NBER Reporter: Winter 2000/2001

Health Care

The NBER's Program on Health Care met on November 17 at the Bureau's headquarters in Cambridge. Program Director Alan M. Garber of Stanford University presided over a day-long discussion of these topics:

"Economic Consequences of Health Insurance Reform"--Presentations and Roundtable Discussion

David M. Cutler, NBER and Harvard University; Jonathan Gruber, NBER and MIT; and Mark B. McClellan, NBER and Stanford University

"Is Health Insurance Affordable for the Uninsured?"

M. Kate Bundorf, NBER and Stanford University, and Mark V. Pauly, NBER and University of Pennsylvania

"Incentives in HMOs"

Martin S. Gaynor, NBER and Carnegie Mellon University; James B. Rebitzer, NBER and Case Western Reserve; and Lowell J. Taylor; Carnegie Mellon University

"Association between Intensity of Treatment and Mortality in Cohorts of Medicare Beneficiaries"

Elliott S. Fisher and Therese A. Stukel, Dartmouth College, and David E. Wennberg, Maine Medical Center

In the first of the day's discussions, Gruber analyzed the economic consequences of a national health insurance plan based on a structured approach to competition among private health plans, tax credits to subsidize health insurance purchase among low-income Americans, and other features to promote near-universal coverage. McClellan presented an analysis of a similar plan, and Cutler led a discussion of several issues in the valuation and costs of national health insurance financing proposals that incorporate competition among private insurance plans.

In their paper, Bundorf and Pauly investigate the meaning of the term "affordability" in the context of the purchase of health insurance. After proposing a definition and estimating the proportion of those currently uninsured who, by this definition, are unable to afford coverage, they find that health insurance actually was affordable for anywhere from 24 to 55 percent of the uninsured in 1998.

Gaynor, Rebitzer, and Taylor use unique proprietary data from an HMO network to analyze the effect of financial and other incentives on medical costs and quality. They report three findings: 1) costs fall as financial incentives for physicians to control costs increase; 2) nonfinancial features of the incentive system (notably peer pressure and mutual monitoring among physicians) may also influence costs; and 3) incentives can be structured so that cost control need not have a negative impact on quality. Indeed, the authors find that panels of physicians who controlled costs most effectively also had the highest score on quality indicators.

Studies of variations in regional medical practice find marked disparities in the amount of medical care provided to Medicare enrollees. Fisher, Stukel, and Wennberg ask whether the more intensive practice pattern observed in some regions results in improved health outcomes. They study the relationship between intensity of treatment and mortality in three groups of Medicare enrollees and find that Medicare enrollees residing in high-intensity regions have no better survival than those residing in regions where enrollees use less health care. After the initial episode of care, enrollees who lived in the highest intensity region received approximately 60 percent more care during the follow-up period than those in the lowest intensity regions. Yet, higher intensity treatment was not associated with improved survival. In fact, the authors observed slightly increased mortality as the intensity of medical practice increased.

NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us