Costly Savings
The effect of health insurance on crime: Evidence from the Affordable Care Act Medicaid expansion
Qiwei He & Scott Barkowski
Health Economics, March 2020, Pages 261-277
Abstract:
Little evidence exists on the effect of the Affordable Care Act (ACA) on criminal behavior, a gap in the literature that this paper seeks to address. Using a simple model, we argue we should anticipate a decrease in time devoted to criminal activities in response to the expansion, because the availability of the ACA Medicaid coverage raises the opportunity cost of crime. This prediction is particularly relevant for the ACA expansion because it primarily affects childless adults, a population likely to contain individuals who engage in criminal behavior. We validate this forecast empirically using a difference‐in‐differences framework, estimating the expansion's effects on panel datasets of state‐ and county‐level crime rates. Our estimates suggest that the ACA Medicaid expansion was negatively associated with burglary, vehicle theft, homicide, robbery, and assault. These crime‐reduction spillover effects represent an important offset to the government's cost burden for the ACA Medicaid expansion.
The Only Prescription Is Transparency: The Effect of Charge-Price-Transparency Regulation on Healthcare Prices
Hans Christensen, Eric Floyd & Mark Maffett
Management Science, forthcoming
Abstract:
We examine the effect of charge-price-transparency regulation (PTR) - a common policy solution intended to curb rising healthcare costs - on hospitals’ prices. We find that, although PTR does not affect payments or consumer search, it does cause hospitals to reduce charges by approximately 5%. The reputational costs of perceived overcharging appear to be one impetus for the reduction in charges, suggesting that certain stakeholders who are able to impose costs on hospitals are unaware that hospitals can decouple charges from payments. The ineffectiveness of PTR policies in reducing payments and the apparent inability of some stakeholders to realize this fact could explain why charge-transparency policies have been widely adopted with little opposition. Overall, our findings provide a cautionary note - transparency regulation focusing on an indicator that can be decoupled from the construct of interest might placate some stakeholders without actually solving the underlying problem.
Macroeconomic Feedback Effects of Medicaid Expansion: Evidence from Michigan
Helen Levy et al.
Journal of Health Politics, Policy and Law, February 2020, Pages 5-48
Methods: We use Michigan as a case study for evaluating the state-level fiscal impact of Medicaid expansion, with particular attention to the importance of macroeconomic feedback effects relative to the more straightforward fiscal effects typically estimated by state budget agencies. We combine projections from the state of Michigan's House Fiscal Agency with estimates from a proprietary macroeconomic model to project the state fiscal impact of Michigan's Medicaid expansion through 2021.
Findings: We find that Medicaid expansion in Michigan yields clear fiscal benefits for the state, in the form of savings on other non-Medicaid health programs and increases in revenue from provider taxes and broad-based sales and income taxes through at least 2021. These benefits exceed the state's costs in every year.
Evidence-Based Community Health Worker Program Addresses Unmet Social Needs And Generates Positive Return On Investment
Shreya Kangovi et al.
Health Affairs, February 2020, Pages 207-213
Abstract:
Interventions that address socioeconomic determinants of health are receiving considerable attention from policy makers and health care executives. The interest is fueled in part by expected returns on investment. However, many current estimates of returns on investment are likely overestimated, because they are based on pre-post study designs that are susceptible to regression to the mean. We present a return-on-investment analysis that is based on a randomized controlled trial of Individualized Management for Patient-Centered Targets (IMPaCT), a standardized community health worker intervention that addresses unmet social needs for disadvantaged people. We found that every dollar invested in the intervention would return $2.47 to an average Medicaid payer within the fiscal year.
Medicare and the Geography of Financial Health
Paul Goldsmith-Pinkham, Maxim Pinkovskiy & Jacob Wallace
Federal Reserve Working Paper, January 2020
Abstract:
We use a five percent sample of Americans’ credit bureau data to study the effects of public health insurance on the geography of consumer financial health. Exploiting the nearly universal eligibility for Medicare at age 65, we find a 30 percent reduction in the level of debts in collections with limited effects on other financial outcomes. Medicare reduces the geographic variation in collections by two-thirds at age 65 and halves the geographic correlation between collections and demographics like race and education. Areas that experienced the largest gains in financial health at age 65 had higher shares of black residents, people with disabilities, and for-profit hospitals.
