Body of Evidence
Are Medical Care Prices Still Declining? A Re-Examination Based on Cost-Effectiveness Studies
Abe Dunn, Anne Hall & Seidu Dauda
Econometrica, March 2022, Pages 859-886
Abstract:
More than two decades ago, a well-known study on heart attack treatments provided evidence suggesting that, when appropriately adjusted for quality, medical care prices were actually declining (Cutler, McClellan, Newhouse, and Remler (1998)). Our paper revisits this subject by leveraging estimates from more than 8000 cost-effectiveness studies across a broad range of conditions and treatments. We find large quality-adjusted price declines associated with treatment innovations. To incorporate these quality-adjusted indexes into an aggregate measure of inflation, we combine an unadjusted medical-care price index, quality-adjusted price indexes from treatment innovations, and proxies for the diffusion rate of new technologies. In contrast to official statistics that suggest medical care prices increased by 0.53 percent per year relative to economy-wide inflation from 2000 to 2017, we find that quality-adjusted medical care prices declined by 1.33 percent per year over the same period.
Health insurance coverage and health outcomes among transgender adults in the United States
Travis Campbell & Yana van der Meulen Rodgers
Health Economics, forthcoming
Abstract:
This study provides evidence of health and insurance coverage disparities between the cisgender and transgender US populations using repeated cross sections from the 2014-2020 Behavioral Risk Factors Surveillance Systems. The analysis tests whether increasing the incidence of insurance coverage among transgender people could alleviate the health disparity. The empirical approach uses a fuzzy regression discontinuity design that leverages breaks in government health assistance eligibility by age. Results indicate that, for transgender recipients only, insurance coverage meaningfully improves mental health; for cisgender recipients only, insurance coverage reduces difficulties with concentration and memory; and for both the transgender and cisgender populations, insurance coverage contributes to important improvements in physical health, overall health, and healthcare access.
The effect of pharmaceutical innovation on longevity: Evidence from the U.S. and 26 high-income countries
Frank Lichtenberg
Economics & Human Biology, forthcoming
Abstract:
This study examines the impact that pharmaceutical innovation, which accounts for most private biomedical research expenditure, has had on longevity. We perform two types of two-way fixed-effects analyses, which control for the effects of many potentially confounding variables. First, we analyze long-run (2006-2018) changes in longevity associated with different diseases in a single country: the U.S. Then, we analyze relative longevity levels associated with different diseases in 26 high-income countries during a single time period (2006-2016). The measure of longevity we analyze, mean age at time of death, is strongly positively correlated across countries with life expectancy at birth. The measure of pharmaceutical innovation we use is the mean vintage (year of initial world launch) of the drugs used to treat each disease in each country. Changes in the vintage distribution of drugs are due to both entry of new drugs and exit of old drugs. Our analysis of U.S. data indicates that the diseases for which there were larger increases in drug vintage tended to have larger increases in the longevity of Americans of all races and both sexes. In other words, the lower the mean age of the drugs, the higher the mean age at death. We test, and are unable to reject, the "parallel trends" hypothesis. We estimate that the 2006-2018 increase in drug vintage increased the mean age at death of Americans by about 6 months (66% of the observed increase). Controlling for sex, race, and education has only a small effect on the estimate of the vintage coefficient. The estimates indicate that drug vintage did not have a significant effect on the mean age at death of decedents with less than 9 years of education. Drug vintage had a positive and significant effect on the mean age at death of decedents with at least 9 years of education, and a larger effect on the mean age at death of decedents with at least 13 years of education. The finding that pharmaceutical innovation has a larger effect on the longevity of people with more education is consistent with previous evidence that more educated people are more likely to use newer drugs. Our analysis of data on 26 high-income countries indicates that the higher the vintage of drugs available to treat a disease in a country, the higher mean age at death was, controlling for fixed disease and country effects. The increase in drug vintage is estimated to have increased mean age at death in the 26 countries by 1.23 years between 2006 and 2016 - 73% of the observed increase. We obtain estimates of the cost of pharmaceutical innovation - its impact on drug expenditure - as well as estimates of an important benefit of pharmaceutical innovation - the number of life-years gained from it - and of their ratio, i.e., the incremental cost-effectiveness ratio. Estimates of the cost per life-year gained for the U.S. and the 26 countries are $35,817 and $13,904, respectively. Both figures are well below per capita GDP in the respective regions, suggesting that, overall, pharmaceutical innovation was highly cost-effective.
The Power of a Tweet? Social Media, Presidential Communication, and the Politics of Health
Simon Haeder & Jacqueline Chattopadhyay
Presidential Studies Quarterly, forthcoming
Abstract:
Social media holds the potential to transform presidential communication and leadership. We test whether presidential tweets affect public opinions about the Affordable Care Act (ACA) as well as partisan reputations for handling health policy using a survey-based experiment. We find that negative tweets about the ACA from President Trump reduced favorability toward the ACA among Republicans and increased the partisan gap. Support was particularly reduced among Republicans with low levels of racial resentment, with a corresponding opposite effect among Democrats with high levels of racial resentment. We found only limited effects on opinions about party handling of health policy more generally.
