THE EFFECT OF PROVIDER CONTROL OF BLUE SHIELD PLANS ON HEALTH CARE MARKETS

Blue Shield plans often are granted regulatory advantages by the states in which they operate. Run efficiently, such not-for-profit firms should use these lower costs to eliminate their less advantaged rivals, the commercial insurers. However, these higher-cost commercial providers have been able to offer insurance coverage at prices competitive with the Blues, as evidenced by the fact that Blue plans have, on average, less than 50 percent market share. Similar prices with lower overall costs implies that economic rents are being earned, rents which a not-for-profit firm cannot distribute to owners. In this paper we argue that when there are competing goals among the groups controlling the Blue Shield plans, the different possible "uses" of the regulatory advantage become endogenously determined, necessitating the use of simultaneous equation estimation. Testing this model we find the major effect of doctor-control of Blue Shield plans is to raise doctors' fees while lowering the amount of rents captured by both consumers and administrators.     

The administrative costs of non-profit health insurers

Interest in the efficiency or inefficiency of non-profit firms has spawned research on the administrative costs of Blue Cross and Blue Shield plans. Relying on plausible implications of the property rights theory of the firm, both Blair, Ginsburg, and Vogel (1975) and Vogel (1977) noted some evidence of inefficiency in these firms. Our analysis, however, utilizing their models and more recent data, reveals little convincing evidence for the view that Blue Shield plans are inefficient.     

The competitive response of Blue Cross to the health maintenance organization

The health maintenance organization (HMO) is an alternative to the traditional fee-for-service health care system in the United States. Other studies have shown that the HMO reduces hospital utilization and offers greater benefit packages than fee-for-service. This paper tests whether the presence of HMO's provides effective competitive pressure on Blue Cross, the largest insurer of hospital costs. The cross sectional regression analysis supports the hypotheses that Blue Cross has reduced hospital utilization and increased benefit packages in response to HMO competition. Consequently, competitive forces are shown to be operative in at least one area of health care.     

What's green about the 1996 award-winning school districts: A comparison of Indiana's districts containing Blue Ribbon winners with 30 randomly selected Indiana school districts

The relationship between spending on education and equal opportunity has been a subject of debate for several decades. This study aims to shed light on this debate by examining correlations between the distribution of Blue Ribbon awards to Indiana middle and high schools and per pupil expenditure. Based on criteria that include curricula, instruction, school climate, leadership, community support, goal setting and attainment, success with all students, skill development, and character education, Blue Ribbon School awards are a recognition of outstanding achievement given by the federal government. Using total federal, state, and local expenditures as the basis for comparison, we found that the federal government did not select more wealthy schools than poor schools for the Indiana Blue Ribbon School awards. However, there was a large difference in the expenditures per pupil in the Indiana districts with Blue Ribbon schools vs. the 30 randomly selected Indiana districts without Blue Ribbon schools. Total local sources were significantly greater in Blue Ribbon school districts than in non-Blue Ribbon school districts. A discussion of items related to the power, prestige, and wealth of the award-winning schools is included.     

The Social Costs of Gambling: An Economic Perspective

Much of the opposition to legalized gambling is based on analyses of the social costs that occur as a result of pathological gambling. It is our contention that many, if not most, authors who have contributed to this literature are either unclear or misguided in what they define as social costs. Instead of starting with a clear definition of what constitutes a social cost, these authors have adopted an ad hoc approach-using "common sense" to determine what constitutes losses to society and then attempting to quantify the impact of those activities. We believe this is not, as some suggest, simply a matter of semantics. Rather, it is a serious problem in the gambling literature. How do we differentiate between a consequence of pathological gambling that is a "social cost" and one that is not? Which of the consequences of addictive behaviors that are associated with gambling arise when gambling is legal, and which will be manifest in some form whether or not gambling is legal? In this article we explain the economic perspective on social costs. An understanding of this paradigm removes the subjectivity in the classification of pathological gambling's social costs. The paper has three major components. First, we introduce the economic notion of social costs. Using this paradigm, we differentiate between the "true" social costs related to pathological gambling, and other negative consequences that cannot legitimately be classified as social costs. Second, we evaluate a recent social cost study using the economics social cost paradigm. Third, we discuss two types of social costs that have been largely overlooked in the gambling literature. One is caused by gambling prohibition. The other occurs as a result of "rent seeking" that is related to the political process surrounding the legalization of gambling.     

