Unbiased Analysis of Today's Healthcare Issues
A recent report from Assistant Secretary for Planning and Evaluation (ASPE) found that for about 30 physician administered drugs, prices are 8 times as high as those charged in other developed countries. To address the high prices, President Trump unveiled a three-part plan to reduce drug prices. Under the “international pricing index” proposal, U.S. drug…
This year’s MacArthur “Genius” Fellows were announced today. While there is a great diversity of amazing individuals receiving the grants, I will focus on those related to the health care space: Amy Finkelstein: health economist, at MIT, who is formulating robust experimental designs that provide data-driven guidance for innovations in health care theory, policy, and delivery…
Darius Lakdawalla has an very interesting review article in the Journal of Economic Literature on the Economics of the pharmacuetical industry. Do read the whole thing, but below I have listed some highlights. A model of firm R&D decisions Lakdawalla uses a simple model based on Nordhaus (1969) to derive some important implications about pharmaceutical…
As an economist, I would say “of course”! Increasing the price (the reward for weight loss) generally leads to an increase in supply (of efforts to lose weight). However, there is evidence that in some cases, adding a financial incentive can actually reduce effort. For instance, Uri Gneezy and Aldo Rustichini (2000) found that adding…
A blog post by Austin Frakt of the Incidental Economist says the answer is yes. In almost every year since the 1960s, health care spending has grown at least as fast as the overall economy, and often much faster. Health economists have long debated why. Strange as it may sound, how we care for our…
How does health policy and pricing affect investment in innovation? This is the research question investigated in Amy Finkelstein’s 2004 QJE paper on Static and Dynamic Effects of Health Policy. She examines three policy changes: 1991 CDC recommendation that all infants be vaccinated against Hepatitis B 1993 decision for Medicare to cover (without any copayments…
The Federal Reserve Bank of Minneapolis has a long but very interesting interview with Amy Finkelstein, one of the preeminent health economist of our time. The interview covers a number of topics including the correlation between adverse selection and risk aversion, annuity markets, geographic variation in health care spending, the Oregon Health Insurance Experiment, and…
The terms adverse selection and moral hazard are well known within the field of health economics. But what is “selection on moral hazard”? Amy Finkelstein explains using the following analogy: In the context of an all-you-can eat restaurant, traditional selection is that people with big appetites are more likely to go to all-you-can-eat restaurants. Selection…
Many health care wonks claim that health care is a market unlike any other. Unique features make it unsuited to be governed by a market economy. However, research research by Amitabh Chandra, et al. (2013) claims that healthcare providers act like firms in most any other industry. The conventional wisdom in health economics is that large…
Perhaps the most important paper on the effect of health insurance on health, spending, and access to care was released this week. Although randomized controlled trials are rare for measuring the effect of insurance, the design of the Oregon Medicaid program introduced random variation into who received Medicaid coverage. The authors write: In 2008, Oregon…