Person:

Cutler, David

Prior studies suggest that, with elastically supplied inputs, free entry may lead to an inefficiently high number of firms in equilibrium. Under input scarcity, however, the welfare loss from free entry is reduced. Further, free entry may increase use of high-quality inputs, as oligopolistic firms underuse these inputs when entry is constrained. We assess these predictions by examining how the 1996 repeal of certificate-of-need (CON) legislation in Pennsylvania affected the market for cardiac surgery in the state. We show that entry led to a redistribution of surgeries to higher-quality this entry was approximately welfare neutral.

Using a variety of data sets from two countries, we examine possible explanations for the relationship between education and health behaviors, known as the education gradient. We show that income, health insurance, and family background can account for about 30 percent of the gradient. Knowledge and measures of cognitive ability explain an additional 30 percent. Social networks account for another 10 percent. Our proxies for discounting, risk aversion, or the value of future do not account for any of the education gradient, and neither do personality factors such as a sense of control of oneself or over one’s life.

Medical care is characterized by enormous inefficiency. Costs are higher and outcomes worse than almost all analyses of the industry suggest should occur. In other industries characterized by inefficiency, efficient firms expand to take over the market, or new firms enter to eliminate inefficiencies. This has not happened in medical care, however. This paper explores the reasons for this failure of innovation. I identify two factors as being particularly important in organizational stagnation: public insurance programs that are oriented to volume of care and not value, and inadequate information about quality of care. Recent reforms have aspects that bear on these problems.

Background: While increases in obesity over the past 30 years have adversely affected population health, there have been concomitant improvements due to reductions in smoking. Better understanding of the joint effects of these trends on longevity and quality of life will help policymakers target resources more efficiently. Methods: For each year from 2005 to 2020, we forecast life expectancy and qualityadjusted life expectancy for a representative 18 year old, assuming a continuation of past trends in smoking from the National Health Interview Survey (1978-79, 1990-91 and 2004-06), and past trends in body-mass index (BMI) from the National Health and Nutrition Examination Survey (1971-75, 1998-1994, and 2003-06). The 2003 Medical Expenditure Panel Survey was used to examine the effects of smoking and BMI on health-related quality of life. Results: The negative effects of increasing BMI overwhelmed the positive effects of declines in smoking in multiple scenarios. In the base case, increases in the remaining life expectancy of a typical 18 year old are held back by 0.71 years or 0.91 quality-adjusted years between 2005 and 2020. If all U.S. adults became normal weight non-smokers by 2020, LE is forecast to increase by 3.76 life years or 5.16 quality-adjusted years. Conclusions: If past obesity trends continue unchecked, the negative impact on U.S. population health is forecast to overtake the positive effect from declining smoking rates, which could erode the pattern of steady gains in health experienced since early in the 20th century.

With health care expenditures soaring, there is increasing interest in workplace-based disease prevention and health promotion as a means of improving health while lowering costs. We conduct a critical meta-analysis of the literature on costs and savings associated such programs, focusing on studies with particularly rigorous methods and examining effects on health care costs and absenteeism. We find that medical costs fall about $3.27 for every dollar spent on wellness programs, and absentee day costs fall by about $2.73 for every dollar spent. This average return on investment suggests that the wider adoption of such programs could prove beneficial for budgets and productivity as well as health outcomes.

BACKGROUND: Policymakers have recently proposed ways of providing health care coverage for an increased number of uninsured persons. However, there are few data that show how the incidence and duration of periods in which persons do not have insurance have changed over time. METHODS: We used two data sets from the Survey of Income and Program Participation of the U.S. Census Bureau: one that covered the period from 1983 through 1986 (25,946 persons), and another that covered the period from 2001 through 2004 (40,282 persons). For each set of years, we estimated the probability that a person would be uninsured for some period of time and the probability that a person would subsequently obtain private or public insurance. We also estimated the probabilities that persons in various demographic groups would become uninsured over the course of a year and would remain uninsured for various amounts of time. RESULTS: The percentage of the population that lost insurance in a 12-month period increased from 19.8% in 1983-1986 to 21.8% in 2001-2004 (P=0.04). The percentage that was uninsured for a period of time increased markedly among persons with the lowest educational level and predominantly represented loss of private coverage. The percentage of new uninsured periods that ended within 24 months increased from 73.8% to 79.7% between the two study periods (P<0.001); increases were seen in all age groups and among persons of all educational levels. Transition from no insurance to private insurance decreased from 65.2% to 59.2% (P<0.001). Transition from no insurance to public insurance increased from 8.7% to 20.4% (P<0.001). CONCLUSIONS: As compared with the years from 1983 through 1986, from 2001 through 2004, more people, particularly those with the lowest educational level, had periods in which they were not insured. The periods without insurance were shorter in 2001-2004 than they were in 1983-1986, since an increase in transitions to public coverage offset a reduction in transitions to private coverage. Our results portend difficulties if private coverage continues to decline and is not offset by further expansions of public insurance.

Background: Community-acquired pneumonia (CAP) is the most common infectious cause of death in the United States. To understand the impact of efforts to improve quality and efficiency of care in CAP, we examined trends in mortality and costs among hospitalized CAP patients. Methods: Using the National Inpatient Sample from 1993–2005, we studied 569,524 CAP admissions. The primary outcome was mortality at discharge. We used logistic regression to evaluate the mortality trend, adjusting for age, gender, and comorbidities. To account for the impact of early discharge practices, we also compared daily mortality rates and performed a Cox proportional-hazards model. We used a generalized linear model to analyze trends in hospitalization costs, which were derived using cost-to-charge ratios. Results: Over time, length of stay (LOS) declined, while more patients were discharged to other facilities. The frequency of many comorbidities increased. Age/gender-adjusted mortality decreased from 8.9% to 4.1% (P < 0.001). In multivariable analysis, the mortality risk declined through 2005 (odds ratio, 0.50; 95% confidence interval [CI], 0.48–0.53), compared to reference year 1993. The daily mortality rates demonstrated that most of the mortality reduction occurred early during hospitalization. After adjusting for early discharge practices, the risk of mortality still declined through 2005 (hazard ratio, 0.74, 95% CI 0.70–0.78). Median hospitalization costs exhibited a modest reduction over time, mostly due to reduced LOS. Conclusions: Mortality among patients hospitalized for CAP has declined. Lower in-hospital mortality at a reduced cost suggests that pneumonia is a case of improved productivity in health care.

The United States far outspends Canada on health care, but the sources of additional spending are unclear. We evaluated the importance of incomes, administration, and medical interventions in this difference. Pooling various sources, we calculated medical personnel incomes, administrative expenses, and procedure volume and intensity for the United States and Canada. We found that Canada spent $1,589 per capita less on physicians and hospitals in 2002. Administration accounted for the largest share of this difference (39%), followed by incomes (31%), and more intensive provision of medical services (14%). Whether this additional spending is wasteful or warranted is unknown.

We examine the effects of exposure to malaria in early childhood on educational attainment and economic status in adulthood by exploiting geographic variation in malaria prevalence in India prior to a nationwide eradication program in the 1950s. We find that the program led to modest increases in household per capita consumption for prime age men, and the effects for men are larger than those for women in most specifications. We find no evidence of increased educational attainment for men, and mixed evidence for women.