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Health Economics
Can we really use economic thinking to understand our health care system? Health Economics, now in
its sixth edition, not only shows how this is done, but also provides the tools to analyze the economic
behavior of patients and providers in health care markets.
Health Economics combines current economic theory, recent research, and up-to-date empirical
studies into a comprehensive overview of the field. Key changes to this edition include:
• additional discussion of the consequences of the Patient Protection and Affordable Care Act
(PPACA), in light of current political changes;
• an extensive discussion of quality measures;
• more discussion of preventive services;
• a new section on drug markets and regulation;
• discussion of Accountable Care Organizations (ACOs);
• new references, problem sets, and an updated companion website with lecture slides.
Designed for use in upper-division undergraduate economics studies, the book is suitable for students
and lecturers in health economics, microeconomics, public health policy and practice, and health and
society. It is also accessible to professional students in programs such as public policy, public health,
business, and law.
Charles E. Phelps, PhD, has contributed to the field of health economics at the RAND Corporation
(1971–1984) and the University of Rochester (1984–2010), USA. Now retired from the faculty, he
continues through work with the National Academy of Medicine (to which he was elected in 1991)
and various consulting arrangements. He has supervised 35 doctoral candidates across the fields of
economics, political science, public policy, statistics, and nursing.
Health Economics
6th Edition
Charles E. Phelps
Sixth edition published 2018
by Routledge
711 Third Avenue, New York, NY 10017
and by Routledge
2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2018 Taylor & Francis
The right of Charles E. Phelps to be identified as author of this work has been
asserted by him in accordance with sections 77 and 78 of the Copyright,
Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or utilised
in any form or by any electronic, mechanical, or other means, now known or hereafter
invented, including photocopying and recording, or in any information storage or
retrieval system, without permission in writing from the publishers.
Trademark notice: Product or corporate names may be trademarks or registered trademarks,
and are used only for identification and explanation without intent to infringe.
First edition published by Prentice Hall 1997
Fifth edition published by Pearson 2013
Library of Congress Cataloging-in-Publication Data
Names: Phelps, Charles E., author.
Title: Health economics / Charles E. Phelps.
Description: 6th edition. | New York, NY : Routledge, 2018. | Includes bibliographical
references and index.
Identifiers: LCCN 2017027102 | ISBN 9781138207981 (hbk.) | ISBN 9781315460499 (ebk.)
Subjects: | MESH: Economics, Medical | Health Services Needs and Demand—economics |
Insurance, Health—economics | Financial Management, Hospital—economics |
Marketing of Health Services—economics | Health Policy—economics | United States
Classification: LCC RA410 | NLM W 74 AA1 | DDC 338.4/73621—dc23
LC record available at https://lccn.loc.gov/2017027102
ISBN: 978-1-138-20798-1 (hbk)
ISBN: 978-1-315-46049-9 (ebk)
Typeset in Minion Pro
by Apex CoVantage, LLC
Visit the companion website: www.routledge.com/cw/phelps
To Dale—our time has just begun again, after 50 years.
Contents
Preface to the Sixth Edition xiv

Acknowledgments xvii
CHAPTER 1 Why Health Economics? 1

1.1 Important (if not Unique) Aspects of Health Care Economics 2
1.2 How Markets Interrelate in Medical Care and Health Insurance 7
1.3 Afterthought 24
1.4 Summary 24
1.5 Related Chapters in Handbook of Health Economics 25
1.6 Problems 25
CHAPTER 2 Utility and Health 27

2.1 How to Think About Health and Health Care
(or . . . How Health Economics?) 28
2.2 The Production of Health 30
2.3 Health Through the Life Cycle 32
2.4 A Model of Consumption and Health 33
2.5 Summary 44
2.6 Related Chapter in Handbook of Health Economics 44
2.7 Problems 44
Appendix to Chapter 2: A Formal Model of Utility Maximization 45
CHAPTER 3 The Transformation of Medical Care to Health 48

3.1 The Productivity of Medical Care 49
3.2 Confusion About the Production Function: A Policy Dilemma 64
3.3 Physician-Specific Variations (Medical Practice Styles) 71
3.4 Extensive and Intensive Margin Differences: Are They Similar? 74
3.5 Summary 76
3.7 Problems 76
Appendix to Chapter 3: Marginal, Average, and Total Productivity 78
viii Contents
CHAPTER 4 The Demand for Medical Care: Conceptual Framework 82

4.1 Indifference Curves for Health and Other Goods 83
4.2 From Indifference Curves to Demand Curves 87
4.3 How Demand Curves Depend on Illness Events 89
4.4 Demand Curves for Many Medical Services 90
4.5 The Demand Curve for a Society: Adding up
Individual Demands 91
4.6 Use of the Demand Curve to Measure Value of Care 91
4.7 How Insurance Affects a Demand Curve for Medical Care 93
4.8 Time Costs and Travel Costs 102
4.9 The Role of Quality in the Demand for Care 103
4.10 Revisited: The Price Index for Health Care 106
4.11 Summary 107
4.13 Problems 108
Appendix to Chapter 4: Demand Curves and Demand Elasticities 109
CHAPTER 5 Empirical Studies of Medical Care Demand

and Applications 112
5.1 Studies of Demand Curves 113
5.2 Another Randomized Study: The Oregon Medicaid Experiment 121
5.3 Effects of Patients’ Age and Sex on Demand 122
5.4 The Effects of Illness on Demand 123
5.5 Lifestyle and Its Effects on Demand 123
5.6 The Demand for “Illness” 125
5.7 Further Discussion of Prescription Drug Insurance 128
5.8 Other Studies of Demand for Medical Care 130
5.9 Applications and Extensions of Demand Theory 133
5.10 Decision Theory: Deriving the “Right” Demand Curve
for Medical Care 136
5.11 Cost-Effectiveness Ratios and Demand Curves 137
5.12 Why Variations in Medical Practice? 138
5.13 Summary 138
5.15 Problems 139
Appendix to Chapter 5: An Example of Medical Decision Theory 140
Contents ix
CHAPTER 6 The Physician and the Physician-Firm 146

6.1 The “Firm”—Inputs, Output, and Cost 147
6.2 The Physician as Entrepreneur 148
6.3 The Physician-Firm and its Production Function 148
6.4 The Physician as Diagnostician 149
6.5 Nonphysician Primary-Care Providers 154
6.6 The Size of the Firm: Group Practice of Medicine 156
6.7 Practice Ownership Patterns 159
6.8 The Physician as Labor 161
6.9 The Aggregate Supply Curve: Entry and Exit 166
6.10 The Open Economy: U.S. and Internationally Trained Physicians 166
6.11 Summary 168
6.13 Problems 169
Appendix to Chapter 6: Cost Passthrough 170
CHAPTER 7 Physicians in the Marketplace 173

7.1 Physician Location Decisions 174
7.2 Consumer Search and Market Equilibrium 179
7.3 The Consequences of Incomplete Search 190
7.4 Actual Search by Patients 191
7.5 Advertising and the Costs of Information 192
7.6 The Role of Licensure 194
7.7 Estimates of the Demand Curve Facing Physician-Firms 195
7.8 Induced Demand 196
7.9 The Role of Payment Schemes 203
7.10 Summary 204
7.12 Problems 205
CHAPTER 8 The Hospital as a Supplier of Medical Care 208

8.1 The Hospital Organization 209
8.2 Who is the Residual Claimant? 213
8.3 Where Does the Utility Function Come From? 216
8.4 Hospital Costs 220
8.5 Long-Run Versus Short-Run Costs 223
x Contents
8.6 The Hospital’s “Cost Curve” 224

8.7 Ambulatory Surgery Remakes the Hospital Sector 226
8.8 The Demand Curve Facing a Single Hospital 228
8.9 The Utility-Maximizing Hospital Manager Revisited 229
8.10 Summary 230
8.12 Problems 230
CHAPTER 9 Hospitals in the Marketplace 233

9.1 Hospitals and the Market for Medical Staff 234
9.2 Hospitals and Patients 235
9.3 A Model of Equilibrium Quality and Price 237
9.4 Insurance and Competition in the Hospital’s Decision 240
9.5 Interaction of Doctors and Hospitals: “Goodies” for the Doctor 242
9.6 Interaction of Doctors and Hospitals: Patients for the Hospital 243
9.7 Competition: “Old Style” Versus “New Style” 244
9.8 Entry and Exit: The Pivotal Role of For-Profit Hospitals 246
9.9 The Hospital in Labor Markets 246
9.10 Nursing “Shortages” 248
9.11 Summary 251
9.13 Problems 252
Appendix to Chapter 9: The Hospital’s Quality and Quantity Decision 252
CHAPTER 10 The Demand for Health Insurance 257

10.1 The Demand for Health Insurance 259
10.2 Reasons People Want Insurance 260
10.3 Choice of the Insurance Policy 264
10.4 Insuring Preventive Services 269
10.5 Insurance Market Stability: The Question of Self-Selection 271
10.6 Income Tax Subsidization of Health Insurance 278
10.7 Empirical Estimates of Demand for Insurance 283
10.8 The Overall Effect of the Tax Subsidy on the Health Sector 284
10.9 “Optimal” Insurance 285
10.10 Other Models of Demand for Insurance 285
10.11 Summary 286
Contents xi

10.13 Problems 287
Appendixes to Chapter 10 290
Appendix A: A Detailed Calculation of Welfare Loss 290
Appendix B: The Calculus of the Risk/Moral Hazard Tradeoff 291
Appendix C: The Statistics of an Insurance Pool 292
CHAPTER 11 Health Insurance Supply and Managed Care 295

11.1 The Supply of Insurance 295
11.2 Insurance Exchanges in the PPACA 299
11.3 Managed care: A Response to the Incentives of
Traditional Insurance 302
11.4 Why Managed Care? 303
11.5 Market Share Trends 305
11.6 Types of Interventions 308
11.7 Which Interventions Work Best for Managed Care? 317
11.8 Long-Run Issues 318
11.9 Summary 321
11.11 Problems 322
CHAPTER 12 Government Provision of Health Insurance 325

