The Economics of Health Reconsidered, Second Edition

Healthcare Financial Management, Nov, 2004 by Michael F. Peters

The Economics of Health Reconsidered, Second Edition Thomas Rice Health Administration Press 341 pages; $69 www.ache.org/hap.cfm

The Economics of Health Reconsidered. Second Edition is an excellent resource that applies economic fundamentals in unique ways to the field of healthcare management. By exploring problems and implications pertinent to the healthcare industry's dominant economic theories, the author presents a compelling case against the traditional belief that a competitive healthcare marketplace results in the best outcomes.

The book is divided into seven chapters, covering topics such as market competition, demand theory, supply theory, equity and redistribution, and the role of government. Of particular interest are discussions of government. In a joint effort with research scientist Miriam J. Laugesen, PhD, the author provides a short, comparative analysis of health economics and cost controls among several other countries, including Australia, Canada, France, Germany, Japan, the Netherlands, Sweden, Switzerland, and the United Kingdom.

New to this edition is an expanded discussion of how distribution of income affects health. Also examined is the application of defined contribution insurance products, Medicare premium support proposals, and medical savings accounts. In addition, the second edition comes with an online instructor's manual and sample syllabi to aid professors who are using this book in the classroom.

The ideal audience for The Economics of Health Reconsidered is anyone with an interest in a macroscopic view of the U.S. healthcare system with a focus on economic applications. Be forewarned, however, readers should possess a moderate understanding of economic theory. A basic understanding of concepts will help when confronting frequently introduced technical terms, such as "producer isoquants," "Pareto optimality," and "negative externalities of consumption."

Overall, although the premise of The Economics of Health Reconsidered is unconventional, it is adequately supported and the author's reasoning appears sound. Rice uses excellent illustrations and comparisons in creative ways to force the reader to follow along and join him in thinking "outside the box."

Reviewed by Michael F. Peters, PhD, Dean-MBA Program and Department Chair of Healthcare Management, Baker College, Flint, Mich.