Health Economics

I was an instructor with full teaching responsibilities of undergraduate Health Economics at Boston University for Spring 2021 and Spring 2022. I designed the course entirely from scratch, and focused on the industrial organization of healthcare markets. About a third of the syllabus was based on the textbook by Bhattacharya, Hyde and Tu; the rest was 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 US to better understand different policy trade-offs.

Course evaluation summary for Spring 2022 (Instructor rating: 4.39/5)

  1. Choice under uncertainty:

Topics - Expected utility, risk aversion, actuarial fairness


  1. Moral hazard:

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


  1. Adverse selection (Einav and Finktelstein (2011), Rothschild-Stiglitz):

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


  1. Hospital industry:

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


  1. Competition and antitrust in hospital industry (part 1):

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


  1. Competition and antitrust in hospital industry (part 2):

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


  1. Vertical integration and contracting in healthcare markets:

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


  1. Employer-insurer-provider bargaining (Ho and Lee 2017 ECMA, 2019 AER):

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.


  1. Provider payment methods and incentives:

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.


  1. Health technology assessment:

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


  1. Health policy systems and tradeoffs:

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)


  1. Beveridge model (nationalized healthcare):

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).


  1. Bismarck model (social health insurance):

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


  1. American model:

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


  1. Affordable Care Act:

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


  1. Pharmaceuticals: [Link to notes]


  1. Grossman model.