12.1 The Medicare Program 327
12.2 Economically Appropriate Deductibles 329
12.3 Program Additions Through Time 329
12.4 Operational Changes in Medicare 337
12.5 The Medicaid Program 350
12.6 Summary 354
12.8 Problems 355
CHAPTER 13 Medical Malpractice 359

13.1 Background of the Legal System in the U.S. 360
13.2 The Economic Logic of Negligence Law 364
13.3 Judicial Error, Defensive Medicine, and “Tough Guys” 366
13.4 Medical Malpractice Insurance 368
13.5 Evidence on Actual Deterrence 368
xii Contents
13.6 Malpractice Awards: “Lightning” or a “Broom Sweeping Clean”? 378

13.7 Tort Reform 379
13.8 How Much Can Tort Reform Reduce Costs? 382
13.9 Tort Reform Writ Large 382
13.10 Summary 383
13.11 Related Chapter in Handbook of Health Economics 384
13.12 Problems 384
CHAPTER 14 Externalities in Health and Medical Care 387

14.1 Externalities, Property Rights, and the Control of Externalities 388
14.2 Externalities of Contagion 389
14.3 Solutions to the Externality Problems 395
14.4 International Issues: Expanding the Scope of the Externality 397
14.5 Externalities from Tobacco 398
14.6 Information as an Externality 400
14.7 Research as an Externality 402
14.8 Reasons for Such Little Research on Medical Effectiveness 403
14.9 Transfusion-Induced AIDS and Hepatitis 404
14.10 Summary 406
14.12 Problems 406
Appendix to Chapter 14: Value of Life 407
CHAPTER 15 Managing the Market: Regulation, Quality Certification,

and Technical Change 412
15.1 A Taxonomy of Regulation 413
15.2 Licensure 414
15.3 Measuring Quality 418
15.4 Paying for Outcomes: ACOs in the PPACA 420
15.5 “Certificate of Need” (CON) Laws 421
15.6 Price Controls 424
15.7 Medicare Price Controls 426
15.8 Drugs and Devices: The New Wave of Medical Care 434
15.9 Summary 447
15.11 Problems 448
Contents xiii
CHAPTER 16 Universal Insurance Issues and International Comparisons

of Health Care Systems 452
16.1 Aggregate International Comparisons 455
16.2 Increase in Costs and Health Outcomes 459
16.3 The Patient Protection and Affordable Care Act 465
16.4 General Considerations for a National Health Policy 468
16.5 A Final Conundrum 478
16.6 Summary 478
16.8 Problems 479
Author’s Postscript 481

Bibliography 483
Index 500
Preface to the Sixth Edition
The fifth edition went to press just as the Patient Protection and Affordable Care Act (hence-
forth the PPACA or simply ACA) was coming to fruition. In the intervening years, the PPACA
succeeded in some of its goals, failed in some, and got intermediate grades in other aspects
of its performance. But then in 2017, the Trump Administration came to the White House,
and the Republican Party had control of both the U.S. House of Representatives and U.S.
Senate. Republican Party candidates had all campaigned vigorously on a promise to “repeal
and replace” the PPACA. After an early failure in March, modified legislation passed the
House of Representatives in May 2017 called the American Health Care Act (AHCA). How-
ever, subsequent parallel legislation failed to achieve a majority in the Senate. Thus: as this
Sixth Edition goes to press, the ACA remains the law of the land, but with continued political
activity to repeal and replace, or to “repair” the ACA. What emerges—and how to analyze
it—will be the task of students and their professors using this book to discover and analyze.
The key issues focused on several things, all of which we will discuss at appropriate
places in this sixth edition. First, about 19 million people had gained health insurance cover-
age under the ACA, driving the rate of people without health insurance (“the uninsured”) to
about 11 percent of the under-65 U.S. population. Before the ACA became law, an estimated
18.2 percent of the same population was uninsured. So with a goal of universal coverage, the
ACA had gotten a bit under 40 percent of the way toward “universal” insurance. Nobody
ever anticipated true universal coverage, and ACA proponents proudly point to the gains in
coverage, and anticipated more enrollment as the penalties for not having coverage (under
the “individual mandate” requiring either insurance coverage or a penalty enforced through
the tax system) increased through time.
Shortly after the details of the AHCA proposal became public in early 2017, the Con-
gressional Budget Office (CBO; a neutral fiscal advisory group working for the U.S. Congress)
estimated that the AHCA would lead to 24 million people losing their insurance coverage,
approximately doubling the percentage of uninsured, while saving about $30 billion per year
in federal spending (less than $100 per person per year in the U.S.). Population polls put the
favorability rating of the AHCA at 17 percent, most likely driven by the CBO estimates of
24 million additionally uninsured people.
Why spend so much time talking about these political issues in the Preface to a text-
book on health economics? First, because the political turmoil leaves somewhat ambiguous
what will happen to the PPACA (and hence with what clarity we can speak about its successes
and failures). Perhaps of greater importance, it highlights an enormously interesting set of
issues in health policy. Economics is the study of tradeoffs made under constraints. That is
precisely the type of discussion carried out in the U.S. Congress about “repeal and replace.”
We begin our analysis of health care by analyzing the standard homo economicus model
of a person maximizing expected utility within a budget constraint, and seeing how that
leads to an understanding of demand curves, demand for insurance, and even choice of indi-
vidual therapy options for (say) cancer patients. We study how doctors behave using similar
models of human behavior. We expand that thinking to help guide our understanding of
how not-for-profit hospitals behave and how they make choices. And we can now vividly see
Preface to the Sixth Edition xv
that the necessity of making tradeoffs within constraints reaches even the highest levels of
national governance. Life is full of tradeoffs. This book will explore how to think about them
at every level, ending with an extensive discussion (in Chapter 16) of the core issues that led
to the enactment of the PPACA, and the 2017 attempts to repeal and replace it.
What’s New in the Sixth Edition

The health care landscape has changed rapidly since the fifth edition went to press in 2011, and
the sixth edition brings things up to date in some important ways. The biggest ambiguity that
remains is what will happen to the PPACA (aka “Obamacare”) with a new U.S. Congress and
new president vowing to repeal and replace it, but (as of the time this edition goes to press) not
reaching consensus on how to do that. The major changes associated with the PPACA include:
• expansion of coverage under the PPACA and discussion of where it failed;

• pricing reforms and experiments to change the ways hospitals and doctors are paid,
including new methods of linking quality of care to Medicare payments;
• discussion of the Health Insurance Exchanges and interaction with the tax for non-
compliance with the individual mandate; and
• Medicaid expansion and Medicaid Managed Care.
During the 2016 U.S. presidential election, the one apparent point of agreement
between the two major-party candidates was that prescription drug pricing deserved major
policy attention. The sixth edition greatly expands the discussion about prescription drugs,
showing that they represent not 10 percent but 16 percent of all health care spending, and
includes new analysis of the effects of the Waxman-Hatch patent extension legislation, the
Orphan Drug Act, and the role of generic competition.
Other additions to the sixth edition include:
• data tables are brought up to date where new data are available;
• a wholly new explanation of the demand for preventive care;
• new information on the role of tort law in driving health care costs;
• new data on the effects of insurance coverage on health outcomes;
• discussions about the growing importance of high-deductible health plans (HDHPs);
• related to the growing importance of HDHPs, new information about price-shopping
and how it helps people with HDHPs save money;
• extended discussion about changes in Part D (prescription drug coverage) and the
expanding role of Medicare Advantage (the voluntary voucher program in Medicare);
• public health updates on Ebola and Zika outbreaks; and
• looking ahead to experiments with global budget caps and all-payer diagnosis-related
groups (DRGs) in Canada and the U.S.
What Comes Next?

At the point in time when you use this textbook in a college course, much may have changed in
the political arena since the time of this writing. Hopefully, you and your professors will be better
able to understand these changes with the tools you will learn while studying health economics.
xvi Preface to the Sixth Edition
The other issue I wish to highlight is the urgency of getting some bright minds to think
about these issues. As you will read in Chapter 1, if current trends continue, our health care
system is in for some troublesome times. If the current health care system remains absolutely
static—no changes in relative prices, per-person use rates, or technological innovation—then
simple changes in the age mix of the U.S. population will drive the current budget share for
health care from 18 percent to 23 percent by the year 2050. And if the steady increase in the
relative prices of medical care continue as they have for the past half-century at 1.7 percent
above inflation—driven primarily by technological change—that budget share will reach
42 percent by 2050. These numbers will not change unless somebody—perhaps you—finds
a way to alter the current course of the health care system. Hopefully, this book will provide
you with some of the tools to help think about these issues constructively.
Additional Resources
Each chapter points readers to key chapters in the two-volume compendium Handbook
of Health Economics, edited by Anthony Culyer and Joseph P. Newhouse (2000). This two-
volume series (part of an extended series of Handbooks in Economics edited by top scholars
in their fields) contains summary articles from state-of-the-art researchers in topics spanning
a wide array of the field of health economics. These articles, while “dated” to the 2000 pub-
lication year, still stand as a useful resource for scholars in this field and will do so for years
to come. This sixth edition adds appropriate references to the second volume of the Hand-
book of Health Economics, published in 2012, edited by Mark V. Pauly, Thomas G. McGuire,
and Pedro P. Barros.
The companion website for Health Economics, found at www.routledgetextbooks.com/text

