Understanding Cross-country Differences in Health Status and Expenditures: Health Price Matters
Raquel Fonseca et al.
Journal of Political Economy, forthcoming
Using a general equilibrium heterogeneous agent model featuring health production, we quantify the contribution of health price in explaining cross-country differences in health expenditures and health status. Considering other country-specific explanatory factors, U.S. health prices are estimated to be 33% higher than those of European countries. This price differential explains more than 60% of the difference in health expenditures and more than half of the difference in health status between Europe and the U.S. Despite its large impact at the aggregate level, these price differences increase the lifetime cost of living of Americans by two percentage points.
Medicaid reimbursement rates for primary care services and behavioral health outcomes
Johanna Catherine Maclean et al.
Health Economics, April 2023, Pages 873-909
We study the effects of changing Medicaid reimbursement rates for primary care services on behavioral health outcomes -- defined here as mental illness and substance use disorders. Medicaid enrollees are at elevated risk for these, and other, chronic conditions and are likely to have unmet treatment needs. We apply two-way fixed-effects regressions to survey data specifically designed to measure behavioral health outcomes over the period 2010–2016. We find that higher primary care reimbursement rates reduce mental illness and substance use disorders among non-elderly adult Medicaid enrollees, although we interpret findings for substance use disorders with some caution as they may be vulnerable to differential pre-trends. Overall, our findings suggest positive spillovers from a policy designed to target primary care services to behavioral health outcomes.
Competition and Vulnerabilities in the Global Supply Chain for US Generic Active Pharmaceutical Ingredients
Mariana Socal et al.
Health Affairs, March 2023, Pages 407-415
The US supply of generic drugs is heavily dependent on the global supply chain for sources of generic active pharmaceutical ingredients (APIs) for the US pharmaceutical market. Data from Clarivate Analytics’ Cortellis Generics Intelligence database were analyzed to perform a systematic examination of generic APIs produced globally for the US market during 2020–21. We identified a total of 565 facilities producing 1,379 unique generic APIs across forty-two countries. India, China, and Italy were the top producers; 14 percent of APIs were manufactured in the US. About a third of APIs were manufactured by a single facility, and another third were manufactured by two or three facilities. More than one in every five APIs reflected markets in which current Food and Drug Administration standards would have failed to detect low competition because there were three or fewer API manufacturers despite there being four or more manufacturers of finished generic drugs. Monitoring the API supply is crucial to identifying vulnerabilities in the US pharmaceutical supply chain and identifying drugs that could represent potential priorities for domestic production. Incentives in the US may be needed to support API production to safeguard against supply-chain disruptions.
The Role of Advertising in High-Tech Medical Procedures: Evidence from Robotic Surgeries
Tae Jung Yoon & TI Tongil Kim
Journal of Marketing, forthcoming
Hospital advertising has grown more than five-fold in the last two decades. However, hospital advertising has been understudied, unlike detailing and advertising for prescription drugs. This study introduces a customer-centric view to this market by investigating the role of advertising in patients’ choice of high-tech medical procedures, with a focus on robotic surgery. The authors analyze approximately 140,000 individual patient records and television advertising data from Florida during 2011-2015 to investigate how hospital advertising of robotic surgery affects patients’ choice of robotic surgery over more conventional laparoscopic and open surgeries. Using a variation of a Designated Market Area border identification strategy, the authors find that this advertising leads to more robotic surgery choices. The advertising effect is especially strong for Medicaid patients, whose socioeconomic status tends to be lower. While robotic surgery is associated with a short-term health benefit (i.e., reduced length-of-stay), it does not affect long-term health benefits and comes at a higher cost than other forms of surgery. Thus, understanding the effect of advertising robotic surgery has significant health, cost, and marketing implications for different stakeholders in the healthcare industry, such as patients, healthcare providers, surgical robot manufacturers, insurance providers, and policymakers.
Firm Finances and the Spread of COVID-19: Evidence from Nursing Homes
Taylor Begley & Daniel Weagley
Review of Corporate Finance Studies, February 2023, Pages 1–35
We find that firms’ financial resources play an important role in mitigating the spread of COVID-19. We study nursing homes -- whose residents account for over one-third of all U.S. COVID-19 deaths -- at a time when investment in risk mitigation was costly and critical. Facilities with less liquidity and those experiencing more severe cash flow shocks had more cases of COVID-19. The importance of cash flow is further supported by tests exploiting state-level variation in Medicaid reimbursement expansion. Evidence on personal protective equipment supplies suggests a lack of financial resources leads to lower investment in risk mitigation.
The impact of Right-to-Work laws on the financials of hospitals: Evidence based on Michigan and Indiana laws
Vijay Gondhalekar & Dawn Brackmann
Applied Economics Letters, forthcoming
This study examines the impact of Michigan and Indiana Right-to-Work (RTW) laws passed in 2012 on the financials (assets, revenue, operating expenses, and profitability) of their hospitals. Difference-in-difference regressions indicate that, on average, RTW enactments by the two states is associated with significant increase in assets (buildings and fixed equipment), net income, operating margin, and ROA of their hospitals compared to those in states with RTW laws or without RTW laws as the control group.
