HSA4430: Health Economics

Course Description

HSA4430 Health Economics applies economic analysis to health and health care — why the market for medical care behaves unlike other markets, and what follows from that for policy and for the organisations that deliver care.

The course is offered at approximately five Florida institutions, including Florida Gulf Coast University, Pasco-Hernando State College, St. Johns River State College, the University of Florida and the University of West Florida.

Florida Gulf Coast University describes a course that will survey topics in health economics and will address public sector issues and the interactions between health and labor markets, at 3 credits.

The subject exists as a distinct field because health care systematically violates the assumptions on which ordinary market analysis rests, and the course is essentially a working through of those violations and their consequences.

The violations are specific and each one has large practical effects. Uncertainty — you do not know when you will need care or how much it will cost, which is why insurance exists and why insurance markets have their own failures. Asymmetric information — the physician knows more than the patient, so the seller advises the buyer on what to buy, which is a relationship no ordinary market contains. Third-party payment — the person consuming the service is usually not the person paying for it, which severs the normal link between price and quantity. Externalities — vaccination and infectious disease control produce benefits to people other than the purchaser. Barriers to entry — licensure, accreditation and training limit supply deliberately. And the ethical position that access to care should not depend entirely on ability to pay, which is a value commitment that constrains what market outcomes are acceptable.

The intellectual pleasure of the course, and it is real, is that these are not complaints about the market — they are analysable features with predictable consequences. Adverse selection, moral hazard, supplier-induced demand and the incentives created by different payment methods are all derivable, and once a student can derive them, a great deal of otherwise baffling health policy becomes legible.

FGCU's naming of "public sector issues and the interactions between health and labour markets" identifies two of the field's most consequential areas. The public sector is more than half of United States health spending. And the health-labour connection is central in the American system specifically, because employment is the dominant route to insurance — which affects wages, job mobility, hiring and the structure of the labour market in ways economists have measured.

Learning Outcomes

Required Outcomes

• Apply basic microeconomic tools — supply, demand, elasticity, marginal analysis, opportunity cost — to health care.
• Explain why health care markets differ from standard competitive markets and identify the specific departures.
• Explain health as human capital and the Grossman model's account of the demand for health.
• Analyse the demand for medical care, including the effect of price, insurance and income, and interpret the evidence on price responsiveness.
• Explain insurance — risk pooling, expected utility, and why risk-averse people buy it.
• Explain adverse selection and its market consequences, including the death spiral.
• Explain moral hazard, distinguish ex ante from ex post, and explain the cost-sharing instruments that address it.
• Analyse the supply of medical care — physicians, hospitals, nurses — and the effect of licensure and training constraints.
• Explain supplier-induced demand and evaluate the evidence for it.
• Analyse provider payment methods — fee-for-service, capitation, DRG, value-based — and the incentives each creates.
• Analyse hospital and insurer market structure, competition and consolidation.
• Explain the role of government — Medicare, Medicaid, regulation, public health — and the economic rationale for each.
• Analyse the employer-sponsored insurance system and its labour market effects.
• Explain the determinants of health and the evidence that medical care is a modest contributor relative to social and behavioural factors.
• Apply economic evaluation — cost-effectiveness, cost-benefit, cost-utility and the QALY — and explain the limitations of each.
• Explain health care cost growth and evaluate the competing explanations.
• Compare the United States system with those of other high-income countries on cost, coverage and outcomes.
• Analyse equity and access, including disparities and the uninsured.
• Interpret empirical health economics research and assess whether a causal claim is supported.

Optional Outcomes

• Analyse the pharmaceutical industry — patents, pricing and innovation incentives.
• Analyse long-term care and its financing.
• Analyse behavioural economics applied to health decisions.
• Analyse health information technology and its economics.
• Analyse global health economics and financing in low-income countries.
• Analyse the economics of mental health and substance use.
• Analyse medical malpractice and defensive medicine.
• Conduct an original economic evaluation or empirical analysis.
• Analyse Florida-specific health policy questions.