books/9780132948531, offers additional resources for students such as useful web links,
additional material on the role of genetics in obesity and the use of alcohol and tobacco,
and self-study quizzes. The companion website also features three appendices to augment
the printed text—material covering marginal tax rates in the U.S. (related to Chapter 10),
a review of health policy and systems in selected countries (related to Chapter 16), and an
introduction to basic economics concepts (for students who would find a review of basic
introductory economics useful).
Acknowledgments
I wish to acknowledge the excellent work by the editorial and production teams at Routledge
Press who made this 6th edition possible. Thanks begin with Emily Kindleysides, Senior Edi-
tor, Natalie Tomlinson, Commissioning Editor, and Laura Johnson, Senior Editorial Assis-
tant. The production team was also stellar, led by Cathy Hurren, Senior Production Editor
and Gary Smith, Editor.
1
Why Health Economics?
Learning Goals
Assess why the special study of health economics makes sense. Understand novel
aspects of health care and ways to approach the issues.
Identify how health care markets differ from others, particularly understanding the
unique role of health insurance.
Ascertain how medical spending has evolved over time (and why), dissecting
changes over the years in medical spending.
H
EALTH CARE REPRESENTS a collection of services, products, institutions, regu-
lations, and people that, in 2015, accounted for about 18 percent of our gross domes-
tic product (GDP), growing at about 2–4 percent of GDP per decade in recent years.
In 2016, the most recent year with estimated data at this writing, medical spending reached
$3.3 trillion, or about $10,500 per person for the 325 million people living in the United
States, representing about 18 percent of the GDP of the country. About half of this comes
from private spending, the other half from government spending (financed by taxation).
This alone makes the study of health care a topic of potential importance.1
Almost every person has confronted the health care system at some point, often in situ-
ations of considerable importance or concern to the individual. Even the most casual contact
with this part of the economy confirms that something is quite different about health care.
Indeed, the differences are often so large that one wonders whether anything we have learned
about economic systems and markets from other areas of the economy will apply, even partly,
in the study of health care. Put most simply, does anybody behave as a “rational economic
actor” in the health care market?
2 Chapter 1 Why Health Economics?
1.1 Important (if not Unique) Aspects of Health

Care Economics
Although the health care sector shares many individual characteristics with other areas of
the economy, the collection of unusual economic features that appears in health care markets
seems particularly large. The unusual features include (1) the extent of government involve-
ment; (2) the dominant presence of uncertainty at all levels of health care, ranging from the
randomness of individuals’ illnesses to the understanding of how well medical treatments
work, and for whom; (3) the large difference in knowledge between doctors (and other pro-
viders) and their patients, the consumers of health care; and (4) externalities—behavior by
individuals that imposes costs or creates benefits for others. Each of these is present in other
areas of the economy as well, but seldom so much as in health care, and never in such broad
combination. A brief discussion of each issue follows.
As background to each of these ideas, and indeed for the entire book, the student of
health economics will be served by the following notion: Uncertainty looms everywhere.
Uncertain events guide individual behavior in health care. This major uncertainty leads to
the development of health insurance, which in turn controls and guides the use of resources
throughout the economy. The presence of various forms of uncertainty also accounts for
much of the role of government in health care. Thus, if all else fails, search for the role of
uncertainty in understanding health care. Such a search will often prove fruitful, and will
lead to a better understanding of why the health care economy works the way it does and
why the institutions in these markets exist.
Government Intervention
The government intrudes into many markets, but seldom as commonly or extensively as in
health care. Licensure of health professionals, of course, is common. Many other profession-
als also require a license before they may practice, including barbers, beauticians, airplane
pilots, attorneys, SCUBA instructors, bicycle racers, and (ubiquitously) automobile drivers.
But almost every specialist in health care has to pass a formal certification process before
practicing, including physicians, nurses, technicians, pharmacists, opticians, dentists, dental
hygienists, and a host of others. The certification processes include not only government
licensure, but often private certification of competence as well. Why does our society so rig-
orously examine the competence of health care professionals?
The government also intrudes into health care markets in ways unheard of in other
areas. The 2010 Patient Protection and Affordable Care Act (PPACA) vastly altered the
health care landscape, including (among other provisions) the requirement that all citi-
zens maintain a minimum level of health insurance coverage, rules prohibiting any health
insurer from using preexisting conditions either to determine access to health care or the
cost of insurance, and established regional “exchanges” to provide health insurance for
people in small-group settings. The PPACA also proposed a phase-in of taxation of high-
cost insurance (“Cadillac”) plans, a number of reforms of Medicare (discussed in detail
in Chapter 12), and development of a stronger focus on illness prevention in both private
insurance and government programs. As this book goes to press, legislation is pending in
the U.S. Congress to reshape the PPACA. And wherever that legislation ends, it will repre-
sent only the next step in the evolution of government intervention in the U.S. health care
sector.
Chapter 1 Why Health Economics? 3
Even before the PPACA, federal and state programs provided insurance or financial
aid against health expenses for an extremely diverse set of people, including all elderly per-
sons, the poor, military veterans, children with birth defects, persons with kidney disease,
persons who are permanently disabled, people who are blind, migrant workers, families of
military personnel, and schoolchildren of all stripes. In addition, a broad majority of people
living in the U.S. can walk into a county hospital and claim the right to receive care for free
if they have no obvious way of paying for the care. Probably only in public education do
various levels of government touch as many individuals at any given time as in health care.
Over a life cycle, nothing except for education comes close: Because Medicare has mandatory
enrollment at age 65, every person who lives to that age will become affected by an important
government health care program. By contrast, many individuals go through private schools
and never see a public school. Why does the government involve itself so much in the financ-
ing of health care?
The government also controls the direct economic behavior of health care providers
such as hospitals, nursing homes, and doctors, far more than in other sectors of the econ-
omy. We have seen economywide price controls sporadically in our country’s history, and
considerable regulation in various sectors such as petroleum, banking, and (by local gov-
ernments) housing rental rates. After the Organization of Petroleum Exporting Countries
(OPEC) raised the price of oil fourfold in 1973, petroleum regulations became a national
phenomenon for several years, with such unintended consequences as gasoline shortages
and hours-long queues to buy a tank of gas. However, such intervention pales in comparison
to government involvement in prices in the health sector. At least in some form, the govern-
ment has been controlling prices in the health care industry continually since 1971, and these
controls, at least in terms of prices paid to physicians by government insurance programs,
have become more rigorous and binding over time. During the same time, the government
decontrolled prices in a broad array of industries, including airlines, trucking, telephones,
and petroleum. Why do we spend so much effort controlling prices in health care in contrast
to those in other industries?
For decades, the United States has also seen direct controls on the simple decision to
enter the business of providing health care. Even ignoring licensure of professionals as an
entry control, we have seen a broad set of regulations requiring such things as a “certificate
of need” before a hospital can add so much as a single bed to its capacity. Similar laws con-
trol the purchase of expensive pieces of equipment such as diagnostic scanning devices. The
reverse process also attracts considerable attention: If a hospital wants to close its doors,
political chaos may ensue. What leads the government to intensively monitor and control the
simple process of firms entering and exiting an industry?
Quite separately, both federal and state governments have commonly provided special
assistance for providing education to people entering the health care field, through direct
financial aid to professional schools and generous scholarships to students in those schools.
This financial aid often directly benefits a group of persons (e.g., medical students) who will
enter one of the highest paying professions in our society. Why do governments proffer this
support for the medical education process?
Government research is also prominent in the health care sector. Although the govern-
ment accounts for considerable research in other areas, most notably those involving national
security (such as aircraft design, electronics, and computers), its concern with research in
health care is unique. The campus of the National Institutes of Health (NIH) in Bethesda,
Maryland (on the outskirts of Washington, D.C.) surpasses that of almost every major uni-
versity in the country in health-related research and education. In no other nonmilitary
area does the government directly undertake research at such a scale. How did biomedical
research reach such a level of prominence?
Before any new drug reaches the market, it must undergo a rigorous series of hurdles—
research requirements imposed by the government on pharmaceutical firms, drug testing,
and reporting of potential side effects. New medical devices confront similar regulations
now. By contrast, for example, no regulations exist to control the study of health economics—
perhaps, you might argue, fortuitously for this textbook! Why does the government concern
itself so much with the drugs we stuff into our mouths, and so little with the knowledge we
stuff into our heads?
Other apparently minor aspects of the government can dramatically affect our lives
through the health sector. A simple provision of the tax code, dating from 1954, made
employer-paid health insurance exempt from income taxation. Another tax provision (Sec-
tion 501(c)3 of the Internal Revenue Code) grants corporate immunity from income taxes to
most hospitals and to insurance plans that account for about half of the private health insur-
ance in the U.S. In turn, most states adopt this same tax treatment for state income and sales
taxes, and most local governments exclude the same organizations from paying property
taxes. Why does the health care sector receive these favored tax treatments, and how much
has its size and shape been changed thereby?
These ideas touch only briefly on the extent of government involvement in health care,
