Econ 309 Health Insurance

Link to slides

Raj Chetty's lecture slides are really great on the data (lectures 7 and 8)

Ken Arrrow's great paper on health care

Problems with the US health insurance system

• Virginia Apgar (Atul Gawande, The New Yorker, October 9, 2006)

  • The effect of the Affordable Care Act on Labor Supply (Jonathan Chait, The New Republic, February 11, 2011)

• Employer based - Creates job and spouse lock

  • Tax deductability makes this a costly "tax-expenditure" and exacerbates income inequality

  • Health insurance job lock may deter entrepreneurship (NU alumni Fairlie and Kapur, Journal of Health Economics, February 5, 2010)   (More on this)

• Adverse selection makes it very expensive to get individual policies for everyone, and particularly for those with pre-existing conditions (resulting in excision).

  • How much does insurance cost in your neighborhood?  (And why is insurance priced based on our ZIPCODE anyway?!?!)  

  • www.HealthCare.gov - A similar service run by US Department of Health & Human Services

• "Adverse Selection Death Spirals" where rising insurance premiums drive out the low cost, healthy people, driving up average costs, and pushing up premiums more, perpetuating the cycle, and reducing the gains from risk pooling.

• Purging where small firms lose their coverage after someone on their insurance develops expensive health problems.  (Business Week, August 7, 2009, CNN, July 3, 2009)

• Rescission where people are dropped from their insurance due to alleged problems with their application   

• People with insurance may over-use it (Moral Hazard), although maybe not.  (Slate, Feb. 3, 2010)

• US health care is remarkably expensive relative to other countries, but without demonstrably better results.  (Here is complicated but depressing graphical analysis by National Geographic.)

  • Some estimates suggest that one-third of treatment costs are pure waste.  Brownlee, Dartmouth Atlas Project, Garson, UVA.

• Malpractice accusations are costly and lead health care providers to practice "defensive medicine."  (David Leonhardt, New York Times, Sept. 22, 2009)  

  • Some think malpractice isn't really a big issue (Ezra Klein, Slate, July 11, 2006)

• Health insurance markets don't fall under US antitrust law.  This is fascinating, and irritating!  (Slate, Oct. 15, 2009)

• Americans seem to pay much more than anywhere else *per unit* of care.  (Ezra Klein, Washington Post, Nov. 2, 2009)

• How do we put a value on health insurance?  (Congressional Research Service, April 6, 2009)

• "Inefficiency Hurst US Longevity Rankings" (New York Times, November 29, 2010)

Interesting readings

• Why does the US have such a high infant mortality rate?  We try to keep a lot of premature births alive.  (Darshak Sanghavi in Slate, March 16, 2007)

• A video of Jon Gruber talking about the 2010 Health Care Bill (March 11, 2010)

• HMO costs rising (New York Times, November 29, 2010)

• McDonald's offers its workers some really crappy insurance (Slate, November 23, 2010)

• "Study Finds No Progress in Safety at Hospitals" - About 25% of hospital admissions come down with preventable problems (New York Times, November 24, 2010)

• New York Times review of the 2010 Health Care Reform bill (March, 22, 2020):  Text, interactive

• Slate.com's up-to-date guide to healthcare reform, plus Slate's guide to healthcare reform vocabulary.

• Baumol on the cost disease of the (health) service sector.  (New York Times, Jan. 17, 2010)

• Gruber on the importance of taxing large health insurance packages.  (Washington Post, Dec. 28, 2009)

• Why are some prescription drugs so expensive?  Lack of competition (lack of demand shifters).  (Slate, August 16, 2010)

• John McCain pushes Republican health policies - Tax credits to buy insurance, allowing people to buy across state lines, malpractice reform (New York Times, Jan. 24, 2010)

• Rationing (or limiting what providers can do) can reduce costs and even improve health outcomes.  (New York Times, Dec. 29, 2009)

• Emergency rooms:  Are most of the visits unnecessary?  (Slate, March 9, 2009)  Are they really a lot more expensive than a doctor's office?  It depends on MC versus AC.  (Slate, June 23 2009)

• Some history of medical insurance, from the day of Teddy Roosevelt.  (Slate, March 9, 2010)

• The mandates in the House and Senate bills.  (New York Times, Dec. 23, 2009)  "Mandates won't help!"  (Darshak Sanghavi in Slate, Jan. 20, 2010)  And what if people refuse to pay?  (Slate, March 11, 2010)

• When is the optimal time to have a mammogram?  Economist Richard Thaler (New York Times, Dec. 19, 2009), Mathematician John Allen Paulos (New York Times, December 10, 2009)

• Jonathan Gruber essentially designed Mitt Romney's Massachusetts heath care plan.  Here he describes it.  (Journal of Economic Perspectives, Fall 2008)

• "Worst Bill Ever" (Wall Street Journal, Nov. 6, 2009)

• Nobel Prize winner Vernon Smith on healthcare's "ABC" incentive problems.  (Wall Street Journal, Oct. 17, 2009)

• Greg Mankiw on why healthcare can never be equal (New York Times, Sept. 20, 2009)

• The US didn't always spend a remarkable share of its GDP on healthcare.  

• "What Drives Health Care Expenditure?  Baumol's Model of 'Unbalanced Growth' Revisited", Jochen  Hartwig.  Journal of Health Economics, Vol. 28, Issue 3, May 2008.

• Paul Krugman on comparisons of healthcare systems in various industrialized nations.  (New York Times, August 16, 2009)

• Paul Krugman on health insurance reform made simple.  (New York Times, August 1, 2009)

• Who really pays for company supplied private health insurance?  DUH!  (New York Times, August 27, 2009).  This includes a link to a great Gruber paper.

• What counts as a "Cadillac" health plan?  (Slate, Oct. 14, 2009)

• How do people feel about the quality of US healthcare?  It depends on their incomes.  (Pew Research Center 2009)

• Is "cost shifting" a real problem?  (Uwe Reinhardt, October 16, 2009)

• Economists from the Brookings Institution on "Bending the Cost Curve" (Dec. 7, 2009)

• Atul Gawande on bending the cost curve (New Yorker, Dec. 14, 2009)

• "Do it yourself healthcare" by young people without insurance.  Absolutely horrifying.  (New York Times, Feb. 17, 2009)

• What do college-age people do to get health insurance?  (New York Times, August 15, 2010)

• What do you do about insurance if you lose your job?  Here are some options.  (New York Times, Feb. 27, 2009)

  • More on the options.

• McKinsey Consulting (2010) looks at what governments health policy changes would do to "Client X" (which presumably would be a composite of the firms that hire them).  

• Should sex change surgery be tax deductible?  (Slate, Feb. 16, 2010)

Health insurance markets aren't very competitive

• David Leonhardt on the lack of choice most Americans face.  (New York Times, August 26, 2009)

• Look at all these states where one insurer has over 50% of the market!  (New York Times, August 19, 2009)

• University of Chicago finance economist John Cochrane on how health insurance markets could offer products that deal better with pre-existing conditions.  (Wall Street Journal, August 14, 2009)

For amusement:  

• Ronald Reagan warns against socialized medicine, like Medicare, in the 1960

• What if air travel worked like health care?  

• Does insurance cover stupid decisions?  (Slate, November 9, 2010)