The Economics of Health Reconsidered, Fourth Edition

by Thomas Rice PhD

Overview

Instructor Resources: PowerPoint slides, important chapter concepts, discussion questions with answers, additional readings, and a transition guide to the new edition.

Now in its fourth edition, The Economics of Health Reconsidered presents an argument that still holds true: despite assertions to the contrary, neither economic theory nor evidence shows that reliance on market forces leads to superior outcomes in healthcare systems. Government plays a crucial role in making the healthcare sector not only more equitable but also more efficient. This book reconsiders the field of health economics as it is traditionally taught and practiced. It critically examines economic theory as applied to the health sector and questions the prevailing belief that a competitive healthcare marketplace results in the best outcomes.

Fully revised and updated, this new edition incorporates information on the impact of the implementation of the Affordable Care Act as well as:

A new chapter on healthcare expenditures, which examines healthcare spending in the United States and in other high-income countries, including the magnitude, growth, and causes of high expenditures and the different policies that have been used or proposed to help control them A new chapter that describes the various types of economic evaluation currently used in healthcare, discusses the issues that arise with the use of economic evaluations, and provides information on how to conduct an economic evaluation New and updated data throughout chapters and exhibits

This book serves as an ideal stand-alone text for health economics and health policy courses and as a general reference for issues in health economics.

Product Details

ISBN-13:	9781567937237
Publisher:	Health Administration Press
Publication date:	06/01/2015
Series:	AUPHA/HAP Book
Edition description:	None
Pages:	623
Product dimensions:	7.00(w) x 10.00(h) x 1.50(d)

About the Author

Thomas Rice, PhD, is professor in the Department of Health Policy and Management at the University of California, Los Angeles (UCLA) Fielding School of Public Health. Between 2006 and 2011, he also served as vice chancellor for academic personnel at UCLA. Dr. Rice received his doctorate in economics from the University of California at Berkeley in 1982. He served on the faculty of the University of North Carolina School of Public Health from 1983 to 1991, when he joined UCLA. Dr. Rice has published widely on issues such as the behavioral economics of healthcare, competition and regulation in health services, physicians’ economic behavior, cost containment, health insurance, and the Medicare program.

Editorial Reviews

Rice (health services, UCLA) argues that the health economics profession has mistakenly embraced the market competition model and failed to consider whether the assumptions of this model are met in the healthcare arena. The primary topics covered by microeconomic theory are addressed: market competition, supply, demand, and equity. For each of these topics, Rice provides a description of the traditional economic model, outlines problems with this model, and presents implications for health policy. Annotation c. by Book News, Inc., Portland, Or.

Booknews

Reviewer: Bryan E. Dowd, PhD (University of Minnesota School of Public Health)
Description: This book provides an overview and critique of economic theory as a guide to the policy-making process in healthcare.
Purpose: The author, an advocate for national health insurance in the U.S., believes that macroeconomic theory has been misused by economists who question the merits of such a system. The purpose of this book is to dispense with the competitive market model as a starting point for discussions of U.S. healthcare reform, by arguing that the conditions required for perfect competition are not met in markets for health insurance and healthcare services.
Audience: Unfortunately, market failure is old news to the intended audience (U.S. health economists) who spend most of their careers analyzing sources of market failure in healthcare markets and recommending solutions. As it turns out, market failure in healthcare (e.g., restricted market entry and distorted prices) often can be traced to flawed policies by the same government to whom the author would turn over administration of the entire system. The most serious omission is a compelling argument in favor of abandoning versus fixing the market. Organization is a bit odd in places. For example, patient cost sharing is discussed in the chapter on supply, rather than the chapter on demand. "Can People Choose the Right Health Plan" would be more appropriately placed in the section entitled "Do Consumers Have Enough Information to Make Good Choices?"
Features: In each of the main chapters (market competition, demand theory, supply theory, and equity/redistribution) the author presents the traditional economic model, problems with the traditional model, and implications for health policy. Generally, the presentation of the economic model is lucid and concise. The "problems" sections also provide a generally good review of the literature on each component of the economic model. (The fact that it is possible to review the literature on each component suggests that the problems are not unknown to economists.) There are some important omissions, however. For example, the section entitled "Do Consumers Know the Results of Their Consumption Decisions?" omits any reference to expected utility theory. Absent that reference, it will be impossible for the uninitiated reader to appreciate the context in which the example of prospect theory in the following section represents "irrational" behavior. A difficulty with the author's inference from the "problems" sections is that except for the chapter on supply, which includes a discussion of supplier-induced demand, most of the "problems" cited are completely general, rather than health-specific. Why, then, would the author's prescription for healthcare not be applicable to the entire economy — except for the fact that we already have run that experiment in this century with appalling results?
Assessment: The author provides a helpful description of the application of economic theory to health policy, and an interesting review of problems associated with the theory. However, as Mark Pauly points out in his response to the author's critique of health economics in the April 1997 issue of Journal of Health Politics, Policy and Law ("Who Was That Straw Man Anyway," volume 22, number 2, pp. 467-473), the real debate in healthcare reform is not perfect markets versus perfect government, but real markets versus real government. Although the author provides some data on outcomes of real markets from which he would have us draw conclusions about efficiency (i.e., consumption of medically ineffective services), no data are presented on outcomes from the "real" (U.S.) government that would bolster our confidence that it can out-perform the market. The closest example is the Medicare program, which has taken up permanent residency on the brink of fiscal insolvency and increasingly is turning to the competitive market as the only way to meet its obligations to current and future beneficiaries.

Doody's Review Service