Costly Disease
Health Insurance Loss during COVID-19 Increases Support for Universal Health Coverage
Ashley Fox et al.
Journal of Health Politics, Policy and Law, forthcoming
Methods: Through a survey of 1,211 Americans in June 2020, we examine the influence of health insurance loss on support for Medicare for All (M4A) in two ways. First, we examine associations between pandemic-related health insurance loss and M4A support. Second, we experimentally prime some respondents with a vignette of a sympathetic victim losing employer-sponsored coverage during COVID-19. As a secondary outcome, we examine the effect of these exposures on support for the Affordable Care Act.
Findings: We find that directly experiencing recent health insurance loss is strongly associated (10 pp, p<0.01) with greater M4A support. Experimental exposure to the vignette increases M4A support by 6 pp (p=0.05). When expansion of the ACA is added as a response option, experimental priming still increases support for M4A, but direct experience of insurance loss is associated with greater support for the ACA than for M4A.
A Denial a Day Keeps the Doctor Away
Abe Dunn et al.
NBER Working Paper, July 2021
Abstract:
Who bears the consequences of administrative problems in healthcare? We use data on repeated interactions between a large sample of U.S. physicians and many different insurers to document the complexity of healthcare billing, and estimate its economic costs for doctors and consequences for patients. Observing the back-and-forth sequences of claims' denials and resubmissions for past visits, we can estimate physicians' costs of haggling with insurers to collect payments. Combining these costs with the revenue never collected, we estimate that physicians lose 17% of Medicaid revenue to billing problems, compared with 5% for Medicare and 3% for commercial payers. Identifying off of physician movers and practices that span state boundaries, we find that physicians respond to billing problems by refusing to accept Medicaid patients in states with more severe billing hurdles. These hurdles are just as quantitatively important as payment rates for explaining variation in physicians' willing to treat Medicaid patients. We conclude that administrative frictions have first-order costs for doctors, patients, and equality of access to healthcare.
When Is Tinkering with Safety Net Programs Harmful to Beneficiaries?
Jeffrey Clemens & Michael Wither
NBER Working Paper, July 2021
Abstract:
Interactions between redistributive policies can confront low-income households with complicated choices. We study one such interaction, namely the relationship between Medicaid eligibility thresholds and the minimum wage. A minimum wage increase reduces the number of hours a low-skilled individual can work while retaining Medicaid eligibility. We show that the empirical and welfare implications of this interaction can depend crucially on the relevance of labor market frictions. Absent frictions, affected workers may maintain Medicaid eligibility through small reductions in hours of work. With frictions, affected workers may lose Medicaid eligibility unless they leave their initial job. Empirically, we find that workers facing this scenario became less likely to participate in Medicaid, less likely to work, and more likely to spend time looking for new jobs, including search while employed. The observed outcomes suggest that low-skilled workers face substantial labor market frictions. Because adjustment is costly, tinkering with safety net program parameters that determine the location of program eligibility notches can be harmful to beneficiaries.
Inducing Labor: The Impact of Health Insurance on Post-Natal Labor Supply
Ithai Lurie, Elena Patel & Shanthi Ramnath
University of Utah Working Paper, July 2021
Abstract:
In this paper we analyze the role of access to health insurance plays in the widely documented, sharp fall in mother's labor supply following childbirth. Our analysis exploits variation created by the Affordable Care Act (ACA), which substantially expanded access to health insurance within the U.S., and richly detailed administrative tax data. We find that mother's relative post-childbirth employment increases by 12% for births that occur after the insurance expansion. This labor supply response is pervasive across mother's pre-birth characteristics, and across the varied impact of the ACA expansion. Our analysis suggests that this response is likely driven by a combination of improved access to maternal health care, increased participation by mothers who do not work before birth, reduced exits among mothers who do work before birth, and a compositional changes in who gives birth following the ACA health insurance expansion.
Medicaid and provider supply
Jason Huh
Journal of Public Economics, August 2021
Abstract:
One of the main goals of public health insurance expansions is to increase access to health care services, but doing so may require providers to move to previously underserved areas. Whether and to what extent any such relocation occurs remains an open question. I study how providers choose their practice locations in response to Medicaid expansions for one of the most common forms of primary care, dental care services. I find that expansions of adult Medicaid dental benefits increased the number of dentists per capita in poor counties relative to non-poor counties by 13 percent, or 2.8 dentists per 100,000 population. The increase was larger in counties where the expansions generated greater financial incentives for dentists.
Inertia, Market Power, and Adverse Selection in Health Insurance: Evidence from the ACA Exchanges
Evan Saltzman, Ashley Swanson & Daniel Polsky
NBER Working Paper, July 2021
Abstract:
We study how inertia interacts with market power and adverse selection in managed competition health insurance markets. We use consumer-level data to estimate a model of the California ACA exchange, in which four firms dominate the market and risk adjustment is in place to manage selection. We estimate high inertia costs, equal to 44% of average premiums. Although eliminating inertia exacerbates adverse selection, it significantly reduces market power such that average premiums decrease 13.2% and annual per-capita welfare increases $902. These effects are substantially smaller in settings without market power and/or risk adjustment. Moreover, converting the ACA's premium-linked subsidies to vouchers mitigates the impact of inertia by reducing market power, whereas reducing high consumer churn in the ACA exchanges increases the impact of inertia by enhancing market power. The impact of inertia is not sensitive to provider network generosity, despite greater consumer attachment to plans with more differentiated provider networks.
