Industry Input in Policymaking: Evidence from Medicare

David C. Chan, Jr and Michael J. Dickstein

No 24354, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In setting prices for physician services, Medicare solicits input from a committee that evaluates proposals from industry. We investigate whether this arrangement leads to prices biased toward the interests of committee members. We find that increasing a measure of affiliation between the committee and proposers by one standard deviation increases prices by 10%, demonstrating a pathway for regulatory capture. We then evaluate the effect of affiliation on the quality of information used in price-setting. More affiliated proposals produce less hard information, measured as lower quality survey data. However, affiliation results in prices that are more closely followed by private insurers, suggesting that affiliation may increase the total information used in price-setting.

JEL-codes: D71 H57 I13 L51 (search for similar items in EconPapers)
Date: 2018-02
New Economics Papers: this item is included in nep-reg
Note: EH IO LE PE POL
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