Dr. Mark Pauly

Dr. Mark Pauly

Faculty Co-Director, LSM (Emeritus)

Bendheim Professor, Professor of Health Care Systems, of Insurance and Risk Management, and of Business and Public Policy, The Wharton School


Mark V. Pauly currently holds the position of Bendheim Professor in the Department of Health Care Systems at the Wharton School of the University of Pennsylvania.  He is Professor of Health Care Systems, Insurance and Risk Management, and Business and Public Policy at the Wharton School and Professor of Economics in the School of Arts and Sciences at the University of Pennsylvania.  He received a Ph.D. in Economics from the University of Virginia.  Dr. Pauly is a former commissioner on the Physician Payment Review Commission and an active member of the Institute of Medicine.  One of the nation’s leading health economists, Dr. Pauly has made significant contributions to the fields of medical economics and health insurance.  His classic study on the economics of moral hazard was the first to point out how health insurance coverage may affect patients’ use of medical services.  Subsequent work, both theoretical and empirical, has explored the impact of conventional insurance coverage on preventive care, on outpatient care, and on prescription drug use in managed care.  In addition, he has explored the influences that determine whether insurance coverage is available and, through several cost effectiveness studies, the influence of medical care and health practices on health outcomes and cost.  His interests in health policy deal with ways to reduce the number of uninsured through tax credits for public and private insurance, and appropriate design for Medicare in a budget-constrained environment.  He is currently studying the effect of poor health on worker productivity.  Dr. Pauly is a co-editor-in-chief of the International Journal of Health Care Finance and Economics and an associate editor of the Journal of Risk and Uncertainty.  He has served on Institute of Medicine panels on public accountability for health insurers under Medicare and on improving the financing of vaccines.  Dr. Pauly is a former member of the advisory committee to the Agency for Health Care Research and Quality, and most recently a member of the Medicare Technical Advisory Panel.

In the area of life sciences, his research has involved methods for determining the cost-effectiveness of a range of drugs and devices, the impacts of regulation and insurer payment policy on the markets for new drugs, in the United States and in other countries, and the determinants of the financing of research and development of biological products.  He is a licensee of a technology through Penn’s Office of Technology Transfer, and the developer of new ways to measure the value to employers of improved worker health.  He supervises a Wharton course in which teams of MBA students consult with drug firms and others on business plans for new products, marketing strategies, and reimbursement negotiations with private insurers, Medicare, and Medicaid.  He has studied how physicians choose which drugs to prescribe, what determines the rate of adoption and diffusion of new technologies, and how profit seeking firms should plan their level of investment in research and development.  His research also involves improving the access to effective drugs in developing countries in Africa and Asia, the impact of AIDS on small businesses and their workers in South Africa, and the prospects for developing pharmaceutical startups in Taiwan, Singapore, and Korea.

A key question addressed by his research is how much a country should invest in science whose goal is to develop products that improve health but are likely to be sold at a high price, especially if protected by patents.  How insurers (public and private) are expected to pay for new products, and what regulations (through the FDA and Medicare) affect what profit seeking firms will find it worthwhile to do is an important area of interest.  He is also concerned with the problem of management of and incentives in teams of knowledge workers whose product is new ideas and new uses for existing projects.

Professor Pauly teaches courses in cost effectiveness analysis, health policy and regulation, and health economics.  His papers have won Article of the Year awards from the Academy for Health Services Research and the American Risk and Insurance Association. In addition, he has been the recipient of a "Distinguished Investigator" award from AcademyHealth and the John M. Eisenberg Excellence in Mentoring award from the Agency for Healthcare Research and Quality. He also was the co-recipient (with M. Kate Bundorf of Stanford University) of the National Institute of Health Care Management Foundation's 13th annual research award. The NICHM Foundation award recognizes their paper, "Is Health Insurance Affordable for the Uninsured?" (Journal of Health Economics, July 2006), as the best research paper published in 2006.