Unbiased Analysis of Today's Healthcare Issues

Archive for the 'Asymmetric Information' Category

The Next Big Growth Industry is…

the ‘second opinions’ industry. Currently, many people have an almost religious trust in their doctor’s recommendation. “A 2010 Gallup poll found that 70% of Americans are so respectful of their doctor’s advice that they never get a second opinion or do additional research.” This finding is despite the fact that medical errors may cost the […]

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Why do insurance companies reject applicants rather than just raise their premiums?

As of 2011, in 45 out of 51 States (including DC) insurers can choose not to provide applicants with insurance coverage.  Requiring insurers to offer coverage to all individuals is known in insurance lingo as “guaranteed issue.” One question is why don’t insurance companies just charge high-risk individuals higher premiums?  Why would they want to […]

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Are Consumer-Driven Health Plans Reducing Medical Spending?

Although the U.S. now spends about 18% of GDP on health care, rate of growth of healthcare spending fell every year between 2002 and 2009.  Why is this?  One reason is the economy.  A worse economy means that less people have health insurance coverage and thus the utilization of medical services decreases.  Another answer is […]

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Value-Based Cost Sharing

Many policy experts have been proponents of value-based cost sharing.  Under value-based cost sharing, medical care that is seen to provide a higher marginal benefit to the patient will have lower coinsurance rates than medical care with lower marginal benefits.  If value-based cost sharing would be implemented, preventive care should have low coinsurance rates because […]

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Learning and Drug Diffusion

How do doctors know which drugs to give to which patients?  Of course there are clinical trials giving the relative efficacy of each drug.  With less than perfect adherence, however, clinical trials may not accurately predict a drug’s efficacy or the potential side effects. A paper by  Chintadunta, Jiang and Jin (2008) look at two […]

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Optimal Contracts in the British NHS

One of the perennial questions of interest for health services researchers how to pay for health care.  A paper by Chalkley and McVicar (2008) examines this question in the contest of a reform in Britain’s National Health Service (NHS). “After 1990 hospitals, which had previously been under the direct control of Health Authorities, could apply for NHS […]

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Choice, Price Competition and Complexity in Markets for Health Insurance

Yesterday, I spoke about the Swiss health care system. One of the main attributes of this system is that patients are allowed to choose from any health care plan and the health insurers can not refuse to cover them. Further, since the insurance benefit is mandated by law, there is very little quality difference between […]

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Insurance Markets and Advantageous Selection

Adverse selection is often seen as a major impediment to the efficient functioning of insurance markets. Rothschild and Stiglitz (1976) create a model where high risk people buy full insurance while low risk individuals buy partial insurance. Yet empirically, one finds that in some insurance markets, low risk individuals purchase more insurance than high risk […]

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When can IT improve medical quality and cut costs

Many people believe that better information technology (IT) can help improve the quality of medical care in the U.S. and around the world. For instance, if a doctor prescribes a drug which interacts harmfully with a drug the patient is already taking, a computer program could notify the doctor of this problem. If a patient […]

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