Mark Pauly

Education

PhD, University of Virginia, 1967; MA, University of Delaware, 1965; AB, Xavier University, 1963

Recent Consulting

Office of Assistant Secretary for Policy Evaluation, U.S. Department of Health and Human Services – Merck, Inc. American Enterprise Institute

Career and Recent Professional Awards; Teaching Awards

Spencer Kimball Article Award from the Journal of Insurance Regulation for “Terrorism Losses and All Perils Insurance” with Howard Kunreuther, December 2006 National Institute of Health Care Management Foundation's Research Award for "Is Health Insurance Affordable for the Uninsured?" with M. Kate Bundorf (Journal of Health Economics, July 2006), May 2007 John M. Eisenberg Excellence in Mentorship Award, Agency for Health Care Research and Quality, June 2007 Distinguished Investigator Award, AcademyHealth, June 2007

Academic Positions Held

Wharton: 1983present (Chairperson, Health Care Systems Department, 19972004; Vice Dean and Director, Doctoral Programs, 199599; named Bendheim Professor, 1990; Chairperson, Health Care Systems Department, 199094; Robert D. Eilers Professor of Health Care Management and Economics, 198489). University of Pennsylvania: 1984present (CoDirector, Roy and Diana Vagelos Program in Life Sciences and Management, 2005present; Professor of Economics, 1983present; Executive Director, Leonard Davis Institute of Health Economics, 198489). Previous appointments: Northwestern University; University of Virginia. Visiting appointments: International Institute for Applied Systems Analysis, Laxenburg, Austria; International Institute of Management, Berlin, Germany

Professional Leadership 20052009

CoEditorinChief, International Journal of Health Care Finance and Economics, 2001present; Advisory Editor, Journal of Risk and Uncertainty, 1987present;

Corporate and Public Sector Leadership 20052009

Medicare Technical Advisory Panel; National Advisory Committee, National Institutes of Health, National Center for Research Resources; National Vaccine Advisory Commission Finance Working Group; Board Member, Independent Health

Mark V. Pauly and Ashley Swanson (Under Revision), Social Impact Bonds in Nonprofit Health Care: New Product or New Package?.

Abstract: Considers a relatively new form of financing for social services, the "Social Impact Bond." Proponents of Social Impact Bonds argue that they present a solution to several problems in funding social services, including performance measurement and the distribution of risk. Using a simple model, we demonstrate that Social Impact Bonds have many features present in standard financing arrangements. They will lead to greater program success when investors’ effort can positively influence outcomes, but are unlikely to do so otherwise. We conclude that the value of this funding innovation will be strongly contextdependent.

Howard Kunreuther and Mark V. Pauly (Work In Progress), Behavioral Economics and Insurance: Principles and Solutions.

J Doshi, P Li, Sean McElligott, Aditi Sen, M Olfson, Mark V. Pauly, Robert Rosenheck, Steven C. Marcus (Draft), Antipsychotic Copayment, Adherence, and Hospital Admission in Dual Eligibles with Schizophrenia.

Abstract: BACKGROUND: Limited evidence exists on the impact of costsharing on access to prescription drugs among vulnerable patients enrolled in both Medicare and Medicaid (“dualeligibles”), in particular, those with schizophrenia. METHODS: Medicare Part D, passed in 2006, required dualeligibles to switch from prescription coverage through Medicaid to a private Part D plan and resulted in higher drug copayments for dualeligibles in many states. We use a quasiexperimental design to compare changes in antipsychotic use and schizophreniarelated hospitalization  before (2005) and after (20062007) the implementation of Part D among dualeligibles with schizophrenia. Patients in a state that provided copayment assistance to eliminate copayments (Connecticut) are compared to patients in a state that did not provide such assistance (Florida). RESULTS: The increase in copayments among dualeligibles in Florida was associated with significantly higher odds of having continuous medication gaps of ≥60 days in 2006 than in 2005 compared to the change over the same period in Connecticut (odds ratio OR: 1.18, 95% confidence interval CI: 1.061.32) and in 2007 (OR: 1.28, 95% CI: 1.121.46). This reduction in antipsychotic use among dualeligibles in Florida was accompanied by higher odds of an inpatient hospitalization related to schizophrenia in 2006 (OR: 1.58, 95% CI: 1.301.94) and in 2007 (OR: 1.73, 95% CI: 1.392.15). CONCLUSIONS: Dualeligibles with schizophrenia appeared to suffer adverse consequences from copayment increases due to the transition to Part D. The increase cost in hospital admissions in the state that did not provide assistance likely offset any savings from not providing copayment assistance. 

