Joseph P. Newhouse (born February 24, 1942) is an American economist and the John D. MacArthur Professor of Health Policy and Management at Harvard University, as well as the Director of the Division of Health Policy Research and of the Interfaculty Initiative on Health Policy. At Harvard, he is a member of the four faculties at Harvard Kennedy School in Cambridge, Harvard Medical School in Boston, Harvard T.H. Chan School of Public Health in Boston, and Harvard Faculty of Arts and Sciences in Cambridge.
Prior to his joining the Faculty at Harvard, he worked for twenty years as an economist at the RAND Corporation, and served as a faculty member of the RAND Graduate School from 1972 to 1988. At RAND, he played a leading role in RAND Health Insurance Experiment. In 2008, he collaborated with the Oregon Health Study team.
He is a Fellow of the American Academy of Arts and Sciences, and an elected member of the National Academy of Medicine formerly the Institute of Medicine. He is also a Faculty Research Associate of the National Bureau of Economic Research. He was the Editor of the Journal of Health Economics for 30 years, which he founded in 1981.
He has received the numerous awards such as the Victor R. Fuchs Lifetime Achievement Award from the American Society of Health Economists, the David Kershaw Prize from the Association for Public Policy Analysis and Management, the Distinguished Investigator Award from the Association for Health Services Research, the Kenneth J. Arrow award in Health Economics from the International Health Economics Association, the Zvi Griliches award for the best paper in Quarterly Journal of Economics, The Hans Sigrist Prize, and the Paul A. Samuelson Certificate of Excellence from TIAA-CREF. He was twice awarded article of the year by AcademyHealth. In 1988, he was awarded the Baxter Health Services Research Prize and the Administrator's Citation from the Health Care Financing Administration. He has also been awarded the Hans Sigrist Foundation Prize for distinguished scientific achievement; the American Risk and Insurance Association's Elizur Wright Award for an outstanding contribution to the literature on risk and insurance literature.
He is the author of many journal articles and several books including "Free for All: Lessons from the RAND Health Insurance Experiment "Harvard University Press, 1993, and "Pricing the Priceless: A Health Care Conundrum" MIT Press, 2002.
He was the founding director of the Health Policy Ph.D. program at Harvard University and chaired the committee that administers the program for 25 years. He is the Principal Investigator of a National Institute of Aging T-32 grant for MD-PhD's in Health Policy, Economics, and Social and Behavioral Sciences. He has chaired or been a member of 71 doctoral dissertation committees in his career.
The Economics of Quality in Health Care
Michael Kobernick Jillian Shank Jefferson Medical College
As a result of years of research with the RAND Corporation and Harvard University, Joseph Newhouse has become extremely passionate about the instability of our nation's health care system. In his 2002 article, he describes the healthcare systems of the United States as “obtaining less value from the resources it uses than other industries”. Prior to proceeding with an explanation of Newhouse's issues that lead to poor performance, it is important to understand the definitions of quality from the Institute of Medicine (IOM) and in economic terms. The IOM defines quality as the gap between the actual and potential performance of the US Healthcare system.
In economic terms, Alan M. Garber and Jonathan Skinner have explored the principles of productive and allocative inefficiency. Productive efficiency refers to the impact of inputs like “physicians, nurses, hospital beds, and capital” on American health care and the authors ask if the impact is greater in other countries (more efficient). Allocative efficiency refers to the benefits from the “marginal dollar spent on health care” and asks the question do the benefits realized “exceed the opportunity cost of other goods” not purchased like raising salaries, a new car, or better education. The authors found that “nearly all countries fall short of ideal in productive efficiency” and the United States system lags behind (is less efficient) other countries most of the time. They found that the U.S. has a high degree of allocative inefficiency, when compared with other high-income countries. The causes are “high prices for inputs, poorly restrained incentives for overutilization, and a tendency to adopt expensive medical innovations rapidly, even when evidence of effectiveness is weak or absent”.