Health Care Solution? It's All in the Research

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Joel Hay '70 studies the economics of health care and medicine

By Nadine Fiedler

From the Autumn 2012 Caller

Health economist Joel Hay ’70 has seen the crisis in health care costs coming—for a long time. Since his time as a graduate student at Yale in the late 1970s, Joel’s extensive research has focused on the health care market, the value and costs of medications, health insurance reform, and more. While he has worked in theoretical economics, Joel’s passion is doing research that has an effect on the real lives of real people.
“What it really comes down to, is how do you trade dollars for lives?” says Joel. “Medicare is a $62 trillion unfunded liability. We have to deal with health costs in this country, or we’ll go bankrupt. The question is, how much can we provide to an 88-year-old needing a bypass, or should the resources go for neonatal screening instead? How do we make it equitable?”
Although the present crisis is far from simple, Joel says that the three options for extricating ourselves are clear: we raise taxes, we cut benefits, or we try to make the health care system more efficient. “The first two solutions are inevitable, but they are political solutions based on compromise. To help create the third solution, health economists study the decisions that have been made, provide evidence, and make recommendations. We demonstrate what works, and doctors apply it. We can say with authority that Drug A is better and more cost effective than Drug B or Surgery C.
“It’s a win-win. A full 30% of all health care given in this country is unnecessary or harmful. By being more efficient, we could solve the budget deficit and a lot of other problems.”
Joel came into his own career serendipitously. He studied economics at Amherst, and continued in the field at Yale. In his PhD research he happened to use data about physicians’ incomes and specialties, and on the strength of that study he was hired at the University of Southern California (USC). Its Health Economics Research Center was the leading institute for the field in the 1970s, but health economics was undervalued and was considered a backwater; the Center eventually folded.
Joel left in 1980 to teach and do research at the University of Connecticut, Stanford, and elsewhere, but came back to USC in 1992 to found a graduate program when it revived health economics. The Center has since graduated 120 PhDs from the program and is again one of the best research and teaching institutes of its kind, with burgeoning interest from students, scholars, and policy makers from around the world. He is also proud of his work co-founding the International Society for Pharmacoeconomics and Outcomes Research and serving as founding editor of their enormously prestigious journal, Value in Health. He has also consulted for many U.S. agencies and several countries, and is often quoted in national media on topics related to health care.
Since those early days, health care economists have made enormous contributions to public health. For example, two of Joel’s students did the study that found that the pain medication Vioxx causes heart attacks. Their study caused Merck to pull Vioxx from the market—and that prevented more than 100,000 heart attacks per year.
“That’s the research we do,” says Joel. “It can make a tangible difference in the lives of people.” He won’t stop doing his research and teaching any time soon, either. “If I had to pay to do what I do, I still would,” he says. “If I can contribute in a meaningful way, I’ll come in every day and work.”

Nadine Fiedler is the editor of the Caller and Catlin Gabel’s publications and public relations director.