do economists make (health) policy? aca edition

The influence of economists on policymaking is a topic of perennial interest to sociologists, and one I’ve spent a fair bit of time trying to understand. One of the arguments Beth Berman and I stress in our review piece on the subject is the importance of institutional position inside the policymaking apparatus. Economic ideas dominate certain federal agencies because economists (and MPPs trained by economists, etc.) staff those agencies. Academic economists have a clear route towards policy influence through their counterparts inside the government.

A new paper by Glied and Miller (G&M) on the role of health economics in the drafting of the Affordable Care Act offers a nice illustration of this argument (h/t to The Incidental Economist, the best health economics/policy blog around). G&M begin by asserting the relative lack of influence of health economics on health policy in the 1960s and 1970s – health economists, it seems, did not play a major role in the creation of Medicare and Medicaid. But since the 1980s, the role for health economics has grown dramatically. G&M chart the changes in health economics (mirroring the larger field) as interwar institutionalism gives way to 1950s-1960s mathematical theory (Arrow’s famous work on uncertainty, market failure and health care). I’m a bit skeptical of some of the narrative here – it lapses into some knee-jerk “institutionalists had no theory” claims that Rutherford convincingly rebuts – but what’s more interesting is that G&M note how even the move to more (by that point) mainstream, mathematical/neoclassical theorizing was insufficient to get health economics into policymaking. Two pieces were missing: empirical research linking the new theories to existing health care markets (econometrics, the massive RAND study, etc.), and an institutionalized place in the policymaking process.

In particular, G&M point to the role of the Congressional Budget Office (CBO). The CBO “scores” bills and proposals, estimating their eventual budgetary cost. Forecasting costs requires models of how behavior will change in response to newly-provided incentives, forecasts (health) economics is now suited to supply. For example, G&M cite CBO scoring of the individual mandate proposal as a successful use of health economics – economists supported the mandate, provided models of effects, and eventually the mandate was adopted. And in a nice example of a within-case contrast, G&M (p. 389) argue that health economics research on physician incentives was not as well-developed, and thus the CBO refused to score various proposals aimed at the agency problem; perhaps as a result, those programs were relegated to demonstration status and not fully implemented in the ACA.

So, the picture painted here of health economics’ policy influence is a pipeline which links theoretically-informed, expensive, extensive empirical research that can make compelling claims about the consequences of policy changes to a network of like-minded insiders positioned in obligatory institutional passage points. It’s not just about theory, or just about data or methods, or prestige, or funding, but how those things articulate in particular policymaking institutions.

Author: Dan Hirschman

I am a sociologist interested in the use of numbers in organizations, markets, and policy. For more info, see here.

1 thought on “do economists make (health) policy? aca edition”

  1. Hey Dan, interesting timing! There’s a new post on the CASTAC blog today that’s also about something similar. It’s about engineers who build electricity markets, and about how they think about economic ideologies. The author suggests that the connection between the research problems in electricity market design that the engineers construct and solve, and the politics of markets, is through the computational machinery that the engineers share with economists. I think it ties in to the third idea in your review paper: about the influence of economics being through “cognitive infrastructures,” although I also think there might be some interesting differences. Anyway, the post is here: http://blog.castac.org/2015/07/hardwired-hayek/. (And full disclosure–although that sounds quite self-important!–I helped edit the post and the author is a friend in my program.)

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