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Health Economics

Department of Economics
Health Economics, Subject: 220, Course: 316, Section: 01 

Professor Tetsuji Yamada, Ph.D.
Classroom: Armitage Hall (ATG-212), Tuesday and Thursday (1:30pm – 2:50pm)
Office Hours: ATG-330: Tuesday and Thursday (11:30AM-1:20PM & 4:30-5:30PM) or by Appointment
Office: ATG-330, Tel: 856-225-6025
E-mail: tyamada@crab.rutgers.edu
Econ website of Yamada: http://economics.camden.rutgers.edu/faculty/tetsuji-yamada/
Econ Department website: http://economics.camden.rutgers.edu/
Department Office: ATG. 4th floor, Department of Economics, Tel: 856-225-6136

General Objective:

Health Economics has been developing and expanding in its theory and applications over the last decade. This field has a wide range of policy implications in business and public arenas, in addition to the healthcare industry. The healthcare sector now represents nearly one-fifth of the U.S. economy in terms of economic activity. The purpose of this course is to understand the healthcare industry and its market, and to develop/strengthen a student’s ability to use economic concepts, tools and theories to analyze healthcare and health related issues, public health policy, healthcare industry, and to aid in decision making and government policy development.

Accumulation of Factual Knowledge:

The course, Health Economics, is designed to provide students who are interested in the health and healthcare industry, non-profit organizations, governments, public health and its policy, and other related health fields with the knowledge and skills needed to incorporate policy perspectives. Students are taught the theory of health economics and its application to polices that seeks to improve the health of the population. The emphasis of the course is on conceptualization and the measurement of variables associated with the healthcare system, demand and supply of healthcare services, healthcare cost and finance, structure, conduct, performance, and market. The relationship between healthcare providers and consumers will be explored in depth.

Critical Analysis:

Health Economics introduces students to the production of health, costs and technology of health care, health capital, consumer choice health behavior, demand for health insurance and health insurance markets, use of healthcare services, human service professions, and equity, efficiency and need in healthcare services to the concepts and principles underlying the factors that affect a variety of healthcare industry and government-healthcare policies. Theory-based analysis of interpersonal, group, and community factors that influence health policies (Medicare, Medicaid, SCHIP, HMOs, BCBS, healthcare financing and distribution organizations, etc.) will be evaluated.

Application of Knowledge:

The course with covers a variety of healthcare industries: the health insurance industry, physician service industry, hospital service industry, pharmaceutical industry, and the long-term care industry with will be analyzed. Students will understand how to use economic tools to analyze these industries, and healthcare reform. The course emphasizes the acquisition of some aspects of theoretical understanding, but also provides basic knowledge that will prove useful to those engaged in teaching, planning, and implementing health policies.

Upon completion of the course, each student will:

  1. Understand health, health care and its market by using basic economic tools.
  2. Identify its theories and applications.
  3. Analyze healthcare issues.
  4. Analyze demand for healthcare services, and increasing health care costs.
  5. Demonstrate the influence of health care costs on consumers.
  6. Describe hospital and physician behavior.
  7. Understand insurance (Medicare, Medicaid, BCBS) and managed care (HMO).
  8. Describe health care financing and long-term care.
  9. Analyze the pharmaceutical market and its products, within the health care industry.
  10. Examine cost-benefit and effectiveness analyses, government policy and health care system.
  11. Understand decision making and policy development.
  12. Understand the U.S. healthcare system and health disparity.
  13. Recognize, discuss and comprehend health issues (determinants of health behavior).
  14. Analyze environmental and institutional factors involved in the identification of and solution to health issues and policies.
  15. Discuss, understand, and implement solutions to the health problems, and government public health policies.
  16. Observe and analyze healthcare industries (the health insurance industry, physician service industry, hospital service industry, pharmaceutical industry, and the long-term care industry) that focus on improving public health policies, and economic efficiencies.
  17. Recommend and implement policies to resolve health related issues and problems.

Textbook (Required):

Sloan and Hsieh; Health Economics, 1st Edition
The MIT Press, 2012

Supplementary Readings (option):
Paul J. Feldstein, Health Policy Issues: An Economic Perspective, Health Administration Press, Chicago, IL, Fifth Edition, 2011.

