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Applied Microeconomics Assignments for Health Economics. Journal of Economics Teaching

March 2018

March 2018
Journal of Economics Teaching, Vol 3(1)

DOI:10.58311/jeconteach/fa5f9056c58fdaff22637cdd9d97020d64781e96

Authors:

University of Notre Dame

In this paper, I describe three assignments that are designed to reduce student misconceptions about health care and insurance. The assignments are a comparison of health care systems, the design of a health insurance plan, and an examination of a physician's choice of practice type. They require a synthesis of the theoretical and practical analysis of economic models, and they ask students to think critically and to provide quantitative estimates. Each assignment includes a group presentation and an individual writing component. The benefit of group projects is the interaction among students and the process of synthesizing their ideas. The projects may also be adapted for large undergraduate microeconomics courses.

Characteristics of Health Care Systems

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Applied Microeconomics Assignments for

Health Economics1

Eva Dziadula†

†University of Notre Dame

In this paper, I describe three assignments that are designed to reduce student misconceptions

about health care and insurance. The assignments are a comparison of health care systems, the

design of a health insurance plan, and an examination of a physician’s choice of practice type.

They require a synthesis of the theoretical and practical analysis of economic models, and they

ask students to think critically and to provide quantitative estimates. Each assignment includes

a group presentation and an individual writing component. The benet of group projects is the

interaction among students and the process of synthesizing their ideas. The projects may also

be adapted for large undergraduate microeconomics courses.

1 I would like to thank my colleagues James Hornsten, Mary Flannery, and Kevin Barry as well as the editors and referees who

provided feedback on this manuscript.

Dziadula / Journal of Economics Teaching (2018)

1. Introduction

Economics is a study of everyday life. Yet students often struggle with applying the theoret-

ical models beyond the classroom. In order to help bridge the theory and real-life applications,

I developed a series of group projects for an undergraduate health economics course with the

goal of highlighting three important perspectives from the health care market. Students are of-

ten unaware of alternative health care systems globally and the rst project is designed to en-

gage them in comparing and contrasting the main characteristics of the U.S system with those

from other countries. In the second project, they focus on clarifying how insurance markets

function, and specically on how insurance plans are priced. This is intended to correct miscon-

ceptions they may have about health insurance which lead to wrong conclusions regarding

public policy matters. In the third project, students evaluate comprehensive market conditions

from the perspective of a health care provider. These group projects are designed to enhance

students’ understanding by providing opportunities for them to apply theory to a variety of

real-life scenarios as they progress through the course. The projects are assigned after covering

the relevant theory in class and are evenly distributed throughout the semester.

While reading examples of applications in the textbook or academic articles is undoubt-

edly benecial, the “hands-on” experience is what truly allows students to master economic

concepts (Dalton, Coats, & Luccasen, 2015; Watts & Becker, 2008). The process of defending

and explaining one’s approach to solving the assigned problem deepens their understanding.

Johnston, James, Lye, and McDonald (2000) nd that cooperative learning allows students to

identify and improve gaps in reasoning and application. Each project presented in this paper

has two components: a group presentation followed by an individual written analysis. Working

in a group enhances learning, because students need to discuss the analysis approach and

decide how to structure the group’s response that is presented in class. This gives the students

an opportunity to elaborate their thinking and practice their communication skills, which are

important aspects of learning (Siegfried, 1998). Furthermore, Yamarik (2007) links collaborative

learning with improved academic performance and students nd group work eective and

enjoy it (Chapman, Meuter, Toy, & Wright, 2010).

In my course, the groups have one week to prepare and then present their analyses in class

where they receive feedback from classmates and the instructor. The written portions of the

assignments are completed by individual students and submitted after the presentations. They

are designed to encourage them to develop their own ideas further based on the group’s ini-

tial collaborative eort, and to allow students to incorporate the feedback received during the

presentation and to revise their group’s work. To further push the students to nd connections

between the class material and real-life examples, the written analysis portion of the project

requires the students to include a recent news article (from the popular press) that is related

to the theoretical concept or model central to the assignment and then briey explain how it

relates to the model. Each group project requires the students to use the theoretical framework

as a baseline and develops their ability to “think like economists.”