Howard Kunreuther, Mark V. Pauly, Stacey McMorrow, Behavioral Economics and Insurance: Improving Decisions in the Most Misunderstood Industry (2013)

Lawton R. Burns and Mark V. Pauly (2012), Accountable Care Organizations May Have Difficulty Avoiding The Failures of Integrated Delivery Networks Of The 1990s, Health Affairs, 31, pp. 24072416. 10.1377/hlthaff.2011.0675

Abstract: Accountable care organizations are intended to improve the quality and lower the cost of health care through several mechanisms, such as disease management programs, care coordination, and aligning financial incentives for hospitals and physicians. Providers employed several of these mechanisms in forming the integrated delivery networks of the 1990s. The networks failed, however, because of heavy financial losses stemming from hospitals’ purchase of physician practices and their inability to align incentives, garner capitated contracts, and develop the infrastructure to manage risk. Although the current mechanisms underlying accountable care organizations continue to evolve, whether and how they will have an impact on quality and costs remains open to question. Care coordination and information technology are proving more complicated and expensive to implement than anticipated, providers may lack the ability to implement these mechanisms, and primary care providers are in short supply. As in the 1990s, success depends on targeting specific populations, such as people with multiple chronic conditions who need and may benefit from coordinated care.

Mark V. Pauly and Robert J. Town (2012), “Counterpoint: Maryland Exceptionalism? AllPayers Regulation and Health Care System Efficiency” , Journal of Health Politics, Policy and Law, 37 (4), pp. 697707.

Mark V. Pauly, TG McGuire, PP Barros, Handbook of Health Economics, Vol. 2 (2012)

Mark V. Pauly and A Saxena (2012), Health Employment, Medical Spending, and Long Term Health Reform, CESifo Economic Studies, 58 (1), pp. 4972.

Mark V. Pauly (Forthcoming), Medical Spending Reform and the Fiscal Future of the United States.

Mark V. Pauly, Kai Menzel, Howard Kunreuther, Richard A. Hirth (2011), Guaranteed Renewability Uniquely Prevents Adverse Selection in Individual Health Insurance , Journal of Risk and Uncertainty, 43(2):127139.

Past Courses

HCMG101 HEALTH CARE SYSTEMS

This introductory course takes a policy and politics angle to health care's three persistent issues access, cost and quality. The roles of patients, physicians, hospitals, insurers, and pharmaceutical companies will be established. The interaction between the government and these different groups will also be covered. Current national health care policy initiatives and the interests of class members will steer the specific topics covered in the course. The course aims to provide skills for critical and analytical thought about the U.S. health care system and the people in it.

HCMG202 ECON & FINCINGHLTHCR DL

The course provides an application of economic models to demand, supply, and their interaction in the medical economy. Influences on demand, especially health status, insurance coverage, and income will be analyzed. Physician decisions on the pricing and form of their own services, and on the advice they offer about other services, will be considered. Competition in medical care markets, especially for hospital services, will be studied. Special emphasis will be placed on government as demander of medical care services. Changes in Medicare and regulation of managed care are among the public policy issues to be addressed.