Major Topics

Required Topics

• The economic toolkit and why health is different. Scarcity, opportunity cost, marginal analysis and efficiency; the competitive market benchmark and the conditions it requires; the specific departures in health care — uncertainty, asymmetric information, third-party payment, externalities, entry barriers, and the value commitment that access should not depend wholly on ability to pay; positive versus normative analysis, and the discipline of distinguishing what the evidence shows from what one thinks should be done, which matters more in this field than in most because the policy stakes are high and the two are routinely conflated in public argument.
• The demand for health and for health care. Health as human capital and the Grossman model — health as a stock that depreciates and can be invested in, which yields the useful distinction between demand for health and derived demand for medical care; the production of health, and inputs beyond medical care; price elasticity of demand for medical care, and the evidence from the RAND Health Insurance Experiment and the Oregon Medicaid Experiment — two of the field's rare randomised studies, and worth understanding in detail because they anchor so much of what is known; income effects; the agency relationship between physician and patient and why it complicates the idea of consumer demand at all.
• Insurance and its market failures. Risk aversion and expected utility as the reason insurance is valued; risk pooling and the law of large numbers; the loading fee and administrative cost; adverse selection — when buyers know more about their risk than insurers, the low-risk exit, premiums rise, and the pool deteriorates — and the responses: mandates, subsidies, guaranteed issue, community rating, risk adjustment and open enrolment periods, each of which is intelligible only as an answer to this problem; moral hazard — ex ante (less prevention because you are insured) and ex post (more care because it is cheaper at the point of use) — and the cost-sharing instruments that trade risk protection against utilisation; the fundamental and unavoidable trade-off between financial protection and efficient use, which no system escapes; managed care and utilisation management as an alternative approach.
• Supply. Physician supply — medical education, residency positions as the actual bottleneck, licensure and specialty choice; the economics of licensure as quality assurance and as entry restriction, and scope-of-practice regulation for nurse practitioners and physician assistants, which is a live and empirically studied policy question; nurse supply and the recurring shortage; hospitals — cost structure, capacity, the non-profit form and what objective a non-profit hospital maximises; supplier-induced demand, the theory and the mixed empirical evidence; physician practice organisation and its consolidation.
• Payment and incentives — the most practically useful topic in the course. Fee-for-service and its volume incentive; capitation and its under-provision incentive; DRG and prospective payment and the incentives it created for length of stay and coding; value-based and pay-for-performance arrangements, bundled payments and accountable care organisations, with the honest observation that the evaluation evidence on their savings is mixed; the general principle that every payment method creates an incentive and none is neutral — the question is which distortion is preferable for a given service; administrative complexity as a cost of a multi-payer system.
• Market structure and competition. Hospital competition and the peculiarity that it has sometimes raised rather than lowered prices; consolidation — horizontal hospital mergers and vertical integration of physicians and insurers — and the substantial evidence that it raises prices; insurer market concentration; bargaining between insurers and providers, which is where prices in the United States are actually set; price variation and opacity, and price transparency policy; antitrust in health care; certificate-of-need regulation, which Florida has substantially repealed — a natural experiment worth knowing about.
• Government. The economic rationale for intervention — market failure, externalities, public goods, distributional aims; Medicare — its parts, its payment systems and its fiscal position; Medicaid — federal-state structure, eligibility and the expansion decision; the ACA and its main mechanisms; the tax exclusion for employer-sponsored insurance, which is the largest tax expenditure in the federal budget and which economists across the spectrum criticise; public health and prevention, and the general finding that public health interventions are frequently more cost-effective than medical care and are systematically underfunded relative to it; regulation of drugs, devices and facilities.
• Health and labour markets — named explicitly in FGCU's description and distinctively American. Employer-sponsored insurance and its historical accident of an origin in wartime wage controls; the incidence question — the evidence that the cost of employer coverage is substantially borne by workers in the form of lower wages, which surprises students and is well supported; job lock and reduced mobility; the effect on hiring, hours and part-time work; health and productivity; absenteeism and presenteeism; health as a determinant of labour supply and earnings, and the reverse causation problem that makes it hard to measure.
• Determinants of health, and the field's most important corrective. The evidence that medical care is a relatively modest contributor to population health compared with social, behavioural, environmental and genetic factors; the social determinants of health — income, education, housing, food security, social connection; the income-health gradient, which is graded across the whole income distribution rather than a threshold effect, and the difficulty of establishing its direction; health behaviours and the economics of addiction; the policy implication that spending more on medical care is not the same as buying more health, which is the single most useful idea in the course for anyone entering health administration or policy.
• Economic evaluation. Cost-effectiveness, cost-benefit and cost-utility analysis and when each applies; the QALY — what it is, how it is constructed, and the serious objections to it, including its treatment of disability and age, and the fact that the United States does not use it in Medicare coverage decisions in the way other countries do; discounting future health; the perspective question — societal, payer or patient — which changes the answer; the incremental cost-effectiveness ratio and thresholds; the uncomfortable but unavoidable point that resources are finite and that declining to make trade-offs explicitly does not avoid making them, it only makes them invisible.
• Cost growth. The long-run rise in health spending as a share of income; the competing explanations — technology and its diffusion, which most economists regard as the dominant factor; ageing, which contributes less than commonly assumed; income growth; insurance-driven demand; prices rather than utilisation, which is the principal explanation for why the United States spends more than other countries; administrative costs; Baumol's cost disease in a labour-intensive service sector; and the standing debate about whether the spending growth is worth it, which requires valuing the health gains.
• Comparative systems and equity. The main system types — national health service, social insurance, mixed — with brief country cases; the comparison on cost, coverage and outcomes, and the finding that the United States spends substantially more per person for coverage that is not universal and outcomes that are not correspondingly better; what each system trades off; equity and access — the uninsured and underinsured, disparities by race, income and geography, rural access, and medical debt; efficiency and equity as distinct objectives that can conflict.
• Reading the evidence. Why causal inference is hard here — sick people seek care, so care and illness correlate; randomised experiments and the small number of them; natural experiments, difference-in-differences and instrumental variables in outline; the discipline of asking what would have happened otherwise; the difference between association and effect; how to read a health economics paper critically, which is the transferable skill.

