Regulation Strategies for the Provision of Paternalistic Goods

December 9, 2017

In this study, we analyze the regulation of markets for the provision of services whose costs are subsidized for paternalistic reasons. We model the choice of a benevolent regulator who wants to maximize consumer welfare in a setting where quality cannot be verified and the good provided is fully subsidized. The choice is thus made between two types of providers (profit maximizers and altruistic providers) and two frameworks (monopoly franchise and quality competition). Our analysis shows that in this environment the performance of mixed markets is always dominated by pure forms. Moreover, although making efficient providers compete for the market minimizes cost, the choice of quality competition with altruistic providers may be preferable from a welfare point of view whenever service quality is relevant and the productivity differential is not substantial.

via Regulation Strategies for the Provision of Paternalistic Goods by Laura Levaggi, Rosella Levaggi :: SSRN

Editor’s note: the U.S. health system is a “mixed markets” approach, implying we could maximize welfare by moving towards market competition or quality competition using altruistic providers.

Price Transparency and Incomplete Contracts in Health Care

December 8, 2017

Market-based health reform solutions dominate the post-Affordable Care Act landscape. Under these plans, competition is supposed to bring down ballooning prices, and patients are to act more like consumers, refusing low-value, medically unnecessary care. Whether one embraces these solutions, one thing is clear: they cannot work absent price transparency—which the U.S. system lacks. To the contrary, the law explicitly enforces open price term contracts between patients and providers.

This Article is the first to synthesize theories of incomplete contracts from traditional law and economics and recent work in the behavioral sciences and to apply these theories to the price transparency problem. It argues that doctrine is out of step with theory, and proposes a contract law solution: an information-forcing penalty default rule. Courts should impose an undesirable default to force the parties to contract around the default. When providers fail to include a price, and it would have been reasonable to do so, courts should fill the gap with a price of $0. Rather than risk not being paid, providers will include a price in the patient contract. Legislative action has been both slow and ineffective in fixing the crucial price transparency problem. At no other time in recent memory has the importance of contract theory been put into such sharp relief and, remarkably, in an area of law that is at the very core of the emerging political economy.

via Price Transparency and Incomplete Contracts in Health Care by Wendy Epstein :: SSRN

What Congress’s Repeal Efforts Can Teach Us About Regulatory Reform by Cary Coglianese, Gabriel Scheffler :: SSRN

December 8, 2017

Major legislative actions during the early part of the 115th Congress have undermined the central argument for regulatory reform measures such as the REINS Act, a bill that would require congressional approval of all new major regulations. Proponents of the REINS Act argue that it would make the federal regulatory system more democratic by shifting responsibility for regulatory decisions away from unelected bureaucrats and toward the people’s representatives in Congress. But separate legislative actions in the opening of the 115th Congress only call this argument into question. Congress’s most significant initiatives during this period — its derailed attempts to repeal and replace the Affordable Care Act and its successful efforts to repeal fifteen regulations under the Congressional Review Act — exhibited a startling lack of democratic deliberation. These repeal efforts reveal how the REINS Act would counterintuitively undermine key democratic elements of the current regulatory process by rendering it less transparent and deliberative.

via What Congress’s Repeal Efforts Can Teach Us About Regulatory Reform by Cary Coglianese, Gabriel Scheffler :: SSRN

The Future of U.S. Health Care: Replace or Revise the Affordable Care Act? | RAND

August 23, 2017

RAND research offers insights about the likely impact of repealing or revising the ACA. RAND’s research on the ACA makes use of an updated version of the RAND COMPARE microsimulation model, which predicts the effects of health policy changes at state and national levels. Using COMPARE, researchers have examined the impact of many configurations of health insurance in the United States, including:

  • maintaining the ACA with no changes
  • repealing the law with no replacement
  • replacing the law with a single payer system
  • replacing the law with other measures that address coverage expansions through Medicaid and the individual market

Source: The Future of U.S. Health Care: Replace or Revise the Affordable Care Act? | RAND

A Tax Reform President Trump Should Like, and You Should Too | Manhattan Institute

August 17, 2017

Democratic lawmakers delayed the onset of the Cadillac plan tax from 2013 to 2018 in the 2010 reconciliation bill that enacted parts of the ACA. More recently, lawmakers delayed it again, postponing its effective date to 2020. The distaste for the Cadillac tax is clearly bipartisan, as the House Republicans’ American Healthcare Act — their ACA repeal-and-replace bill — would further delay the tax to 2025, and the Senate’s version of this bill would push it off to 2026.

Instead of kicking the can farther down the road, a different approach to dealing with employer-sponsored insurance is needed. In a new Mercatus Center report, we discuss some potential options available to policymakers.

Source: A Tax Reform President Trump Should Like, and You Should Too | Manhattan Institute

The tech policy case for repealing Obamacare | Technology and Innovation Blog » AEIdeas

August 9, 2017

Unleashing the technology of health care is another salient argument for repealing Obamacare. In “The Patient Will See You Now: The Future of Medicine in Your Hands” (2015), Eric Topol (also interviewed in this compelling EconTalk podcast by Russ Roberts) describes the revolutionary changes in health care driven by the democratization of data, a veritable “Gutenberg Moment” in which people are empowered with information through their smartphones just as they were with books from the printing press. Presently the government is in the center of health care, but it should be the individual consumer instead.

Source: The tech policy case for repealing Obamacare | Technology and Innovation Blog » AEIdeas

The Republicans’ Budget Mess | RealClearPolicy

August 4, 2017

On health care, the president has made it clear that he does not care what is in a bill to repeal and replace Obamacare, so long as he can say he achieved that goal. At various points, he was for the House repeal-and-replace plan, for the clean “repeal-and-delay” bill that Republicans passed in 2015, and for Senator Mitch McConnell’s last-ditch “skinny repeal” plan, which really was just a repeal of the tax penalties enforcing the Affordable Care Act’s individual mandate. When the Senate bill failed last week, it was clear that even if a bill did ever emerge from a House-Senate conference, it couldn’t pass in the Senate with major Medicaid reforms or with any real replacement of the major subsidy provisions of the ACA. Republicans are now saying “we were so close” to achieving victory, but the “skinny repeal” plan was the only thing that came close. And that shows the GOP is not, in fact, close to agreement on a workable plan to replace the ACA.

Source: The Republicans’ Budget Mess | RealClearPolicy