MONOPOLY, MONOPSONY AND CONTESTABILITY IN HEALTH INSURANCE: A STUDY OF BLUE CROSS PLANS

As dominant sellers of health insurance and buyers of health services, Blue Cross and Blue Shield have potential monopoly and monopsony power. The credible threat of entry resulting from the increased competitiveness of these markets in the 1980s may have produced competitive outcomes—reduced prices, improved quality and efficient cost structures—even in a concentrated market. We find the plans used economies of scale and monopsony power to reduce administrative costs, provide payments and consumer premiums. Our findings suggest that steps to enhance the contestability of health markets may be a better response than regulation.     

We Can Run But We Can't Hide:

Long-term care costs are not covered to any significant extent by public or private insurance. As a result, nursing home patients often must use their entire life savings to pay for their care and once impoverished turn to welfare in the form of Medicaid, the federal-state health care program for the poor. Private-sector solutions, such as private long-term care insurance, should expand to play a larger role but cannot solve the whole problem by themselves. Reform of the Medicaid program to make the means test less onerous would be desirable, but this approach would retain the welfare stigma. What is needed is a public insurance program to which everyone would contribute and earn the right to benefits when they need them without having to prove impoverishment. Any public insurance program should leave a substantial role for the private sector. Public costs of a social insurance program would be high but not unaffordable, especially since society will incur most of these costs even without an expanded public program.     

THE IMPORTANCE OF TRADE COSTS IN DEVIATIONS FROM THE LAW‐OF‐ONE‐PRICE: ESTIMATES BASED ON THE DIRECTION OF TRADE

The full impact of trade costs in segmenting product markets cannot be captured by considering aggregate prices or in the absence of information on the direction of trade. We address this problem by utilizing product‐specific prices, cross‐sectional productivity indices, and bilateral trade flows, allowing us to identify the probable source of any one product. We show that trade costs in the form of transportation and distribution costs are important in determining international price differences and segmenting international markets. Physical distance relative to the origin has a precisely estimated positive impact on international deviations from the Law‐of‐One‐Price that is larger than estimates that do not account for the origin of each product. Based on our benchmark estimates, the price elasticity of distance was around 10% in 1990. (JEL F4)     

Loan performance and race

Recent studies find evidence of racial discrimination in mortgage markets. Although these studies explore loan approval rates for whites versus minorities, they do not specifically consider loan performance, either in the form of default rates or loan administration costs. This study considers discrimination in the used car credit market, where the collateral is not subject to location externalities, collateral value and quality do not vary as much as in real estate, and the loan terms are shorter. We find administration costs and default rates are higher for minorities than for whites, controlling for age, income, home ownership, wealth, occupation, loan terms, and geographic location.     

THE UNEMPLOYMENT VOLATILITY PUZZLE: THE ROLE OF MATCHING COSTS REVISITED

Pissarides has argued that the standard search model with sunk fixed matching costs increases unemployment volatility without introducing an unrealistic response of wages of new matches to productivity shocks. We revise the role of matching costs and show that when these costs are not sunk and, therefore, can be partially passed on to new hired workers in the form of lower wages, the amplification mechanism of fixed matching costs is considerably reduced. Finally, we observe that an empirical reasonable share of sunk costs is not able to match the volatility of unemployment without introducing unrealistic sensitivity to unemployment benefits. (JEL E32, J32, J64)     