Optional Topics

• Pharmaceutical economics — patents, R&D costs, pricing and international comparisons.
• Long-term care and its financing; the role of Medicaid.
• Behavioural economics — nudges, present bias, and their application to health behaviour.
• Health information technology and interoperability.
• Mental health and substance use economics; the opioid crisis.
• Medical malpractice, liability and defensive medicine.
• Global health financing and health in low-income countries.
• The economics of pandemics and emergency preparedness.
• Florida health policy as a sustained case study.

Resources & Tools

• Health Economics by Charles Phelps — the standard textbook, rigorous and comprehensive.
• The Economics of Health and Health Care by Folland, Goodman and Stano — the most widely adopted undergraduate text, more accessible and well suited to a course with mixed backgrounds.
• Health Economics by Bhattacharya, Hyde and Tu — modern, clear and unusually good at explaining the empirical literature.
• The Healthcare Handbook by Askin and Moore — a plain-language explanation of how the United States system actually works; useful for students who find the institutional detail bewildering, which most do at first.
• An American Sickness by Elisabeth Rosenthal — journalistic, opinionated and effective at motivating the analysis; The Healing of America by T.R. Reid for the comparative material.
• Free and authoritative — this field is exceptionally well served with public data:
  • KFF (Kaiser Family Foundation) — the single most useful free resource in health policy: state-level data, employer survey data, explainers and issue briefs. Its state health facts pages cover Florida in detail.
  • CMS — National Health Expenditure data, Medicare and Medicaid statistics, and provider-level data.
  • AHRQ — the Medical Expenditure Panel Survey (MEPS) and HCUP hospital data; MEPS is the standard source for individual-level United States health spending and is free.
  • CDC and the National Center for Health Statistics; OECD Health Statistics for international comparison, which is what the cross-country charts come from.
  • The Congressional Budget Office and MedPAC — non-partisan, technically careful, and MedPAC's annual reports are the best free source on Medicare payment policy.
  • The Dartmouth Atlas for geographic variation in practice and spending — a body of work that reshaped the field.
• Florida-specific: the Agency for Health Care Administration (AHCA), which administers Florida Medicaid and publishes hospital and utilisation data; Florida Health Charts (Department of Health) for county-level health indicators; OPPAGA, which evaluates Florida health programmes and whose reports are excellent undergraduate sources; the Florida Office of Insurance Regulation.
• Journals: Journal of Health Economics, Health Affairs (the most policy-accessible and widely read), Health Services Research, American Journal of Health Economics, and the New England Journal of Medicine's policy pieces.
• Professional organisations: the American Society of Health Economists; AcademyHealth; and for administration students, the American College of Healthcare Executives (ACHE), which has student associate membership and active Florida chapters.

