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State Medicaid Expansions and Mortality, Revisited: A Cost-Benefit Analysis
Benjamin Sommers
American Journal of Health Economics, forthcoming
Abstract:
Previous research found that Medicaid expansions in New York, Arizona, and Maine in the early 2000’s reduced mortality. I revisit this question with improved data and methods, exploring distinct causes of death and presenting a cost-benefit analysis. Differences-in-differences analysis using a propensity-score control group shows that all-cause mortality declined by 6%, with the most robust reductions for healthcare-amenable causes. HIV-related mortality (affected by the recent introduction of antiretrovirals) accounted for 20% of the effect. Mortality changes were closely linked to county-level coverage gains, with one life saved annually for every 239-316 adults gaining insurance. The results imply a cost-per-life saved ranging from $327,000 to $867,000, which compares favorably to most estimates of the value of a statistical life.
The Health Insurance and Life Satisfaction Connection
Ngan Lam Thi Tran, Robert Wassmer & Edward Lascher
Journal of Happiness Studies, April 2017, Pages 409–426
Abstract:
Prior studies indicate that perceived health is strongly associated with a sense of well-being. The effect of health insurance is much less clear: there has been little rigorous empirical research assessing whether health coverage has an independent impact on individual happiness. This topic is especially important in the US where recently an estimated 18 % of the non-elderly were uninsured and extension of coverage through means such as the Affordable Care Act has been controversial. The present study addresses this question. Drawing from a large survey that collected comprehensive health and personal information about the US adult population, controlling for a wide variety of factors known to influence well-being, and addressing the possible endogeneity of having health insurance, we find that individuals without health insurance coverage were less likely to be “very satisfied” or “satisfied” with life. This may be because health insurance reduces uncertainty. Regardless of other benefits it may bring, the expansion of health insurance coverage should increase the life satisfaction of American society.
Early Effects of the Affordable Care Act on Health Care Access, Risky Health Behaviors, and Self-Assessed Health
Charles Courtemanche et al.
NBER Working Paper, March 2017
Abstract:
The goal of the Affordable Care Act (ACA) was to achieve nearly universal health insurance coverage through a combination of mandates, subsidies, marketplaces, and Medicaid expansions, most of which took effect in 2014. We use data from the Behavioral Risk Factor Surveillance System to examine the impacts of the ACA on health care access, risky health behaviors, and self-assessed health after two years. We estimate difference-in-difference-in-differences models that exploit variation in treatment intensity from state participation in the Medicaid expansion and pre-ACA uninsured rates. Results suggest that the ACA led to sizeable improvements in access to health care in both Medicaid expansion and non-expansion states, with the gains being larger in expansion states along some dimensions. No statistically significant effects on risky behaviors or self-assessed health emerge for the full sample. However, we find some evidence that the ACA improved self-assessed health among older non-elderly adults, particularly in expansion states.
Mystery Of The Chargemaster: Examining The Role Of Hospital List Prices In What Patients Actually Pay
Michael Batty & Benedic Ippolito
Health Affairs, April 2017, Pages 689-696
Abstract:
Hospitals in the United States maintain chargemasters that contain the official list prices for all billable services. The prices vary widely across hospitals and are more than three times what hospitals are paid for treating a patient, on average. From this it is tempting to conclude that list prices are a strange, yet ultimately inconsequential, quirk of US health care. However, using both state and national data sets covering the period 2002–14, we found considerable evidence suggesting that list prices reflect hospitals’ strategic behavior and have meaningful effects on payments made by and on behalf of patients. Specifically, we found that list prices varied predominantly across hospitals and within markets, were well predicted by observable hospital characteristics, and were positively related to prices actually paid by patients and their insurers. Moreover, analyses of data before and after the implementation of California’s Hospital Fair Pricing Act suggest that high list prices causally increased payments from the uninsured. However, list prices had at most a limited relationship with care quality.
Market environment and Medicaid acceptance: What influences the access gap?
Amelia Bond et al.
