Summary Health Economics_Minor Healthcare Management_Gezondheidswetenschappen
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Course
Health Economics (E_EBE3_HEC)
Institution
Vrije Universiteit Amsterdam (VU)
Book
Studyguide for Health Economics by Bhattacharya, Jay, ISBN 9781137029966
This summary includes all lectures with notes, the processing of the book and related articles, answers of the weekly assignments and notes of the working groups. In other words: the total package for your exam Health Economics.
Note: associated articles and chapters are incorporated
into the lectures of the corresponding week
Health Economics
Minor Health Care Management – Vrije Universiteit Amsterdam 2021/2022
Inhoudsopgave
Week 1 ........................................................................................................................................................... 4
Introduction to the Welfare State and the Health Care Market ......................................................................... 4
Difference between causality and correlation ............................................................................................... 4
Various ways of estimating causal effects ..................................................................................................... 4
Lecture 1.1 .......................................................................................................................................................... 5
A primer in economics ................................................................................................................................... 5
Economics of the welfare state ..................................................................................................................... 6
Concluding remarks ....................................................................................................................................... 8
Lecture 1.2 .......................................................................................................................................................... 9
Chapter 1: why health economics?................................................................................................................ 9
Chapter 2: demand for health care................................................................................................................ 9
Chapter 7: why health economics?.............................................................................................................. 11
Chapter 8: adverse selection: Akerlof's market for lemons ......................................................................... 13
Recap lecture .................................................................................................................................................... 16
Exercises arc elasticy .................................................................................................................................... 17
Tutorial ............................................................................................................................................................. 17
Weekly assignment ........................................................................................................................................... 18
Week 2 ......................................................................................................................................................... 22
Lecture 2.1 ........................................................................................................................................................ 22
Global burden of disease ............................................................................................................................. 22
Public vs. private health spending ............................................................................................................... 23
Rationales for government intervention in health ...................................................................................... 24
Who benefits from (public) health spending? ............................................................................................. 25
The health policy trilemma .......................................................................................................................... 27
Lecture 2.2 ........................................................................................................................................................ 28
Coping with insured shocks ......................................................................................................................... 28
How should health insurance markets work? ............................................................................................. 30
Several options: ........................................................................................................................................... 30
Universal Health Coverage and the impact of health insurance ................................................................. 31
How should moral hazard be controlled? .................................................................................................... 32
How should health care provision be regulated? ........................................................................................ 34
Assessing national health policies................................................................................................................ 35
Recap lecture .................................................................................................................................................... 36
Tutorial ............................................................................................................................................................. 39
Recap papers ............................................................................................................................................... 39
Weekly assignment ........................................................................................................................................... 42
Week 3 ......................................................................................................................................................... 46
Lecture 3.1 ........................................................................................................................................................ 46
Chapter 11: moral hazard ............................................................................................................................ 46
Chapter 3: demand for health: Grossman model ........................................................................................ 51
Chapter 4: socioeconomic disparities in health ........................................................................................... 56
1
, Lecture 3.2 ........................................................................................................................................................ 60
Health disparities between countries .......................................................................................................... 60
Health disparities between socio-economic groups .................................................................................... 60
Health capital theory ................................................................................................................................... 61
Introduction: health disparities ................................................................................................................... 62
Economic theory of health disparities ......................................................................................................... 62
Concluding remarks ..................................................................................................................................... 65
Recap lecture .................................................................................................................................................... 65
Exercises moral hazard ................................................................................................................................ 67
Exercises Grossman Model .......................................................................................................................... 68