and indeed much of the remainder of this book refers continually to the presence and effects
of the government. Astonishingly, though, the government’s role in the health sector in the
U.S. is much less than in almost all other countries. An online supplement to Chapter 16 at
www.routledgetextbooks.com/textbooks/9780132948531 describes how other nations have
made choices to involve the government even more than in this country, and attempts to
understand the consequences of such choices.
Uncertainty 2
Uncertainty lurks in every corner of the health care field. Many decisions to use health care
begin because of seemingly random events—a broken arm, an inflamed appendix, an auto
accident, or a heart attack. Most other medical events are initiated because an individual is
concerned about the possibility of some illness—“Do I have cancer, Doctor?” “Am I crazy,
Doctor?” “Why am I so tired, Doctor?”
Uncertainty may begin with the consumer-patient in health care, but it certainly doesn’t
end there. Providers also confront large uncertainty, although often they don’t appear to rec-
ognize it individually. Yet, in similar situations, doctors often recommend treatment at vastly
different rates, and often diverge greatly on which treatment they recommend. Therapies of
choice change through time, often with little or no scientific basis for the decision. How can
such medical confusion persist in a modern, scientific society?
The contrast between our approach to uncertainty in some areas of medical care
(e.g., new drugs) and to similarly large uncertainty in other areas (e.g., the efficacy of a
new surgical technique) also commands attention. In one case, we regulate the market
intensively. In the other, we license the providers broadly, and then entrust them to make
appropriate decisions. Thus, new therapies may sweep through the country with not so
much as a single case-control study, let alone a true randomized controlled trial such
as would be required for a new drug. Why do we behave so differently in these areas of
uncertainty?
Asymmetric Knowledge
Symmetry exists when two objects are identical in size, shape, or power. When two people
bargain in an economic exchange, and one holds far more relevant information than the
other, the issues of asymmetric information arise. “Knowledge is power,” so goes the old say-
ing. This holds equally in international arms control negotiations and discussions between
a doctor and a patient. In the former case, however, both sides have similar opportunity and
(presumably) similar skill in evaluating the positions and claims of the other. In health care,
just the opposite holds true: One party (the doctor) generally has a considerably, possibly
massively, greater level of knowledge than the other (the patient) about the issues at hand—
namely, the diagnosis and treatment of disease. Not only that, the incentives to reveal infor-
mation differ. In the arms control case, the two parties hold similar incentives to reveal or
hide information. In the doctor–patient case, the patient clearly wishes to reveal information
to the doctor, but the doctor may be in a different position.3 Professional duty, ethics, and
personal responsibility make the doctor want to be open and honest. Conflicting with this,
however, the simple profit motive can lead the doctor into different choices. Put most simply,
if so desired, the doctor might be able to deceive the patient, and make more money doing
so. In addition, the patient would have no way of telling when this was happening (if at all).
Patients, after all, decide to consult with doctors because they want the doctors’ advice.
As with many other facets of health care economics, this situation is not unique to
health care. Many adults have confronted a similar circumstance in the most common set-
ting imaginable—auto repair. There, the auto mechanic is in a position to do the same thing,
that is, deceive the customer into believing that repairs are needed, and then possibly not
even undertake them, because nothing really needed to be fixed.
We have evolved a variety of mechanisms to protect untutored consumer-patients in
settings such as these, some applying with more force in health care than others. As Kenneth
Arrow (1963) has discussed so well, one of the important reasons for “professions” to evolve,
with a code of ethics and, commonly, professional licensure, is to provide an institutional
mechanism to help balance transactions such as these.
Arrow also emphasizes the importance of trust in ongoing relationships, and recent
developments in the study of health care and other similar markets have formalized these
ideas more completely: When two parties know that they will deal with one another for a
long time—the classic “doctor–patient relationship”—their behavior can differ considerably
from that in a one-time transaction.
The logic of this idea is quite simple: If a mechanic at a cross-country-route service
station tells you that you need new shock absorbers in your car, pointing ominously to some
oil dripping from one of your shock absorbers, the chances are a lot higher that the mechanic
squirted the oil there moments before, rather than that you really need new shocks. However,
local mechanics have both less opportunity and less reason to try such stunts. First, they can-
not keep selling you new shocks each week! Second, they know that if you catch them once at
attempted fraud, your relationship will end, and you will also tell your friends to avoid them.
Mid-desert service stations will never see you again, and thus have no such constraints on
their behavior.
Consumers can protect themselves against fraud by learning more about the activity at
hand. With auto repair, many people can learn to be effective mechanics on their own, and
hence less likely to be subject to fraud. With the purchase of stereo equipment, we at least can
listen to the quality of the sound. With these and many other activities, we also can return the
product to the seller or the device to the repair person if it doesn’t function correctly. You can
always go back to your mechanic and say, “Do it again until you get it right!” Not only that,
mechanics probably have incentives to try, if they value maintaining a lasting relationship
with you.
With medical care, as with other areas in which “professionals” dominate the supply
of the activity, things seem at least qualitatively different. First, the disparity of knowledge
between the doctor and the patient is larger than that between the customer and the auto
mechanic. A reasonably intelligent person can learn quite a bit about auto repair in a rela-
tively short period of time.
Perhaps more important, it may prove difficult to trade in a “service” when it doesn’t
work properly. By its very nature, a “service” involves the participation of the patient’s body. If
a surgical mistake is made, trade-ins may be hard to come by. Obviously, many medical mis-
takes are self-correcting, and many others can be restored with further medical intervention,
but it seems reasonable to state that, on average, mistakes are harder to correct with services
than with goods, services having less recourse to trade-ins as an ultimate fallback strategy.
The ability of individual customers to learn about the activity they purchase from oth-
ers places a constraint on the amount of fraud one might expect. Alas, there are so many
things to learn about in this world that we cannot learn enough to protect ourselves on every
possible front. Adam Smith pointed this out a few hundred years ago, when he noted that
“division of labor is limited by the extent of the market.” In frontier communities, we would
all operate as “Jacks (and Jills) of all trades”; in a larger society, we all specialize. Because we
specialize, we must depend on (and trust) others, leading to the possibility of fraud. Some of
this fraud is not worth confronting. There is, in the words of one study, an “optimal amount
of fraud” that we should learn to live with (Darby and Karni, 1973).
Fortunately, we are protected somewhat by our friends and neighbors who take the
time to learn about auto repair (for example). They can help steer us away from clearly fraud-
ulent mechanics toward those whom they trust. This process of acquiring information about
the quality of mechanics (or doctors and dentists) proves important in the functioning of
health markets, a topic to which we return in Chapter 7.
Externalities
Another area importantly separating health care from many other (but not all) economic
activities is the common presence of “externalities,” both positive and negative. External ben-
efits and costs arise when one person’s actions create benefits for or impose costs on others,
and when those benefits and costs are not privately accounted for in individuals’ decisions.
Many early successes in medicine dealt with communicable diseases, probably the purest
form of an event with externalities. When people get sick with a communicable disease such
as polio or the flu, they not only bear their own illness, they also increase the risk that their
relatives, friends, and neighbors will contract the same illness. When they take steps to avoid
such diseases, they confer a benefit not only on themselves, but on those around them. For
example, the social benefit of getting a flu shot exceeds the private benefit. If people balance
the costs of flu shots (including monetary costs, time, inconvenience, pain, and the risk of an
adverse reaction) with just their private benefits (the reduced risk of contracting the flu for
a season), they will underinvest in flu shots from a societal perspective.
Many health care activities have little or no external benefit or cost, but surprisingly
many other such activities do. Most of the major health care activities with significant exter-
nalities have become such a part of the background of our society that we seldom recognize
their presence or consequences. Sewage control, mosquito abatement, quarantine rules for
certain diseases, and massive inoculation programs for infectious diseases often pass unno-
ticed by the average person.
Other apparently private activities also create external costs. For example, every time a
patient receives an antibiotic injection, the odds go up slightly that a drug-resistant strain of
a bacterium will emerge, immune to the current antibiotic. In relatively closed communities
such as nursing homes, this can become a serious problem (Phelps, 1989).
A number of other private actions affect other people’s health and safety, but the health
care system deals with them only at the end of the process. Most notable are individuals’
decisions to drink and drive. Half of the vehicle fatalities in this country involve at least one
driver who has consumed alcohol, and the number of “external” deaths caused by drunk
drivers staggers the imagination. Every three years, for example, drunk drivers cause the
deaths of more people on American roads than all deaths among U.S. soldiers in the entire
Vietnam War. Although these issues typically are not considered as “health care economics,”
the death and injury associated with such events may be more important than most diseases
(and their cures) in our society.
As with everything else discussed in this section, the issue of externalities is not con-
fined to the health care sector. Such simple local activities as fire and police protection have
at least some element of externality (or “public good”) about them, and on a grander scale,
national defense and the formation of alliances such as NATO create the same issues. Air and
water pollution, obnoxious “boom boxes” at the beach, and cars with noisy mufflers provide
other examples of externalities outside the area of health. Thus, although externalities may
be an important part of some medical activities, they are not unique to health care markets.
1.2 How Markets Interrelate in Medical Care

