University of South Carolina, Arnold School of Public Health, Dept. of Health Services Policy and Management

To keep up with continued expansion of Obamacare enrollment, see

Massachusetts ER visits eventually fell after insurance expanded

Glaxo Says It Will Stop Paying Doctors to Promote Drugs, Katie Thomas, New York Times, December 16, 2013. Obamacare requires disclosing such payments and GlaxoSmithKline is stopping them. Sunshine disinfects.

New York State Hospital Data Exposes Big Markups, and Odd Bargains, Nina Bernstein, New York Times, Published: December 9, 2013

Cost vs. Charges in Neonatal Care, Published: December 9, 2013.

Bargain-Basement Prices at a New York Hospital Prove Too Good to Be True , Nina Bernstein, New York Times, Published: December 11, 2013

Medicaid expanding in South Carolina anyway (but not by as much as it could)

The lady who told CBS that her health insurance was being cancelled now thinks Obamacare may be a "blessing.".

Bill Moyers on apologies for Obamacare problems

Massachusetts has a functioning exchange, and has gotten the uninsured down to 1.9% of the population.

Cool video from John Green about why the pre-Obamacare U.S. health care system has been so expensive. Almost everything he talks about is on our reading list. By the end of the semester, you will be able to give this talk! (John does make one or two mistakes that we can fix.)

Obamacare exchange premiums in S.C.

Grades for the semester

Most exam questions are 10 points each. To be on track for an A, get 100 points worth done or submitted by Oct. 24. To get an A, get 200 points by the end of the semester.

Redos are permitted until the last class. If it is the last week of class and you don't have 200 points yet, and you want an A, submit an extra question or two, in case you do not get full credit on everything.

The semester point cutoffs for different grades will be
200 or more for an A
175 or more for a B+
150 or more for a B
125 or more for a C+
100 or more for a C

Current commentary
Politics of implementing Obamacare: "'A new birth of freedom'"

Syllabus in progess


Blogs I recommend:
New York Times economix -- health care/, especially Uwe Reinhardt's posts, and Paul Krugman on macroeconomics. Krugman is also good on health reform and Medicare and Medicaid. If you want to follow just one blog, follow Krugman's.

How a PR firm engineered the defeat of universal health insurance in the 1940s, by Jill LePorte in The New Yorker, Sep. 24, 2012.

Social Security a Ponzi scheme? An explanation.

Video: A free-market paradise

 Macroeconomics  slideshows 

1. Economic depressions happen and can persist.

2. The baby-sitting cooperative's depression, and what cured it.

3. What is money?

4. Monetary policy in a depression

5. Concluding remarks on macro

Government health insurance controls cost better than private health insurance.

The Medicare Time Bomb and What Can Be Done , The Daily Kos, August 21, 2011.

Medicare slide show


Dr. Baker's is the beak on the left.

HSPM 714 MPH Section J50
Economics Perspectives on U.S. Health Care
Fall 2013

Samuel L. Baker, Ph.D.

Professor Emeritus
Department of Health Services Policy and Management
Arnold School of Public Health
University of South Carolina
Columbia, SC 29208
I have retired. This subject matter is not being offered in this form. References below to Blackboard no longer work. I will occasionally maintain and update this web site for your reference.
What you'll need - What you'll do - Schedule of Classes, Readings, and On-Line Materials - Interactive Tutorials

The class meets at 6:00pm-8:45pm on Thursdays in Swearengen 2A07. Class meetings are available live over the internet to registered students. The class meetings are recorded as well. Students can view the recordings at their convenience.

Office hours: Thursdays 1:30pm to 4:30pm in the HSPM computer lab.


HSPM 714 J50 follows the money in the U.S. health care system. It introduces the application of economic theory to decisions regarding the amount, organization, and distribution of health care services in the United States. The goals of the course are:


You will demonstrate on the course's written assignments and through class participation:
  1. that you understand and can use basic economics concepts, such as supply, demand, marginal analysis, the theory of capital, and cost-benefit analysis,
  2. that you can analyze the economic institutions of the United States health care system,
  3. that you can discuss controversies surrounding the development of health insurance and the government's role in providing, financing, and regulating health services.

What you need to have to take this course

Prerequisite courses: None. No prior study of economics is required for this course.

Interactive instruction: A group of interactive instructional tutorials is at The interactive tutorials introduce basic economics concepts, and assume no economics background. Your work with the interactive tutorials is not monitored or graded. These tutorials are integrated into the Class Schedule and Readings, as shown below. All of the interactive tutorials are available all semester, so you can use or reuse them at any time.

