Economics and Health Reform

Abstract

Two prior studies, conducted in 1966 and in 1979, examined the role of economic research in health policy development. Both concluded that health economics had not been an important contributor to policy. Passage of the Affordable Care Act offers an opportunity to reassess this question. We find that the evolution of health economics research has given it an increasingly important role in policy. Research in the field has followed three related paths over the past century—institutionalist research that described problems; theoretical research, which proposed relationships that might extend beyond existing institutions; and empirical assessments of structural parameters identified in the theoretical research. These three strands operating in concert allowed economic research to be used to predict the fiscal and coverage consequences of alternative policy paths. This ability made economic research a powerful policy force. Key conclusions of health economics research are clearly evident in the Affordable Care Act.