Medical Debt in the US, 2009-2020
Raymond Kluender et al.
Journal of the American Medical Association, 20 July 2021, Pages 250-256
Design, Setting, and Participants: Data on medical debt in collections were obtained from a nationally representative 10% panel of consumer credit reports between January 2009 and June 2020 (reflecting care provided prior to the COVID-19 pandemic). Income data were obtained from the 2014-2018 American Community Survey. The sample consisted of 4.1 billion person-month observations (nearly 40 million unique individuals). These data were used to estimate the amount of medical debt (nationally and by geographic region and zip code income decile) and to examine the association between Medicaid expansion and medical debt (overall and by income group).
Results: In June 2020, an estimated 17.8% of individuals had medical debt (13.0% accrued debt during the prior year), and the mean amount was $429 ($311 accrued during the prior year). The mean stock of medical debt was highest in the South and lowest in the Northeast ($616 vs $167; difference, $448 [95% CI, $435-$462]) and higher in poor than in rich zip code income deciles ($677 vs $126; difference, $551 [95% CI, $520-$581]). Between 2013 and 2020, the states that expanded Medicaid in 2014 experienced a decline in the mean flow of medical debt that was 34.0 percentage points (95% CI, 18.5-49.4 percentage points) greater (from $330 to $175) than the states that did not expand Medicaid (from $613 to $550). In the expansion states, the gap in the mean flow of medical debt between the lowest and highest zip code income deciles decreased by $145 (95% CI, $95-$194) while the gap increased by $218 (95% CI, $163-$273) in the nonexpansion states.
Why do narrow network plans cost less?
Eli Liebman & Matthew Panhans
Health Economics, forthcoming
Abstract:
Narrow network health insurance plans have been shown to have lower premiums and lower costs to insurers. This paper decomposes and quantifies the magnitudes for various mechanisms by which networks may reduce premiums and costs. Using data on the Colorado non-group market, we examine three mechanisms through which a narrow network might achieve lower costs: (1) enroll a population with lower utilization, (2) negotiate lower prices, or (3) steer patients away from high-cost hospitals. We find that all three mechanisms play a role. Narrow plans are partly able to achieve lower costs because they both steer patients to lower cost hospitals and, for a given hospital, negotiate lower prices than broad plans. The lower negotiated prices mechanism accounts for 15% of the cost savings to narrow network plans, and the steering away from higher cost hospitals accounts for about 18%. Both of these mechanisms can be ways to efficiently lower costs. The remaining 67% of the cost savings is due to lower utilization of narrow network plan enrollees. These findings are important for policymakers considering how to balance containing healthcare costs with concern for the appropriate regulation of narrow network plans.
Do Policies to Increase Access to Treatment for Opioid Use Disorder Work?
Eric Barrette, Leemore Dafny & Karen Shen
NBER Working Paper, July 2021
Abstract:
Even among commercially-insured individuals, opioid use disorder (OUD) is undertreated in the U.S.: nearly half receive no treatment within 6 months of a new diagnosis. Using a difference-in-differences specification exploiting the extension of insurance parity requirements for substance disorder treatment to small group enrollees in 2014, we find that parity increases utilization of residential treatment but decreases utilization of agonist medications, the standard of care. We find direct interventions to increase access to medication may be more promising: increases in the county-level share of physicians able to prescribe agonists are associated with substitution toward medication-assisted treatment.
Do Urgent Care Centers Reduce Medicare Spending?
Janet Currie, Anastasia Karpova & Dan Zeltzer
NBER Working Paper, July 2021
Abstract:
We examine the impact of the opening of a new urgent care center (UCC) on health care costs and the utilization of care among nearby Medicare beneficiaries. We focus on 2006-2016, a period of rapid UCC expansion. We find that total Medicare spending rises when residents of a zip code are first served by a UCC, relative to spending in yet-to-be-served zip codes, while mortality remains flat. We explore mechanisms by looking at categories of spending and by examining utilization. Increases in inpatient visits are the largest contributor to the overall increase in spending, rising by 6.65 percent within six years after UCC entry. The number of emergency room visits that result in a hospital admission also increases by 3.7 percent. In contrast, there is no change in the number of ER visits that do not result in admission to hospital, in visits to physicians outside a UCC, or in imaging and tests. Overall, these results provide little evidence that UCCs replace costly ER visits or that they crowd out visits to patients' regular doctors. Instead, the evidence is consistent with the possibility that UCCs - which are increasingly owned by or contract with hospital systems - induce greater spending on hospital care.
Unobserved Heterogeneity, State Dependence, and Health Plan Choices
Ariel Pakes et al.
