Health Care.

• Position: National Bureau of Economic Research Program on Health Care meeting on May 9 2003

Members of the NBER's Program on Health Care met in Cambridge on May 9. Program Director Alan M. Garber, of Stanford University, organized the meeting. These papers were discussed:

Jonathan S. Skinner and Douglas O. Staiger, NBER and Dartmouth College, "Technological Innovation and Health Outcomes: A New Look"

Ahmed W. Khwaja, Duke University, "Some Economic Consequences of Being (Medi)Careless"

M. Kate Bundorf and Laurence C. Baker, NBER and Stanford University, "The Market Level Effects of Health Plan Quality Measurement and Reporting"

Nancy Beaulieu, NBER and Harvard University, "Externalities in Overlapping Supply Networks"

Derek S. Brown, Duke University; Gabriel Picone, University of South Florida; and Frank A. Sloan, NBER and Duke University, "Do Routine Eye Exams Improve Vision?"

There are a variety of models that seek to explain the process of technological innovation, but less is understood about the nature of innovation and diffusion in health care. Most models of technological innovation imply convergence; gradually, even the laggard adopters of new technology catch up to the innovators. And, while different hospitals or regions may develop their own strategies for treating specific diseases, the productivity of their strategies--that is, their quality-adjusted price--should exhibit convergence over time. Using Medicare data on 2.6 million heart attack patients during 1989-2000, Skinner and Staiger find first that the rapid technological gains occurring during the late 1980s and early 1990s have flattened by the late 1990s; indeed the quality-adjusted price has risen since 1995. Second, in considering regional differences in mortality costs and outcomes, the authors find no evidence of convergence with respect to productivity during this period. The evidence favors long-term differences across states in their propensity to adopt new technology; states likely to adopt hybrid corn in the 1930s and 1940s were most likely to adopt the use of highly effective and low cost beta-blockers in the 1990s.

Khwaja uses microdata on a longitudinal sample of individuals from the Health and Retirement Study and conducts a computer- simulated thought experiment comparing the trends and outcomes under the status quo to a world without Medicare. Further, Khwaja analyzes the effect of Medicare on life-cycle health related behaviors, that is, alcohol consumption, smoking, and exercise. The simulations from the model show that, in the absence of...