Recently, I found myself trying to think of as many positive (as opposed to normative) statements I could that I thought most health economists would agree with about the economics of health care. “Economics” of health care is broader than just spending and cost and encompasses all the areas of health care studied by the discipline, including quality, choices, outcomes, etc.
The following is my own list, but it is informed by the literature on this subject, and by “literature” I mean Baicker and Chandra (2008), Morrisey and Cawley (2008), and Fuchs (1996). I think most health economists would agree with these stylized facts:
- Uncertainty about the timing of need for health care is the reason for health insurance.
- Insurers have an incentive for favorable selection.
- Insurance markets suffer adverse selection.
- Insured people use more care.
- Insured people have better health outcomes.
- Health insurance does not guarantee good health care.
- Preventive care does not usually pay for itself.
- Employees pay for all employer-based health benefits; they offset wages or other benefits.
- Favorable tax treatment of employer-based health benefits leads to greater employer offers and more generous benefits.
- Employer-based plans serve a risk pooling function.
- Cost sharing reduces utilization.
- Physicians influence patients’ level of utilization.
- Technological change is the primary driver of increasing health care spending.
- Level of educational attainment affects health.
- Horizontal and vertical integration in the health sector occurs in pursuit of market power.
- Income inequality worsens health.
- Shortfalls in revenue from one payer do not cause hospitals to raise prices to another.
What do you think is missing from this list? Do you disagree with any items on this list? What are some important questions health economics hasn’t largely settled?