Career Pathways

• Medical and Health Services Managers (SOC 11-9111) — the largest destination and one of the faster-growing management occupations; hospitals, systems, physician groups, insurers and post-acute providers.
• Financial and budget analysts in health systems (SOC 13-2051, 13-2031) — strategic planning, service line analysis, payer contracting and reimbursement, where this course's content is the daily work.
• Health policy analysts (SOC 19-3094, 13-1111) — government, research organisations, trade associations and advocacy groups.
• Economists (SOC 19-3011) — health economics research; generally requires graduate study, and a doctorate for research positions.
• Actuaries (SOC 15-2011) — health actuarial work is a substantial speciality with a defined examination pathway and strong compensation; requires quantitative aptitude and the professional examinations.
• Insurance and managed care — network management, product design, pricing, utilisation and analytics.
• Pharmaceutical and device industry — market access, health economics and outcomes research (HEOR), and reimbursement strategy, which is a well-paid speciality built directly on the economic evaluation content of this course.
• Consulting (SOC 13-1111) — health care practices at the major firms and specialist health consultancies.
• Public health administration (SOC 11-9111, 19-3094) — state and county health departments.
• Graduate study — MHA, MPH, MBA, MPP or a health economics doctorate. The MHA is the standard credential for hospital administration and is worth knowing about early.

The Florida picture is unusually strong. The state has one of the largest health care sectors in the country, driven by a large and ageing population. Major employers include AdventHealth, HCA Florida, Orlando Health, BayCare, Baptist Health, Jackson Health, Tampa General, Lee Health, Moffitt and the university health systems, along with insurers, a very large post-acute and long-term care sector, and a substantial managed care industry serving Florida Medicaid. Florida-specific policy questions — the state's decision on Medicaid expansion, its Medicaid managed care programme, certificate-of-need repeal, rural hospital viability and the size of its uninsured population — are live and are excellent research paper topics with public data available.

The practical advice. Take statistics or econometrics seriously; the analyst roles that pay well are quantitative, and Excel plus a statistical package is the practical toolkit. Do an internship in a health system's finance, strategy or decision support function — this is how administration careers begin. And join ACHE as a student associate; the Florida chapters are active and the field hires through them.

Special Information

⚠ Prerequisites vary substantially — and the economics background is the thing to check

FGCU's catalog entry lists no prerequisite for HSA 4430, which is notable given the subject. Practice varies considerably: some institutions require principles of microeconomics, some require statistics, some require both, and some gate only on admission to a health administration programme.

This produces genuinely different courses under one number, and it is the most important planning fact here.

• A section requiring microeconomics can use demand curves, elasticity and marginal analysis directly, and will be recognisably an economics course applied to health.
• A section with no economics prerequisite must teach the tools alongside the applications, and will be more descriptive and institutional — closer to health policy than to economics.

⚠ Both are legitimate and they are not interchangeable. A student intending graduate study in economics or an analyst role wants the first; a student in health administration may be well served by the second. Read the syllabus, and check the prerequisite even if none is listed — the absence of a stated prerequisite is itself information about the level.

What genuinely helps regardless: principles of microeconomics, which is the single most useful preparation; statistics, for the empirical literature, since the course reads studies making causal claims; and basic comfort with graphs and algebra. Both prerequisites transfer cleanly from the Florida state colleges and are commonly completed there.

Position in the curriculum

HSA4430 is an upper-division course, normally junior or senior year. The HSA prefix is health services administration, which situates it: it is most often a required or core course in a health services administration or health management programme rather than an economics elective.

It is also taken by economics, public health, nursing, pre-medical and business students. Note that it is offered at some Florida state colleges — Pasco-Hernando and St. Johns River both carry it — within their bachelor's programmes, which is legitimate and transfers, subject to the state-college upper-division admission gate documented elsewhere in this repository.

It pairs naturally with health policy, health care finance, health law, epidemiology and statistics.

Course format and workload

Taught as a lecture with discussion and case analysis. Assessment normally combines examinations, problem sets where the section is quantitative, a policy analysis or research paper, and participation.

Expect five to eight hours a week outside class. The workload depends heavily on which version you are taking — a quantitatively pitched section with problem sets is materially heavier than a survey.

⚠ Two things students find hardest. The institutional detail. The United States health system is genuinely complicated — Medicare's parts, Medicaid's federal-state structure, the exchange subsidies, the alphabet of payment models — and students frequently mistake being confused by the institutions for being bad at the economics. They are separate difficulties; the institutional material is memorisation and it yields to a chart. And the counter-intuitive results: that hospital competition can raise prices, that employees bear the cost of employer insurance, that more medical spending does not straightforwardly buy more health. These are well supported, and the course's value is largely in being able to explain why.

For the research paper, the free data is the opportunity. KFF, MEPS, CMS and Florida's AHCA and Health Charts make genuinely original undergraduate analysis possible — a Florida-specific question with real data is a far better paper than a summary of the national debate.

⚠ A politically contested subject, and what the discipline asks

Health policy is among the most politically divisive areas in American life, and a course that pretended otherwise would be useless. The discipline's contribution is to separate three things that public argument reliably conflates.

