Cities? The Heterogeneous Impact of Medicaid Managed Care,” Journal of Health Economics, July 2014, 36(1): 47- 68.
  • Aizer, Anna, Janet Currie, and Enrico Moretti. 2007. “Does Managed Care Hurt Health? Evidence from Medicaid Mothers.” Review of Economics and Statistics 89 (3): 385-99.
  • Duggan, Mark, and Tamara Hayford. 2013. “Has the Shift to Managed Care Reduced Medicaid Expenditures? Evidence from State and Local-Level Mandates.” Journal of Policy Analysis and Management 32 (3): 505-35.
  • Part 2 o Organizational Form and Performance
  • Duggan, Mark G. 2000. “Hospital Ownership and Public Medical Spending.” The Quarterly Journal of Economics 115 (4): 1343-73.
  • Ho, Vivian, and Barton H. Hamilton. 2000. “Hospital Mergers and Acquisitions: Does Market Consolidation Harm Patients?” Journal of Health Economics 19 (5): 767-91.
  • Schmitt, Matt. 2017. “Do Hospital Mergers Reduce Costs?” Journal of Health Economics. 52: 74-94.

Module 6: Medicare and Medicaid

  • Part 1 o Medicare
  • Finkelstein, Amy. 2007. “The Aggregate Effects of Health Insurance: Evidence from the Introduction of Medicare.” The Quarterly Journal of Economics 122: 1- 37.
  • Card, David, Carlos Dobkin, and Nicole Maestas. 2008. “The Impact of Nearly Universal Insurance Coverage on Health Care Utilization: Evidence from Medicare.” American Economic Review 98 (5): 2242-58.
  • Card, David, Carlos Dobkin, and Nicole Maestas. 2009. “Does Medicare Save Lives?” Quarterly Journal of Economics 124 (2): 597-636.Abaluck, Jason, and

Jonathan Gruber. “Choice inconsistencies among the elderly: evidence from plan choice in the Medicare Part D program.” American Economic Review 101.4 (2011): 1180-1210.

  • Part 2 o Medicaid
  • Currie, Janet, and Jonathan Gruber. 1996a. “Health Insurance Eligibility, Utilization of Medical Care, and Child Health.” The Quarterly Journal of Economics 111 (2): 431-66.
  • Currie, Janet, and Jonathan Gruber. 1996b. “Saving Babies: The Efficacy and Cost of Recent Changes in the Medicaid Eligibility of Pregnant Women.” Journal of Political Economy 104 (6): 1263.
  • Cutler, D. M., and J. Gruber. 1996. “Does Public Insurance Crowd Out Private Insurance?” The Quarterly Journal of Economics 111 (2): 391-430.
  • Gruber, Jonathan, and Aaron Yelowitz. 1999. “Public Health Insurance and Private Savings.” Journal of Political Economy 107 (6): 1249-74.
  • Yelowitz, Aaron S. 1995. “The Medicaid Notch, Labor Supply, and Welfare Participation: Evidence from Eligibility Expansions.” The Quarterly Journal of Economics 110 (4). Oxford University Press: 909-39.

Module 7: Adverse Selection

  • Part 1 o Rothschild, Michael, and Joseph Stiglitz. 1976. “Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information.” The Quarterly Journal of Economics 90(4): 629. o Cutler, D. M., and S. J. Reber. 1998. “Paying for Health Insurance: The Trade-Off between Competition and Adverse Selection.” The Quarterly Journal of Economics 113 (2): 433-66. o Buchmueller, Thomas, and John DiNardo. 2002. “Did Community Rating Induce an Adverse Selection Death Spiral? Evidence from New York, Pennsylvania, and Connecticut.” American Economic Review 92 (1): 280-94. o Handel, 2013. “Adverse selection and inertia in health insurance markets: when nudging hurts.” American Economic Review, 103 (7), 2643-2682. o Handel, Ben, Igal Hendel, and Michael D. Whinston. 2015. “Equilibria in Health Exchanges: Adverse Selection versus Reclassification Risk.” Econometrica 83(4): 1261- 1313.

Module 8: Health Insurance Expansions

  • Part 1 o Dependent Coverage Mandates o Antwi, By Yaa Akosa, Asako S. Moriya, and Kosali Simon. 2013. “Effects of Federal Policy to Insure Young Adults: Evidence from the 2010 Affordable Care Act’s Dependent- Coverage Mandate.” American Economic Journal: Economic Policy 5 (4): 1-28.

o Akosa Antwi, Yaa, Asako S. Moriya, and Kosali I. Simon. 2015. “Access to Health Insurance and the Use of Inpatient Medical Care: Evidence from the Affordable Care Act Young Adult Mandate.” Journal of Health Economics 39: 171-87.

