Health Economics

I teach Health Economics at Kansas State University, and have previously taught it at Boston University as a PhD student (Spring 2021 and 2022).

The course focuses on the industrial organization of healthcare markets. About a third of the syllabus is based on the textbook by Bhattacharya, Hyde and Tu, and the rest is based on journal articles and policy papers to introduce students to research in IO and health economics.

The aim of the course is for students to use economic theory to think through an economic problem, then combine these insights with empirics and institutional details to understand the trade-offs involved in policy-making.

The course also emphasizes important IO concepts like vertical integration and contracting, employer-insurer-provider bargaining, and antitrust issues regarding healthcare providers. An additional emphasis is placed on learning about healthcare systems outside the US to better understand different policy trade-offs.

Topics - Expected utility, risk aversion, actuarial fairness


Topics - Ex ante and ex post moral hazard, strategies to limit moral hazard, Pauly's model.


Topics - Adverse and advantageous selection, efficiency cost, complete unraveling, loading factor, policy remedy.


Topics - Internal organization of hospitals, volume outcome relationship, differentiated products, non-profits.


Topics - CON and AWP laws, contract clauses to stifle competition, mergers between insurers and hospitals, promoting competition, facility fees, 340B program.


Topics - Roles of DOJ's antitrust division and FTC, market definition, horizontal merger guidelines, cost efficiencies.


Topics - Backward and forward integration, referral networks, foreclosure, transaction costs, patient steering, anti-kickback statute, Stark laws.


Topics - Nash-in-Nash bargaining, employer-insurer bargaining over premiums, insurer-provider bargaining over reimbursement rates.

Intuition behind the relevant channels of bargaining (premium and enrollment effect, price reinforcement effect, hospital cost effect, recapture effect, threat of replacement effect).

Effects of hospital mergers and insurer mergers.


Topics - Information used to calculate payments, breadth of provider payment, fineness of payment classification, generosity of payment, incentives from different contract structures, pay-for-performance scheme, effect of reimbursement schemes on market structure.


Topics -  Cost Effectiveness Analysis, Cost Benefit Analysis, ICER, CEF, Statistical value of life.


Topics - Possible answers to 3 key questions. i) How should insurance markets work (private, public, employer-sponsored). ii) How should moral hazard be controlled (cost-sharing, CEA, queueing) iii) How should provider markets be regulated (private, public, price regulation)


Topics - Overview of nationalized healthcare system with examples from UK and Canada. Discussion on queueing and rationing. Introducing elements of competition (NHS and provider choice).


Topics - Overview of healthcare system in Germany and Switzerland. How to operate a managed-competition healthcare market. Intro to risk adjustment.


Topics - Private and employer-based health insurance, managed care plans, selective universal insurance, private healthcare provision.


Topics - Regulations on individual insurance marketplaces, individual mandate, employer mandate, Medicaid expansion, attracting insurers to marketplaces.