Ruhr Economic Papers

Ruhr Economic Papers #849

Are Doctors Better Health Ministers?

by Adam Pilny and Felix Roesel

RWI, 05/2020, 54 S./p., 10 Euro, ISBN 978-3-86788-984-1 DOI: 10.4419/86788984

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Abstract

Appointing or electing professionals to be public officials is a double-edged sword. Experts can use their rich knowledge to implement reforms, but they can also favor their own profession. In this study, we compare physician-trained state health ministers to ministers of other professions in Germany during 1955-2017. German state health ministers have great power to determine hospital capacities and infrastructure. Our results show that physician-trained health ministers increase hospital capacities, capital, and funding by the statutory health insurance (SHI). This prompts hospitals to hire more physicians, but with little impact on hospital outputs. As a result, total factor productivity (TFP) growth in hospital care slows down substantially under physician-ministers. At the same time, job satisfaction of hospital doctors tends to increase. We conclude that, in particular, the medical profession benefits from medical doctors in office.

JEL-Classification: D72, I11, I18, O47

Keywords: Hospitals; health minister; productivity; TFP; favoritism; profession; technocracy

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