The next sections provide detailed descriptions of the three projects to familiarize the read-

er with the assignments. The subsequent sections focus on the details of administering the

projects in class. I oer suggestions on forming the groups and the goals of the group presen-

tations, and clarify the additional components of the written analyses. Furthermore, I outline

the grading guidelines for the assignments and describe modications that could be made for

large classes. The appendices include printable handouts of the health economics projects and

an alternative handout for use in a microeconomics course.

2. Assignment 1: Health Care Systems

This project is designed to engage students in comparing and contrasting the various ex-

isting health care systems as a general introduction to health economics. The assignment is the

rst of the series and therefore only focuses on the consumer side, as health care producers

and insurance companies have not yet been introduced in the course. Students address the

questions of why countries might adopt diering systems and what the relevant economic

issues in designing a well-functioning system may be; they also evaluate the pros and cons

and the incentive structure the consumers face. Most health economics textbooks will have an

overview of dierent health care systems as a starting point. I use Santerre & Neun (2012) which

reviews the healthcare systems of Canada, Germany, Switzerland, and United Kingdom. Table

1 highlights the dierences between the major alternatives among developed nations, and is

used as a starting point.

Each group focuses its analysis on a dierent system or country. The task is to formulate a

summary of the assigned system and compare it to the U.S. system for the presentation. I ask

students to consider the following: (1) who is insured, (2) whether insurance is compulsory, (3)

who pays, (4) how payments are made, (5) who has access to care (rationing), and (6) whether

there are dierences in access to basic versus specialized care. I further ask them to reect on

the system within the framework of the three indicators of health care performance: cost, ac-

cess, and quality, and to characterize the system’s eciency (welfare or consumer and producer

surplus) and equity (access and fairness). Classmates and the instructor provide feedback on

Dziadula / Journal of Economics Teaching (2018)

Table 1 – Characteristics of Health Care Systems

Canada Germany Switzerland United

Kingdom

United

States

Health Insurance

Coverage

Universal Near universal Near universal Near universal 84 percent

Financing General taxes Payroll &

general taxes

Premiums General taxes Voluntary

premiums &

general taxes

Payer Single-payer

system

Single-payer

system

Single-payer

system

Single-payer

system

Multi-payer

system

Reimbursement

to hospitals

Global budgets Fixed payments Negotiated

payments

Global budgets Mostly xed

payments

Reimbursement

to doctors

Negotiated fee-

for-service

Negotiated

point-fee-for-

service

Negotiated fees Salaries and

capitation

payments

Mostly fee-

for-service

Consumer out-

of-pocket price

Very small Very small High Very small Small

Production Private Private Public & private Private but

public contract

Private

Source: Santerre and Neun (2012), Health Economics: Theory, Insights, and Industry Studies, (6th Edition), Table 4-1, p. 119.

their group analysis in class.

Following the presentations, students prepare their written analyses of the health care sys-

tem and utilize the feedback received. Additionally, as part of the individual portion of this

project, each student is assigned a dierent role of a consumer in the healthcare market. The

handout, set up for four groups and four students per group, includes a list of roles which vary

by age, health status, and income level. These are merely suggestions for the instructor and the

number of “patients” and their characteristics can be modied. I ask students to reect on how

the system will impact his or her choices regarding health care consumption, and to identify

the economic principles behind these decisions. This reection provides an opportunity for

students to contrast the individual perspective and the power of incentives with the larger

picture of the overall system. In the handout provided, I assign dierent roles for each country.

However, it may be an interesting exercise to assign the same “patients” in all of the countries

and compare how they would fare in each system. Alternatively, this would provide an interest-

ing follow-up discussion topic for the class.

The main goal of the projects is to apply the theory to the real world. I, therefore, also ask

each student to search the popular press and nd a recent news story related to health care sys-

tems or markets. I ask them to briey explain it in their written analysis using the framework of

economics and identify the concept(s) behind the story, such as incentives, competition, costs,

access to care, or quality of care.