 How to submit your written work: 
Blackboard's Assignments feature

Please do not use Blackboard's digital drop box or messages. I do not check those.

Academic Integrity

By the act of submitting a paper or exam for this course, you certify that you are complying with departmental and University academic integrity policies. You agree that questions about adherence to the policies will be handled through the formal procedures mandated by the department and the University.

Course Work for Credit

There will be two take-home exams, due Oct. 24 and Dec. 12.

Each exam counts for one-half of the grade.

The questions will be available well in advance at a link here on this web page.

Class Schedule and Readings

Advice for the overwhelmed: If the reading for this course seems like a lot, see How 2 Read an Article.

August 22 Introduction to the Course

How the course will operate, and the general shape of the US health care economic sector.

August 29 Markets, Supply and Demand

What economists mean by markets, supply and demand, elasticity, and risk and risk aversion. These are building block concepts towards assessing having a free market in health care.

September 5

No class this week.

September 12 Health Insurance

Building-block ideas relating to the economic theory of insurance
Types of insurance in the U.S.
Obamacare and health insurance coverage

September 19 Health Care and the Theory of the Free Market's Optimality

 What we'll talk about first  Glance at these, enough so you can find stuff when you write your exam answers.
  1. Medicaid primer
  2. Short look at long-term care
  3. Medicaid spending varies across states
  4. Impact of state Medicaid decisions
  5. More details: Cost of states not expanding Medicaid
  6. From RAND:
  7. Higher insurance premiums in states that do not expand Medicaid, pp. 43-45 of the PDF, 30-32 of the paper.
  8. From me:
  9. Medicare and Medicaid $ slide show
What's against Obamacare: Scams
Health and income

September 26

Slides for class

What things have to be true for the free market to give a good result? Are those things true for health care?

Information and uncertainty in health care choice, implications for letting the free market rule
Medical practice variation
If you have time for only one article, read the last one, by Gawande.

October 3 Copayments for controlling health care demand

Slideshows: For this week. .

The trendy way to control health care spending is to have a big deductible and copayments. (Obamacare does exempt some "preventive" services.) People do get less health care when they have to pay more. To use the jargon, the demand for health care has some elasticity. The elasticity is pretty low, especially for people seeking care for serious symptoms, but it's not 0.

The articles go on to investigate whether people who buy less care are worse off as a result. If they are not worse off, then it is wasteful to let people get care without paying out of pocket. Are all the costs being considered? How good are people at determining what care they can do without?

October 10 Managed Care to control health care demand

HMO slides

Learning objectives:  The history and results managed care.

Managed care development
Did HMOs have an incentive to M your H?

Prevention and savings slides

October 24 Mid-term exam due No Class

October 31 The Supply Side -- Cost Theory

November 7 Pricing in health care

DRG payment for hospitals
RBRVS payment for doctors -- A tool for controlling physician fees
Where we are with pricing

November 14 Transactions (administrative) cost, in the U.S. and elsewhere.

Administrative cost in U.S. health care
Administrative Cost slides
Other countries

Canada-US comparison slides

November 21 Pharmaceuticals

Learning objectives: Pharmaceutical prices, research, and sales promotion. The dilemma of how to finance and promote technological advance.


December 5 Quality Affordable Health Care for the U.S.

Malpractice torts -- not much help or hurt
Malpractice slides
Quality without Insurance?
Socialized Medicine! In America!
Accountable Care Organizations and Health Care Reform
ACO slide

Dec. 12 All assignments due by the end of this day.

The views and opinions expressed in this page are strictly those of the page author. The contents of this page have not been reviewed or approved by the University of South Carolina.
2013 stuff above. 2012 stuff below.

Supplemental articles (Read them if you're interested):

Meredith Minkler, Esme Fuller-Thomson, and Jack M. Guralnik, "Gradient of Disability across the Socioeconomic Spectrum in the United States," N Engl J Med, 355:7, Aug. 17, 2006. Alternative PDF link A little economics of health, rather than just the economics of health care.
  • Paul Krugman, Live Long and Prosper, August 13, 2010. The prosperous live longer, so the poor lose the most when the Social Security eligibility age is raised. A diagram. The CBO report. Pat Robertson's take.
  • Medicare Advantage plans include fitness memberships to appeal to get healthier people to enroll.

    Oct. 30 slides


    Link to the 2012 mid-term exam.

    Second take-home exam from 2012.