  • Part 2 o ACA Expansion & Massachusetts Reform
  • Courtemanche, C., Marton, J., and Yelowitz, A., 2016. “Who Gained Insurance Coverage in 2014, the First Year of Full ACA Implementation?” Health Economics, 25(6): 778-784.
  • Courtemanche, C., Marton, J., Ukert, B., Yelowitz, A., and Zapata, D., “Impacts of the Affordable Care Act on Health Insurance Coverage in Medicaid Expansion and Non- Expansion States,” Journal of Policy Analysis and Management, 2017, 36(1): 178-210.
  • Frean, M., Gruber, J., Sommers, B. 2017. “Premium Subsidies, the mandate, and Medicaid expansion: Coverage effects of the Affordable Care Act.” Journal of Health Economics, 53: 72-86.
  • Kaestner, R., Garrett, B., Chen, J., Gangopadhyaya, A. and Fleming, C., 2017. “Effects of ACA Medicaid Expansions on Health Insurance Coverage and Labor Supply.” Journal of Policy Analysis and Management, 36: 608-642.
  • Courtemanche, C., Marton, J., Ukert, B., Yelowitz, A., and Zapata, D., “Early Effects of the Affordable Care Act on Health Care Access, Risky Health Behaviors, and Self- Assessed Health,” Southern Economic Journal.
  • Courtemanche, Charles J., and Daniela Zapata. 2014. “Does Universal Coverage Improve Health? The Massachusetts Experience.” Journal of Policy Analysis and Management 33 (1): 36-69.

Module 9: Behavioral economics

  • Part 1 o Marton, J., Yelowitz, A., and Talbert, J., “Medicaid Program Choice, Inertia and Adverse Selection,” Journal of Health Economics, 2017, 56(1): 292-316. o Ericson, K.M.M., 2014. Consumer inertia and firm pricing in the Medicare part D prescription drug insurance exchange. American Economic Journal: Econ. Policy 6 (1): 38-64. o Handel, B.R., Kolstad, J., 2015. Health insurance for ‘humans’: Information frictions, plan choice, and consumer welfare. American Economic Review 105 (8): 2449-2500. o Handel, B.R., Kolstad, J., 2015. Getting the Most from Marketplaces: Smart Policies on Health Insurance Choice, Brookings Institution. o Saurabh Bhargava, George Loewenstein, Justin Sydnor; Choose to Lose: Health Plan Choices from a Menu with Dominated Option, The Quarterly Journal of Economics, 2017, 132(3): 1319-1372. o Abadie, Alberto and Sebastien Gay, 2006. “The impact of presumed consent legislation on cadaveric organ donation: A cross-country study,” Journal of Health Economics, 25(4): 599- 620.

Module 10: Diseases and Lifestyle Choices

  • Part 1 o Chandra, Amitabh, Courtney Coile, and Corina Mommaerts. 2023. “What Can Economics Say about Alzheimer's Disease?” Journal of Economic Literature, 61 (2): 428–70. o Kadir Atalay, Garry F. Barrett, Anita Staneva, “The effect of retirement on elderly cognitive functioning, Journal of Health Economics, 66, 2019, Pages 37-53, https://doi.org/10.1016/j.jhealeco.2019.04.006. o Cutler, David M. 2008. “Are We Finally Winning the War on Cancer?” Journal of Economic Perspectives, 22 (4): 3–26.
  • Part 2 o Cho, Y., Shin, SY., Won, S. et al. Alcohol intake and cardiovascular risk factors: A Mendelian randomisation study. Sci Rep 5, 18422 (2015). https://doi.org/10.1038/srep18422 o Abby Alpert, William N Evans, Ethan M J Lieber, David Powell, Origins of the Opioid Crisis and its Enduring Impacts, The Quarterly Journal of Economics, 137(2), May 2022, 1139– 1179, https://doi.org/10.1093/qje/qjab043 o Pedro Bessone, Gautam Rao, Frank Schilbach, Heather Schofield, Mattie Toma, The Economic Consequences of Increasing Sleep Among the Urban Poor, The Quarterly Journal of Economics, Volume 136, Issue 3, August 2021, Pages 1887–1941, https://doi.org/10.1093/qje/qjab013 o Paul Gertler, Tadeja Gracner, “The Sweet Life: The Long-Term Effects of a Sugar-Rich Early Childhood” NBER Working Paper 30799, Revised June 2023. o Braghieri, Luca, Ro'ee Levy, and Alexey Makarin. 2022. “Social Media and Mental Health.” American Economic Review, 112 (11): 3660–93. o Allcott, Hunt, Luca Braghieri, Sarah Eichmeyer, and Matthew Gentzkow. 2020. “The Welfare Effects of Social Media.” American Economic Review, 110 (3): 629–76. o Hunt Allcott, Rebecca Diamond, Jean-Pierre Dubé, Jessie Handbury, Ilya Rahkovsky, Molly Schnell, Food Deserts and the Causes of Nutritional Inequality, The Quarterly Journal of Economics, Volume 134, Issue 4, November 2019, Pages 1793– 1844, https://doi.org/10.1093/qje/qjz015