A. Learning Goals

There are several learning goals with this assignment. After successfully completing the

assignment students will be able to:

• compare health care systems in the United States and other countries

• recognize the dierent types of rationing in health care markets (by price, wait times,

limited choices) and their impact on competition and dierent incentives for consum-

ers/patients (consumption of health care) and producers/providers (cost reduction, in-

novation, quality)

• understand allocative and productive eciency and the trade-o between eciency

and equity

B. Health Care Systems Handout1

Each group is to describe one type of health care system (Canada, Germany, Switzerland,

and United Kingdom) and is to present the pros and cons and compare and contrast these with

the U.S. system. You should highlight the main characteristics of the system:

• Who is insured?

• Is insurance compulsory?

• Who pays?

• How are payments made?

• Who has access to care (rationing)?

1 A printable copy of this handout can be found in Appendix A.

Dziadula / Journal of Economics Teaching (2018)

• Are there dierences in access to basic versus specialized care?

Consideration must be given to the demographic characteristics (rich versus poor versus

average, sick versus healthy, young versus old). How does this particular system work for these

groups, considering the three indicators of health care performance (Cost, Access, and Quali-

ty)? How would you characterize the system’s eciency (think welfare/consumer and producer

surplus) and equity (access, fairness)?

Your group presentation is limited to ve minutes and is worth half the project’s weight.

Everyone should participate.

During your group presentation, you will receive feedback to incorporate into your individ-

ual written analyses. Additionally for the written analysis, each student is assigned a dierent

role from the list below and is to reect (using economic theory) on how the system will impact

his or her choices regarding health care consumption. Lastly, nd a recent news event (in the

popular press) that is related to the theoretical concept or model that is central to this assign-

ment and briey explain how the story is related to the theoretical model. The nal written

analysis is worth the remaining half of the grade and should be approximately two pages with a

limit of three. Please also reect on the contribution of all group members (0 = no contribution

to group discussion; 1 = limited contribution; 2 = good contribution).

Individual Roles by Group:

Group Country Student Income Age Health

1 Canada 1 Poor 45 cancer

1 Canada 2 Average 70 needs a kidney transplant

1 Canada 3 Rich 35 brain tumor

1 Canada 4 Average 25 perfect health

2 Germany 5 Rich 27 perfect health

2 Germany 6 Average 45 cancer

2 Germany 7 Rich 70 needs a hip replacement

2 Germany 8 Poor 35 diabetes

3 Switzerland 9 Poor 45 diabetes

3 Switzerland 10 Rich 70 needs heart surgery

3 Switzerland 11 Average 35 brain tumor

3 Switzerland 12 Poor 23 broken arm

4 UK 13 Rich 27 major injuries from car accident

4 UK 14 Poor 45 cancer

4 UK 15 Average 35 brain tumor

4 UK 16 Rich 70 cancer

Dziadula / Journal of Economics Teaching (2018)

3. Assignment 2: Designing Health Insurance

Health care spending is a large fraction of U.S. GDP, and there are constant debates over

the ideal structure of the insurance market and coverage of services. Students often have mis-

conceptions regarding the basics of insurance and confuse the concept of having insurance

coverage for events that may happen with some uncertainty with simply having services paid

for. Moreover, it is imperative for the students to understand the challenge of addressing mor-

al hazard and adverse selection when designing a proper system. Therefore, for the second

project, the task is to design a health insurance plan for a self-insured company. Each group is

assigned a dierent type of rm, varying in size, the age of employees, and the risk of injury on

the job. I list four options in the handout (large corporation, construction rm, software start-

up, large university), but an instructor may change the existing descriptions or add additional

rms to increase the number of groups. The group’s goal is to determine, on behalf of the rm,

what coverage they would like to oer and what the expected loss function looks like for their

company. This is an active application where a mathematical equation becomes a real-life story.

