Continuing Coverage
Health insurance benefits as a labor market friction: Evidence from a quasi-experiment
Ulya Tsolmon & Dan Ariely
Strategic Management Journal, forthcoming
Abstract:
This study examines the propensity of small firms to provide health insurance in response to high state-level unemployment insurance (UI) benefits, given that generous UI benefits reduce labor market frictions that constrain employee mobility. We exploit a unique data set of over 15,000 small private firms in the United States and find that when state UI benefits are high, firms will offer their employees health insurance benefits - especially when those firms rely on human capital that is difficult to replace. We find positive effects of health insurance policy on worker retention, worker productivity, and firm performance. We discuss the implications of our findings to the theory development on the relationship between exogenous labor market frictions and firms' responses to those frictions.
Is There a VA Advantage? Evidence from Dually Eligible Veterans
David Chan, David Card & Lowell Taylor
NBER Working Paper, February 2022
Abstract:
We study public vs. private provision of health care for veterans aged 65 and older who may receive care provided by the US Department of Veterans Affairs (VA) and in private hospitals financed by Medicare. Utilizing the ambulance design of Doyle et al. (2015), we find that the VA reduces 28-day mortality by 46% (4.5 percentage points) and that these survival gains are persistent. The VA also reduces 28-day spending by 21% and delivers strikingly different reported services relative to private hospitals. We find suggestive evidence of complementarities between continuity of care, health IT, and integrated care.
Does telemedicine save lives? Evidence on the effect of telemedicine parity laws on mortality rates
Jiajia Chen & Angela Dills
Southern Economic Journal, forthcoming
Abstract:
Between 1995 and 2018, just over half of U.S. states enacted laws requiring private insurance plans cover medical care provided remotely. These telemedicine parity laws likely increase health care access, particularly in areas with few providers, by granting patients access to specialists or primary care providers located elsewhere. We estimate the effect of telemedicine parity laws on mortality rates of all causes and for causes of death due to conditions more frequently treated with telemedicine. Mortality rates decline postparity laws, driven by decreases in ischemic heart disease deaths. Ischemic heart disease mortality rates decline by about 6% in the difference-in-differences specification and 9% in the event study estimation. These effects are concentrated in counties located in the fringes of metropolitan areas. We also estimate declines in hospital admissions postparity law, consistent with improved health outcomes. Our results suggest that relaxing current telemedicine regulations would reduce mortality rates.
Bad Medical News and the Aversion of Generic Drugs
Manuel Hermosilla & Andrew Ching
Johns Hopkins University Working Paper, November 2021
Abstract:
Efforts to reduce inefficient healthcare spending are prevalent across the developed world. Among available policy options, the substitution of brand name for generic drugs is of particular interest because it can deliver large savings without objective quality sacrifices. These policies are nevertheless met with resistance from patients, who perceive generic drugs as of relatively lower quality. This article sheds new light on the behavioral underpinnings of such generic averse behavior. We argue that generic aversion can be fueled by an inescapable element of patients' interaction with the healthcare system, i.e., receiving information that unveils a health deficiency. We argue that such bad medical news reduce the patient's risk tolerance, causing a turn from generic drugs due to their higher perceived risk. Supporting evidence is presented from the context of LDL ("bad") cholesterol testing, where patients who receive a 130 mg/dL result are assigned to a bad news treatment in a plausibly random way compared to those who receive a 129 mg/dL result. Compared to these control patients, we find that treated patients experience a 1.3% reduction in their propensity to choose a drug's generic option after receiving the LDL result, conversely, an 8% increase in brand name choice propensity.
Do Higher-Priced Hospitals Deliver Higher-Quality Care?
Zack Cooper et al.
NBER Working Paper, February 2022
Abstract:
We analyze whether receiving care from higher-priced hospitals leads to lower mortality. We overcome selection issues by using an instrumental variable approach which exploits that ambulance companies are quasi-randomly assigned to transport patients and have strong preferences for certain hospitals. Being admitted to a hospital with two standard deviations higher prices raises spending by 52% and lowers mortality by 1 percentage point (35%). However, the relationship between higher prices and lower mortality is only present at hospitals in less concentrated markets. Receiving care from an expensive hospital in a concentrated market increases spending but has no detectable effect on mortality.
Influence of Genetic Information on Neonatologists' Decisions: A Psychological Experiment
Katharine Press Callahan et al.
Pediatrics, February 2022
Methods:
We conducted a national study of neonatologists using a split sample experimental design. The questionnaire contained 4 clinical vignettes. Participants were randomly assigned to see one of 2 versions that varied only regarding whether they included the following genetic findings: (1) a variant of uncertain significance; (2) a genetic diagnosis that affects neurodevelopment but not acute survival; (3) a genetic versus nongenetic etiology of equally severe pathology; (4) a pending genetic testing result. Physicians answered questions about recommendations they would make for the patient described in each vignette.
Results:
Vignette versions that included a variant of uncertain significance, a diagnosis foreshadowing neurodevelopmental impairment, or a genetic etiology of disease were all associated with an increased likelihood of recommending palliative rather than intensive care. A pending genetic test result did not have a significant effect on care recommendations.
Physician Practices With Robust Capabilities Spend Less On Medicare Beneficiaries Than More Limited Practices
Hector Rodriguez et al.