Caron in‐network with Aetna

Caron Treatment Centers is an in‐network provider for Aetna, effective Oct. 1, the Pennsylvania‐based program announced last week. “The COVID‐19 pandemic is taking a toll on the mental health of Americans,” said Doug Tieman, CEO and President of Caron Treatment Centers. “Unfortunately, isolation and anxiety make addiction worse, and we are already seeing a spike in substance use and substance use disorders. It's imperative that families have access to affordable, high‐quality, life‐saving treatment programs and support services.” The expansion of in‐network insurance relationships is among several recent moves by Caron to make treatment more accessible. Caron is also an in‐network provider with Highmark and the Blue Card program, which covers persons entitled to benefits as a member of any other Blue Cross and/or Blue Shield plan licensed by the Blue Cross Blue Shield Association, Independence Blue Cross, AmeriHealth Administrators, Independence Administrators, UPMC, Blue Cross Blue Shield, Employer Groups of Penn Medicine and Tower Health. “Accessing quality substance use disorder treatment has always been difficult for many families,” continued Tieman. “With more than 20 percent of the treatment sector reducing or closing services and programs as a result of the pandemic, it's even more difficult. This in‐network agreement with Aetna allows their members to access Caron at a time when they are needed the most.”     

The long-term protection of biological diversity—lessons from market ethics

Economic markets are not morally free zones. Contrary to popular misconceptions, market functioning rests on the ethical principles of fairness and voluntariness. This ethical foundation can be traced back at least to moral philosopher Adam Smith, one of the founders of modern economics. In the inconspicuous form of microeconomic axioms, these moral foundations are preserved. Thus, virtually all “neo-classic” economic concepts presuppose a market ethics of fairness and voluntariness. In a world of pervasive uncertainty on the long-term development of the human-environment interaction, the protection of the global life-support systems is an important test case for the scope of the ethical content of market ethics. We review risk protection strategies in the face of this uncertainty that are (i) based on the insurance effect of biological diversity, and (ii) that employ a safe minimum standard (SMS). Because the fairness principle of market ethics requires that economic agents who cause “external” costs must, at least, compensate those who are burdened with these costs, the interests of future generations have to be included in responsible economic decision-making. The market and market ethics approach is applied to the analysis of a SMS for biological diversity, and to the inherent problems of such an approach. At the microeconomic level of individual decision-making, an unconditional protection is supported by market ethics neither for the putative interests of future generations nor for biological diversity: Poor people who struggle to cover their basic needs cannot not be required to care for biological diversity. In all other cases, the protection of biological diversity in favour of future generations is supported—if costs are not “unacceptably high”. At which cost level this point is approached, market ethics is not designed to decide.     

Support for National Health Insurance: Intercohort Differentials

Past research has demonstrated that the majority of the Americanpublic favor some form of national health insurance (NHI), butthe sources of this support have not been clearly identified.This paper shows that support for NHI follows party lines, withDemocrats most favoring it, followed by Independents and Republicans.The young, women, blacks, the less educated (among others) alsofavor NHI more than others, but it is apparently not a "personalneed" for the insurance that prompts this support. Lack of adequateinsurance coverage, dissatisfaction with current care, or pooraccess to health care are not associated with support for NHI.Instead, cognizance of the larger socioeconomic issues (particularlyrising society-wide health care costs), in addition to politicalidentification, generates support for NHI.     

Legal problems of health care cost containment.

Employers faced with rising health care costs are exploring various means to control them. One way is prospective utilization review, although this may pose significant legal risks. Another is the capitation form of payment in which an employer contracts with a health care provider either directly or through an employer-sponsored HMO. The authors discuss these alternatives and the implications for employers.     

Idiot science for a blue humanities: Shakespeare’s The Comedy of Errors and Deleuze’s mad Cogito

ABSTRACT

Can we imagine a Blue Humanities that takes the non-relation as a starting point for ecological thought? I believe we can. Following Shakespeare and Deleuze, this essay engages in a thought experiment that, if it is not too absurd, might, like the ship of fools of medieval times, unmoor the Blue Humanities from its current safe harbor by putting the thought of ‘our’ world under erasure. This is not a matter of turning thought around, such that, by turning to the sea, we turn thought away from calculation and instrumental reason and rediscover our true nature. Rather, the image of thought I pursue here is narcissistic. Reading Shakespeare and Deleuze in a minor key, we will see that narcissism not only makes our relations doubtful, but also enfolds the non-relation as the very inside/outside of ecological thought.     

