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.