and Health Insurance
To gain a better understanding of health care economics, the next step should provide a
framework upon which more detailed information can be assembled. This section provides
that framework; it spells out the relationships between health care and health insurance,
and establishes the major forces affecting supply and demand in each market. Later chapters
focus on each of these subjects in greater detail; our purpose here is to set the stage, and to
show more in outline form how these various factors relate to one another.
This analysis of health markets will be “static,” assuming initially that the world stands
still for a while. In this analysis, we seek to determine the sort of equilibrium toward which
the health care markets would naturally move. Later, we consider dynamic issues, particu-
larly those arising from development of new knowledge about medical care and health, and
those arising from broad economic events (such as persistent economic growth). After we
have this structure in hand, we will go back to the important elements in this world—supply
and demand for insurance, supply and demand for medical care, and technical change—
and study each in more detail.
Medical Care Markets with Fixed Technology

One fruitful way to analyze medical markets links together the supply and demand for health
insurance with the supply and demand for medical care. In each separate market (as in any
market), supply and demand interact to create the observed quantity demanded and the
observed price, the product of which is actual spending in the market. Except for this direct
interaction, the analysis of competitive markets assumes that supply and demand in a mar-
ket are independent of one another. Put differently, consumers shouldn’t care about the cost
of the inputs for a good, just its output price. Similarly, producers (at least in a competitive
market) don’t need to know the incomes of consumers in order to decide how to price their
products. In noncompetitive markets, different ways of analyzing behaviors of sellers and
buyers are needed, as we shall see in later chapters.
Health care differs considerably from most other markets in the following way: The
price consumers pay to buy the product is different from the price sellers receive. This hap-
pens because of health insurance, which lowers the price of medical care to the consumer at
the time of purchase. Of course, the premium charged by the insurance company must even-
tually result in recovery of all of the costs of that insurance, including medical care purchased
through the plan, but the net result of insurance still leads to a lower relevant price for deci-
sion making by the consumer. Chapter 4 discusses these ideas in detail, but for now, we need
only to create a link between insurance and medical markets: We cannot talk meaningfully
about medical markets or health insurance markets separately.
Figure 1.1 shows how these (and related) markets interact. Each box in the diagram
characterizes either a supply or demand side of one of the relevant markets. Dotted “circles”
show the phenomena we observe as these markets interact, such as prices and quantities
consumed.
FIGURE 1.1 The interaction of medical, health insurance, and other markets
With this basic structure in mind, we now turn to a description of each component in
these markets.
Figure 1.1 shows immediately why health care markets differ fundamentally from other
areas of the economy. We cannot simply talk about “the supply and demand for medical care”
(as we might with the study of other markets), but instead we must talk about two closely
interrelated markets—those for medical care and for health insurance.
Health insurance (uniquely among insurance markets) directly affects the demand
for medical care through the way it pays for health care. In other insurance markets, the
insurance covers an asset that has a definable market value (such as a home or an automo-
bile), and if some harm or loss comes to that asset (fire, theft, collision, flooding, earthquake,
etc.), then an appraiser can estimate the value of the loss and compensate the owner with a
direct payment of cash, which the owner can use for any purpose whatsoever (repairing or
replacing the damaged asset or any other use of the money).
With health insurance, no such objective valuation can occur because the “asset” is an
ephemeral stock of health (more about this in the next chapter) for which no market exists
and for which no objective valuation is possible. Because of that, health insurance instead
insures the purchase of medical care, which (hopefully!) will recoup losses to one’s health.4
But this mechanism of protecting against financial risk (paying for health care) distorts the
prices we pay for treatment of illness or injury, and hence directly alters the demand for
medical care. Chapters 4 and 5 discuss how this works in detail and provide considerable
empirical data to help understand the magnitude of the effects in operation.
Figure 1.1 contains several new components, all due to the PPACA. On the left-hand
side, the diamond-shaped box (indicating governmental roles) feeding into the “Insurance
supply” box indicates the presence of new “Insurance exchanges” created by the PPACA.
Chapter 11 describes these in more detail. To the right of the “Insurance demand” box
sits another diamond, indicating “Mandated insurance.” This refers to the PPACA rule
requiring that all individuals have health insurance coverage meeting at least minimum
standards defined in the PPACA. This removes the choice of whether or not to acquire
insurance; it becomes required by law. But individuals still have many potential sources
of coverage and a dizzying array of options, so “consumer demand” still plays a dominant
role in insurance choices. Finally, the diamond showing “Regulation” of health insurance
has an important new component in the PPACA. Insurance companies are forbidden
(under PPACA rules) from using preexisting conditions either to determine insurance
premiums or to define limits on coverage. Previously, the Health Insurance Portability and
Accountability Act (HIPAA) had curtailed the use of preexisting conditions in two ways.
First, insurers could only “look back” for six months to see if a person had been treated
for any illness or injury (the “test” for a preexisting condition) and could refuse coverage
for only up to one year after a new enrollment. The PPACA sweeps away any uses of pre-
existing conditions.
Health insurance also directly enters into the choices of medical care that patients and
their health care providers make in the general realm of “managed care,” a topic discussed in
detail in Chapter 11.
Medical care is not really a single service or good. Rather, it is a collection of goods and
services provided by professionals (doctors, nurses, dentists, pharmacists, therapists of vari-
ous sorts, technicians of various sorts, and more) through a dizzying array of organizations
(medical, dental, and other therapists’ practice groups; hospitals; clinics; pharmacies; nursing
homes; and more) that operate under different organizational structures (not-for-profit, for-
profit, governmental) and almost always under various forms of regulation (federal, state,
and local). These providers (and their organizations) use or prescribe various prescription
drugs and medical devices that are invented and manufactured in worldwide markets. These
also come under federal regulation (the Food and Drug Administration in the U.S.).
Chapters 6 and 7 discuss the primary type of professional provider (“the physician”)
and the organizations in which they typically work (“the physician firm”), and Chapters 8
and 9 discuss the most important separate health care organization (“the hospital”) and some
specific aspects of governance and decision making of these organizations in their most typ-
ical organizational structure (the not-for-profit firm).
Chapter 10 then discusses the market for insurance, focusing on the traditional eco-
nomic model of why people purchase insurance (“risk-averse consumers”), and develops
some important complications to this traditional model that arise because of the unique way
that health insurance “covers” the risk of illness (by paying for medical care). Chapter 11 then
discusses the evolution of the market for health insurance to consider “managed-care” mech-
anisms that help counteract some of the perverse incentives created by the basic structure of
health insurance. Chapter 10 elaborates more on the effects of the PPACA mandate for indi-
vidual insurance coverage, and Chapter 11 discusses the insurance exchanges created by the
PPACA and also elaborates on economic issues associated with the preexisting condition ban.
Subsequent chapters explore other aspects of health care markets that (visually) sit
around the periphery of Figure 1.1, beginning with Chapter 12, discussing governmental
provision of health insurance for various populations such as elderly people (Medicare),
low-income individuals (Medicaid), children (Children’s Health Insurance Program, or CHIP),
veterans, and others. We then turn to medical malpractice law (Chapter 13) and the issues
involved in “externalities” (Chapter 14). Chapter 15 emphasizes heavily the mechanisms by
which new technologies enter U.S. health care markets, including regulatory structures and
pricing as well as coverage decisions of public and private health insurers.
As we shall see next, the health care economy has grown at prodigious rates over the
last half-century in the U.S. (and around the world), and while we can “explain” much of the
growth in medical spending through such traditional economic mechanisms as inflation
(changes in the cost of living), population growth, and the systematic aging of the popula-
tion, there remains an important component of the time trends in health care spending—
approximately a 2.5-fold increase over the past half-century—that most analysts attribute to
technological change—the introduction of new ways of treating illness and injury. The role
of technological change, and the best ways to control it, are in many ways the most interest-
ing and complicated aspects of the study of health economics and the implementation of
health care policy at a societal level.
Finally, Chapter 16 summarizes all earlier material in the textbook in a discussion of
ways to think about “universal” health insurance in the U.S. Most industrialized nations in
the world have at least some form of universal health insurance for their citizens. The U.S.
remains without universal health insurance. Before the PPACA, approximately 45 million
people in the U.S. had no health insurance, a number brought down (in 2016) to 25 mil-
lion. At this writing in mid-2017, with political attempts to repeal (and perhaps replace)
the PPACA underway, the future count of uninsured persons remains unknown. Proposed
replacements for the PPACA would (according to estimates from the Congressional Budget
Office) remove coverage from 22 million people. Chapter 16 discusses ways to think about
those issues that help bring together every aspect of the economics of health care that have
come in the first 15 chapters of the book.
Chapter 16 also brings together the various changes created by the PPACA, weaving in
the more general issues about universal insurance with the specific mechanisms employed in
the PPACA. It is important to keep in mind that different ways exist to create universal insur-
ance, since (1) the U.S. law may change through time (including the possibility of repeal of
the PPACA’s key features), and (2) the U.S. Supreme Court ruled in 2012 that the individual
mandate was legal, and enrolment continued under the law, with the mandate (and its asso-
ciated tax penalties for noncompliance) being phased into full force only in 2016. However,
at this writing (in mid-2017) an active legislative challenge is underway by President Trump
and the Republican-controlled U.S. House and Senate to repeal (and perhaps replace) the
PPACA.
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At the bar as prysoner holding vp his hand. 1559, 63.
[84] Whiche in other’s cause, coulde. 1559, 63.

[85] Lyke. 1559, 63.
[86] As mummers mute do stand N.
[87] Vnable to vtter a true plea of denyall. 1559, 63.
[88] When that. 1559.
[89] For halfe a ryall. 1559, 63.
[90] We could by very arte haue made the black. 1559, 63.
[91] And matters of most wrong, to haue appered most right.
1559, 63.
[92] Most wise, may chance be too too weake. N.
[93] But may be brought to stand. 1578.
[94] Stanzas 5 and 6 added 1571.
[95] Behold me one vnfortunate amongst this flocke. N.
[96] Cal’d sometime. N.
[97] By discent a gentleman. 1559, 63.
[98] ‘And’ omitted. N.
[99] State. N.
[100] To whom frowarde fortune gaue a foule checkmate.
1559, 63.
[101] In all our common. N.
[102] What so wee. 1559, 63.
[103] We did conclude. N.
[104] Both life, death, lands, and goods. N.
[105] So great gaine we did get. 1559, 63.
[106] And sises. 1578. N.
[107] Still chiefe. N.
[108] We let hang the true man. 1559, 63.
[109] Doth neuer keepe. 1559, 63.
[110] Whiche though it haue enough yet dothe it not suffyse.
1559, 63. And more at no time doth suffise. 1578.
[111] And drinke they neuer so much, yet styl for more they
cry. 1559, 63.
[112] So couetous catchers toyle. 1559, 63.
[113] Gredy and euer needy, prollyng. 1559, 63.
[114] Fayth we did professe. 1578.
[115] Makyng a solempne oth in no poynt to dygresse. 1578.
[116] Wretches. 1559, 63.
[117]
Of the judge eternall, more high to be promoted,

To mammon more then God, all wholly were deuoted.
1578.
[118] We interpreted. 1559, 63.

[119] Like a. 1559, 63.
[120] Many one. 1559, 63.
[121] To serue kings in al pointes men must sumwhile breke
rules. 1559, 63.
[122] Ful nie. 1559, 63.
[123] To crepe into whose fauour we. 1559, 63.
[124] Auayle. 1578.
[125] Wurde. 1559, 63. Sense. 1578.
[126] Sence, 1559, 63.
[127] Of land. N.
[128] Wyll. 1578.
[129]
The king thus transcendyng the limittes of his lawe,

Not raygning but raging by youthfull insolence,
Wise and wurthy persons did fro the courte wythdraw,
There was no grace ne place for auncient prudence:
Presumpcion and pryde with excesse of expence,
Possessed the palays and pillage the countrye;
Thus all went to wracke vnlike of remedye. 1559, 63.
[130] Baronye. 1559, 63.

