Prof. Elenka Brenna; Prof. Cinzia Di Novi

Health Economics PROF. ELENKA BRENNA; PROF. CINZIA DI NOVI

COURSE AIMS To supply students with the basic concepts in relation to: i) healthcare service demand and supply, as expressions of individual decisions aimed at safeguarding health; ii) the application of microeconomic theory to healthcare services markets and to interaction between consumers and healthcare service providers; iii) the structure of the public healthcare systems in leading OECD nations; iv) the different types of financing of healthcare services; v) healthcare planning, with particular reference to the hospital environment; vi) key aspects in the history of Italy's National Healthcare Service; and vii) the evaluation of healthcare programs and technologies.

COURSE CONTENT Microeconomic theory will be used for analysing health, healthcare markets, and the pharmaceutical market, and for analysing the behaviour of the various economic agents involved in the market for healthcare services. The course will start off with the concept of health as an economic good, and will examine the concepts of demand for health, production of health, and the relationship between health and economic growth. Considering the individual's state of health is dominated by uncertainty, the course will also study the issues of health insurance and the market imperfections in relation thereto. The course will end with the study of the pharmaceutical market and patent-monopoly dilemma. Theoretical analytical tools will be applied to reality, with the use of concrete examples. Introduction to the healthcare business – Definition of the health and healthcare business (with health defined as a meritorious good) and state intervention in safeguarding health. – Problems related to the market for healthcare goods and services. – Health and economic growth (macroeconomic view of health). – Relationships between the economy and health, investment in health and economic development, spending on health care within the economic accounting system, spending on health care in OECD countries. – Private, public and meritorious goods; long-term excess in demand for health. – Presence of externalities and relates problems, role of the doctor in rationing of demand. Uncertainty and insurance – Health insurance (information theory; moral hazard and adverse selection in healthcare insurance; references to the theory of uncertainty; references to the theory of expected utility; demand and supply of healthcare insurance; insured's participation in healthcare expenditure). – Health insurance: the American case and Obama's reform. Demand and production of healthcare – Healthcare production function and inputs (medical treatments, lifestyle, and education). – Introduction to dynamic maximisation. – Healthcare-capital demand: the Grossman model and the Cropper model. – Patient/consumer choice and demand for healthcare (references to consumer theory; patient's equilibrium and healthcare market's equilibrium; healthcare demand; healthcare market with perfect competition and healthcare market with monopoly). – Long term care. Institutional models for healthcare services – Factors that determine the ballooning of spending in OECD nations; public and private systems; configuration of modern healthcare systems (heterogeneous nature of the financing and of the ownership of the services). – Financing of hospital activity: separation between the producer of services and purchaser-financing party, development and use of DRG system in EU nations. – Doctor compensation, the phenomenon of Primary Care Groups and Trusts in the UK and UTAP in Italy. The national health-care service in Italy: from 1978 to the present – Principles underlying Italian Law No. 833 of 1978. – The reforms of the early nineties and the transformation into businesses. – Law No. 299 of 1999. – Law No. 56/2000 and the process of fiscal federalism. The economic valuation of technologies and health-care programs – Preliminary concepts, the principal techniques of economic valuation; case study: the SUN2 project for the Region of Lombardy. – Steps in the economic valuation, measurement problems. The pharmaceutical market – Monopoly, patents, R&D and innovation. – Patents and developing nations.

READING LIST Textbook S. FOLLAND-A.C. GOODMAN-M. STANO, The Economics of Health and Health Care, 4th, 5th or 6th edition, Pearson Prentice Hall, Upper Saddle River. Recommended reading N. DIRINDIN-E. PAGANO (compiled by), Governare il federalismo, Il Pensiero Scientifico Editore, Rome, 2001. M.F. DRUMMOND ET ALII, Metodi per la valutazione economica dei programmi sanitari, Il Pensiero Scientifico Editore, Rome, 2000. Recommended reading M. GROSSMAN, On the Concept of Health Capital and the Demand for Health, Journal of Political Economy, 80: 223-255, 1972. M.L. CROPPER, Health, Investment in Health and Occupational Choice, Journal of Political Economy, 85: 1273-1294, 1977. M.L. CROPPER, Measuring the Benefits from Reduced Morbidity, The American Economic Review, 71: 235-240, 1981. D.M. CUTLER-R.J. ZECKHOUSER, The Anatomy of Health Insurance, Handbook of Health Economics. A.J. Culyer and J. P. Newhouse, North Holland, Elsevier Science B.V. 1A: 563-643, 2000. K.J. ARROW, Uncertainty and the welfare economics of medical care, The American Economic Review, 5: 941-973, 1963. Supplemental material will be provided during the course and will be available on Blackboard.

TEACHING METHOD Lectures, exercises in class, student preparation of essay papers.

ASSESSMENT METHOD The final exam will either be a written test or an interview, depending on the number of students enrolled in the course.

NOTES Further information can be found on the lecturer's webpage at http://docenti.unicatt.it/web/searchByName.do?language=ENG or on the Faculty notice board.