Estimating Equilibrium in Health Insurance Exchanges: Price Competition and Subsidy Design under the ACA
Pietro Tebaldi
NBER Working Paper, March 2022
Abstract:
In government-sponsored health insurance, subsidy design affects market outcomes. First, holding premiums fixed, subsidies determine insurance uptake and average cost. Insurers then respond to these changes, adjusting premiums. Combining data from the first four years of the California ACA marketplace with a model of insurance demand, cost, and insurers' competition, I quantify the impact of alternative subsidy designs on premiums, enrollment, costs, public spending, and consumer surplus. Younger individuals are more price sensitive and cheaper to cover. Increasing subsidies to this group would make all buyers better off, increase market participation, and lower average costs and average subsidies.
Testing the reproducibility and robustness of the cancer biology literature by robot
Katherine Roper et al.
Journal of the Royal Society Interface, April 2022
Abstract:
Scientific results should not just be 'repeatable' (replicable in the same laboratory under identical conditions), but also 'reproducible' (replicable in other laboratories under similar conditions). Results should also, if possible, be 'robust' (replicable under a wide range of conditions). The reproducibility and robustness of only a small fraction of published biomedical results has been tested; furthermore, when reproducibility is tested, it is often not found. This situation is termed 'the reproducibility crisis', and it is one the most important issues facing biomedicine. This crisis would be solved if it were possible to automate reproducibility testing. Here, we describe the semi-automated testing for reproducibility and robustness of simple statements (propositions) about cancer cell biology automatically extracted from the literature. From 12 260 papers, we automatically extracted statements predicted to describe experimental results regarding a change of gene expression in response to drug treatment in breast cancer, from these we selected 74 statements of high biomedical interest. To test the reproducibility of these statements, two different teams used the laboratory automation system Eve and two breast cancer cell lines (MCF7 and MDA-MB-231). Statistically significant evidence for repeatability was found for 43 statements, and significant evidence for reproducibility/robustness in 22 statements. In two cases, the automation made serendipitous discoveries. The reproduced/robust knowledge provides significant insight into cancer. We conclude that semi-automated reproducibility testing is currently achievable, that it could be scaled up to generate a substantive source of reliable knowledge and that automation has the potential to mitigate the reproducibility crisis.
Personalized Disease Screening Decisions Considering a Chronic Condition
Ali Hajjar & Oguzhan Alagoz
Management Science, forthcoming
Abstract:
Clinical practice guidelines do not sufficiently address the needs of patients with chronic conditions as these guidelines focus on single disease management and ignore unique patient-specific conditions. As a result, a nonpersonalized approach to the management of the patients with chronic conditions leads to adverse events and increases the financial burden on the healthcare system as over 150 million Americans experience chronic conditions. To this end, we develop a stochastic modeling framework to personalize the disease screening decisions for patients with or at risk for developing a chronic condition and provide an exact solution algorithm. We consider the optimal management of the screening decisions for an index disease (e.g., breast cancer, colorectal cancer, human immunodeficiency virus, etc.) while accounting for the existence of a chronic condition (e.g., hypertension, diabetes, Alzheimer's disease, etc.). Our modeling framework is particularly useful for the cases where the chronic condition affects the risk of the index disease. In a case study using real breast cancer epidemiology data, we demonstrate how our modeling framework can be used to personalize breast cancer screening for women with type 2 diabetes. In addition to providing a personalized breast cancer screening schedule for women with diabetes, we find some important policy insights that were not previously recognized by the medical community. More specifically, we find that compared with women without diabetes, women with diabetes should be screened less aggressively, but screening should end at similar ages. We also find that adherence to the optimal screening policy is more crucial for women with diabetes compared with nondiabetic women. Our main insight on screening recommendations also has important resource implications as it leads to fewer screening mammograms. That is, compared with the current national breast cancer screening guidelines, the optimal breast cancer screening policy for women with diabetes could save the healthcare system approximately 2.6 million mammograms annually.
Does Entry Remedy Collusion? Evidence from the Generic Prescription Drug Cartel
Amanda Starc & Thomas Wollmann
NBER Working Paper, March 2022
Abstract:
Entry represents a fundamental threat to cartels engaged in price fixing. We study the extent and effect of this behavior in the largest price fixing case in US history, which involves generic drugmakers. To do so, we link information on the cartel's internal operations to regulatory filings and market data. We find that collusion induces significant entry, which in turn reduces prices. However, regulatory approvals delay most entrants by 2-4 years. We then estimate a structural model to assess counterfactual policies. We find that reducing regulatory delays by just 1-2 years equates to consumer compensating variation of $597 million-$1.52 billion.
