Corruption red flags in public procurement: new evidence from Italian calls for tenders.

This paper contributes to the analysis of quantitative indicators (i.e., red flags or screens) to detect corruption in public procurement. It presents an approach to evaluate corruption risk in public tenders through standardized ML tools applied to detailed data on the content of calls for tenders. The method is applied to roadwork contracts in Italy and three main contributions are reported. First, the study expands the set of commonly discussed indicators in the literature to new ones derived from operative practices of police forces and the judiciary. Second, using novel and unique data on firm-level corruption risk, this study validates the effectiveness of the indicators. Third, it quantifies the increased corruption-prediction ability when indicators that are known to be unavailable to the corruption-monitoring authority are included in the prediction exercise. Regarding the specific red flags, we find a systematic association between high corruption risk and the use of multi-parameter awarding criteria. Furthermore, predictability of the red flag makes them ineffective as prediction tools: the most obvious and scrutinized red flags are either uncorrelated with corruption or, even, negatively associated with it, as it is the case for invoking special procedures due to "urgency," or the extent of publicity of the call for tender.

Buyers' role in innovation procurement: Evidence from US military R&D contracts.

This study provides the first quantification of buyers' role in the outcome of R&D procurement contracts. We combine together four data sources on US federal R&D contracts, follow-on patented inventions, federal public workforce characteristics, and perception of their work environment. By exploiting the observability of deaths of federal employees, we find that managers' death events negatively affect innovation outcomes: a 1% increase in the share of relevant public officer deaths causes a decline of 32.3% of patents per contract, 20.5% patent citations per contract, and 34.3% patent claims per contract. These effects are driven by the deaths occurring in the 6 months before the contract is awarded, thereby indicating the relevance of the design and award stage relative to ex post contract monitoring. Lower levels of self-reported within-office cooperation also negatively impact R&D outcomes.

Subsidy Design in Privately Provided Social Insurance: Lessons from Medicare Part D.

The efficiency of publicly-subsidized, privately-provisioned social insurance programs depends on the interaction between strategic insurers and the subsidy mechanism. We study this interaction in the context of Medicare's prescription drug coverage program. We find that the observed mechanism is successful in keeping "raise-the-subsidy" incentives relatively low, acts much like a flat voucher, and obtains a level of welfare close to the optimal voucher. Across a range of counterfactuals, we find that more efficient subsidy mechanisms share three features: they retain the marginal elasticity of demand, limit the exercise of market power, and preserve the link between prices and marginal costs.

Open enrollment periods and plan choices.

Open enrollment periods are pervasively used in insurance markets to limit adverse selection risks resulting when enrollees can switch plans at will. We exploit a change in the open enrollment rules of Medicare Advantage to analyze how beneficiaries responded to the option of switching to a 5-star-rated plan at anytime, in a setting where insurers adjusted premiums and benefit design to counterbalance the increased selection risk. We present three findings: Within-year switches to 5-star plans increase by 7-16%; demand for 5-star plans across the years does not decline; and the enrollees who switch to a 5-star plan during the year are in better health status than those who do not switch.

Total knee arthroplasty in Italy: reflections from the last fifteen years and projections for the next thirty.

PURPOSE: Annual rates of knee arthroplasty are increasing in all developed countries, imposing a significant economic and organizational burden; it is crucial to forecast the future need for knee arthroplasty, to assist stakeholders in planning strategies and investments, especially in a country like Italy, with the largest proportion of elderly citizens in Europe. Few epidemiological studies have been performed worldwide to estimate the demand for future knee replacement, and a variety of methods have been proposed. METHODS: We investigated the epidemiology of knee arthroplasty performed in Italy in the last 15 years and projected incidence rates up to the year 2050, utilizing, comparing, and adapting the available methodologies. RESULTS: From 2001 to 2016, 812,639 primary TKA were performed in Italy on patients over 40. The total number of surgeries increased by 262% with an average annual growth rate of 6.6%. CONCLUSIONS: Adopting the best fitting projection method, an increase of 45% in incidence rate is expected for 2050.

Insurers' response to selection risk: Evidence from Medicare enrollment reforms.

Evidence on insurers' behavior in environments with both risk selection and market power is largely missing. We fill this gap by providing one of the first empirical accounts of how insurers adjust plan features when faced with potential changes in selection. Our strategy exploits a 2012 reform allowing Medicare enrollees to switch to 5-star contracts at anytime. This policy increased enrollment into 5-star contracts, but without risk selection worsening. Our findings show that this is due to 5-star plans lowering both premiums and generosity, thus becoming more appealing for most beneficiaries, but less so for those in worse health conditions.

The unintended effects of the Medicare Part D low income subsidy.

OBJECTIVES: Medicare Part D is the voluntary program that provides insurance for prescription drugs to 37 million US elderly. This form of public insurance is delivered exclusively through a choice-based private insurance market, where Medicare pays various types of subsidies. The objective of this paper is to analyze how the subsidy paid to low income enrollees induces insurers to distort their plan premiums. METHODS: Combining both an analysis of the incentives created by the different regulations and empirical evidence obtained from plan level data for the years between 2006 and 2013, the paper evaluates the presence of premium distortions associated with insurers response to the low income subsidy. RESULTS: The findings indicate that insurers cluster premiums at the value that maximizes the rents they earn on enrollees receiving the low income subsidies. Moreover, insurers use the possibility of offering multiple insurance plans to manipulate the amount of the subsidy and increase further their rents. CONCLUSIONS: This study indicates the need to reform the subsidy system in Medicare Part D and offers guidance on the essential elements of the low income subsidy reform.

Medicare Part D: Are Insurers Gaming the Low Income Subsidy Design?

This paper shows how in Medicare Part D insurers' gaming of the subsidy paid to low-income enrollees distorts premiums and raises the program cost. Using plan-level data from the first five years of the program, I find multiple instances of pricing strategy distortions for the largest insurers. Instrumental variable estimates indicate that the changes in a concentration index measuring the manipulability of the subsidy can explain a large share of the premium growth observed between 2006 and 2011. Removing this distortion could reduce the cost of the program without worsening consumer welfare.