NBER Working Paper, July 2021
Abstract:
We provide a new method to analyze discrete choice models with state dependence and individual-by-product fixed effects and use it to analyze consumer choices in a policy-relevant environment (a subsidized health insurance exchange). Moment inequalities are used to infer state dependence from consumers' switching choices in response to changes in product attributes. We infer much smaller switching costs on the health insurance exchange than is inferred from standard logit and/or random effects methods. A counterfactual policy evaluation illustrates that the policy implications of this difference can be substantive.
Did the ACA's "guaranteed issue" provision cause adverse selection into nongroup insurance? Analysis using a copula-based hurdle model
Giampiero Marra, Rosalba Radice & David Zimmer
Health Economics, forthcoming
Abstract:
Prior to the Affordable Care Act (ACA), insurance companies could charge higher premiums, or outright deny coverage, to people with preexisting health problems. But the ACA's "guaranteed issue" provision forbids such price discrimination and denials of coverage. This paper seeks to determine whether, after implementation of the ACA, nongroup private insurance plans have experienced adverse selection. Our empirical approach employs a copula-based hurdle regression model, with dependence modeled as a function of dimensions along which adverse selection might occur. Our main finding is that, after implementation of the ACA, nongroup insurance enrollees with preexisting health problems do not appear to exhibit adverse selection. This finding suggests that the ACA's mandate that everyone acquire coverage might have attracted enough healthy enrollees to offset any adverse selection.
Down to the Cents: The Case of International Drug Prices
Bill Hu et al.
Finance Research Letters, forthcoming
Abstract:
Using drug prices from the Veteran Affairs office, we document limited clustering on whole dollars and heightened strategic pricing. Surprisingly 97.9% of drugs over $10,000 are priced down to the cents. We find no significant variations in clustering by price levels or uncertainty, rejecting the negotiation hypothesis. Strategic pricing on 01 and 99 increases monotonically as prices decline. For international drug prices, we find significant clustering on integers in Luxembourg and South Africa as price level increases, supporting the negotiation hypothesis. Our findings contribute to better negotiating drug prices to reduce healthcare costs while not discouraging innovations in drug development.
Larger Nursing Home Staff Size Linked To Higher Number Of COVID-19 Cases In 2020
Brian McGarry et al.
Health Affairs, August 2021, Pages 1261-1269
Abstract:
Staff in skilled nursing facilities (SNFs) are essential health care workers, yet they can also be a source of COVID-19 transmission. We used detailed staffing data to examine the relationship between a novel measure of staff size (that is, the number of unique employees working daily), conventional measures of staffing quality, and COVID-19 outcomes among SNFs in the United States without confirmed COVID-19 cases by June 2020. By the end of September 2020, sample SNFs in the lowest quartile of staff size had 6.2 resident cases and 0.9 deaths per 100 beds, compared with 11.9 resident cases and 2.1 deaths per 100 beds among facilities in the highest quartile. Staff size, including staff members not involved in resident care, was strongly associated with SNFs' COVID-19 outcomes, even after facility size was accounted for. Conventional staffing quality measures, including direct care staff-to-resident ratios and skill mix, were not significant predictors of COVID-19 cases or deaths. Reducing the number of unique staff members without decreasing direct care hours, such as by relying on full-time rather than part-time staff, could help prevent outbreaks.
Regulated Revenues and Hospital Behavior: Evidence from a Medicare Overhaul
Tal Gross et al.
NBER Working Paper, July 2021
Abstract:
We study a 2008 policy reform in which Medicare revised its hospital payment system to better reflect patients' severity of illness. We construct a simulated instrument that predicts a hospital's policy-induced change in reimbursement using pre-reform patients and post-reform rules. The reform led to large persistent changes in Medicare payment rates across hospitals. Hospitals that faced larger gains in Medicare reimbursement increased the volume of Medicare patients they treated. The estimates imply a volume elasticity of approximately unity. To accommodate greater volume, hospitals increased nurse employment, but also lowered length of stay, with ambiguous effects on quality.
Family Health Spillovers: Evidence from the RAND Health Insurance Experiment
Michal Hodor
Journal of Health Economics, forthcoming
Abstract:
I study how family spillovers shape healthcare consumption through two main sources: a learning channel whereby family members share information about their health insurance and the effectiveness of healthcare, and a behavioral channel whereby risk perception and habits are shared and transmitted. I exploit two types of sudden health shocks to identify a causal effect operating through each channel: a spouse's non-fatal heart attack or stroke and a severe injury to a child. I incorporate these shocks into an event-study framework to quantify the effect of spillovers on healthcare consumption of a non-injured adult family member. I find a significant behavioral spillover effect of an increase of more than 200% in medical expenditure of preventive care over a four-year horizon. Moreover, I find a strong and persistent learning spillover that amounts to an average increase of more than 150% in medical expenditure relative to prior to the health shock, and I demonstrate that this effect promotes health investment. While the first result is in line with previous findings in the literature, the second is novel.