What Does a Provider Network Do? Evidence from Random Assignment in Medicaid Managed Care
American Economic Journal: Economic Policy, February 2023, Pages 473-509
Leveraging the random assignment of over 50,000 Medicaid enrollees in New York, I present causal evidence that narrower networks are a blunt instrument for reducing health care spending. While narrower networks constrain spending, they do so by generating hassle costs that reduce quantity, with modest effects on prices paid to providers. Enrollees assigned to narrower networks use fewer of both needed and unneeded services and are less satisfied with their plans. Using my causal estimates to construct counterfactuals, I identify an alternative assignment policy that reduces spending without harming satisfaction by matching consumers with narrower networks that include their providers.
The Effects of Expanding Access to Mental Health Services on SS(D)I Applications and Awards
Matt Messel, Isaac Swensen & Carly
Urban Labour Economics, forthcoming
The growing number of individuals suffering from a serious mental illness underscores the important role of interventions such as treatment, policies, and programs to support those in need. Such support efforts often interact in unanticipated ways. This paper considers the degree to which access to mental health treatment services affects participation in federal disability programs including the Supplemental Security Income and the Social Security Disability Insurance (SS(D)I) programs. Our main approach uses an identification strategy that leverages county-level variation in the number of mental health treatment establishments to estimate changes in access to mental health treatment on SS(D)I program participation—measured by applications and awards. We also explore a series of event studies and heterogeneity analyses. Our results show that an increase in mental health facilities increases participation in SS(D)I programs. A 10 percent increase in a county’s number of office-based mental health establishments increases the SSI application rate by 1.2 percent and the SSDI application rate by 0.7 percent. While the overall sample suggests that this does not translate to an increase in SS(D)I awards, we do find increases in awards in counties that have a higher proportion of residents below the poverty line. This suggests that increasing access to mental health resources can be a pathway through which people suffering from severe mental illness can be diagnosed and access social safety nets.
FDA-approved medications for dementia are unlike non-pharmacological interventions as they are counterproductive
Applied Economics, forthcoming
Recently, a number of non-pharmacological interventions for dementia symptoms were evaluated using cost–benefit analysis (CBA) and found to be both effective and socially worthwhile. What is missing is a comparison of evaluations for these interventions with pharmaceutical interventions approved by the Food and Drug Administration (FDA) to see which interventions should be given priority in public expenditure budgets aiming to reduce dementia symptoms. This paper fills this knowledge gap by carrying out a CBA of FDA-approved medications using a large national data set provided by the National Alzheimer’s Coordinating Center (NACC). We find that the pharmaceutical medications were actually counterproductive, and therefore social welfare would be substantially improved by not investing in these medications. This therefore means that non-pharmaceutical interventions should be given higher priority at this time.
The Effects of Neonatal Intensive Care on Infant Mortality and Long-Term Health Impairments
Tamás Hajdu et al.
American Journal of Health Economics, forthcoming
We study the effects of being born in a city with a Neonatal Intensive Care Unit (NICU) and in a city integrated into the Newborn Emergency Transportation System (NETS) on neonatal and infant mortality and long-term impairments. We use administrative and census data covering the gradual expansion of the NICU and NETS systems between 1990 and 2015, and we identify the effects using the distance of residence to the nearest NICU/NETS hospital as an instrumental variable. Residence fixed effects control for all unobserved municipality-specific time-invariant determinants of newborns’ death and impairment. Being born in a city with a NICU decreases 0-6-day mortality by 153/1000 (birth weight < 1500g) and 24/1000 (birth weight < 2500g). NETS effects are positive, too, but they are substantially smaller (57/1000 and 9/1000, respectively). The effect estimates on long-term impairment are small in magnitude and are all statistically indistinguishable from zero. Access to NICUs and the NETS saves lives in the long run, without substantial overall effects on long-term impairments.
User-Generated Physician Ratings and Their Effects on Patients' Physician Choices: Evidence from Yelp
Yiwei Chen & Stephanie Le
Journal of Marketing, forthcoming
Patients increasingly rely on online physician ratings to select their physicians and make healthcare decisions. However, it is unclear whether online physician ratings signal physician quality information and affect patients' physician choices. By combining physician rating data from Yelp with data from Medicare, which covers a large elderly patient group, the paper finds that ratings are positively associated with important measures of physician quality, including physicians' credentials, adherence to clinical guidelines, and patients' health outcomes. The paper introduces novel instrumental variables, where reviewers' leniency in rating other businesses is employed as an instrument for physicians' ratings. The paper finds that an increase in physicians' average rating increases physicians' patient flow. To understand the quality signals that patients respond to, the paper also uses the LDA model and extracts topics from review texts. Patients respond differentially to different information and respond most to information about physicians' interpersonal and clinical skills. Additionally, rating credibility, accessibility, and strength of other existent signals moderate the positive effects of online ratings on patient flow. Overall, online physician rating platforms can promote efficiency by disseminating important quality information to patients and directing patients to higher-quality physicians.