Code Red: Two Economists Examine the U.S. Healthcare System

June 14, 2010

In the News

Filed under: Health services research,Health spending,Research methods,Uninsured — David Dranove and Craig Garthwaite (from Oct 11, 2013) @ 8:31 am

I have been away from my blog for a couple of weeks but I have been busy. More on that in a moment.

There are several health related news stories this morning. Price Waterhouse Coopers released a study forecasting a 9 percent increase in health insurance premiums, with deductibles exceeding $400 in the median plan. The nation’s news media took the premium increase in stride but was apoplectic about the size of the deductible. I guess it okay if “employers pay” $15,000 per employee for medical care but it is big news if workers have to pay a few hundred dollars annually. (I scoff because we all know that higher premiums mean lower wages.) I think the bigger news is that despite these big deductibles, health spending keeps going up. I think consumer directed health plans have their place, but they are clearly no panacea.

The other big health stories pertain to the uninsured. A new survey finds that uninsured cancer patients forego some medical care because of the cost. I am guessing that if uninsured cancer patients purchased all the medical care their doctors recommended, they might have to forego housing expenses, food, and other necessities of life because of the cost. The circumstances facing uninsured cancer patients are dire. But is the best solution to provide more medical care? The surveyors are silent on this seemingly essential point. Another study reminds us that the uninsured die sooner. Like similar studies before it, this one fails to determine whether the problem is a lack of insurance, or other individual characteristics unobserved by the researchers.

Let’s stipulate that it stinks to be uninsured and that like it or not, Obamacare might do something about this. With this stipulation, can we stop funding poorly designed studies that attempt to show what we already know?

I confess to being missing in the blogosphere. In the past few weeks, my friend and co-conspirator Will White and I have written a proposal for a new book. Northwestern University Press seems willing to publish it and so we have embarked on this new adventure. The tentative title is “The 17 Percent Solution” which refers to the percent of GDP spent on healthcare and indirectly to an old Sherlock Holmes film. The book will explain why we remain unbridled optimists about the future of private sector healthcare delivery. We will explore past and ongoing attempts to radically restructure the delivery of care and explain why this time may really be different. “Efficient healthcare delivery” may not be an oxymoron much longer.

The important point is we will be blogging excerpts from draft chapters. We want you to understand the ongoing sea change in healthcare delivery and describe what we believe to be best practices worthy of imitation. And we look forward to your feedback. Let us know if we are on target, or half crazy. Give us your examples of best practices. We look forward to sharing our adventure with you.


  1. […] This post was mentioned on Twitter by Kellogg School, Carlos Gonçalves. Carlos Gonçalves said: RT @KelloggSchool: Back to Code Red #Kellogg Prof David Dranove and Cornell's Prof Will White embark on book "The 17 … […]

    Pingback by Tweets that mention In the News « Code Red -- — June 14, 2010 @ 1:12 pm

  2. David,

    I look forward to reading some of the excerpts. I’m especially interested in getting your take on why this time is different.

    Comment by Brian H — June 14, 2010 @ 4:30 pm

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