HCMG204 COMPARATIVE HC SYSTEMS

This course examines the structure of health care systems in different countries, focusing on financing, reimbursement, delivery systems and adoption of new technologies. We study the relative roles of private sector and public sector insurance and providers, and the effect of system design on cost, quality, efficiency and equity of medical services. Some issues we address are normative: Which systems and which public/private sector mixes are better at achieving efficiency and equity? Other issues are positive: How do these different systems deal with tough choices, such as decisions about new technologies? Our main focus is on the systems in four large, prototypical OECD countriesGermany, Canada, Japan, and the United Kingdomand then look at other countries with interesting systems including Italy, Chile, Singapore, Brazil, China and India. We draw lessons for the U.S. from foreign experience and vice versa.

HCMG845 MANAGED CARE & INTEG HC

This course, cotaught with Brad Fluegel (former Executive VP of Wellpoint, Inc and current Chief Strategy Officer at Walgreens) will focus on two interrelated topics: managed care and market structure. The section on managed care will cover strategic planning and marketing of managed care services, operational issues in developing a managed care network, actuarial issues, and the management of physician behavior. The section on health care market structure will analyze strategies of vertical integration and horizontal integration (M+As), and their attempt to alter the balance of power in local healthcare markets. The section will also analyze the operational issues in managing cost and quality in an integrated system, integration along the supply chain, and the performance of these systems, and the bargaining and negotiation between hospitals, physicians, and health plans.

HCMG859 COMPARATIVE HC SYSTEMS

This course examines the structure of health care systems in different countries, focusing on financing, reimbursement, delivery systems and adoption of new technologies. We study the relative roles of private sector and public sector insurance and providers, and the effect of system design on cost, quality, efficiency and equity of medical services. Some issues we address are normative: Which systems and which public/private sector mixes are better at achieving efficiency and equity? Other issues are positive: How do these different systems deal with the tough choices, such as decisions about new technologies? Our focus first on the systems in four large, prototypical OECD countries Germany, Canada, Japan, and the United Kingdom and then look at other developed and emerging countries with interesting systems including Italy, Chile, Singapore, Brazil, China and India. We will draw lessons for the U.S. from foreign experience and vice versa.

HCMG863 MGMT&ECONOFPHARM&MEDTECH

This course provides an overview of the management, economic and policy issues facing the pharmaceutical, biotechnology and medical device industries. The course perspective is global, but with emphasis on the U.S. as the largest and most profitable market. Critical issues we will examine include: R&D intensive cost structure with regulation and rapid technological change; strategic challenges of biotechnology startups; a complex global marketplace in which prices are regulated in most countries and customers include governments and insurers, as well as physicians, and consumers; intense and evolving M&A, joint ventures, and complex alliances; thriving generics industry in the US and globally. We use Wharton and industry experts from various disciplines to address these issues.

HCMG890 ADVANCED STUDY PROJECT

HCMG 890001: This course examines issues related to the Services Sector of thehealth care industry. For those interested in management, investing, or bankingto the health care industry, the services sector will likely be the largest and most dynamic sector within all of health care. We will study key management issues related to a number of different health care services businesses with a focus on common challenges related to reimbursement, regulatory, margin, growth, and competitive issues. We will look at a number of different businesses and subsectors that may have been unfamiliar to students prior to taking the course. We will make extensive use of outside speakers, many of whom will be true industry leaders within different sectors of the health care services industry. Speakers will address the current management issues they face in running their businesses as well as discuss the career decisions and leadership styles that enables them to reach the top of their profession. Students will be asked to develop a plan to both buyout and manage a specific health care services business of their choosing and will present their final plans to a panel of leading Health Care Private Equity investors who will evaluate their analysis. Prerequisites: HCMG 841. Health Care Management MBA majors only ,Senior healthcare executives and policy leaders will be engaged as guest speakers.