Health Affairs, March 2022, Pages 414-423
Abstract:
No research has considered a range of physician practice capabilities for managing patient care when examining practice-level influences on quality of care, utilization, and spending. Using data from the 2017 National Survey of Healthcare Organizations and Systems linked to 2017 Medicare fee-for-service claims data from attributed beneficiaries, we examined the association of practice-level capabilities with process measures of quality, utilization, and spending. In propensity score-weighted mixed-effects regression analyses, physician practice locations with "robust" capabilities had lower total spending compared to locations with "mixed" or "limited" capabilities. Quality and utilization, however, did not differ by practice-level capabilities. Physician practice locations with robust capabilities spend less on Medicare fee-for-service beneficiaries but deliver quality of care that is comparable to the quality delivered in locations with low or mixed capabilities. Reforms beyond those targeting practice capabilities, including multipayer alignment and payment reform, may be needed to support larger performance advantages for practices with robust capabilities.
Patient Routing to Skilled Nursing Facilities: The Consequences of the Medicare Reimbursement Rule
Ginger Zhe Jin, Ajin Lee & Susan Feng Lu
Management Science, forthcoming
Abstract:
Medicare does not pay for a skilled nursing facility (SNF) unless a fee-for-service patient has stayed in the hospital for at least three days. This Medicare reimbursement rule, or the "three-day rule," provides full coverage for the first 20 days and partial coverage for days 21-100 for skilled nursing care provided at any Centers for Medicare and Medicaid Services-approved SNF. In this paper, we study how this Medicare reimbursement rule affects patient routing to SNFs and whether an SNF discharge reduces patients' 30-day hospital readmission rates. Data analysis shows that Medicare patients are more likely to be discharged to an SNF rather than home after the three-day cutoff, and SNF discharges increase hospital readmission rates for Medicare day 3 patients. This perverse effect is driven by infection-related readmissions and is more likely to occur when local SNFs have lower occupancy rates and higher deficiency citations than the median SNF of the same state-year. Back-of-the-envelope calculation suggests that the three-day rule may have generated an extra Medicare cost of $71 million to $345 million per year due to the overuse of SNFs and the subsequent rise in hospital readmissions. Replacing the three-day rule with a machine-learning algorithm mimicking private insurers would help.
Reducing Frictions in Healthcare Access: The ActionHealth NYC Experiment for Undocumented Immigrants
Jonathan Gruber et al.
NBER Working Paper, March 2022
Abstract:
In 2016, New York City designed and implemented an intervention reducing frictions in accessing safety-net care: randomly making initial primary care appointments for 2,428 undocumented immigrants. We leverage a novel survey-administrative data linkage to show that the program resulted in a more efficient allocation of care. The program increased self-reported access to primary care, leading to a 21% fall in emergency department (ED) use. This effect was driven by high-risk individuals whose ED visits fell by 42% on average. Among those visiting sponsored clinics, chronic condition diagnoses and preventive screens increased, positively affecting long-run health.
Loss Aversion or Lack of Trust: Why Does Loss Framing Work to Encourage Preventative Health Behaviors?
Emily Beam et al.
NBER Working Paper, March 2022
Abstract:
We implemented a field experiment designed to increase participants' willingness to visit a health clinic. We find differential responses to a $50 incentive framed as a loss versus framed as a gain. We find little support for the notion that loss aversion is responsible for the effectiveness of loss framing. Instead, it appears that loss framing promotes take-up by raising the perceived probability that the incentive will be provided as promised. The results suggest trust is an alternative pathway through which loss framing may affect behavior, and trust may be an important way to promote desirable health behaviors.
Information, Relative Skill, and Technology Abandonment
Bingxiao Wu & Guy David
Journal of Health Economics, forthcoming
Abstract:
We study the role of relative task-specific skill in explaining the heterogeneity in physicians' technology abandonment decisions in response to negative information shocks. We show that after an unexpected FDA safety warning on the use of minimally invasive hysterectomies, physicians alter their procedural mix towards open procedures and away from the minimally invasive procedures. This effect is less pronounced for physicians more skilled in performing minimally invasive procedures relative to open procedures, highlighting relative skill as an explanation for differential technology abandonment. Since physicians with higher relative skill are more likely to use minimally invasive procedures before the FDA safety communication, we find that the FDA intervention led to a substantial increase in practice variation across physicians with different relative skill levels. These findings are consistent with a theoretical model that predicts physicians' response to new information regarding the effectiveness of medical technology.
How Do Copayment Coupons Affect Branded Drug Prices and Quantities Purchased?
Leemore Dafny, Kate Ho & Edward Kong
NBER Working Paper, February 2022
Abstract:
Drug copayment coupons to reduce patient cost-sharing have become nearly ubiquitous for high-priced brand-name prescription drugs. Medicare bans such coupons on the grounds that they are kickbacks that induce utilization, but they are commonly used by commercially-insured enrollees. We estimate the causal effects of coupons for branded drugs without bioequivalent generics using variation in coupon introductions over time and comparing differential responses across enrollees in commercial and Medicare Advantage plans. Using data on net-of-rebate prices and quantities from a large Pharmacy Benefits Manager, we find that coupons increase quantity sold by 21-23% for the commercial segment relative to Medicare Advantage in the year after introduction, but do not differentially impact net-of-rebate prices, at least in the short-run. To quantify the equilibrium price effects of coupons, we employ individual-level data to estimate a discrete choice model of demand for multiple sclerosis drugs. We use our demand estimates to parameterize a model of drug price negotiations. For this category of drugs, we estimate that coupons raise negotiated prices by 8% and result in just under $1 billion in increased U.S. spending annually. Combined, the results suggest copayment coupons increase spending on couponed drugs without bioequivalent generics by up to 30 percent.