Gender please, without the gender police: rethinking pain in archetypal narratives of butch, transgender, and FTM masculinity

Why is it that many of the often-cited narratives about butch, FTM, and/or transgender masculinity happen to be fictions that highlight suffering as a de facto rite of passage for the butch, FTM, or transgendered protagonist? This essay attempts to answer that question, first by outlining the "coherentist assumptions" of lesbian feminism and the forms of gender-policing that cast butch, FTM, and transgendered subjectivities as "false consciousness." It then analyzes the practice of anchoring butch, FTM, and/or transgender identity claims in pain-filled narratives such as "The Well of Loneliness," "Stone Butch Blues," and "Boys Don't Cry." While these narratives do important cultural work-exposing the violence heaped upon butches, FTMs, and transgendered guys-it may be time to imagine alternative narratives that are less invested in suffering as a barometer of masculine authenticity.     

A cost-benefit analysis of a smoking cessation program

Smoking cessation programs are usually evaluated in terms of the percentage of participants who have stopped smoking at least 6 months after the program's completion. This paper shows how a relatively low rate of behavior change may actually result in a high ratio of benefits to costs. Cost-benefit analysis is done for a specific program but the procedures and cost estimates are generalizable to other smoking cessation programs. Benefits to the firm included reduced costs of insurance and the savings due to employee absenteeism and disability. Costs included the program costs as well as the opportunity costs of the participants. Data from the literature and from the specific program are combined to form conclusions about the effectiveness of the program.     

Optimal coalition size when making proposals is costly

Though some costs of proposing legislation are borne by individual congressmen, the benefits accrue to many. To encourage legislators to incur these costs, members may wish to form coalitions which are larger than a minimum majority, and they may want to allow the proposer of a policy to incorporate private benefits into his proposal.We gratefully acknowledge the comments of anonymous referees, N. Baigent, A. DeVany, B. Grofman, and N. Stoughton. We are solely responsible for any remaining errors. The Securities and Exchange Commision, as a matter of policy, disclaims responsibility for any private publication or statement by any of its employees. The views expressed here are those of the authors and do not necessarily reflect the views of the Commission or the authors' colleagues on the Staff of the Commission.     

The Willingness to State an Opinion: Inequality,Don't Know Responses,and Political Participation

Most explanations of inequality in political participation focus on costs or other barriers for those with fewer economic, educational, and “cognitive” resources. I argue, drawing on Pierre Bourdieu's work on “political competence,” that social position in the form of income also structures political participation through differences in the sense that one is a legitimate producer of political opinions. I test whether income differences in participation persist net of costs by examining nonparticipation in a setting in which barriers to participation are low: answering political survey questions. Lower‐income people are more likely than others to withhold political opinions by saying “don't know” net of differences in education, “cognitive ability,” or engagement with the survey exercise. Further, political “don't know” rates predict voting rates, net of other predictors. Efforts to democratize participation in American politics must attend not only to the costs of involvement but also to class‐based differences in individuals' relationship to political expression itself.     

ALTERNATIVES FOR RESTRUCTURING THE RAILROADS: END-TO-END OR PARALLEL MERGERS?

The U.S. railroad industry has seen considerable merger activity over the past two decades and more mergers are expected in the near future, but little is presently known about the relative social benefits of alternative merger configurations. Using traffic data for origin-destination pairs affected by recent mergers, this paper examines the impact of end-to-end and parallel mergers on increases in the market share of merged firms. To the extent that increases in market share reflect social benefits in the form of improved service and lower costs, end-to-end mergers are found to outperform parallel mergers.