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An Interview with Professor John Cawley This entry is the first in a two-part interview with Cornell University health economist John Cawley. The interview is based on a survey (and forthcoming paper in the Journal of Health Politics, Policy, and Law) that he conducted with his colleague Michael Morrisey. In 2005, they received survey responses from 359 health economists from academia, government, non-profits and private industry regarding their views on health policy. Their responses shed light both on the major issues in health economics and on the state of (the pursuit of) knowledge in the economics profession in general.
Did anything surprise you about the results? I was surprised that health economists can no longer be classified, on the basis of their beliefs about health policy, into two camps. An earlier survey that was published in 1990 found that health economists of that era could be classified as either Type N (neoclassical economists) or Type B (broad economists, who were skeptical of markets in health care). Type B broad economists believed that physicians induce demand for their services, the Canadian system of health insurance was better, and that cost-shifting occurred. An example of cost shifting is a hospital raising its price to one payer because it lowered its price to another. For example, if hospitals raise their prices to private payers when Medicare lowers its payment rates. Type N narrow economists tended to believe the opposite. In our survey from 2005 we found no such pattern. My optimistic opinion is that political beliefs matter less, and the research findings matter more, in determining today's health economists' views of health policy. How well informed do you think the current political debates over health care policy are, viz. what is widely agreed upon by health economists? I think that the challenges facing our health insurance and health care system are very complex, and politicians clearly have decided that it isn't a winning strategy to try to explain to the voters the system in all its complexity. On the other hand, I think that there are many individuals in government (for example, on Congressional committee staffs, in the Center for Medicare and Medicaid Services) who are extremely well-informed about the issues and arguably know the details better than anyone. Is there a consensus among health economics that the U.S. health care system is broken? Yes but unfortunately there isn't agreement about which part(s) is/are broken. If so, is the problem seen as one of efficiency (i.e. many treatments are undertaken that are not worth their costs) or one of equity (poor patients cannot consume as much health care as wealthier patients)? Can it be both? Many health economists do agree about the efficiency problems. Some people are so well insured against health care costs that they are over-consuming care - consuming care for which the agrgegate costs to society are greater than the aggregate benefits, although the individual may personally benefit. Other individuals are uninsured and under-consume care (not consuming care for which the aggregate benefits are greater than the aggregate costs - for example, getting vaccinations and other preventive care). Whether there is a problem with equity or fairness is not something that can be decided with the tools of economics. That's something for individuals to decide based on their personal philosophy, morals, and ethics, and it is in these types of value questions that we find the most disagreement in our survey. What is your major take-away from the survey, particularly as it pertains to national health policy? I think that it helps non-economists to better understand how health economists, who study these issues, view these policy options. It confirms that, thanks to the strengths of microeconomics, health economists tend to agree on positive statements (statements of fact and evidence). I think it also reminds health economists that, on normative issues (value judgments), not all of their colleagues view the world the same way. John Cawley is an Associate Professor in Cornell University’s Department of Policy Analysis and Management and is a Research Associate in the Programs on Health Economics and Health Care at the National Bureau of Economic Research. Before obtaining his Ph.D in Economics at the University of Chicago, John was a student fellow during the 1993 AIER Summer Fellowship Program.
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