Health Economics

Notes & simulations

Interactive simulations for health economics. Each topic pairs explanation with a Shiny app you can run in the browser — adjust parameters, watch markets unravel, and build intuition for how healthcare markets differ from textbook competitive markets.

Builds on: Statistical Inference | Applied Causal Inference

Healthcare markets fail in ways that ordinary markets do not. Patients cannot evaluate the product they are buying. Insurance creates moral hazard. Adverse selection can destroy markets entirely. Providers act as both adviser and seller. These failures justify extensive government intervention — and create new problems in turn.

Demand for Healthcare

• Moral Hazard & Insurance — The fundamental tradeoff: risk protection vs overconsumption. The RAND HIE and optimal coinsurance.
• Adverse Selection — When insurers cannot distinguish types, markets unravel. Death spirals, Rothschild-Stiglitz, and the demand-cost diagram.

Health Production

• The Grossman Model — Health as a depreciating capital stock. Investment, depreciation, and the lifecycle of health.
• QALYs & Cost-Effectiveness — Measuring health outcomes, ICERs, and the cost-effectiveness plane.

Provider & Market

• Provider Behavior — Fee-for-service vs capitation, supply-induced demand, and the physician as imperfect agent.
• Two-Part Models — Modeling healthcare spending with mass at zero and right-skewed positives.

Policy Evaluation

• The Oregon Experiment — Medicaid expansion by lottery. ITT, first stage, LATE, and what we learned about insurance and health.