A Conversation with Assistant Professor Zarek Brot-Goldberg

One new tenure-track faculty member, Zarek Brot-Goldberg, has joined  the University of Chicago Harris School of Public Policy in Academic Year 2020-2021, extending the school’s strength, breadth, and depth of expertise in the field of healthcare economics. Harris has added 22 tenure-track faculty since 2015, including six scholars who joined last academic year. Earlier this year, Nobel Prize-winning economist Michael Kremer was appointed University Professor at the University of Chicago, where he will join the faculty of the Kenneth C. Griffin Department of Economics with an appointment at Harris.

We sat down with Assistant Professor Brot-Goldberg to learn more about his work.

Why Harris?

Harris combines the two big parts of my professional life: economics, and a focus on taking policy seriously. And it doesn’t hurt to have a dean, Katherine Baicker, who studies health economics, and who I already regularly cite in my own work!

You’re a health economist. What got you interested in the field?

When I started my research career, I was a research assistant working for a handful of economists. One of them was Amitabh Chandra, who showed me a paper he wrote with Katherine Baicker – now the dean at Harris – and Jonathan Skinner about productivity issues in US health care. I remember being stunned by a graph showing that 1-year mortality and costs of hospital treatment for heart attacks were completely uncorrelated. It was unexpected, and I needed to know more.   

More generally, the fact that healthcare policy matters a lot further sparked my interest.  In the US, the healthcare sector now makes up 20% of GDP. It’s a setting with a lot of  issues, like market power, that economists think a great deal about across every industry, and the scale of those problems is magnified in healthcare, which makes it really compelling.

Healthcare is an industry that’s tied to very human moments of vulnerability, uncertainty, and weakness, and thus it’s easy to ignore its financial consequences, but they exist, and are substantial.   That dynamic is a really interesting one to try to understand better. 

You’ve looked at how Americans have adapted to Medicare Part D, which is intended to help provide coverage for prescription drugs. What did you learn?

In some of my current research, we studied the importance of default rules in health insurance markets. When low-income Medicaid beneficiaries turn 65, they qualify for subsidies in Medicare Part D, the public drug insurance benefit for the elderly, which is provided by private insurers. If they don’t actively choose a plan, they are assigned, by default, to a randomly-chosen plan.

In our research, we found that 84% of beneficiaries receive the default, and, of that group, two-thirds fail to opt out even after five years. In fact, some are assigned to insurance plans that do not cover the drugs they are already taking. Those who receive poor-fitting default plans by not opting out of the default plan, often respond by cutting back on their drugs, even if that cutback is very large.

I think our results highlight both how important it is to design good default rules into markets for services—because many people will follow those defaults—as well as how what looks like “consumer choice” in complex markets may simply reflect people following the status quo, despite major costs to their health and finances.

You’re also interested in anti-trust issues in the healthcare system. What can you tell us about your research in that area?

Consolidation has become massively important in U.S. healthcare. While the classic image of how doctors practice in many Americans’ mind is probably a doctor working in an independent solo or small practice, the typical doctor in 2020 is an employee of a large, highly-integrated health system, a pattern which is rising rapidly, largely because each individual acquisition of a small practice is too small for antitrust scrutiny.

Healthcare providers claim that this newfound integration helps increase coordination across doctors, while antitrust experts worry that integration may allow these systems to pay doctors to steer their referrals to affiliated specialists, a practice which is illegal under anti-kickback laws but has become increasingly common for integrated systems to do.

In my dissertation work, I studied the effect of the integration of primary care physicians with orthopedic surgeons in Massachusetts. I found evidence supporting both these assertions: While integrated PCP-orthopedist pairs were able to conserve on costs, largely through reductions in wasteful imaging services, PCPs also tended to favor their coworker orthopedists over lower-cost alternatives. I estimated that nearly one-third of patients would have seen a different orthopedist if theirs wasn’t integrated with their PCP. The classic worry about mergers is that they make it easy to raise prices—my work suggests that we should also be concerned about this ability to capture the flow of the market. In a lot of ways, it echoes recent debates about Amazon’s dual role as market maker and seller.

Are you teaching this year? How do you approach teaching, especially during the coronavirus pandemic?

Approaching teaching during a pandemic requires a lot of preparation and a lot of patience!

I’m teaching PPHA 32300, Principles of Microeconomics and Public Policy I. This year, more than ever, the sun will never set on Harris: I expect to be teaching first-year students who are remotely enrolled and taking classes from every continent on the planet. My co-instructor, Tom Coleman and I have put in a lot of effort to bridge the large time zone gap and make the class accessible to everyone. We even arranged for a TA session at 3am Chicago time! This is a very difficult time for students and instructors alike, and being able to teach and learn effectively requires us to try to be empathetic towards everyone’s struggles.

This must be an especially interesting time to be conducting research on issues of health. Are there aspects of the pandemic and its impact that you’re intrigued to examine?

Unfortunately, I think much of the economics of coronavirus are simple: Defeat the virus, save the economy. My collaborator Zack Cooper coauthored a terrific op-ed making a simple case: The US is rich, and full of experts with good ideas about how to tackle the coronavirus. We have the fiscal capacity to try many of these plans simultaneously, and we should, given the threat we’re facing.

One thing I’m curious about is how this crisis will shape our long-run attitudes towards risk. There’s a literature in economics that argues that having lived through economic depressions at formative years reduces people’s willingness to take financial risk. I’ve wondered if our current crisis will make health maintenance an (even more) important part of our collective consciousness.

What else do you want the Harris community to know about you?

I’m an avid (vegetarian) cook. I especially love making ice cream. If you get an A in my class, then once the Keller Center reopens, I will give you a scoop.