Economics 132 - Health Economics

Why are health care goods and services, such as pharmaceutical drugs, so expensive in the U.S. compared to other countries? Why is the health sector share of the economy rising in all nations? And is this a good thing? What are the consequences of the U.S. health insurance market being so fragmented, and is it a problem that not all people have access to health insurance? The course addresses questions such as these using standard microeconomic theory, as well as extensions to complications that are much more important in health care markets than in many other markets: informational asymmetries, uncertainty, consumer purchase of health goods and services through insurance rather than direct payment, health externalities, and monopoly due to patents.
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Mathematics 16A-16B, Statistics 13, Economics 100 (or consent of instructor).


Varies from year to year; taught in fall quarter 2015


Health Economics 132 presents a detailed description of the institutional features of the U.S. health care market and current trends, as well as some international comparisons. These features and their consequences are studied using microeconomics tools and some statistical/mathematical analysis (especially applied to insurance). Compared to other areas of economics, the economics of health care is complicated by a lack of information (about what health services the consumer needs), great uncertainty (hence the need for insurance), payment through third-parties (insurance companies) rather than direct payment by the consumer, monopoly (due to patents), externalities (infectious diseases) and public goods provision (such as government-funded research). A considerable part of the course considers these complications.