HCMG900 PROSEMINAR IN HSR

This seminar will explore empirical methods in health care research with an emphasis on applications in health care economics and finance. The methods covered include estimation with panel data, program evaluation models, qualitative and limited dependent variable models, stochastic frontier models, estimation with count data, and duration models. The readings consist of a blend of classic and recent empirical studies, including articles on the demand for health care and health insurance, tests for moral hazard and adverse selection, and estimation of provider cost functions. Students are required to conduct an econometric analysis of some issue within the health care field. With the permission of the instructor, the seminar is open to doctoral students from departments other than Health Care Systems.

HCMG901 SEM:HLTH CARE COST BEN

The purpose of this doctoral level course is to investigate the theory and practice of costbenefit and costeffectiveness analysis as applied to health care. The three techniques to be examined are costeffectiveness analysis with single dimensional outcomes, cost effectiveness analysis with multiple attributes (especially in the form of Quality Adjusted Life Years), and economic costbenefit analysis. Valuation of mortality and morbidity relative to other goods will be emphasized. Students will be expected to develop written critiques of articles in the literature, and to design a new application of one of the techniques as a term project.

• Victor R, Fuchs Lifetime Achievement Award from ASHEcon, 2012
• President of the American Society of Health Economics, 2012
• William B. Graham Prize for Health Services Research from the Baxter International Foundation and the Association of University Programs in Health Administration, 2012
• University of Pennsylvania Provost’s Award for Distinguished Ph.D. Teaching and Mentoring, 2012
• John M. Eisenberg Excellence in Mentorship Award from the Agency for Health Care Research and Quality, 2007
• Distinguished Investigator Award from AcademyHealth, 2007
• National Institute of Health Care Management Foundation’s Research Award (with M. Kate Bundorf) for “Is Health Insurance Affordable for the Uninsured?” (Journal of Health Economics 2006), 2007
• Spencer Kimball Article Award (with Howard Kunreuther) from the Journal of Insurance Regulation for, 2006
• American Morning, CNN 03/10/2010
• Morning Edition, NPR 02/15/2010