Health Economics, forthcoming
Abstract:
The U.S. health care system is undergoing significant changes. Two prominent shifts include millions added to Medicaid and greater integration and consolidation among firms. We empirically assess if these two industry trends may have implications for each other. Using experimentally derived (“secret shopper”) data on primary care physicians' real-world behavior, we observe their willingness to accept new privately insured and Medicaid patients across 10 states. We combine this measure of patient acceptance with detailed information on physician and commercial insurer market structure and show that insurer and provider concentration are each positively associated with relative improvements in appointment availability for Medicaid patients. The former is consistent with a smaller price discrepancy between commercial and Medicaid patients and suggests a beneficial spillover from greater insurer market power. The findings for physician concentration do not align with a simple price bargaining explanation but do appear driven by physician firms that are not vertically integrated with a health system. These same firms also tend to rely more on nonphysician clinical staff.
After Nearly A Decade Of Rapid Growth, Use And Complexity Of Imaging Declined, 2008–14
David Levin et al.
Health Affairs, April 2017, Pages 663-670
Abstract:
Imaging is an important cost driver in health care, and its use grew rapidly in the early 2000s. Several studies toward the end of the decade suggested that a leveling off was beginning to occur. In this study we examined more recent data to determine whether the slowdown had continued. Our data sources were the nationwide Medicare Part B databases for the period 2001–14. We calculated utilization rates per 1,000 enrollees for all advanced imaging modalities. We also calculated professional component relative value unit (RVU) rates per 1,000 beneficiaries for all imaging modalities, as RVU values provide a measure of complexity of imaging services and may in some ways be a better reflection of the amount of work involved in imaging. We found that utilization rates and RVU rates grew substantially until 2008 and 2009, respectively, and then began to drop. The downward trend in both rates persisted through 2014. Federal policies appear to have achieved the desired effect of ending the rapid growth of imaging that had been seen in earlier years.
Does Medicaid Generosity Affect Household Income?
Anil Kumar
Federal Reserve Working Paper, December 2016
Abstract:
Almost all of the recent literature on Medicaid and labor supply has used ACA-induced Medicaid eligibility expansions in various states as natural experiments. Estimated effects on employment and earnings differ widely due to differences in the scope of eligibility expansions across states. Using a Regression Kink Design (RKD) framework, this paper takes a uniquely different approach to the identification of the effect of Medicaid generosity on household income. Both state-level data and March CPS data from 1980-2012 suggest that generous federal funding of state-level Medicaid costs have a modest negative effect on household income. The negative impact of Medicaid generosity on household income is more pronounced at the lower end of the household income distribution and on household income of female heads.
Conflicts of Interest on Expert Committees: The Case of FDA Drug Advisory Committees
James Cooper & Joseph Golec
University of Connecticut Working Paper, April 2017
Abstract:
We test whether financial and other conflicts of interest bias FDA drug advisory committee experts’ votes on drug approvals. Earlier studies find that financial conflicts lead to more “yes” votes, but we show that this depends on one’s definition of a financial conflict, and whether one controls for experts’ characteristics. We find that characteristics such as expertise, consumer group affiliation, and temporary status lead to more “no” votes, and that many bias effects wash out when votes are aggregated for the committee recommendation. We also show that a Congressional Act that sharply limited financial conflicts, had the unintended effect of increasing “yes” votes and drug approvals, because average member expertise dropped when financially conflicted members were excluded. Our results have significant implications for the popular goal of excluding conflicted experts from committee decisions.
Sharing R&D Risk in Healthcare via FDA Hedges
Adam Tejs Jørring et al.
MIT Working Paper, March 2017
Abstract:
The high cost of capital for firms conducting medical research and development (R&D) has been partly attributed to the government risk facing investors in medical innovation. This risk slows down medical innovation because investors must be compensated for it. We propose new and simple financial instruments, Food and Drug Administration (FDA) hedges, to allow medical R&D investors to better share the pipeline risk associated with FDA approval with broader capital markets. Using historical FDA approval data, we discuss the pricing of FDA hedges and mechanisms under which they can be traded and estimate issuer returns from offering them. Using various unique data sources, we find that FDA approval risk has a low correlation across drug classes as well as with other assets and the overall market. We argue that this zero-beta property of scientific FDA risk could be a main source of gains from trade between issuers of FDA hedges looking for diversified investments and developers looking to offload the FDA approval risk. We offer proof of concept of the feasibility of trading this type of pipeline risk by examining related securities issued around mergers and acquisitions activity in the drug industry. Overall, our argument is that, by allowing better risk sharing between those investing in medical innovation and capital markets more generally, FDA hedges could ultimately spur medical innovation and improve the health of patients.