[131] Seing no reason. 1578.
[132] Maugre all. 1559.
[133] Maugre his princely mynde they. 1578. His kingly might.
N.
[134] All men vnchecked. 1578.
[135] Which. 1578.
[136] Regally. 1571, 78.
[137] That Richard. 1578.
[138] Order. 1578.
[139]
In whyche parliament muche thynges was proponed

Concerning the regaly and ryghtes of the crowne,
By reason kyng Richarde, whiche was to be moned,
Full lytell regardynge his honour and renowne,
By synister aduyse, had tourned all vpsodowne:
For suerty of whose estate,[143] them thought it did
behooue
His corrupt counsaylours, from hym to remooue. 1559,
1563.
[140] In the beginning of the parliament was called Robert

Veer, duke of Irelande, Alexander Neuell, archebishop of
Yorke, Mighell de la Poole, erle of Suffolk, sir Robert Tresilian,
chiefe iustice of Englande, to answere Thomas of Woodstock,
duke of Gloucester, Richard, erle of Arondel, Thomas, erle of
Derby, and Thomas erle of Nottyngham, vpon certaine articles
of high treason, which these lordes did charge them with. And
for as much as none of these appered, it was ordeyned by the
whole assent of the parliament that they shoulde be banished
for euer: and their landes and goodes, moueable and
vnmouable, to be forfeit and seased into the kinge’s hand, the
landes entayled onely except.
Shortly after this, was founde Robert Tresilian, chiefe
iustice, lurkyng in a poticarie’s house at Westmynster, and
there founde the meanes to have spyes daylie vpon the lordes
what was done in the parliament: for all the dayes of his lyfe
he was craftie, but at the last his craft turned to hys
destruction: for he was discouered by his owne seruant, and
so taken and brought to the duke of Gloucester, and the same
daye had to the Towre, and from thence drawen to Tyborne,
and there hanged.
The morow after, syr Nicholas Pembroke, which afore had
been maior of the citie of London, against the citezen’s will,
was brought foorth. Grafton.
This man (Tresilian) had disfigured himselfe, as if he had
beene a poore weake man, in a frize coat, all old and torne,
and had artificially made himselfe a long beard, such as they
called a Paris beard, and had defiled his face, to the end he
might not be knowen but by his speach. Stowe.
[141] Tharchbyshop of Yorke was also of our band, 1578.
[142] See Statutes at large, temp. Rich. II. viz. 11. c. I. II. III.
20. c. VI. and 31. c. XII. XIII.
[143] State, 1559.
[144] Judge. 1578.
[145] To dye there as. 1578.
[146] The fickle fee of fraud. 1578.
[147] Ye iudges now liuing. 1578.
[148] Fye on stynkyng lucre, of all vnryght the lure, Ye judges
and ye justicers let my most iust punicion. 1559, 63.
[149] Al pure. 1578. Still pure. N.
[150] What glory is more greater in sight of God. 1578.
[151] By the pathes of equytie. 1559, 63.
[152] And truely. 1578.
[153] Alwayes. 1559, 63.
[154] Lawes for to scan. N.
[155] Reward. 1559, 63. That justice may take place without
reward. 1578.
[156] Take. 1559, 63.
[157] The righteous. 1578. The most iust. N.
[158] Of mortals displeasure. N.
[159] Closde. 1578.
[160] Worldly hyre. 1559, 63. Way not this worldly mucke.
1578.
[161]
If som in latter dayes, had called vnto mynde,

The fatall fall of vs for wrestynge of the right,
The statutes of this land they should not haue defynde
So wylfully and wittingly agaynst the sentence quyte:
But though thei skaped paine, the faut was nothing light,
Let them that cum hereafter both that and this compare,
And waying well the ende, they will I trust beware. 1559,
63.
[162] George Ferrers. These initials first added, 1571.

[163] This. 1559, 63. 71.
[164] When finished was this tragedy. 1578.
[165] Syr Roger Mortimer, earle of March, and heyre
apparaunt of England, whose. 1578.
[166] Purposed matter. 1578.
[167] Of these great infortunes, and as they be more auncient
in tyme, so to place their seuerall plaintes. 1578.
[168] Two earles of the name of Mortimer. 1578.
[169] One hanged in. 1559, 63.
[170] In the tyme of king Edward. 1578.
[171] Another in Richard the seconde’s time, slayne in Ireland.
1578.
[172] Fauours. 1578.
[173] Personage of the earle Mortimer, called Roger, who full
of bloudye woundes. 1578.
[174] To Baldwin, in this wise. 1578.
[175] The dates added 1571—Fabian has given a summary of
the life of the second Roger Mortimer, and upon which the
poet relied, as of 1387, but the death of Mortimer happened
about 1398.
[176] On. 1578.
[177] Thred, vntimely death dyd reele. 1578.
[178] Brought from boote to extreme bale. 1578.
[179]
——the queene so much was stir’d,

As for his sake from honour she did scale. 1578.
[180] Merye gale. 1559, 63.

[181]
And whilest fortune blew on this pleasaunt gale,

Heauing him high on her triumphall arch,
By meane of her hee was made earle of March. 1578.
[182] Breded. 1559, 63.

[183] Pride folly breeds in. N.
[184] Hym, 1559, 63.
[185] For where he somwhat hauty was before. 1559, 63.
[186]
Whence pryde out sprang, as doth appeare by manye,

Whom soden hap, aduaunceth in excesse,
Among thousandes, scarse shal you fynde anye,
Which in high wealth that humor can suppresse,
As in this earle playne proofe did wel expresse:
For whereas hee too loftye was before,
His new degree hath made him now much more. 1578.
[187] Ne recks. N.
[188] Respecting none saue only the queene mother. 1578.
[189] Which moued malice to foulder. 1578.
[190] Which deepe in hate, before. 1578.
[191] Th’one as well as th’other. N.
[192] They did the earle attaynt. 1578. He was soone attaint.
N.
[193] Such crimes as hidden lay before. 1578.
[194] For hydden hate. 1578. For enuy still. N.
[195] Biddes small faultes to make more bad. 1578.
[196]
Causing the king to yelde vnto the Scot,

Townes that his father, but late afore had got. 1578.
[197] Had, wanting, in 1559, 63. N.

[198] Yeuen to the Scots for brybes and priuie gayne. 1578.
[199] That by. 1578.
[200] Most, wanting. 1559, 63, 71. N. Most cruelly. 1578.
[201] And last of all by pyllage. 1578.
[202] Had spoyld. 1578.
[203] Dampned he was. 1578.
[204] Syr Roger Mortymer was accused before the lordys of
the parlyament of these artycles with other; whereof v. I fynde
expressyd. And firste was layed vnto his charge that by his
meaneys syr Edwarde of Carnaruan, by mooste tyrannouse
deth, in the castell of Barkley, was murderyd; secondaryly, that
to the kynge’s great dyshonoure and dammage, the Scottys,
by his meanys and treason, escapyd from the kyng at the
parke on Stanhope, whiche then shuld haue fallen in the
kynge’s daunger, ne had been the fauoure by the sayde Roger
to them than shewyd; thyrdely, to hym was layed, that he, for
execucion of the sayd treason, receyued of the capytane of
the sayd Scottis, namyd syr Iamys Dowglas, great summys of
money, and also for lyke mede he had, to the kynge’s great
dyshonoure and hurte of his realme, concludyd a peace
atwene the kynge and the Scottis, and causyd to be delyuered
vnto theym the charter or endenture called Ragman, with
many other thynges, to the Scottys great aduauntage and
impouerysshynge of this realme of Englande. Fourtlye, was
layed to hym, that where by synystre and vnlefull meanys,
contrary the kynge’s pleasure and wyll, or assent of the lordys
of the kynge’s counceyll, he had gotten into his possessyon
moche of the kynge’s treasoure, he vnskylfully wasted and
myspent it; by reason whereof the kyng was in necessyte, and
dryuen parforce to assaye his frendys. Fyfthlye, that he also
had enproperyd vnto hym dyuerse wardys belongynge to the
kynge, to his great lucre and the kynge’s great hurt, and that
he was more secret with quene Isabell, the kynge’s mother,
than was to Godde’s pleasure, or the kynge’s honoure: the
whiche artycles, with other agayne hym prouyd, he was, by
auctoryte of the sayde parlyament, iugyd to deth, and vpon
seynt Andrewys euyn next ensuynge, at London, he was
drawyn and hangyd. Fabyan.
[205] My coosins fall might. 1578. My cosin then might. N.
[206] Brybing, adultery and pride. 1578.
[207] I wene. 1578.
[208] ‘Deare,’ omitted. N.
[209] That dyd, 1559.
[210]
——heire of Lyonell,
Of king Edward the third the second sequell. 1578.
The third king Edward’s sonne, as stories tell. N.
[211] Cald. 1578.

[212] By true. 1578.
[213] Of ladies all the. 1578.
[214] Left in me. 1559, 63.
[215]
After whose death I onely stood in plight,

To be next heyre vnto the crowne by right. 1578.
[216] Of the. N.
[217]
Touching the case of my cousin Roger,
(Whose ruful end euen now I did relate)
Was found in tyme an vndue atteindre. 1578.
[218] By lawe eche man of. 1578. By law each one of. N.
[219]
Should be heard speake before his iudgement passe,

That common grace to him denyed was. 1578.
[220] In court of. 1578.

[221] His atteindre appering erroneous. 1578.
[222]
A president worthy, in record left,

Lorde’s lygnes to saue, by lawless meanes bereft. 1578.
[223] While fortune vnto me her grace did deigne. N.

[224] The. 1559, 63.
[225] Looser. N.
[226]
Whyle fortune thus did frendly me receyue,

Rychard the king, that second was by name,
Hauing none heire after him to reigne. 1578.
[227] That vnderstoode my bent. 1578.

[228]
And me to serue was euery manne’s entent,

With all that wyt or cunning could inuent. 1578.
[229] In hope. 1578.

[230] Chaunge their hue. 1578.
[231] For whiles fortune so luld. 1578.
[232] Dame. 1578.
[233] To dash me downe. 1578.
[234] Irish kernes. 1578.
[235]
My landes of Vlster vniustly to bereaue,

Which my mother for heritage did me leaue. 1578.
[236] Whom I did not regard. N.