1 Introduction, What is Health Economics? 1

Health and Health Behaviors: Health Production Functions and Demand for Health

3 Health and Health Behaviors: Health Capital, Uncertainty and Consumer Choices 2
4 Demand for Healthcare Services  3
5 Demand for Health Insurance, Welfare, and Risk Adjustment 4
6 Market for Physicians’ Services 5
7 Hospitals, Performance, and Regulations 6
8 Quality of Healthcare and Medical Malpractice 7
9 Nurses in Hospital and Long-Term Care Services 8
10 Pharmaceutical Manufacture, Products, and Pricing 9
11 Pharmaceutical industry and International Aspects 9
12 Supply and Demand for Health Insurances 10
13 Government and Health Insurance 10
14 Healthcare Financing and Private Sector 11
14 Healthcare Financing and Public Sector 12-13

Course Requirements:

1 Testing:

Ten examinations will be given; including quizzes and homework assignments. The examinations will be announced approximately one week in advance. There will be regular/pop-up quizzes during the semester. You will be assigned homework occasionally. Make-ups will not be given unless the instructor is consulted in advance and permission is given or unless extraordinary circumstances arise (as judged by the instructor) which prevent advance contact. Questions should be answered thoughtfully. These questions are formed by the information discussed in class discussions, and both required and supplemental readings. More specific instructions will be attached to the exam when it is handed out.

2 Timely Completions of All Assignments:

There will be regular/pop-up quizzes during the semester. You will be assigned homework occasionally. Do not skip the classes in order not to miss the quizzes and homework because there is no makeup quizzes and homework. Timely completion of all assignments. Timely completion of the assignments is a formal requirement of the course. The assignments are intended to help students reinforce concepts and applications developed in class. Students are strongly encouraged to put forth maximum effort on each homework assignment and quiz. I accept your assignments by hand. Don’t submit your assignments by e-mail.

3 Attendances and Participation:

Class attendance is crucial to this course. Class will begin promptly. Participation is also crucial to this course. Students are expected to actively participate in each class by contributing thoughts, ideas, and information based on assigned readings and personal resources. Discussion in class is encouraged at all times. I expect you to attend class regularly. It has been my experience that students who miss classes generally have greater difficulty in learning the material. Class participation is directly factored into the final grade and it will also be considered in borderline cases.

It has been my experiences that students who miss classes generally have great difficulty learning the material. Class participation is factored into the final grade and it will also be considered in borderline cases.

4 Notice to Students:

To obtain the maximum benefit from the course you should do the assigned readings prior to class and attend the lectures. Specific questions and dates for quizzes and homework will be given in conjunction with the topics. Academic honesty shall be maintained in accordance with University policy.

5 Criteria for Evaluation:

After the end of the semester, students will receive a final grade report. This will include a breakdown of the points he/she earned for his/her two mid-term examinations, an individual project, a group project, one final examination, all assignments, and a point total with the corresponding letter grade.

6 Grading:

Grading: Undergraduate students:
30% = Final examination; 20%x2 = Two mid-term examinations;
Quizzes & homework = 20%; and One research paper = 10%.

Grading: Graduate students:
30% = Final examination; 20%x2 = Two mid-term examinations;
Quizzes & homework = 10%; and One research paper = 20%.

Borderline Case:
Homework assignments and quizzes are factored into the final grade and it will also be considered in borderline cases.

Grade Scale:
A = 93~100%             B+ = 88~92%             B = 82-87%
C+ = 78~81%;           C = 70~77%               D = 60~69                   F <60%

7 Plagiarism:

Plagiarism takes many forms. Flagrant forms include purchasing or copying a paper from the internet or from a fellow student or anyone else, whether or not that paper is published; copying or cutting and pasting portions of others’ work (whether a phrase, sentence, paragraph, chart, picture, figure, method or approach, experimental results, statistics) without attribution. A more subtle, but equally heinous, form is paraphrasing or attempting to put in your own words the theories, opinions or ideas of another without proper citation. Carelessly, inadequately or inaccurately using citations are also a form of plagiarism. Fabricating citations is a very serious form. Re-using your own previous work without appropriate citation is plagiarism. Even inappropriately assuming that a fact or idea is common knowledge and, therefore, not providing a citation is plagiarism.

8 Cheating:

Examples of cheating include, but are not limited to: giving or receiving unauthorized assistance to/from another on quizzes, examinations, assignments; using materials or devices (such as calculators, computers, cell phones) not specifically authorized during any form of a test or examination; sitting in for someone else or permitting someone to sit in for you on any form of test or examination; working on any form of test or examination beyond the allotted time; hiding, stealing or destroying materials needed by other students; and altering and resubmitting for re-grading any assignment, test or examination.


An act of academic misconduct will have consequences. Depending on the specific nature and circumstances of one’s behavior, a student who is found to have violated academic integrity may be subject to one or more of the following:

  • Performing additional work(s) intended to assist the student in avoiding future misconduct.
  • Redoing the work, up to and including repeating the entire class.
  • Reduction in grade on a particular submitted piece of work, or segment of work required for a course or the entire course down to and including a failing grade.
  • Within five business days of notification, the instructor will inform the student dean and the department chairperson, and, if necessary, review the procedures to be followed and any prior history of violations by the accused student.