Risk Adjustment, Reinsurance Improved Financial Outcomes For Individual Market Insurers With The Highest Claims
Paul Jacobs, Michael Cohen & Patricia Keenan
Health Affairs, April 2017, Pages 755-763
Abstract:
The Affordable Care Act (ACA) reformed the individual health insurance market. Because insurers can no longer vary their offers of coverage based on applicants’ health status, the ACA established a risk adjustment program to equalize health-related cost differences across plans. The ACA also established a temporary reinsurance program to subsidize high-cost claims. To assess the impact of these programs, we compared revenues to claims costs for insurers in the individual market during the first two years of ACA implementation (2014 and 2015), before and after the inclusion of risk adjustment and reinsurance payments. Before these payments were included, for the 30 percent of insurers with the highest claims costs, claims (not including administrative expenses) exceeded premium revenues by $90–$397 per enrollee per month. The effect was reversed after these payments were included, with revenues exceeding claims costs by $0–$49 per month. The risk adjustment and reinsurance programs were relatively well targeted in the first two years. While there is ongoing discussion regarding the future of the ACA, our findings can shed light on how risk-sharing programs can address risk selection among insurers — a pervasive issue in all health insurance markets.
The Volume Of TV Advertisements During The ACA’s First Enrollment Period Was Associated With Increased Insurance Coverage
Pinar Karaca-Mandic et al.
Health Affairs, April 2017, Pages 747-754
Abstract:
The launch of the Affordable Care Act was accompanied by major insurance information campaigns by government, nonprofit, political, news media, and private-sector organizations, but it is not clear to what extent these efforts were associated with insurance gains. Using county-level data from the Census Bureau’s American Community Survey and broadcast television airings data from the Wesleyan Media Project, we examined the relationship between insurance advertisements and county-level health insurance changes between 2013 and 2014, adjusting for other media and county- and state-level characteristics. We found that counties exposed to higher volumes of local insurance advertisements during the first open enrollment period experienced larger reductions in their uninsurance rates than other counties. State-sponsored advertisements had the strongest relationship with declines in uninsurance, and this relationship was driven by increases in Medicaid enrollment. These results support the importance of strategic investment in advertising to increase uptake of health insurance but suggest that not all types of advertisements will have the same effect on the public.
The effects of malpractice non-economic damage caps on the supply of physician labor: Heterogeneity by physician age and risk
Michael Pesko et al.
International Review of Law and Economics, June 2017, Pages 7–14
Abstract:
We explore the impact of malpractice caps on non-economic damages that were enacted between 2003 and 2006 on the supply of physician labor, separately for high-malpractice risk and low-malpractice risk physician specialty types, and separately by young and old physicians. We use physician data from the Area Resource File for 2000–2011 and malpractice policy data from the Database of State Tort Law Reforms. We study the impact of these caps using a reverse natural experiment, comparing physician supply in nine states enacting new caps to physician supply in ten states that had malpractice caps in place throughout the full time period. We use an event study to evaluate changes in physician labor compared to the prior year. We find evidence that non-economic damage caps increased the supply of high-risk physicians <35 years of age by 0.93 physicians per 100,000 people in the year after the caps were enacted. Non-economic damage caps were cumulatively associated with an increase of 2.1 high-risk physicians <35 years of age per 100,000 people. Stronger non-economic damage caps generally had a larger impact on physical supply.
State And Federal Coverage For Pregnant Immigrants: Prenatal Care Increased, No Change Detected For Infant Health
Laura Wherry et al.