Mitigating Risk Selection in Health Care Entitlement Programs: A Patient-Level Competitive Bidding Approach
Dan Montanera, Abhay Mishra & Raghu Santanam
Georgia State University Working Paper, January 2020
Abstract:
Health care entitlement programs in the U.S. represent a large and growing financial outlay for taxpayers. In the pursuit of operational efficiencies, program administrators often contract with private managed care organizations (MCOs) to procure insurance for beneficiaries. This, however, encourages MCOs to attract the healthiest beneficiaries and avoid the sickest; a phenomenon known as risk selection. This leaves the sickest patients to potentially seek care in safety net facilities or emergency rooms. A mechanism that improves beneficiaries’ access to care without increasing costs would be invaluable to managers and policymakers. This paper investigates whether risk selection can be mitigated with a mechanism where MCOs bid to enroll individual beneficiaries. Although procurement auctions have been studied extensively in the literature, extant research has rarely discussed individual-level bidding. Using game theory, we model an entitlement program under three payment mechanisms: risk-adjustment, bidding, and a mix of prospective payment and bidding. Analytical results show that traditional risk-adjustment cannot optimally be used to eliminate risk selection, while either bidding mechanism eliminates it entirely. Mixed bidding eliminates risk selection at a strictly lower cost than pure bidding. The proposed mixed bidding approach is a new type of mechanism with pre-auction offers that strictly dominates the second-price auction without requiring additional assumptions. Numerical analysis shows bidding dominates risk adjustment in 73.1 percent of simulated parameter sets. Compared to risk adjustment, bidding enrolls 12.1 percent more beneficiaries at 12.7 percent lower cost. Sensitivity analysis reveals that the proposed bidding mechanism dominates in scenarios that more closely resemble real-world health care entitlement environments. More remarkably, bidding would likely generate more cost savings in jurisdictions with a large population of higher risk beneficiaries. These results show that individual-level auctions are a promising mechanism for achieving the dual aim of financial sustainability and expanded access to care for the most vulnerable.
Interaction of the Labor Market and the Health Insurance System: Employer-Sponsored, Individual, and Public Insurance
Naoki Aizawa & Chao Fu
NBER Working Paper, January 2020
Abstract:
We study regulations on the health insurance system for working-age U.S. households, consisting of employer-sponsored health insurance (ESHI), individual health insurance exchange (HIX), and Medicaid. We develop and estimate an equilibrium model with rich heterogeneity across local markets, households, and firms, which highlights the inter-relationship between various components of the health insurance system as well as their relationship with the labor market. We estimate the model exploiting variations across states and policy environments before and after the Affordable Care Act. In counterfactual experiments, we consider policies to cross subsidize between ESHI and HIX, which include pure risk pooling between the two markets as a special case. We find such policies would benefit most households, improve average household welfare, and decrease government expenditure. Furthermore, the welfare gains are larger if the cross subsidization is interacted with Medicaid expansion.
The impact of reducing pharmaceutical industry payments on physician prescribing
Sara Parker‐Lue
Health Economics, March 2020, Pages 382-390
Abstract:
Policymakers in the U.S. have expressed the hope that reducing payments from pharmaceutical companies to physicians will result in lower drug expenditures by reducing branded prescribing. This paper analyzes how the overall use and charges for generic and branded prescriptions change in an inpatient setting after a physician has had a payment from a pharmaceutical company reduced or cut off entirely. This research analyzes the impact of a pharmaceutical company cutting speaking payments to physicians in order to use fewer physicians more often, so the removal of payments is unrelated to a change in the company's product offering. Using hospital discharge data from New Jersey, this research employs a within‐physician differences‐in‐differences design and finds that physicians who have payments reduced do not alter the number of or charges for prescriptions relative to unpaid physicians, neither do physicians who have their payments cut off but are still being paid by other pharmaceutical companies. Physicians who have their payments cut but who are not being paid by other companies, however, increase in the charges for and number of prescriptions written (both branded and generic) relative to their unpaid peers.
Non-Infection-Related And Non-Visit-Based Antibiotic Prescribing Is Common Among Medicaid Patients
Michael Fischer et al.
Health Affairs, February 2020, Pages 280-288
Abstract:
Ambulatory antibiotic stewardship policies focus on prescribing decisions made when patients present to clinicians with possible infections. They do not capture antibiotics prescribed outside of clinician visits or without clear indications for use. Antibiotic prescribing for vulnerable patients in the US has not been comprehensively measured. We measured the frequency with which all filled antibiotic prescriptions were associated with infections and in-person visits for Medicaid patients in the period 2004-13. We found that among 298 million antibiotic fills (62 percent for children) for 53 million patients, 55 percent were for clinician visits with an infection-related diagnosis, 17 percent were for clinician visits without an infection-related diagnosis, and 28 percent were not associated with a visit. Non-visit-based antibiotic prescriptions were less common for children than for adults and more common in the West than in other US regions. Large fractions of antibiotic prescriptions are filled without evidence of infection-related diagnoses or accompanying clinician visits. Current ambulatory antibiotic stewardship policies miss about half of antibiotic prescribing.
Outcomes of primary care delivery by nurse practitioners: Utilization, cost, and quality of care
Chuan‐Fen Liu et al.
Health Services Research, forthcoming
Data Sources: Veterans Affairs (VA) administrative data capturing characteristics, outcomes, and provider assignments of 806 434 VA patients assigned to an MD primary care provider (PCP) who left VA practice between 2010 and 2012.
