Daniel P. Kessler

Keith and Jan Hurlbut Senior Fellow
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Daniel Kessler is the Keith and Jan Hurlbut Senior Fellow at the Hoover Institution and a professor at the Graduate School of Business at Stanford University, where he teaches courses on economics, public policy, and the health care industry. He is also a professor at the Stanford Law School and a professor, by courtesy, of health research and policy in the School of Medicine.

Among his publications are, with Mark McClellan, “The Effect of Hospital Ownership on Medical Productivity,” in the RAND Journal of Economics (2002), and “Designing Hospital Antitrust Policy to Promote Social Welfare,” which appeared in Frontiers in Health Policy Research. His books include a forthcoming second edition of Healthy, Wealthy, and Wise: Five Steps to a Better Health Care System (Hoover Institution Press, 2011), coauthored with Leonard and Shirley Ely Senior Fellow John Cogan and R. Glenn Hubbard, and Regulation versus Litigation: Perspectives from Economics and Law (University of Chicago Press, 2010).

He is the holder of a PhD in economics from the Massachusetts Institute of Technology and a JD from Stanford Law School.

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Recent Commentary

Analysis and Commentary

Merger Policy in Changing Hospital Markets

by Daniel P. Kessler, Mark McClellanvia Hoover Daily Report
Monday, December 11, 2000

Mergers can lead to higher costs and lower quality by reducing competition.

A System Gone Bad

by Daniel P. Kesslervia Hoover Digest
Sunday, January 30, 2000

America’s liability laws are completely irrational—for everyone but trial lawyers. Hoover fellow Daniel Kessler on ways to restore the system to at least a modicum of sanity.

Analysis and Commentary

Tort Liability and the Patients’ Bill of Rights

by Daniel P. Kesslervia Hoover Daily Report
Monday, January 3, 2000

What is the appropriate medical liability policy in an era of managed care?


with Daniel P. Kessler, Jack Lewin, Mark Hydevia Uncommon Knowledge
Friday, November 12, 1999

In the last decade, health maintenance organizations (HMOs) have come to dominate the health care system, in part because they promised to contain soaring health care costs. But patients are unhappy with reduced treatment options and doctors are unhappy with reduced payments. Will the Patients Bill of Rights passed by Congress in 1999 solve these problems? Are there more fundamental problems with our health care system that will require more far-reaching solutions?

The Economic Effects of the Liability System

by Daniel P. Kesslervia Analysis
Tuesday, June 1, 1999

Liability law has two principal objectives: compensation of parties injured in accidents and deterrence of negligent behavior of potential injurers. Considerable evidence, however, suggests that the current liability system in the United States achieves neither. The system has high transaction costs and fails to compensate injured parties appropriately. There is evidence that liability pressure has distorted firms' incentives for innovation. In the health care sector, liability pressure has led to defensive medicine--precautionary treatments with minimal medical benefit administered out of fear of legal liability.

This essay summarizes recent empirical research on the economic effects of liability-reducing reforms to tort law. The strategy of this research is to compare time trends in economic outcomes from states that adopted law reforms with trends in outcomes from states that did not, controlling for other determinants of the outcomes in question. Differences in trends between the two types of states provide an estimate of the effect of the reforms.

In general, this research suggests that reductions in the level of liability improve productive efficiency. But even if these studied reforms improve efficiency, they may not improve the performance of the system in terms of the compensation goal. The essay concludes with a discussion of the potential effects of a wide range of largely untried reforms to the liability system, some advocating radical changes to the allocation of responsibility for accidental injuries, that seek to address both compensation and deterrence goals.

If You Smoke, Florida Wants to Tax You

by Daniel P. Kessler, Jeremy Bulowvia Hoover Digest
Thursday, April 30, 1998

The recent settlement between Florida and the tobacco companies amounts to an excise tax on smokers in all fifty states. Anyone for taxation without representation? By Hoover national fellow Daniel P. Kessler and former Hoover national fellow Jeremy Bulow.