Grand Unification Theory of Healthcare

Dr. Richard N. Fogoros has a very interesting website named, the Grand Unification Theory of Healthcare, which relates his views about health care.   His analysis is systematic.  One is able to understand the health care system from the point of view of physicians, patients, health plans, the government, and employers. His “Pathway # 2 to…

Laurence Baker

Laurence Baker is a health economist at Stanford’s Center for Health Policy. Much of Mr. Baker’s work has dealt with how HMOs have affected care levels. Today I will briefly review three of Baker’s articles: HMO Penetration and the Cost of Health Care (AER 1996) In this paper, Baker and Corts look how HMO market…

Health Insurance and Medical Care Utilization

Does health insurance increase utilization of medical services? Economic theory generally predicts that it will. Health insurance decreases the price individuals pay for medical care and thus the equilibrium quantity of medical care used will increase. A paper by Buchmueller, Grumbach, Kronick and Kahn (“Effect of Health Insurance on Medical Care Utilization…â€?) examines this phenomenon…

Patient Cost-Sharing, Hospitalization Offsets, and the Design of Optimal Health Insurance for the Elderly

The RAND health insurance experiment (HIE) demonstrated that increasing coinsurance rates decreases medical care utilization. The HIE also found that health outcomes did not vary between individuals with high, low and zero coinsurance rates. A working paper by Chandra, Gruber and McKnight (“Patient Cost Sharing…“) re-examines whether or not this is the case using a…

Getting Doctors to Compete

There is an interesting post at GoozNews (“Getting Doctors to Compete“) in which Merrill Goozner comments on Harvard Business School professor Michael Porter’s belief that competition and integrated care are the solutions to the nation’s health care woes. “Where we need to go is an integrated practice model,” he said. His model entails patient-focused practice…

Tax-preferred health savings accounts

Health savings accounts (HSAs) have been a major point of contention for health care reformers. Supporters claim that HSAs can reduce health care costs by decreasing the moral hazard problem inherent when third parties—such as insurance companies or the government—pay for medical services. Opponents claims that HSAs will attract rich and healthy individuals, leaving only…

Crowd Out

In recent years, the federal government has attempted to increase access to government provided health insurance. Between 1984 and 2004, the percentage of non-elderly individual with government provided health insurance rose from 13.5% to 17.5%. Over the same time period, however, the percentage of American without health insurance also rose from 13.7% to 17.8%. In…

Increase copays and increase medical spending?

Most economists believe that increasing the price of an item will decrease demand for the item. Health care is no different from any other good. If you increase the copayment or coinsurance rate, people will consume fewer medical services. The famous RAND Health Insurance Experiment (HIE) demonstrated that higher coinsurance rates discourage medical care consumption.…