In order to approximate the expected loss function μ = Σ πiLi, where Li is the value of out-

come i and πi is the probability of outcome i, three components are necessary: a list of out-

comes, the probabilities associates with those outcomes, and the costs or values of the out-

comes. The interaction of students within the group should help facilitate the process, as they

are more likely to come up with a comprehensive set of possible outcomes.

Each group rst needs to consider which health services the employees of their company

may be most likely to utilize given their demographic characteristics and job risk. The list should

include the most common diseases and conditions, such as u and high blood pressure, as well

as less common outcomes such as cancer; getting injured on the job; annual check-ups; and

childbirth among others. While not every single possible outcome needs to be included in the

expected loss function, it should demonstrate that the students thought about the issue care-

fully. I set the limit to 20 outcomes for simplicity. Then, the group needs to research, or at least

take an educated guess at, the probabilities associated with these outcomes. Common and fre-

quent outcomes such as the u should be assigned a high probability, whereas rare outcomes

should be assigned a low probability. The next step is to nd information on how much these

procedures and treatments may cost in order to estimate the expected losses. While prices may

vary widely by the provider and area, for the purpose of this project, the prices do not need to

be exact and simple Google search results are sucient. There is no feasible way to assess the

accuracy of these estimates within the scope of the assignment, yet it provides an opportunity

for an engaging follow-up discussion. What happens if the probabilities or costs were not cor-

rect? What are the implications? This could also serve as a reminder of the basics of economic

models and the need for revisions.

The group also needs to determine the structure of the insurance plan and how to address

adverse selection and moral hazard. Specically, they should elaborate on how generous of

coverage the group would oer (emergency only, specialists, vision, dental, orthodontics) and

what cost-sharing mechanisms they would implement (copays, coinsurance, deductibles). In-

surance is not common for outcomes that are certain (such as dental and vision), because the

expected loss is estimated with 100-percent probability, and therefore premiums would be

roughly equal (or higher with loading fee) to the expected loss. The group should discuss the

selection of their coinsurance rate and deductibles, whether to control moral hazard or con-

tain costs. Cost sharing mechanisms such as co-pays and coinsurance are designed to mitigate

moral hazard (consuming higher quantity of care because the price is lower with insurance);

the higher the coinsurance and deductible, the less risk of unnecessary treatments. On the oth-

er hand, if patients skip treatment, more serious conditions may arise. Therefore, preventative

Dziadula / Journal of Economics Teaching (2018)

care is in most cases covered at a high rate, if not fully. Creating an insurance plan for a company

pools together diverse individuals and should help reduce adverse selection. Family coverage

may be oered by some groups and ideally they would discuss the implications of having a

larger pool of subscribers.

Following the group presentation, which includes the plan characteristics (coverage and

cost-sharing mechanisms) and the expected loss function, students incorporate the feedback

received and may modify the group plan in their individual written analyses. In addition, they

should provide an estimate of how to price the plan for their company and compare their esti-

mates to the other rms in terms of the premium itself and in terms of the variance of the ex-

pected loss function. Younger or healthier rms will likely have lower expected losses that may

result in a lower price of insurance. The administrative cost of managing the plan, reviewing

claims, and processing payments should also be considered in addition to the expected loss-

es when estimating the premiums. For the approximation, students should sum the expected

losses over the subscribers (employees) of the company, add some administrative costs, and

divide by the number of subscribers.2 Premiums paid by the consumers are transfers of income

for risk reduction and the service. Consumers are utility-maximizers and imperfect information

and uncertainly in the health care market lead to risk. Risk-averse consumers are willing to pay

in order to avoid risk and the pooling of customers, a benet of insurance, mitigates the risk.

The variance, a measure of risk, increases when the probability of extreme outcomes increases;

thus, large rms will pool more people and result in lower risk.

Lastly, the individual written analysis must briey discuss a current news story related to

health insurance. With this assignment, students often discuss employer-based or govern-

ment-provided insurance and how it relates to adverse selection or moral hazard and the role

of pre-existing conditions with a 100-percent probability of needing treatment. Having an eco-

nomic model or framework provides the students with a new set of tools for analyzing the

current news and gives them a deeper insight.