Tutorial ............................................................................................................................................................. 69
Weekly assignment ........................................................................................................................................... 70
Week 4 ......................................................................................................................................................... 73
Lecture 4.1 ........................................................................................................................................................ 73
Setting the stage: the disease burden due to preventable illness ............................................................... 73
Modeling health investments and behavior ................................................................................................ 74
Barriers to preventive health care and behavior ......................................................................................... 74
Chapter 20 Economics of Health Externalities ............................................................................................. 75
Chapter 24: Time inconsistency and health ................................................................................................. 78
Lecture 4.2 ........................................................................................................................................................ 81
Facts and figures .......................................................................................................................................... 81
HIV/AIDS and poverty .................................................................................................................................. 83
Treatment vs. prevention ............................................................................................................................ 84
Economic evaluation.................................................................................................................................... 86
Economic epidemiology ............................................................................................................................... 87
Chapter 21: Disease control & applications of economic epidemiology ..................................................... 90
Recap lecture .................................................................................................................................................... 91
Tutorial ............................................................................................................................................................. 94
Recap papers ............................................................................................................................................... 94
Weekly assignment ........................................................................................................................................... 97
Week 5 ....................................................................................................................................................... 100
Lecture 5.1 ...................................................................................................................................................... 100
Global drivers of non-communicable diseases (NCDs) .............................................................................. 100
Aging .......................................................................................................................................................... 101
Chapter 19: Population aging and the future of health policy .................................................................. 101
Socio-economic and behavioral risk factors .............................................................................................. 103
Assessing government interventions ......................................................................................................... 106
Lecture 5.2 ...................................................................................................................................................... 108
What are the main determinants of mental health? ................................................................................. 108
How are poverty and mental health related?............................................................................................ 109
Breaking the cycle between poverty and mental health ........................................................................... 110
Poverty and cognitive functioning ............................................................................................................. 112
Recap lecture .................................................................................................................................................. 113
Tutorial ........................................................................................................................................................... 113
Mock exam ..................................................................................................................................................... 113
Weekly assignment ......................................................................................................................................... 114
Extra ........................................................................................................................................................... 128
Recap tutorial (week 7 tutorial) ...................................................................................................................... 128
3
, Week 1
Welfare state, Economics and Market Imperfections in Healthcare
Chapter 1, 2, 7, 8
Introduction to the Welfare State and the Health Care Market
Causality: i.e., relationship between health and SES, impact of policy changes on numerous outcome measures,
the impact of education on wages etc.
Difference between causality and correlation
• Correlation = do observations with higher X also have higher Y? > does not imply
causation!
• Reverse causality = Y could causality affect X;
• Confounding factors = other factors causally affecting both X and Y (= variable
bias);
• I.e., what is the causal effect of health on income?
o Reverse causality = income affects health;
o Confounding factors = education affects both health and income.
Various ways of estimating causal effects
• RCT: to ensure that any observed difference is due to treatment.
o Random assign different health levels to individuals:
§ Any confounders should have similar impact on treated and non-treated individuals;
§ Can check differences in observable characteristics;
§ Reverse causality also ruled out due to randomization;
§ But feasibility? In some cases, yes, in this example no!
• Difference-in-difference: use a control group as counterfactual;
o Assume a new type of medication comes available for a disease: improvement in health level
for patients;
o Medication only available for young individuals: use old individuals as control group:
§ Test using pre-trends;
§ Control for (constant) pre-treatment differences due to differences in for example the
level of health;
§ Control for time effects that affect both groups: Recessions etc.
• Regression discontinuity: use strict thresholds in which the variable of interst 'jumps' to estimate Local
Average Treatment Effect (LATE):
o Sharp: probability of treatment increases from 0 to 1;
o Fuzzy: probability of treatment increases;
o Effect of Covid-19 vaccination on income:
§ Vaccinated and non-vacciated people are different: confounding factors;
§ Income might determine whether you get vaccinated: reverse causality;
§ Assume age threshold for Covid-19 vaccin of 30 years old: individuals aged 29 years
and 364 days not (yet) vaccinated, individuals aged 30 years (possibly) vaccinated;
§ Young individuals will become vaccinated later, so cannot use difference-in-
difference;
§ But individuals below the threshold are very similar to individuals above the age
threshold, so we can compare around the threshold.
• Instrumental variables: use an instrument that shock your variables of
interest, without affecting the confounders or outcome variable directly.
o Estimate the effect of the instrument on the variable of interest;
o Estimate the effect of the change in variable of interest due to the
IV, on the outcome Y.
• Always test your confounders.
4
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