OVERVIEW These slides are intended to give you a general outline of the lectures and help you connect what is covered to the readings in the text. The syllabus encourages you to treat the book as a supplement to the lectures, rather than the other way around. The lectures will be very organized and structured, and will strongly emphasize the main points—the “big picture.” The book will provide much more detail on most of these points, that, hopefully, will make the lectures come to life. Most of your test material will, therefore, be covered in class and in the book. But there are some things that are purely lecture, and some material just in the book. You are responsible for all, though you will find that I try not to ask questions about picky details.

Lecture 1: The Production of Health and Historical Evidence on Health Production (3 classes) Assessing Population Health The Production of Health Properties of the Production Function Role of Health Care in the Production of Health Cross-country and Cross-Time Comparisons of Health ** This lecture provides basic theory about health production that will be used later, and some empirical evidence about the role of health care in producing health. The book chapter is a nice discussion of health and health production over time, which will be supplemented by Internet presentations.

Lecture 2: Value Creation in Health Care (2 classes) Value Creation: What Markets Are Supposed to Do What is Value Creation? Measuring Health Benefits: QALYs and VSL Cost-Benefit & Cost-Effectiveness Analyses ** Your book does a nice job on this material. Be able to do simple cost-benefit or cost- effectiveness analyses. (The book examples are a little ornate.)

Lecture 3: Health Care Demand Health Care Demand Derived from the Production of Health Optimal Health Care Demand and Moral Hazard Elasticity of Health Care Demand; the RAND Study ** The book does not have a chapter on health care demand, so we will utilize the “Your Money or Your Life” excerpt as a nice substitute.

Lecture 4: Health Insurance: Demand and Supply Risk Spreading and Value Creation in Health Insurance Supply and Demand Effects on the Amount of Insurance and Insurance Premiums Adverse Selection ** The book chapters do a nice, thorough job of this material.

Lecture 5: The Health Insurance Industry and Managed Care (2 classes) Employer Based Insurance and Evolution of the U.S. Health Insurance Market Traditional Indemnity Insurance and Its Problems Managed Care and Its Features Evidence on the Effects of Managed Care ** The chapter does a good, thorough job on the material, supplemented by the newspaper articles.

UNIT 1 SYNOPSIS There are five lectures, with three or four topics in each lecture, listed on the previous slides. In addition to these topics, each lecture was built around a “set piece” that organized the main ideas. Lecture 1: Health Production Fn. and its properties Lecture 2: Gardasil Example Lecture 3: Points A, B, and C in Health Production and HC Demand Lecture 4: The Visual Model of Insurance (the pot) Lecture 5: Four Features of Traditional Indemnity Insurance & Four New Features of Managed Care