Empirical questions have answers that evidence bears on: does cost-sharing reduce utilisation, and does it reduce necessary care as well as unnecessary; does hospital consolidation raise prices; what happened to coverage and outcomes in states that expanded Medicaid. These are contested in public and substantially settled or well-bounded in the literature.

Predictive questions — what a proposed reform would do — carry genuine uncertainty, and honest analysis states the uncertainty rather than resolving it by assumption.

Normative questions — how much should be spent, how the burden should be distributed, whether access should depend on ability to pay — are value judgements that economics informs and cannot settle. Economists disagree about them as citizens, and the discipline's tools do not adjudicate them.

The skill the course develops is telling which kind of question you are in, and that is genuinely useful well beyond this subject. A student should be able to finish the course able to state the strongest version of a position they do not hold, and to say which parts of their own view rest on evidence and which on values.

Articulation and transfer

HSA4430 carries the same SCNS number across Florida public institutions and SCNS equivalency governs transfer of the credit. As an upper-division course it does not appear in A.A. programmes, though the economics and statistics prerequisites transfer cleanly from the state colleges.

Two notes. The prerequisite and level variation above means a receiving department may ask about coverage where the course satisfies a core requirement — keep the syllabus. And where the course is taken at a state college within a bachelor's programme, confirm that the receiving institution accepts upper-division work from that source toward the major, and note the separate bachelor's-programme admission gate that state colleges apply.

AI Integration

Health economics is a field where these tools are useful for orientation, dangerous on the numbers, and where the subject matter increasingly concerns the tools themselves.

Where they help. Explaining a concept — adverse selection, moral hazard, the QALY — where a patient walk-through is genuinely useful. Explaining the institutional structure, which is the confusing part: how Medicare's parts fit together, what a DRG is, how exchange subsidies phase out. Summarising a research paper as an entry to reading it. Helping with statistical analysis code for a research project. And generating counterarguments to a policy position before you defend it.

⚠ Where they fail, and the first is the one that will cost marks and credibility.

Health statistics are frequently wrong and are always dated. National health expenditure, the uninsured rate, Medicaid enrolment, premium levels, per-capita spending comparisons — all change annually, and a model will supply a confident figure from whenever its data ends without flagging it. KFF, CMS and OECD publish the current numbers and are free. There is no defensible reason to cite a model for a health statistic.

Policy details are jurisdiction-specific and change. Medicaid eligibility thresholds differ by state and change; Florida's Medicaid rules are not the national rules, and Florida's decision on expansion makes its coverage landscape materially different from many states'. Go to AHCA and KFF's state pages.

Contested empirical questions get flattened. The evidence on the ACA's effects, on consolidation, on value-based payment savings and on the returns to medical spending is genuinely mixed in places, and a fluent summary that resolves the disagreement misrepresents the field. Knowing what is contested is course content.

Fabricated citations. The standard hazard; verify every reference before it enters a bibliography.

And the field's own politics are in the training data. Health policy is argued fiercely in public, and generated summaries can carry the framing of whichever body of writing dominates without signalling it. The peer-reviewed literature and the non-partisan sources — CBO, MedPAC, KFF — are the reliable base.

What is genuinely happening, which is now part of the subject. Machine learning is being deployed across health care in ways this course's framework analyses directly. Algorithmic risk prediction is used in care management, utilisation review and payment — and a well-documented case in which a widely used population health algorithm underestimated illness in Black patients, because it used prior spending as a proxy for need and less had historically been spent on them, is the standard and instructive example: an economically sensible proxy encoding an existing inequity. Prior authorisation and claims processing are increasingly automated, with real consequences for access. Administrative automation addresses a cost category the United States is a global outlier on, which is a genuine efficiency opportunity. And clinical decision support raises the question of who is liable when it is wrong.

And the point that follows, which is what this course equips a graduate to make. Every one of these is an economics question as much as a technical one: what is being optimised, who bears the cost of an error, what incentive does the payment method create for how the tool is used, and does a measured efficiency gain represent real value or a shifted cost? A health economist's contribution is to ask what the objective function actually is — and in a system where the payer, the provider and the patient have different objectives, that question is rarely idle.

Academic integrity. Read your instructor's policy. The point specific to this course: the analysis is the assessment, and the skill being built is the ability to take a policy claim apart — to say what the evidence supports, what it does not, and where a value judgement has been smuggled in as a finding. That is not a skill anything can do on your behalf, and it is the one worth having.