Managed care may influence technology diffusion in health care. This article empirically examines the relationship between HMO market share and the diffusion of neonatal intensive care units. Higher HMO market share is associated with slower adoption of mid-level units, but not with adoption of the most advanced high-level units. Opposite the common supposition that slowing technology growth will harm patients, results suggest that health outcomes for seriously ill newborns are better in higher-level units and that reduced availability of mid-level units may increase their chance of receiving care in a high-level center, so that slower mid-level growth could have benefitted patients.

Evidence from the United States suggests that technological change is a key factor in understanding both medical expenditure growth and recent dramatic improvements in the health of people with serious illnesses. Yet little international research has examined how the causes and consequences of technological change in health care differ worldwide. Seeking to illuminate these issues, this volume documents how use of high-technology treatments for heart attack changed in fifteen developed countries over the 1980s and 1990s. Drawn from the collaborative effort of seventeen research teams in fifteen countries, it provides a cross-country analysis of microdata that illuminates the relationships between public policies toward health care, technology, costs, and health outcomes.

The comparisons presented here confirm that the use of medical technology in treatment for heart attack is strongly related to incentives, and that technological change is an important cause of medical expenditure growth in all developed countries. Each participating research team reviewed the economic and regulatory incentives provided by their country's health system, and major changes in those incentives over the 1980s and 1990s, according to a commonly used framework. Such incentives include: the magnitude of out-of-pocket costs to patients, the generosity of reimbursement to physicians and hospitals, regulation of the use of new technologies or the supply of physicians, regulation of competition, and the structure of hospital ownership. Each team also reviewed how care for heart attacks has changed in their country over the past decade.

The book will be of enormous importance to health economists, medical researchers and epidemiologists, and policymakers.

Because the optimal level of medical malpractice liability depends on the incentives provided by the health insurance system, the rise of managed care in the 1990s may affect the relationship between liability reform and defensive medicine. In this paper, we assess empirically the extent to which managed care and liability reform interact to affect the cost of care and health outcomes of elderly Medicare beneficiaries with cardiac illness. Malpractice reforms that directly reduce liability pressure - such as caps on damages - reduce defensive practices both in areas with low and with high levels of managed care enrollment. In addition, managed care and direct reforms do not have long-run interaction effects that are harmful to patient health. However, at least for patients with less severe cardiac illness, managed care and direct reforms are substitutes, so the reduction in defensive practices that can be achieved with direct reforms is smaller in areas with high managed care enrollment. We consider some implications of these results for the current debate over the appropriateness of extending malpractice liability to managed care organizations.

Previous research suggests that "direct" reforms to the liability system - reforms designed to reduce the level of compensation to potential claimants - reduce medical expenditures without important consequences for patient health outcomes. We extend this research by identifying the mechanisms through which reforms affect the behavior of health care providers. Although we find that direct reforms improve medical productivity primarily by reducing malpractice claims rates and compensation conditional on a claim, our results suggest that other policies that reduce the time spent and the amount of conflict involved in defending against a claim can also reduce defensive practices substantially. In addition, we find that "malpractice pressure" has a larger impact on diagnostic rather than therapeutic treatment decisions. Our results provide an empirical foundation for simulating the effects of untried malpractice reforms on health care costs and outcomes, based on their predicted effects on the malpractice pressure facing medical providers.

Health care report cards - public disclosure of patient health outcomes at the level of the individual physician and/or hospital - may address important informational asymmetries in markets for health care, but they may also give doctors and hospitals incentives to decline to treat more difficult, severely ill patients. Whether report cards are good for patients and for society depends on whether their financial and health benefits outweigh their costs in terms of the quantity, quality, and appropriateness of medical treatment that they induce. Using national data on Medicare patients at risk for cardiac surgery, we find that cardiac surgery report cards in New York and Pennsylvania led both to selection behavior by providers and to improved matching of patients with hospitals. On net, this led to higher levels of resource use and to worse health outcomes, particularly for sicker patients. We conclude that, at least in the short run, these report cards decreased patient and social welfare.

Six states require health plans to provide or authorize second medical opinions (SMOs). The intent of such legislation is to preserve consumer choice, to improve the flow of information, and to improve health outcomes in this era of managed care. However, it is unclear who benefits from these laws. This paper reviews the changing role of second opinions and, using a nationally representative data set from the Commonwealth Fund, examines who gets them. Of persons who had visited a doctor in the previous year, 19 percent received a second opinion, for an estimated cost of $3.2 billion in 1994. Findings suggest that cultural norms and sociocultural factors may partially determine who may benefit from SMO legislation.

A unique, in-depth discussion of the uses and conduct of cost-effectiveness analyses (CEAs) as decision-making aids in the health and medical fields, Cost-Effectiveness in Health and Medicine is the product of over two years of comprehensive research and deliberation by a multi-disciplinary panel of economists, ethicists, psychometricians, and clinicians. Exploring cost-effectiveness in the context of societal decision-making for resource allocation purposes, this volume proposes that analysts include a "reference-case" analysis in all CEAs designed to inform resource allocation and puts forth the most explicit set of guidelines (together with their rationale) ever defined on the conduct of CEAs. Important theoretical and practical issues encountered in measuring costs and effectiveness, evaluating outcomes, discounting, and dealing with uncertainty are examined in separate chapters. Additional chapters on framing and reporting of CEAs elucidate the purpose of the analysis and the effective communication of its findings.

Cost-Effectiveness in Health and Medicine differs from the available literature in several important aspects. Most importantly, it represents a consensus on standard methods. Standardization is particularly important for CEA, since its principal goal, only partly realized to date, is to permit comparisons of the costs and health outcomes of alternative ways of improving health. The second major contribution of this book is the detailed level at which the discussion is offered. Guidelines in journal literature and in CEA-related books tend to be rather general, to the extent that the analyst is left with little guidance on specific matters. Thirdly, this volume is differentiated by a detailed discussion of the theoretical background underlying areas of controversy and the implications of methodological alternatives. Finally, the study is written with a wider audience in mind, since it is not limited , for instance, to pharmaceutical analysts, physicians or any other interest subgroup. Intended primarily for analysts in medicine and public health who wish to improve practice and comparability of CEAs, this book will also be of interest to decision-makers in government, managed care, and industry who wish to consider the roles and limitations of CEA and become familiar with the criteria for evaluating these studies.