[237]
The wylder sort, whom I did least regard,

And therfore the rechlesse manne’s reward. 1578.
[238] By auctoryte of the same parliament [in 1585-6] syr

Roger Mortymer, erle of the Marche, and sone and heyre vnto
syr Edmunde Mortymer, (and of dame Phylyp, eldest daughter
and heyer vnto syr Lyonell, the seconde sone of Edwarde the
thyrde) was soone after proclaymyd heyer paraunt vnto the
crowne of Englande; the which syr Roger shortly after sayled
into Irelande; there to pacyfye his lordeshyp of Wulstyr, whiche
he was lorde of by his foresayde mother: but whyle he was
there occupyed abowte the same, the wylde Irysshe came
vpon in noumbre, and slewe hym and moche of his company,
Fabyan.
[239] Nor helpe of frendes. 1578.
[240] Or. 1578.
[241] No law of armes they know. 1578.
[242] No foes. N.
[243] Their booty chiefe, they coumpt a dead man’s heade.
1578.
[244]
Their chiefest boote is th’aduersarie’s head,

They end not warre till th’enemie be dead. N.
[245] Their foes when they doe faine. N.

[246]
Nor yet presume to make their match amisse,
Had I not so done, I had not come to this. 1578.
——I had been left aliue. N.
[247]
At naught I set a sort of naked men,

And much the lesse, seeming to flye away,
One man me thought was good ynough for ten,
Making small account of number more or lesse,
Madnesse it is in war to goo by gesse. 1578.
[248]
See here the stay of pompe and highe estate,

The feeble hold of this vncerteyn lyfe. 1578.
[249] Hauing fayre fruict by my belooued wyfe. 1578. Syr

Roger had issu Edmunde, and Roger, Anne, Alys, and
Elanoure. Fabyan.
[250] Cavil. The “Ca.” was first affixed in 1571, and is repeated
in all the subsequent editions, except that of 1578, where
there appears “T. Ch.” the supposed signature of Thomas
Churchyard. As from that edition we shall have to notice,
presently, another similar alteration, it makes it doubtful
whether the same can be considered a misprint, though it
does not appear in the enumeration of his own pieces made
by Churchyard. See Bibliographia Poetica. Since this note was
printed the claim of ‘Master Chaloner’ to this signature has
been discovered. See postea, p. 53, n. 1.
[251] Was, omitted. 1578.
[252] Not to be treated of, 1559, 63.
[253] In the seuententh yere (1394) came oute of Scotlonde
certayne lordes into Englonde, to gete worshypp by fayte of
armes. The earl of Morris chalenged the erle marchall of
Englonde to juste wyth hym on horsbacke wyth sharpe
speres. And soo they roode togyder certayne courses, but not
the full chalenge. For the Scottyshe erle was caste bothe
horse and man, and two of his rybbes broken wyth the same
fall, and soo borne home into his inne. And anone after was
caryed homeward in a lytier. And at Yorke he deyed. Syre
Wyllyam Darell banerer of Scotlonde, and syre Pyers
Courteney the kynge’s banerer of Englonde roode togyder
certayne courses of warre hitte and assayed. The Scottisshe
knyghte seenge that he myghte not haue the better, yaue it
ouer: and wold noo more of the chalenge. Thenne one
Cokburne, squyer of Scotlond, and syre Nicholl Hauberk,
roode fyue courses, and at euery course the Scot was caste
bothe horse and man. Polychronicon.
[254] And whan thys ryall maryage was done and fynysshed
kynge Rycharde wyth dame Isabel his quene came into
Englonde. And the mayre of London, with all his brethren,
wyth grete multytude of the comyns of the cyte and the
craftes, receyuyd hym worshypfully at Blackheth, and brought
hym to Saynt Georges barre. And there taking their leue, the
kyng and quene roode to Kenignton. And after that wythin a
whyle the quene came to the toure of London, at whose
comyng was moche harme doo, for on London bridge were ix
persones thrust to deth, of whom the priour of typre was one.
Polychronicon. The prior of Tiptor, in Essex, was one. Stowe.
[255] Muche myndyng, 1559, 63.
[256] Date, added. 1571.
[257] Is stablysht. 1559, 63. Who stablisht is in state, seeming.
1578.
[258] Turne thine eare to. 1578.
[259] Prest in presence on fortune to. 1578.
[260] Of the. 1559, 63.
[261] Who by discent was of the. 1578.
[262] Nought. N.
[263] Before, eyther since. 1559. Or since. N.
[264] Most false fayth. 1578.
[265] Marcht. N.
[266] Thus hoysted high on fortune’s whyrling wheele. 1578.
[267] For whan fortune’s flud ran with. 1559, 63.
[268] I beynge a duke discended of kinges. 1559, 63.
[269] In. 1559, 63.
[270] Esperaunce. 1559, 63, 71. Assurance. 1578.
[271] All, omitted. N.
[272] To appoynt. 1559, 63.
[273] And for to settle others in their place. N.
[274] So, omitted. N.
[275] On a bell. N.
[276] Or. 1559, 63.
[277] Haply, omitted. N.
[278] For doyng on. 1559, 63. On, omitted. N.
[279] A sore checke. 1559, 63. I vnaduised caught a cruell
checke. N.
[280] Renown’d. N.
[281] For the tale of the rats, whence originates the proverbial
observation, “Who shall bell the cat?” see the vision of Pierce
the Plowman, by Crowley, ed. 1550, fol. iii. by Dr. Whitaker,
1813, p. 9.
[282] Expound. N.
[283] To curb. N.
[284] ’Bout. N.
[285] T’obay. N.
[286] It fits not a subiect t’haue. N.
[287] Thys by wurde. 1559, 63.
[288] And, omitted. N.
[289] Erle. 1559, 63.
[290] We by our power did call a parlament. N.
[291] With our. N.
[292] Playnely we depriued him of. 1559, 63.
[293] T’vnderstand. N.
[294] Thus wrought. 1578.
[295] By subiectes thus in bondage to bee brought. 1578.
[296] His. 1559, 63.
[297] Former cause of rancour to. 1578.
[298] Accoumpt. 1578.
[299] Were by me. 1559, 63.
[300] In the twentyest yere kynge Rycharde dide holde a grete
feeste at Westmestre. Att whyche feest aryued the souldyours
that hadde kepte Breste, and satte att dyner in the halle. And
after dyner the duke of Glocestre sayd to the kynge: “Syre,
haue ye not seen those fellowes that sate at dyner in your
halle.” And the kinge demaunded who they were. And he
sayde: “Thyse ben your folke that haue serued you, and ben
come from Breste. And now wote not what to doo, and haue
ben euyl payed.” Thenne the kynge sayde that they sholde be
payed. Thenne answered the duke of Gloucetre in a grete
furye: “Syre, ye oughte fyrste to put your body in deuoyre to
gete a towne, or a castell by fayte of warre vpon youre
enmyes, er ye sholde selle or delyuer ony townes that your
predecessours, kynges of Englonde, haue goten and
conquered.” To the whyche the kynge answerde ryght angrely:
“How saye ye that?” Thenne the duke his vncle sayd it
agayne. Thenne the kynge beganne to wexe wrothe, and
sayd: “Wene ye that I be a marchaunte or a foole to sell my
londe. By saynt Iohnne Baptyst naye: but trouthe it is that our
cosyn of Brytayne hath rendred and payd to vs the somme
that my predecessours had lent vppon the sayd towne of
Breste, and syth he hath payd, it is reason that this towne be
delyuered to hym agayne.” Thus beganne the wrath bitwene
the kynge and his vncle. Polychronicon.
[301] To claime entertainment the town beyng solde. 1559, 63.
To clayme their wages. 1578.
[302]
Of hate in hys hert hourded a tresure. 1559, 63.

Fulfyld his hart with hate. 1578.
[303] Nor. 1559, 63.

[304] But frendship fayned, in proofe is found vnsure. 1578.
[305] With long sicknesse diseased very sore. 1578.
[306] I was confedered before. 1578.
[307] Such aduauntage. 1578.
[308] Eame. This word is used repeatedly in the legends by
Ferrers. In the above passage it means uncle. It was also a
term for a gossip, compeer, or friend.
[309] To goe before. 1578.
[310] Preparedst a playne waye. 1578.
[311] What measure to others we awarde. 1578.
[312] The initials of George Ferrers, first added, 1571.
[313] This. 1559, 63, 71.
[314] Tragedy of the Lord Mowbray, the chief wurker of the
duke’s distruction, 1559, 63.
[315] To the state of a duke, added. 1571.
[316] Lykely. 1559, 63.
[317] Marke, I will shew thee how I swerued. 1559, 63.
[318] A vertuous mynde. 1559, 63.
[319] The herte to evyll to enclyne. 1559, 63.
[320] Kynde. 1559, 63.
[321] I thanke her, was to me so kynde. 1559, 63.
[322] Neyther of vs was muche to other holde. 1559, 63.
[323] Misprinted ‘thought’ by Higgins and Niccols.
[324] Wrong’d. N.
[325] Of England. 1578.
[326] Bad officers. N.
[327] Afore had. N.
[328] Aye seeks. N.
[329] The kinge’s fauour. 1578.
[330] Pryde prouoketh to. 1578.
[331] To poll and oppresse. 1578.
[332] And still. N.
[333] Him to. N.
[334] For pryde prickt me first my prince to flatter. 1578.
[335] Who so euer. 1578.
[336] Nere. N.
[337] Because of holdes beyond the sea that he solde. 1578.
[338] My. 1559, 63.
[339] Though vnto all these ils I were a frend. N.
[340] The duke of Gloucester for me did send. N.
[341] From place. 1578.
[342] Bewrayed the king. 1559, 63, 71, 78.
[343] At Arundell was a counseylle of certayne lordes: as the
duke of Gloucetre, tharchebysshop of Caunterbury, the erles
of Arundeel, Warwyck, and Marchall, and other, for to
refourme the rule abowte the kynge. Whyche lordes promysed
eche to abyde by other and soo departed. And anone after the
erle Marchall, whiche was captayne of Calays, bewrayed and
lete the kyng haue knowleche of all theyr counseylle:
wherupon the xxv daye of August, the duke of Glocetre was
arested at Plassheye in Estsex, and brought to the toure of
London. And from thence sent to Caleys and there murthred
and slayne wyth out processe of lawe or justyce.
Polychronicon.
[344] Earle. 1559, 63.
[345] It out. 1559, 63, 71.
[346] The palme represse. N.
[347] Earle. 1559, 63.
[348] Earle. 1559, 63.
[349] Manteyneth. 1559, 63.
[350] An. N.
[351] Earle. 1559, 63.
[352] Warly. 1559, 63.
[353] Misprinted, brest. 1587.
[354] In the same yere (1398) fel a great debate and
dyssencyon bytwene the duke of Herforde, erle of Derby, on
that one partye, and the duke of Norfolke, erle marchall, on
that other partye. In soo moche that they waged battaylle and
caste downe their gloues whiche were take vppe before the
kynge and ensealed, and the day and place assigned at
Couentree. To whyche place the kinge came, the duke of
Lancastre, and other lordes. And whan both partyes were in
the feelde redy for to fyghte, the kyng toke the matere in his
owne honde: and forthwyth he exyled and banysshed the
duke of Herforde for ten yeres, and the duke of Norfolke for
euermore. The duke of Norfolke deyed at Venyse.
Polychronicon.
[355] Doubtfull. 1578.
[356] That. N.
[357] Shame. N.
[358] Are iust to. 1578.
[359] Is. 1559, 63.
[360] Herewyth. 1559, 63, 71, 78.
[361] Which made them thinke mee worse then any feende.
1578.
[362] For other griefe. 1578.
[363] I parted thence and. 1578.
[364] The duke of Norffolke whiche supposed to haue been
borne out by the kynge, was sore repentant of his enterprise,
and departed sorowfully out of the realme into Almaine, and at
the laste came to Venice, where he for thoughte and
melancolye deceassed. Hall.
[365] More pleasure and reliefe. 1578.
[366] Which was not longe. 1578.
[367] Loo! thus his glory grewe great, by my dispite. 1578.
[368] So enuy euer, her hatred doth acquite. 1578.
[369]
Sorrowe and false shame,