A. Learning Goals

After successfully completing this assignment students will be able to:

• describe the expected loss function and its determinants.

• navigate the issues of adverse selection and moral hazard by choosing specic insur-

ance plan characteristics (subscription and cost-sharing mechanisms).

• explain that insurance is based on risk with asymmetric information and willingness to

pay to reduce the risk among risk-averse individuals.

• determine (1) which events/outcomes are insurable, based on the presence of risk ver-

sus a certain payout, (2) how larger number of subscribers lowers the variance of ex-

pected payout and thus risk, and (3) how these factors relate to pricing of insurance.

B. Designing Health Insurance Handout3

Your group is to design an insurance plan for a company. The rm does not want to join a

plan with other subscribers, but would rather self-insure. Use conventional theory (standard

gamble) μ = Σ πiLi (Li = value of outcome i and πi = probability of outcome i). There are no right

2 In a follow-up class discussion, one could also challenge the students to think about alternative pricing where employees

pay dierent premiums based on their risk and how this relates to adverse selection.

3 A printable copy of this handout can be found in Appendix B.

Dziadula / Journal of Economics Teaching (2018)

or wrong numbers in terms of the expected losses, probabilities, or associated utilities. Use

common sense and economic theory to best estimate the risks and support your analysis with

reasoning. You should carefully reect on the characteristics of your company when estimating

the expected loss function and, as a group, decide how to appropriately weight the dierent

possible outcomes you decide to include in the function (max 20). Feel free use Google search

to nd probabilities of diseases, injuries, etc., and to nd the prices associated with these proce-

dures. They do not have to be exact. You may also take an “educated guess” and provide some

reasoning behind your estimates. Also, as a group, you need to discuss how you would address

possible moral hazard and adverse selection problems. Indicate what cost-sharing mechanisms

you want to implement, if any, and what types of services you would cover.

In your group presentation, please include the following:

• What is your estimated expected loss function?

• Will you incorporate deductibles, copays, and coinsurance?

• Would your plan cover dental, vision, check-ups, or hospital visits?

Your group presentation is limited to ve minutes and is worth half the project’s weight.

After your group presentation, you will receive feedback to incorporate into your individual

written analyses. The analysis should include the expected loss function and plan character-

istics you developed with the group, but you are encouraged to expand or change the plan

characteristics. Furthermore, given the size and risks of your rm, calculate (approximate) what

each member would have to pay in premium if you were to self-insure (remember, you need to

cover the expected expenses). How do you think that would compare to the rms assigned to

the other groups? What about the variance or risk in your group compared to that of the other

rms? Support your opinions with economics reasoning. In addition, nd a recent news event

(in the popular press) that is related to the theoretical concept or model that is central to this

assignment and explain how the story is related to the theoretical model. The nal written anal-

ysis is worth the remaining half of the grade and should be approximately two pages, with a

limit of three. Please also reect on the contribution of all group members (0 = no contribution

to group discussion; 1 = limited contribution; and 2 = good contribution).

Group 1: Large corporation with 20,000 workers with ages uniformly distributed between 20

and 65

Group 2: Successful young company of 1,500 computer programmers ages 23 to 30

Group 3: Construction rm with 1,000 employees ages 18 to 50

Group 4: Large university with enrollment of 12,000 students and 5,800 sta and faculty

4. Assignment 3: Physician’s Choice

The physician market has changed toward a group-practice model and the majority of pro-

viders accept insurance. This development is a result of market forces that providers in any

industry may face and respond to, such as the characteristics of the demand for their product

or services and the costs associated with running a business. The third project switches the

focus from consumers to producers and it relates to the physician’s choice of (1) determining

the supply of their services; (2) evaluating the cost of providing services; (3) deciding whether

Dziadula / Journal of Economics Teaching (2018)

or not to advertise; (4) how to price services; and (5) whether to participate in insurance plans.

