Health economics

Michele Fioretti, Hongming Wang, 19 January 2020

As health spending continues to rise globally, pay-for-performance can be an attractive policy tool for promoting high-quality services at lower costs. But there are concerns that it weakens the finances of poor-performing hospitals in low-income areas. This column examines the efficiency and equity consequences of the introduction of pay-for-performance in the Medicare insurance programme in the US. It finds that after the payment reform, high-quality insurers selected healthier enrollees, shifting the distribution of high-quality insurance to the healthiest counties and worsening regional disparities in healthcare access.

Katharina Janke, Carol Propper, Raffaella Sadun, 17 January 2020

Studies have shown that in the private sector, top managers and CEOs can make a difference in the performance of their organisations and have a ‘style’ that is portable across firms. This column uses the setting of hospitals in the English National Health Service to examine whether CEOs can make a difference in large and complex public sector organisations. The findings suggest that the CEOs of large public hospitals do not have a significant impact on performance, casting doubt on the ‘turnaround CEO’ approach to management in the public sector.

Tiziano Arduini, Alberto Bisin, Onur Ozgur, Eleonora Patacchini, 27 November 2019

Smoking and alcohol use are widespread among adolescents in the US and are linked to negative socioeconomic effects.While existing research has separately looked at the dynamic choice and the social interactions that shape adolescent risky behaviours, this column considers both components in a dynamic social interactions model. Looking at alcohol and smoking use in a school environment, it finds that addiction and peer effects are more than twice as important as the effect of individual preferences in shaping risky behaviour and that students take into account the amount of time they have left in the school system.

Leila Agha, Dan Zeltzer, 25 November 2019

Pharmaceutical companies often market their drugs to highly connected physicians through monetary or in-kind transfers. The column examines how peer influence broadened the influence of the payments for three drugs between 2014 and 2016. Following a large payment, prescriptions for the target drug by the paid physician and the physician's peers increased, with peer spillovers contributing a quarter of the increase.

Michael Geruso, Timothy J. Layton, Grace McCormack, Mark Shepard, 16 November 2019

Sicker consumers tend to exhibit higher demand for health insurance, which drives up costs. This column argues that this adverse selection takes place along two margins: whether to buy insurance at all and how much coverage to buy, It develops a new framework that incorporates both selection margins, and shows that policies aimed at addressing one margin can often exacerbate selection along the other. It is therefore vital for optimal policy to consider both margins simultaneously. 

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