Political economy studies of health policy offer more than simple economic or political studies. Politics can have a greater influence on health policy decisions and their implementation than either economic or health considerations. Politics constrain how much of an optimal economic or health programme can be adopted and implemented. At the same time, the economic interests of the stakeholders drive their political positions on any potential policy change. We need more political economy studies to understand how to craft and execute politically viable ‘best’ health policies. This editorial uses the decision choices facing China’s health reform to illustrate the importance of political economic analysis and argues for more integrated political economy studies, particularly ones examining the roles of the health bureaucracy and the medical profession.

A competitive national health insurance system was introduced in Israel in 1995. Comsumer mobility has been traditionally a signal of market (managed) competition. However, since 1998, sickness funds’ switching rate has been stable at around 1% of the population. The low switching rate is explained by limited real options and similarity in the sickness funds functioning, and reluctance to change providers. The paper aims to characterize the 1% of the population who switches sickness fund in relation to the stayers, and to examine the implications for public policy. The National Insurance Institute Health Registry was used to conduct two analyses: (i) bivariate comparisons on selected socio-demographic characteristics of the switchers to those of the stayers in the years 1999–2000, and (ii) a multivariate logistic analysis of the propensity to switch for the entire adult (21+) population in the years 2005–2006. The main result is that switching is an inferior good. Both the bivariate and the multivariate analysis show that persons with lower labor-income, receiving income support or unemployment benefits are more likely to switch. Switchers have more children up to age 18. Arabs and Orthodox Jews are more likely to switch sickness funds. The 1% of switchers does not form a random draw from the age–sex-adjusted population. The over-representation of poor persons among switchers is unique to the Israeli scene, which might have resulted from demand-side initiatives, but also from implicit risk-selection strategies exercised by the sickness funds under the Israeli incomplete age-based risk-adjustment system.

Rising pharmaceutical prices, increasing demand for more effective innovative drugs and growing public outrage have heightened criticism of the pharmaceutical industry. The public debate has focused on drug prices and access. As a consequence, the patent system is being reexamined as an efficient mechanism for encouraging pharmaceutical innovation and drug development. We propose an alternative to the existing patent system, instead rewarding the innovating firm with direct tax credits in exchange for marginal cost pricing. This concept is based on the fundamental assumption that innovation that benefits society at large may be financed publicly. As an industry which produces a social good characterized by high fixed costs, high information and regulatory costs, and relatively low marginal costs of production, pharmaceuticals are well-suited to such a mechanism. Under this proposal, drug prices fall, consumer surplus increases, access is enhanced, and the incentives to innovate are preserved.

This paper examines whether delivery practice patterns (Cesarean sections or vaginal) are influenced by lawsuits or whether the hypothesized relationship is confounded by small area variation. The analysis uses multilevel analysis to deal with hospital- and Dartmouth Hospital Referral Region-level variation. The model includes patient clinical variables, patient socio-economic status, and hospital characteristics as control variables. The secondary data sources include hospital discharges from the 2002 Texas Health Care Information Council as well as 1988–2001 Texas Department of Insurance Closed Claim File data. After extracting the variation in delivery practice between hospitals and between Dartmouth Hospital Referral Regions in a multilevel model, the effects of lawsuits on defensive medicine are reduced but are still significant.

This article presents an investigation into whether individuals incorporate information on their family genetic (health) endowment into decision making regarding participation in behaviours related to the production of health capital. Competing theoretical perspectives exist as to how genetic endowment should affect participation in health-related behaviours. There is also a growing consensus that the availability of genetic information holds important consequences for the individual in terms of investment in human capital, the pricing and availability of health insurance, and labour market opportunity. Therefore, the question of how individuals use the greater availability of genetic data is important. Our empirical results indicate that poor genetic endowment tends to be associated with a lower probability of participation in cigarette smoking, but also a lower probability of participation in regular exercise.

As England (unlike the rest of the UK) retreads the market route in health policy, it is worth asking two questions. Firstly, is the government right that the ‘new market’ (as it refuses to call it, except in private seminars) is fundamentally different from the 1990s’ internal market which New Labour allegedly abolished in 1997? Secondly, given that the new market is clearly not characterized by the invisible hand, should we characterize it as steered ‘economically’ by a visible (facilitating) hand, on the one hand, or managed ‘politically’ by a fist which would like to remain invisible in order to maintain its power? This article goes on to examine choice in the new NHS with reference to Hirschman (1970), arguing that genuflections to the latter by pro-choice advocates such as Le Grand (2003) are just that – genuflections. Hirschman is used as a taxi by which to reach a desired destination rather than a stimulus to critical reflection, Hirschman-style, upon how ‘exit’, ‘voice’, and particular combinations of ‘exit’ and ‘voice’ may produce perverse outcomes.

In ‘Visible hand or invisible fist’ Professor Paton asks two specific questions; first, whether the new internal market is different to the one we experienced in the 1990s; and, second, given that the new market is not steered by anything approximating the invisible hand, is it an economic market at all, or some kind of political market instead?

Calum Paton’s article reads like a howl of pain when faced with the history of the past 20 years of ‘market-like’ reform to the NHS and the prospect of what is to come. Typically, he makes some powerful points. Not least, he highlights some of the unresolved tensions in current health policy. It does indeed remain pretty much of a mystery quite how patient choice, practice-based commissioning, and commissioning by primary care trusts will knit together, let alone how all NHS Trusts, foundation or not, are meant to make a profit (surplus) within a cash-limited system. But, while his article contains a litany of the problems, both actual and potential, that the ‘new NHS’ may bring, it is missing a counter factual. It contains an unspoken assumption that these changes are being made, almost willfully, to a system that was functioning, if not perfectly, then pretty well.

I am grateful for two respondents as perceptive as Ian Greener and Nick Timmins. Greener’s response allows me in turn to extend my argument. Timmins’ response challenges my case, allowing me to defend it – while his sharp political ‘nose’ sniffs out trends in policy with which I agree.

As the American right wing’s control of national (and local) politics implodes in the United States, there is the inevitable hope wafting in the air as policy specialists and other political activists on the other side of the divide anticipate capturing the US presidency at the end of 2008 to go with the center-left’s majorities won in the US Congress at the end of 2006. And so, health care reform is once again on the march! Alas, if Max Weber was wise to have observed that ideas run upon the tracks of interests, implying clearly that some good ideas die their death because they do not find the right track of interests, while some tracks of interests go nowhere for lack of the right idea, the health policy debate still provides a Technicolor demonstration that the mish and mash of this and that is not yet pointing the country in any particular direction, regardless of election outcomes in 2006 and 2008. Worse yet, in spite of the great sociologist Reinhard Bendix’s demonstration in his masterwork Kings orPeople (1978) that non-incremental transformations often occur at critical junctures of a nation’s history due to the diffusion effects of ideas from abroad, there is no evidence in the current (or past) American debate that the country has ever learned anything at all or thinks it has anything at all to learn from the way these problems are grappled with, and more successfully, elsewhere. (Oh, let’s just take Japan, France, Germany, Spain, Canada, the UK, and a handful of other countries as quick examples.)