Each group is assigned to be a practitioner with a dierent specialty, geographic market, and

average income in the area. I include an inner-city family doctor, suburban orthodontist, ru-

ral optometrist, and a suburban orthopedic surgeon. One may provide additional options for

more groups. The group portion of this assignment is focused on guring out the mode or type

of practice, the pricing of services (relative to marginal cost), and the decision of whether to

advertise.

Groups need to take the market structure, cost structure and, of course, the characteristics

of the market demand into consideration. The market structure dictates the competition the

provider faces and inuences pricing decisions; the more competition the lower the amount

of market power. Cost structure, specically xed versus variable costs, and economies of scale

and scope inuence the choice of practice type and determine whether group practice may be

advantageous. Demand characteristics aect pricing. The less elastic the demand is, the larger

the mark-up (price above marginal cost) and high-income neighborhoods are likely to have a

higher willingness to pay assuming health care is a normal good. In addition, if there are other

providers in the geographic market, students may comment on the cross-price elasticity of de-

mand for the services. By engaging in a group discussion and decision process and working as

a team, students need to critically evaluate each other’s proposals and formulate their theories

and arguments to present to class. This oers a unique opportunity for the students to analyze

the impact of competition, product dierentiation, cost structure, demographics, and the de-

terminants of price, cross-price and income elasticities of demand.

The individual portion of this assignment allows students to expand on the group analysis

by incorporating their own insight along with the feedback received. In addition, I ask students

to compare their decisions regarding pricing (market power) and advertising to the other pro-

viders. Furthermore, they are to decide whether to accept insurance carefully considering the

trade-os between lower reimbursement and the number of patients referred by the plan. Stu-

dents are also asked to consider what factors may enter a utility function of the provider U=f(x,

y, z). While prot will be a large part of it, they should also reect on the value of leisure, which

may impact the choice of practice type. Group practice allows individual providers to go on

vacation and not be on call at all times, while simultaneously providing plenty of availability to

patients.

The written submission must also include a brief reection on a recent news event related

to health care markets, and providers in particular. Whether it is about competition, accep-

tance of insurance plans, insurance fraud, or the availability of services in certain areas, students

should nd plentiful examples and connect the economic theory with the real-life story.

A. Learning Goals

After successfully completing this assignment students will be able to:

• understand the cost structure of dierent types of production, mainly the dierence

between xed and variable cost and economies of scale (and scope)

• distinguish market structures and their impact on market power and the ability to set

prices

• describe the determinants of market demand and the role of elasticity of demand in the

pricing of the product, especially from the perspective of the availability of substitutes

(competition), product dierentiation, and the incentives to advertise

Dziadula / Journal of Economics Teaching (2018)

• recognize the trade-o between the ability to charge a higher price and larger volume

of patients by accepting insurance

B. Physician Industry Handout4

Your group is to choose what mode/type of practice you would open (solo practice, part-

nership, large group practice) and provide economic reasoning for your choice. Take into con-

sideration the market you are in (perfect competition, monopolistic competition, oligopoly,

monopoly), your possible competition, the determinants of market demand and its elasticities

(price, cross-price, income), your prot, and your utility as a provider.

In your group presentation, please include the following:

• What type of practice would you choose?

• How would you price your services relative to your marginal cost?

• Would you use advertising? If you were to advertise, what medium do you think would

be eective for advertising in your area?

Clearly present your arguments for the choices you made using economic theory where

applicable. Your group presentation is limited to ve minutes and is worth half the project’s

weight.

Upon your group presentation, you will receive feedback to incorporate into your individual

written analyses. For the individual analysis, expand on your group’s proposal and reect on the

economic theory to support your answers. How would your prices and advertising decisions

compare to those of the other types of providers assigned to the remaining groups? Briey

contrast and compare. Would you sign up for any insurance plans? Why or why not?

