Nearly all prior work on government outsourcing has focused on the contracting firm's incentives. This paper shows how strong incentive contracts may be insufficient to generate spending reductions (or other desired outcomes) in the presence of a binding technological or managerial constraint....

Governments often contract with private firms to provide public services such as health care and education. To decrease firms' incentives to selectively enroll low-cost individuals, governments frequently "risk-adjust" payments to firms based on enrollees' characteristics. We model how risk...

Unlike in the production of most goods, changes in capacity for labor-intensive services only affect outcomes of interest insofar as service providers change the way they allocate their time in response to those capacity changes. In this paper, we examine how public sector service providers...

Local governments can provide services with their own employees or by contracting with private or public sector providers. We develop a model of this "make-or-buy" choice that highlights the trade-off between productive efficiency and the costs of contract administration. We construct a dataset...

Many government services are provided at the state level such as unemployment insurance, Medicaid, and SNAP. Given the lack of competition, a natural worry is that customer support provided by states for these services is less than adequate. While there are many different measures of how a state...

In the United States, the two principal modes of producing local government services are inhouse provision by government employees and contracting out to private suppliers, also known as privatization. We examine empirically how United States counties choose their mode of providing services. The...

To improve public services, public sector managers must encourage reticent civil servants to enact effective reforms. We show through a randomized controlled trial that school principals, i.e., school mangers, can act as leaders to improve Instructional Management (0.3SD) and student learning...

The Affordable Care Act Marketplaces were introduced in 2014 as part of a reform of the U.S. individual health insurance market. While the individual market represents a small slice of the U.S. population, it has historically been the market segment with the lowest rates of take-up and greatest...

A health insurer's Medical Loss Ratio (MLR) is the share of premiums spent on medical claims. The Affordable Care Act introduced minimum MLR provisions for all health insurance sold in fully-insured commercial markets, thereby capping insurer profit margins, but not levels. While intended to...

We propose a "common-agency" model for explaining inefficient contracting in the U.S. healthcare system. In our setting, common-agency problems arise when multiple payers seek to motivate a shared provider to invest in improved care coordination. Our approach differs from other common-agency...