Knowledge @ Wharton

• Is Canada the Right Model for a Better U.S. Health Care System?, Knowledge @ Wharton 05/19/2017
• Following ‘Repeal and Replace,’ What’s the Fate of Health Care?, Knowledge @ Wharton 03/28/2017
• The Republican Health Care Plan: Do the Promises Add Up?, Knowledge @ Wharton 02/21/2017
• What Changes Are Ahead for the Affordable Care Act?, Knowledge @ Wharton 01/23/2017
• Will Mylan’s EpiPen Episode Help Curb Pharmaceutical Price Gouging?, Knowledge @ Wharton 08/26/2016
• Trump or Clinton? How the Election Will Impact the Economy, Knowledge @ Wharton 08/17/2016
• How Pfizer’s Allergan Purchase Will Boost Its Drug Pipeline, Knowledge @ Wharton 12/02/2015
• The Supreme Court ACA Ruling: What’s the Prognosis?, Knowledge @ Wharton 06/26/2015
• What’s Driving Health Insurers’ Merger Mania?, Knowledge @ Wharton 06/23/2015
• Hospital Consolidation: Can It Work This Time?, Knowledge @ Wharton 05/11/2015
• Does EmployerSponsored Health Insurance Have a Future?, Knowledge @ Wharton 03/18/2015
• Capital Flight: Can Tax Inversions Be Prevented?, Knowledge @ Wharton 09/16/2014
• Health Care Outcomes: When the More Effective Choice Costs More, Knowledge @ Wharton 08/22/2014
• Smoke Signals: What the ReynoldsLorillard Merger Means for the Tobacco Industry, Knowledge @ Wharton 07/30/2014
• ‘Trying to Recapture the Magic’: The Strategy Behind the Pharma M&A Rush, Knowledge @ Wharton 05/28/2014
• Sustainable Health Care: Protecting Hospitals’ Financial Health, Knowledge @ Wharton 04/24/2014
• Sovaldi: Who’s to Blame for the $1,000 a Day Cure?, Knowledge @ Wharton 04/16/2014
• Hospitals Hiring Physicians: Why the Trend Is on the Rise, Knowledge @ Wharton 02/12/2014
• Why Insurance Is the ‘Most Misunderstood Industry’, Knowledge @ Wharton 12/18/2013
• The U.S. Deficit Shrank, but Will It Come Back Bigger Than Ever?, Knowledge @ Wharton 09/23/2013
• Refusing to Hire Workers Who Smoke: An Economic Perspective, Knowledge @ Wharton 08/08/2013
• Access or Profits? Drug Patent Rulings in India Fuel the Debate, Knowledge @ Wharton 04/10/2013
• On Samoa Air, Fatter People Pay More to Fly: Good Business or Bad Customer Relations?, Knowledge @ Wharton 04/10/2013
• Mobile Medical Vans: Overcoming India’s Lastmile Health Care Challenges, Knowledge @ Wharton 02/14/2013
• Insurance: The Most Misunderstood Industry, Knowledge @ Wharton 02/13/2013
• Inaugural Speech, Part II, Knowledge @ Wharton 01/22/2013
• Health Rates to Rise, but the Expected Impact Is Unclear, Knowledge @ Wharton 01/11/2013
• ‘Multitasking Writ Large’: Is American Health Care Reform a Prescription for Trouble?, Knowledge @ Wharton 12/19/2012
• ‘Multitasking Writ Large’: Is Health Care Reform a Prescription for Trouble?, Knowledge @ Wharton 12/05/2012
• Faculty Perspectives on the Election, Knowledge @ Wharton 11/07/2012
• What Now, Mr. President?, Knowledge @ Wharton 11/07/2012
• When Insurance Buyers and Sellers Speak Different Languages, Knowledge @ Wharton 10/23/2012
• Back to the Future: What’s at Stake for the Economy in the ObamaRomney Contest, Knowledge @ Wharton 09/12/2012
• The Soda Tax Gamble: Will It Really Make Us Healthier?, Knowledge @ Wharton 09/12/2012
• Dealing with Natural Disasters, and Beyond, Knowledge @ Wharton 08/01/2012
• The Supreme Court Health Care Ruling: Now What?, Knowledge @ Wharton 06/28/2012
• Unneeded Medical Tests: Is It Time to Just Say No?, Knowledge @ Wharton 04/16/2012
• Health Care Reform: Life after the Supreme Court Debate, Knowledge @ Wharton 04/11/2012
• Research Roundup: Improving Intelligence Forecasts, Vertically Integrated Health Care, and ‘Worrisome’ Health Care Costs, Knowledge @ Wharton 12/20/2011
• Concierge Medicine: The Doctor Is (Always) In, If You Pay Enough, Knowledge @ Wharton 11/22/2011
• Mystery Diagnosis: An Era of Uncertainty for the Health Care Sector, Knowledge @ Wharton 09/14/2011
• Cures for an Industry Crisis: Big Pharma Scrambles to Find New Ways to Develop Drugs Faster, Knowledge @ Wharton 02/10/2011
• Health Care Reform: Not Ready to Be Discharged Yet, Knowledge @ Wharton 03/31/2010
• So You Want to Live to 100? More of Us Will, and Here Is What Life Might Look Like, Knowledge @ Wharton 12/09/2009
• Big Bucks, Small Bang, Knowledge @ Wharton 11/16/2009
• Why Improving Global Health Care Is Everyone’s Responsibility, Knowledge @ Wharton 11/09/2009
• Rx for the Pharmaceutical Industry: Focus on Innovation, Not Marketing, Knowledge @ Wharton 10/14/2009
• Another Hurdle to Health Care Reform: Too Few General Practice Doctors, Knowledge @ Wharton 07/22/2009
• One War We Shouldn’t Avoid: A New Approach to Reducing the Cost of Future Catastrophes, Knowledge @ Wharton 07/08/2009
• One Way to Lower Health Costs: Pay People to Be Healthy, Knowledge @ Wharton 06/24/2009