I want you to create a plan that will bring the most utility to you as a provider, so you need

to provide a utility function. There is no need for a specic functional form; simply ll in what

you believe should be considered: U = f(x, y, z). In addition, nd a recent news event (in the pop-

ular press) that is related to the theoretical concept or model that is central to this assignment

and explain how the story is related to the theoretical model. The nal written analysis is worth

the remaining half of the grade and should be approximately two pages, with a limit of three.

Please reect on the contribution of all group members (0 = no contribution to group discus-

sion; 1 = limited contribution; 2 = good contribution).

Group 1: Family doctor in a low-income, urban neighborhood

Group 2: Orthodontist in an above-average income, suburban community

Group 3: Optometrist in a rural community

Group 4: Orthopedic surgeon in an average-income, urban neighborhood

5. Setting Up Groups and Implementing the Assignment

A large benet of group projects comes from the interaction between students. It facilitates

learning and understanding of the concepts and also allows students to experience working

4 A printable copy of this handout can be found in Appendix C.

Dziadula / Journal of Economics Teaching (2018)

as a team and experience the pros and cons that may arise from such an arrangement. For

this reason, I assign dierent random groups of four to ve students for each of the projects.

Based on the existing literature, students do not appear to prefer random versus self-creat-

ed groups (Chapman, Meuter, Toy, & Wright, 2010), and student outcomes also do not appear

to be sensitive to the composition of the group (Moore, 2011), though there is some evi-

dence that suggests that male-dominant groups perform worse (Hansen, Owan, & Pan, 2015).

Once groups are assigned, they have one week for discussion and preparation of the pre-

sentation. I ask students to keep their presentations to ve minutes in length to accommodate

all groups’ presentations in one class period.5 Furthermore, all groups are required to email me

their presentations one hour prior to class so that I can have them open and ready to go before

class begins, which minimizes the time it takes for groups to switch. The group presentation

may be live in class using a power point or one may ask students to record a video of their pre-

sentation in advance. Using a recording eliminates the risk of groups running out of time and

also allows the students to practice and revise their presentations. However, it requires more

time and coordination from the group members especially if the student body is predominantly

non-residential. After watching the live or recorded presentation in class, the class has the op-

portunity to ask questions and provide feedback. I reserve my comments until the end of class.

Once the presentation is completed, the remainder of the project is individual. Group members

are given an additional week for incorporating the feedback into their written analyses.

6. Written Assignment

For the individual written portion of the projects, students are asked to draw on the group

presentation and synthetize the analysis in writing. During the group discussion, all students

may not completely agree with the details of the analysis and results, and this part of the project

allows them to not only express their own opinions but to incorporate the feedback received

following the group presentation. Furthermore, the projects also include student-specic as-

signments which would be answered in the individual submissions. There are two additional

components to the written analysis. Each student is responsible for nding a current (within a

year) news story that is relevant to the group project topic. My goal for these projects is to con-

nect the classroom with the world and I do so by turning the students’ focus to current events.

Their task is to identify a theoretical concept that we discussed in class and briey explain how

it relates to the story they choose. Lastly, students are asked to rate the participation and contri-

bution of their groups’ members to provide a feedback channel in case there is shirking, which

serves as an incentive for everyone to contribute during the group portion of the project. In my

course, I simply ask the students to reect on the contribution of all group members with the

following options: 0 = no contribution to group discussion; 1 = limited contribution; and 2 =

good contribution.

7. Grading

Completion of each group project requires a fair amount of time and eort; therefore, I

assign a ve-percent weight of the nal course grade to each assignment. Half the weight is

placed on the group presentation and half on the individual written analysis. When evaluating

the projects, I use the following guidelines. Table 2 reports the evaluation points for the group

project, while Table 3 reports the same for the student’s individual written assignment.

