Unbiased Analysis of Today's Healthcare Issues

Behavioral Hazard

Moral hazard says that people use too much care when prices are subsidized.  Behavioral hazard, on the other hand, says that even when the price of care is subsidized by insurance, patient utilization of some healthcare services may be suboptimal.  Why is this the case?  A paper by Baicker, Mullainathan and Schwartzstein (2012) offers four […]

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The Impacts of Managed Competition in Netherlands

Financial incentives matter.  If one had to give economists (and health economists as well) a slogan, this would be it. In 2006, the Netherlands instituted a form of managed competition. According to Van Dijk et al (2012) “Before 2006, inhabitants had either compulsory social (sickness fund, 62%) or voluntarily private (36%) health insurance depending, among others, on income (below a gross […]

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Adverse Selection in Germany

In Germany, poor and middle class individuals must use public insurance, but well-off Germans can choose between using public and private insurance. “In Germany, about 90% of the population is publicly insured (Colombo & Tapay, 2004). Buying public insurance is mandatory for dependent employees with a regular employment contract as long as their income does […]

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Mass Circumcision and Moral Hazard

In Swaziland, a nationwide campaign is under way to circumcise 160,000 males by the end of this year.  Not 160,000 male babies, 160,000 adult males.  In a country with less than 1.5 million people, this is a huge undertaking. Why would the government of Swaziland promote adult circumcision so strongly?  Here’s the answer: “…a randomized […]

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Moral Hazard in Action

About two weeks ago, I was driving to work and a rock from below a car in front of me flew of the ground and made a quarter-sized spiderweb on my windshield.  ₣@¢כ!!! Fortunately, my insurance company fixes a windshield for free if the damage is smaller than the size of a dollar bill.  I […]

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Do higher copayments decrease health care costs?

Merrill Goozner of GoozNews writes the following: The share of health care costs borne by individuals has remained fairly steady over the past several decades, and that is the prime argument behind conservative and economist claims that making patients have “more skin in the game” will drive health care costs lower. That ignores the fact […]

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Pharmaceuticals as an excuse, not treatment

Should doctors prescribe pharmaceuticals to patients who have heart disease.  Statins and ACE inhibitors are frequently prescribed to patients with cardiovascular problems.  These medications have been shown to decrease the risk of heart attack in clinical trials, but could they actually increase the risk of a heart attack in the real world? The answer is […]

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Subprime Lending

One of the biggest news stories this year is the collapse of the subprime mortgage lending market. Why did this happen? How much do we really know about subprime lending? A working paper by William Adams, Liran Einav and Jonathan Levin examines the subprime market for automobile loans. The authors find that liquidity constraints are […]

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