Whereby her foes do shine in higher fame. 1578.
[370] Running. 1559.

[371] T. Ch. This signature first added in the edition of 1571,
and has been uniformly believed to mean Thomas
Churchyard. However, it may be more confidently assigned to
Master Chaloner, i. e. Sir Thomas Chaloner.—In the British
Museum there is a fragment of the original edition of the Mirror
for Magistrates, as printed in folio, during the reign of Queen
Mary, and suppressed, as already noticed, by the Lord
Chancellor. The fragment consists of two leaves, and which,
unfortunately, are duplicates, commencing with the
interlocutory matter before the legend of Owen Glendower,
and ends with the eighteenth stanza of the same legend. It
begins “Whan Master Chaloner had ended thys so eloquent a
tragedy,” and therefore appears conclusive that the above was
written by Thomas Chaloner, and that the legend of Richard
the Second, by Ferrers, which now follows, was first written for
the edition of 1559.
When the legend of Jane Shore was added in 1563,
Baldwin says: “This was so well lyked, that all together
exhorted me instantly to procure Maister Churchyarde to
vndertake and to penne as manye moe of the remaynder as
myght by any meanes be attaynted at his handes:” which
compliment proves that the author was a new candidate, and
upon the signatures being first added in 1571, we find his
name affixed to “Shore’s Wife,” in full, Tho. Churchyarde, to
distinguish it from the above abbreviation for Thomas
Chaloner.
[372] About the feeste of seynt Bartholmew fell dyscension
and discorde atwene the duke of Herforde and the duke of
Norfolke, wherefore the duke of Herforde accusyd that other
that he had taken iiii M. marke of the kynge’s, of suche money
as he shulde therewith haue wagyd certeyne sowdyours at
Calays, he lefte vndon, and toke the same money to his owne
vse. But another wryter sayeth, that as the sayd ii dukys rode
vpon a tyme from the parlyament towarde theyr lodgynges,
the duke of Norfolke sayde vnto that other: “Sir, see you not
howe varyable the kynge is in his wordis, and how shamefully
he puttyth his lordes and kynnes folkys to deth, and other
exylyth and holdyth in pryson; wherfore full necessary it is to
kepe, and not for to truste moche in his wordis, for with out
dowte in tyme to come, he wyll by such lyke meanys bryng vs
vnto lyke deth and distruction.” Of which wordys the sayd duke
of Herforde accusyd that other vnto the kynge; wherefore
eyther wagyd batayle, &c. Fabyan.
[373] For where as maister Hall, whom in thys storye we
chiefely folowed, making Mowbray accuser and Boleynbroke
appellant, mayster Fabyan reporteth the matter quite contrary,
and that by the reporte of good authours, makyng
Boleynbroke the accuser, and Mowbray the appellant. Which
matter, &c. 1559, 63.
[374] Recordes of the parliament. 1578.
[375] We referre to the determinacion of the haroldes, or such
as may cum by the recordes and registers of these doynges,
contented in the mean whyle with the best allowed iudgement
and which maketh most for. 1559, 63.
[376] Richard the 2. 1578.
[377] I woulde (quoth one of the cumpany) gladly say
sumwhat for king Richarde. But his personage is so sore
intangled as I thynke fewe benefices be at this daye, for after
hys imprisonment, his brother. 1559, 63.
[378] King, omitted. 1559, 63.
[379] Thinke. 1559, 63, 71, 78.
[380] In the kinge’s behalf. 1559, 63.
[381] See him all. 1559, 63.
[382] Vpon a beere in. 1578.
[383] Makyng his mone in thys sort. 1559, 63.
[384] From his seat, and miserably murdred in prison. 1559,
63.
[385] Vertue to folow and vyces to keepe vnder. 1578.
[386] Boast of high byrth, sword, scepter, ne mace. 1578.
[387] Rayne do drops of thunder. 1578.
[388] Let kinges therfore the lawes of God embrace. 1578.
[389] That vayne delightes. 1578.
[390] Do gase vpon me. 1559, 63.
[391] Lyeth, for whom none late myght rout. 1559, 63.
[392] Princes. 1578.
[393] Loute. 1559, 63, 71. Dead and least dread, to graue is
caryed out. 1578.
[394] But earth and clay. 1578.
[395]
Behold the woundes his body all about,

Who liuing here, thought, 1578.
[396] Wilt nowe declare. 1571, 78.

[397] My vicious story, 1559, 63.
[398] They kepe not, doutles say I dare. 1559, 63.
[399] Tyll the one. 1559, 63.
[400] Without respect of. 1578.
[401]
I am a kynge that ruled all by lust,

That forced not of vertue, right. 1559, 63.
[402] But alway put false flatterers most in trust, 1559, 63.
In false flatterers reposinge all my trust. 1578.
[403] Embracinge sutch. 1578.
[404] Fro counsell sage I did alwayes withdrawe. 1578.
[405]
By faythfull counsayle passing not a strawe;

What pleasure prickt, that thought I to be iust:
I set my minde, to feede, to spoyle, to iust. 1559, 63.
[406] Of God or man I stoode no wise in awe. 1578.

[407] More. 1578.
[408]
And to augment my lecherous minde that must

To Venus’ pleasures alway be in awe. 1563.
The edition of 1559 reads “and all to augment,” &c.

[409] Which to mayntayne I gathered heapes of golde. 1578.

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Health economics 6th Edition Charles

Health Economics Charles E. Phelps

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Preface to the Sixth Edition xiv

CHAPTER 1 Why Health Economics? 1

CHAPTER 2 Utility and Health 27

CHAPTER 3 The Transformation of Medical Care to Health 48

CHAPTER 4 The Demand for Medical Care: Conceptual Framework 82

CHAPTER 5 Empirical Studies of Medical Care Demand

CHAPTER 6 The Physician and the Physician-Firm 146

CHAPTER 7 Physicians in the Marketplace 173

CHAPTER 8 The Hospital as a Supplier of Medical Care 208

8.6 The Hospital’s “Cost Curve” 224

CHAPTER 9 Hospitals in the Marketplace 233

CHAPTER 10 The Demand for Health Insurance 257

10.12 Related Chapters in Handbook of Health Economics 287

CHAPTER 11 Health Insurance Supply and Managed Care 295

CHAPTER 12 Government Provision of Health Insurance 325

CHAPTER 13 Medical Malpractice 359

13.6 Malpractice Awards: “Lightning” or a “Broom Sweeping Clean”? 378

CHAPTER 14 Externalities in Health and Medical Care 387

CHAPTER 15 Managing the Market: Regulation, Quality Certification,

CHAPTER 16 Universal Insurance Issues and International Comparisons

Author’s Postscript 481

What’s New in the Sixth Edition

• expansion of coverage under the PPACA and discussion of where it failed;

What Comes Next?

The companion website for Health Economics, found at www.routledgetextbooks.com/text

1.1 Important (if not Unique) Aspects of Health

1.2 How Markets Interrelate in Medical Care

Medical Care Markets with Fixed Technology

[84] Whiche in other’s cause, coulde. 1559, 63.

Of the judge eternall, more high to be promoted,

[118] We interpreted. 1559, 63.

The king thus transcendyng the limittes of his lawe,

[130] Baronye. 1559, 63.

In whyche parliament muche thynges was proponed

[140] In the beginning of the parliament was called Robert

If som in latter dayes, had called vnto mynde,

[162] George Ferrers. These initials first added, 1571.

——the queene so much was stir’d,

[180] Merye gale. 1559, 63.

And whilest fortune blew on this pleasaunt gale,

[182] Breded. 1559, 63.

Whence pryde out sprang, as doth appeare by manye,

Causing the king to yelde vnto the Scot,

[197] Had, wanting, in 1559, 63. N.

[211] Cald. 1578.

After whose death I onely stood in plight,

Should be heard speake before his iudgement passe,

[220] In court of. 1578.

A president worthy, in record left,

[223] While fortune vnto me her grace did deigne. N.

Whyle fortune thus did frendly me receyue,

[227] That vnderstoode my bent. 1578.

And me to serue was euery manne’s entent,

[229] In hope. 1578.