5 Depending on the amount of time available, instructors may choose to provide more time for each group.

Dziadula / Journal of Economics Teaching (2018)

8. Large Lecture Modication

Relatively small modications can make this series of assignments applicable to large lec-

tures, making it especially attractive as engaging students in large classes is challenging. Most

universities utilize a learning management software (LMS) which allows for generating groups

of students. If the LMS does not have the automatic grouping function, creating groups by al-

phabetical order makes it easier to manually group students within the system. In a large-class

setting that would not allow for in-class presentation, the groups can post their recordings on

the LMS discussion board, so that others may review it and provide feedback. Requesting stu-

dents to provide insightful written feedback may be used as an additional graded out-of-class

assignment. For large classes, instead of asking each student to provide feedback to all presen-

tations, groups could be paired up and required to provide feedback to each other. When using

recorded presentations in a large class setting, completion of the project in three weeks rather

than two may be more realistic. One might dedicate one week for group discussion and prepa-

ration of presentation, one week for providing written feedback to other groups, and one week

for incorporating feedback and revising the nal written analysis. In order to reduce the volume

of papers and thus grading in a large class, the written portion can also be a group write-up.

Points Possible

Emailed one hour before class 5

All students in group participated610

Well organized presentation 10

Presentation met time requirements 5

Presentation included careful consideration of

the appropriate economic theory 20

Table 2 – Evaluation of Group Presentation

Points Possible

Submitted on time 5

Organized well; clear writing style; absent of

grammatical errors 10

Analysis included careful consideration of the

appropriate economic theory 25

Current news analysis 10

Table 3 – Evaluation of Written Assignment

6 If the group indicates that a student did not participate in preparing for the presentation, I subtract points accordingly.

Dziadula / Journal of Economics Teaching (2018)

9. Microeconomics Modication

While these projects were developed for a health economics course, the assignments could

also be modied for use in an undergraduate microeconomics class. Several of the current prin-

ciples of microeconomics textbooks cover the market for health care and one may utilize the

rst project which compares dierent types of systems. For example in Hubbard and O’Brien

(2017), the economics of health care chapter is introduced after the supply and demand model,

price controls, elasticity, and taxes. Therefore, students are in a good position to consider the

incentives that are unique to the systems and to comment on the trade-o between the sys-

tems’ eciency (welfare or consumer and producer surplus) and equity (access and fairness).

One may consider providing a summary table like Table 1 to the students as a starting point for

the group project.

The health insurance project could be adapted to designing other insurance plans in up-

per-level electives that cover risk and insurance. For example, one could ask students to price

car insurance or bicycle insurance on campus, and to evaluate the probabilities of risk and

events covered by the policies. Furthermore, the evaluation of market conditions is not unique

to health care providers. Therefore, the last project may be modied for use in either principles

or intermediate microeconomics courses. One may focus on the food or clothing industry, for

example, and oer a dierent set of providers. The existing structure of the project applies, as

it utilizes the analysis of market structure, the number of sellers, economies of scale and scope,

product dierentiation, advertising, and prot maximization. An alternative handout for a food

industry is included in Appendix D for the instructor’s convenience.

10. Conclusion

This paper presents three assignments designed to engage students and deepen their un-

derstanding of the material covered in a health economics course. The assignments focus on

the dierent players in the health care market: consumers, insurers, and providers. Students

actively apply economic theory to dierent scenarios and also look for relevant examples in the

news, making a further connection between class material and real life.

The added benet of group assignments, as demonstrated by the literature, is the interac-

tion and communication with other students. Analyzing a problem as a group requires each

student to be ready to defend their suggested solutions. This facilitates learning and under-

standing of the concepts and also allows students to experience working as a team. The pre-

sentation component challenges the team to come up with a group answer and utilize technol-

ogy, while the written component of these assignments allows for individuals to present their

own perspective and reasoning. These projects can be used as a set or individually and they are

easily adaptable to large lectures, which makes them especially attractive as engaging students

in a large class can be challenging.

Dziadula / Journal of Economics Teaching (2018)

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Dziadula / Journal of Economics Teaching (2018)

Appendix A – Health Care Systems Assignment

Each group is to describe one type of health care system (Canada, Germany, Switzerland,

and United Kingdom) and is to present the pros and cons and compare and contrast these with

the U.S. system. You should highlight the main characteristics of the system:

• Who is insured? Is insurance compulsory?

• Who pays? How are payments made?