David Matthew Cutler is the Otto Eckstein Professor of Applied Economics at Harvard University. He holds a joint appointment in the economics department and in Harvard's Kennedy School of Government and the Harvard School of Public Health. He graduated from Harvard College, summa cum laude, with a degree in Economics, and then joined the Harvard faculty after receiving his Ph.D. in Economics from the Massachusetts Institute of Technology in 1991. He served in the administration of Bill Clinton and was the senior health care advisor to Barack Obama. From 2003-2008 Cutler was Dean of the Faculty of Arts and Sciences for Social Sciences.
While his work on health economics covers a broad range of subtopics, he is particularly notable for his work on the value of the health care system as a whole. Much of his work argues that the United States has realized good "bang for its buck" by any reasonable measure of the value of a statistical year of life in good health. That is, while health care is extremely expensive, Americans also place a very high value on documentable health gains. He also argues that they could gain considerably more health for the dollar if reimbursement for care were tied to the health value of the service instead of the intensity of the service.
His book Your Money or Your Life gives an introduction on the US health care system. The book and Cutler's ideas were the subject of an article in the New York Times Magazine titled The Quality Cure.
Also, Cutler's 2003 study, "Why have Americans become more obese?", discusses rising obesity as an outcome of the revolution in mass food packaging. He includes vacuum packing, improved preservatives, deep freezing, and microwaves as culprits. Consumer prices on items like various frozen foods, soda, and potato chips are increasing at half the rate of fresh fruits and vegetables, which mass preparation makes for lower costs and more food consumption.
Calories expended, however, changed little. Accordingly, Cutler posits that the 20 min average reduced time of food preparation has resulted in a calorie increase of 100 per day per individual, on average. These extra 100 Calories can largely account for a 10-12 lb weight gain in the American population over the past 20 years.
Work regarding the movement of individuals across health care plans
The article, ″Selection Stories: Understanding Movement across Health Plans,″ written by David Cutler, Bryan Lincoln and Richard Zeckhauser was published in the Journal of Health Economics in 2010. The purpose of the article was to explore why some employees participating in employee sponsored insurance programs change enrollment status between Health Maintenance Organization (HMO) managed care and Fee for Service (FFS) options. The authors theorized that there are three different health insurance selection processes that individuals engage in that influence personal insurance selection. These include backward looking selection, adverse retention, and aging in place. Backward looking selection is explained as past experiences influencing the level of insurance acquired by an individual. For example, someone who got severely ill and did not have enough insurance coverage may seek out more insurance coverage as a result of their previous experience. Adverse retention refers to someone who chooses to maintain the current level of coverage when ill and the unlikelihood of the individual switching insurance plans the more sick that they become. Aging in place refers to someone remaining on the same plan for life because insurance that they are provided is sufficient and the cost of switching is too high. This study conducted analyses by creating models based on data from the Massachusetts state employee health insurance programs. The data was aggregated by HMO versus FFS.
Based on the analyses and modeling, the overall impact of adverse selection and adverse retention was very small when compared to the projected impact due to premium increases for enrollees. In other words, as premiums increase, enrollment in FFS dramatically decreased. This finding was also demonstrated in a literature review published by the RAND corporation. Although there is little difference in terms of selection effects between HMOs and FFS since the enrollee pays a small portion of marginal costs, Cutler contends that adverse selection (less healthy individuals moving from more restrictive HMO to less restrictive and more costly FFS plans,) has a greater impact than adverse retention on enrollees’ choice of health plans. In summary, movement due to adverse selection and adverse retention is minimal; however, it is highly correlated and concentrated in the older and less healthy population, favoring HMO plans due to their lower premiums and economic stability. Overall, adverse selection and retention are not critical factors in adjusting risk for health care plans; however, demographics such as sex and age seem to be significant in spending patterns and differences in plan choices. This article explored the trends and rationale behind the shift from FFS to HMO based. In terms of overall quality of care provided based on the type of health insurance, current literature suggest that the quality of care does not differ between HMO and FFS plans. This article is timely in that it is relevant to the overall shift towards managed care in an effort to reduce health care costs without reducing quality of care. In addition, it is relevant to the current discussions concerning the possibility of having competitive choice health insurance plans that are based upon risk adjustments.
- Harvard Econ Department David Cutler: CV
- Obama's economic advisers are brainy academics Kevin G. Hall, April 4, 2008
- Folland, S. Goodman, A. Stano, A. (2010). The Economics of Health and Health Care. (6th ed). Boston, MA: Prentice Hall
- David Cutler's faculty webpage at Harvard University
- David Cutler's faculty webpage at the Harvard Kennedy School
- The Quality Cure
- Improving Health Care Quality: Is Medicare a Good Candidate for Pay-for-Performance? Policy Forum by the Cato Institute, November 2, 2006, featuring David Cutler, Dr. Sandra Gadson, Michael F. Cannon and Gail Wilensky, audio and video