The Medicaid windfall: Medicaid expansions and the target efficiency of hospital safety-net subsidies
Sayeh Nikpay
Journal of Public Economics, April 2022
Abstract:
Federal hospital safety-net subsidy programs seek to defray costs of uncompensated hospital care, but eligibility criteria are based on Medicaid volume. Therefore, subsidies have poor "target efficiency": hospitals that provide large amounts of uncompensated care may not receive subsidies (exclusion error), while hospitals that provide little uncompensated care may receive subsidies (inclusion error). Medicaid expansions may exacerbate poor targeting by increasing Medicaid patient volume while reducing uncompensated care. Using hospital administrative data from 2003 to 2019, I quantify the target efficiency of Medicare and Medicaid Disproportionate Share Hospital payments and the 340B drug discount program and quantify how changes in Medicaid eligibility affect safety-net subsidy receipt and target efficiency. I find that the ACA Medicaid expansion increased participation in Medicare DSH and 340B, especially among non-safety-net hospitals (inclusion errors) resulting in a shift of approximately $5B from safety-net to non-safety-net hospitals. I find the opposite for a Medicaid contraction in Tennessee in 2005. My results demonstrate an unintended consequence of Medicaid-based eligibility criteria: changes in Medicaid coverage affect the allocation of public subsidies for safety-net patients.
Financial Impacts And Operational Implications Of Private Equity Acquisition Of US Hospitals
Marcelo Cerullo et al.
Health Affairs, April 2022, Pages 523-530
Abstract:
Although private equity acquisition of short-term acute care hospitals purportedly improves efficiency and cost-effectiveness, financial performance after acquisition remains unexamined. We compared changes in the financial performance of 176 hospitals acquired during 2005-14 versus changes in matched control hospitals. Acquisition was associated with a $432 decrease in cost per adjusted discharge and a 1.78-percentage-point increase in operating margin. The majority of acquisitions - 134 members of the Hospital Corporation of America, acquired in 2006 - were associated with a $559 decrease in cost per adjusted discharge but no change in operating margin. Conversely, non-HCA hospitals exhibited a 3.27-percentage-point increase in operating margin without a concomitant change in cost per adjusted discharge. When we examined markers of hospital capacity, operational efficiency, and costs, we found that private equity acquisition was associated with decreases in total beds, ratio of outpatient to inpatient charges, and staffing (total personnel and nursing full-time equivalents and total full-time equivalents per occupied bed). Therefore, financial performance improved after acquisition, whereas patient throughput and inpatient utilization increased and staffing metrics decreased. Future research is needed to identify any unintended trade-offs with safety and quality.
The Costs and Benefits of Monitoring Providers: Evidence from Medicare Audits
Maggie Shi
Columbia University Working Paper, March 2022
Abstract:
This paper examines the extent to which government programs should monitor for wasteful expenditure when outsourcing to third parties, taking into account the costs and savings associated with monitoring. I use novel administrative data to study the largest Medicare monitoring program aimed at identifying and reclaiming payments for unnecessary inpatient admissions. I exploit plausibly exogenous variation across hospitals and across patients, and find that the majority of savings are due to the deterrence of future admissions. I do not find evidence that the marginal patient denied admission is harmed, suggesting that hospitals fine-tune their response to target unnecessary care. But in doing so, they incur compliance costs and adopt technology specifically aimed at assessing the medical necessity of care. For every $1,000 in savings to Medicare, hospitals incur $216 in compliance costs. My welfare calculations imply that despite the costs, increasing monitoring improves welfare.
Mixing It Up: Operational Impact of Hospitalist Caseload and Case-Mix
Masoud Kamalahmadi et al.
Management Science, forthcoming
Abstract:
Hospitalists are medical doctors that specialize in the care of hospitalized patients, a role that until recently belonged to primary care physicians. We develop an operational model of hospitalist-patient interactions with rounding and responding service modes, optimizing hospitalist caseload and case-mix to achieve the maximal reduction in patient length of stay (LOS). We show that hospitalists are effective at reducing LOS for patients with complex conditions, corroborating intuitive reasoning. However, the optimal hospitalist case-mix also includes "simple" patients with few interventions and short LOS, as they can effectively reduce discharge delays. This actionable insight is particularly salient for small community hospitals with simple, short-stay patients, where hospitalists may be undervalued due to the prevailing belief that they are primarily effective for complex patients. We conduct a comparative case study of a small community hospital and a large academic hospital, drawing a stark contrast between the two in terms of ideal caseload and patient coverage. Despite the fact that the academic hospital treats higher complexity patients, hospitalists at the community hospital should actually have a lower caseload than hospitalists at the academic hospital due to shorter stays in the community hospital. We find that both hospitals are understaffed but for different reasons: the academic hospital needs to staff more hospitalists to reduce the current caseload of its hospitalists, whereas the community hospital needs to staff more hospitalists to expand its hospitalist coverage to more patients. We estimate that these hospitals can save on average $1.5 million annually by implementing the optimal staffing policies.