Study Design: We applied a difference‐in‐difference approach comparing outcomes between patients reassigned to MD and NP PCPs, respectively. We examined measures of outpatient (primary care, specialty care, and mental health) and inpatient (total and ambulatory care sensitive hospitalizations) utilization, costs (outpatient, inpatient and total), and clinical outcomes (control of hemoglobin A1c, LDL, and blood pressure) in the year following reassignment.
Principal Findings: Compared to MD‐assigned patients, NP‐assigned patients were less likely to use primary care and specialty care services and incurred fewer total and ambulatory care sensitive hospitalizations. Differences in costs, clinical outcomes, and receipt of diagnostic tests between groups were not statistically significant.
Does Telemedicine Reduce Emergency Room Congestion? Evidence from New York State
Shujing Sun, Susan Lu & Huaxia Rui
University of Rochester Working Paper, December 2019
Abstract:
Overcrowding in emergency rooms (ERs) is a common yet nagging problem. It not only is costly for hospitals but also compromises care quality and patient experience. Hence, finding effective ways to improve ER care delivery is of great importance. Using a large dataset covering all emergency visits of New York State from 2010 to 2014, we investigate whether telemedicine enhances ER care delivery. We show that, on average, telemedicine availability in the ER significantly reduces average patients' length of stay (LOS), which is partially driven by the flexible resource allocation. Specifically, the adoption of telemedicine leads to a larger reduction in ER LOS when there is a demand surge or supply shortage. Furthermore, such improvement is not a byproduct of other widely adopted health IT applications and does not come at the expense of care quality or patient cost. We also replicate the analysis using annual U.S. hospital data and find that ER telemedicine adoption significantly reduces average patients' waiting time, which suggests that the LOS reduction partially comes from the reduction of waiting time.
Implications Of The Rapid Growth Of The Nurse Practitioner Workforce In The US
David Auerbach, Peter Buerhaus & Douglas Staiger
Health Affairs, February 2020, Pages 273-279
Abstract:
Concerns about physician shortages have led policy makers in the US public and private sectors to advocate for the greater use of nurse practitioners (NPs). We examined recent changes in demographic, employment, and earnings characteristics of NPs and the implications of those changes. In the period 2010-17 the number of NPs in the US more than doubled from approximately 91,000 to 190,000. This growth occurred in every US region and was driven by the rapid expansion of education programs that attracted nurses in the Millennial generation. Employment was concentrated in hospitals, physician offices, and outpatient care centers, and inflation-adjusted earnings grew by 5.5 percent over this period. The pronounced growth in the number of NPs has reduced the size of the registered nurse (RN) workforce by up to 80,000 nationwide. In the future, hospitals must innovate and test creative ideas to replace RNs who have left their positions to become NPs, and educators must be alert for signs of falling earnings that may signal the excess production of NPs.
Changes in emergency department dental visits after Medicaid expansion
Hawazin Elani, Ichiro Kawachi & Benjamin Sommers
Health Services Research, forthcoming
Data Sources/Study Setting: We used the State Emergency Department Database to compare changes in ED visit rates and payment source for dental conditions among patients from 33 states. These states represent four distinct policy environments, based on whether they expanded Medicaid and whether their Medicaid programs provide dental benefits. We first assessed the number of ED dental visits before (2012) and after (2014) the ACA. Then, we used differences‐in‐differences regression to estimate changes in insurance for dental visits by nonelderly adults.
Principal Findings: Our sample contained 375 944 dental ED visits. In states that expanded Medicaid and offered dental coverage, dental ED visits decreased by 14.1 percent (from 19 443 to 16 709, for a net difference of 2734). By contrast, in the remaining three state groups, dental ED visits rose. Meanwhile, the expansion significantly increased Medicaid coverage and decreased the rate of self‐pay for ED dental visits.
Higher Rates of Preventive Health Care With Commercial Insurance Compared With Medicaid: Findings From the Arkansas Health Care Independence “Private Option” Program
Anthony Goudie et al.
Medical Care, February 2020, Pages 120-127
Background: A requirement of the Arkansas Medicaid Section 1115 demonstration waiver was to evaluate the level of care received for Medicaid expansion eligible beneficiaries enrolled in commercial Qualified Health Plans (QHPs) in the Health Care Independence “Private Option” Program. This allowed for a direct comparison of Medicaid and commercial system performance serving similar newly covered adults.
Research Design: In 2014, assignment to either Medicaid or a QHP was made based upon a psychometrically derived continuous composite score to exceptional health care needs assessment screener using a sharp a priori threshold cutpoint. Using a regression discontinuity design we compared preventive care (flu vaccination and screening rates) services in the 2 programs over 3 years.
Results: Compared with Medicaid enrollees, a higher percentage of QHP enrollees consistently received eligible preventive care screenings with 15.3, and 6.9% more receiving at least 1 or all eligible screenings, respectively. For individual preventive care outcomes and compared with Medicaid enrollees over the 3 years under study, a higher percentage of eligible QHP enrollees received a flu shot, cholesterol screenings, glycated hemoglobin assessment, and cervical and breast cancer periodic assessments. No differences were found for colorectal periodic assessments.