Industry Input in Policymaking: Evidence from Medicare

David C. Chan, Jr, Michael J. Dickstein

NBER Working Paper No. 24354
Issued in February 2018
NBER Program(s):Health Care, Industrial Organization, Law and Economics, Public Economics, Political Economy

In setting prices for physician services, Medicare solicits input from a committee that evaluates proposals from industry. We investigate whether this arrangement leads to prices biased toward the interests of committee members. We find that increasing a measure of affiliation between the committee and proposers by one standard deviation increases prices by 10%, demonstrating a pathway for regulatory capture. We then evaluate the effect of affiliation on the quality of information used in price-setting. More affiliated proposals produce less hard information, measured as lower quality survey data. However, affiliation results in prices that are more closely followed by private insurers, suggesting that affiliation may increase the total information used in price-setting.

You may purchase this paper on-line in .pdf format from ($5) for electronic delivery.

Access to NBER Papers

You are eligible for a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.


Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w24354

Users who downloaded this paper also downloaded* these:
Sacks, Vu, Huang, and Karaca-Mandic w24129 The Effect of the Risk Corridors Program on Marketplace Premiums and Participation
Nicholson and Souleles w8536 Physician Income Expectations and Specialty Choice
Finan, Olken, and Pande w21825 The Personnel Economics of the State
Buchmueller, Jacobson, and Wold w10700 How Far to the Hospital? The Effect of Hospital Closures on Access to Care
Andreoni and Serra-Garcia w22824 Time-Inconsistent Charitable Giving
NBER Videos

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

Contact Us