Health Affairs, April 2017, Pages 607-615
Abstract:
Expanded health insurance coverage for pregnant immigrant women who are in the United States lawfully as well as those who are in the country without documentation may address barriers in access to pregnancy-related care. We present new evidence on the impact of states’ public health insurance expansions for pregnant immigrant women (both state-funded and expansions under the Children’s Health Insurance Program) on their prenatal care use, mode of delivery, and infant health. Our quasi-experimental design compared changes in immigrant women’s outcomes in states expanding coverage to changes in outcomes for nonimmigrant women in the same state and to women in nonexpanding states. We found that prenatal care use increased among all immigrant women following coverage expansion and that cesarean section increased among immigrant women with less than a high school diploma. We found no effects on the incidence of low birthweight, preterm birth, being small for gestational age, or infant death. State public insurance programs that cover pregnant immigrant women appear to have improved prenatal care utilization without observable changes in infant health or mortality.
The Impact of Information Technology on the Diffusion of New Pharmaceuticals
Kenneth Arrow, Kamran Bilir & Alan Sorensen
NBER Working Paper, March 2017
Abstract:
How does information affect the diffusion of innovations? This paper evaluates the influence of physicians' access to detailed drug information on their decisions about which products to prescribe. Combining data on prescriptions and use of a point-of-care electronic drug reference database for over 125,000 individual U.S. physicians, we find that those using the reference prescribe a significantly more diverse set of products, are faster to begin prescribing new generic drugs, and also have a greater propensity to prescribe generics in general. Notably, physicians using the reference database are not faster to prescribe new branded drugs. Given that a new generic drug resembles its branded equivalent clinically, these results are consistent with database users responding primarily to the increased accessibility of non-clinical information such as drug price and insurance formulary data; the results also suggest improvements to physician information access could have important implications for the costs and efficiency of medical care. We address possible selection effects in physician types by relying on within-doctor variation and an instrument for adoption timing that is based on the marketing strategy of the drug reference firm.
Impact of hospitalist care on hospital malpractice premiums using California hospital data
Jinhyung Lee
Applied Economics Letters, Summer 2017, Pages 742-752
Abstract:
This study assessed the impact of hospitalist care on hospital malpractice premiums. The retrospective cohort study used hospital financial data from the California Office of Statewide Health Planning and Development and the annual hospital survey conducted by the American Hospital Association. The sample included 1000 California hospitals from 2006 to 2010. The effect of hospitalist care on hospital malpractice premiums was evaluated using generalized estimation equation models with log link normal distribution after controlling for hospital and market characteristics, patient utilization and staffing patterns. In multivariable analyses, hospitals with more full-time hospitalists per average daily census were associated with lower malpractice insurance premiums. For example, a one-hospitalist increase per 100 daily censuses resulted in a 5.1% reduction in malpractice insurance premiums. Hospitalist care was associated with a reduction in malpractice insurance expenses. The data reveal that hospitalist care is more efficient and effective in patient treatment and preventing complications. The improved efficiency may reduce malpractice insurance expenses.
Knowledge as a Predictor of Insurance Coverage Under the Affordable Care Act
Maximiliane Hoerl et al.
Medical Care, April 2017, Pages 428–435
Objectives: To assess whether health insurance literacy and financial literacy predict being uninsured, covered by Medicaid, or covered by Marketplace insurance, holding demographic characteristics, attitudes toward risk, and political affiliation constant.
Subjects: A total of 2742 US residents ages 18–64, 525 uninsured in fall 2013, participating in the RAND American Life Panel, a nationally representative internet panel.
Results: Among the uninsured in 2013, higher financial and health insurance literacy were associated with greater probability of being insured in 2015. For a typical uninsured individual in 2013, the probability of being insured in 2015 was 8.3 percentage points higher with high compared with low financial literacy, and 9.2 percentage points higher with high compared with low health insurance literacy. For the general population, those with high financial and health insurance literacy were more likely to obtain insurance through Medicaid or the Marketplaces compared with being uninsured. The magnitude of coefficients for these predictors was similar to that of commonly used demographic covariates.