Health scare
Stephen Morgan & Minhyoung Kang
Sociological Science, September 2015
Abstract:
Through an analysis of the 2004 through 2014 General Social Survey (GSS), this article demonstrates that the 2010 passage of the Affordable Care Act (ACA) decreased support for spending on health among Democrats, Independents, and Republicans, contrary to the conjecture that a rigid partisanship equilibrium has taken hold among voters in the United States. Instead, only a partisan deflection is present, with spending preferences declining more for Republicans than for Democrats, and with Independents in between. Through supplemental analysis of the GSS panel data, as well as comparative analysis of other GSS items on national spending preferences, government responsibility, and confidence in leaders, this article also undermines support for an alternative explanation that cannot be entirely eliminated from plausibility, which is that the identified period effect that emerged in 2010 and persisted through 2014 is a response to the Great Recession and resulting deficit spending by the federal government. Implications for public opinion research are discussed, lending support to current models of thermostat effects and policy-specific political mood from the political science literature, which are informed by an older literature on weather fronts in public opinion that originated in the sociology literature.
---------------------
The Price of Responsibility: The Impact of Health Reform on Non-Poor Uninsureds
Mark Pauly, Adam Leive & Scott Harrington
NBER Working Paper, September 2015
Abstract:
This paper estimates the change in net (of subsidy) financial burden ("the price of responsibility") and in welfare that would be experienced by a large nationally representative sample of the "non-poor" uninsured if they were to purchase Silver or Bronze plans on the ACA exchanges. The sample is the set of full-year uninsured persons represented in the Current Population Survey for the pre-ACA period with incomes above 138 percent of the federal poverty level. The estimated change in financial burden compares out-of-pocket payments by income stratum in the pre-ACA period with the sum of premiums (net of subsidy) and expected cost sharing (net of subsidy) for benchmark Silver and Bronze plans, under various assumptions about the extent of increased spending associated with obtaining coverage. In addition to changes in the financial burden, our welfare estimates incorporate the value of additional care consumed and the change in risk premiums for changes in exposure to out-of-pocket payments associated with coverage, under various assumptions about risk aversion. We find that the average financial burden will increase for all income levels once insured. Subsidy-eligible persons with incomes below 250 percent of the poverty threshold likely experience welfare improvements that offset the higher financial burden, depending on assumptions about risk aversion and the value of additional consumption of medical care. However, even under the most optimistic assumptions, close to half of the formerly uninsured (especially those with higher incomes) experience both higher financial burden and lower estimated welfare; indicating a positive "price of responsibility" for complying with the individual mandate. The percentage of the sample with estimated welfare increases is close to matching observed take-up rates by the previously uninsured in the exchanges.
---------------------
Health-Care Reform or Labor Market Reform? A Quantitative Analysis of the Affordable Care Act
Makoto Nakajima & Didem Tuzemen
Federal Reserve Working Paper, September 2015
Abstract:
An equilibrium model with firm and worker heterogeneity is constructed to analyze labor market and welfare implications of the Patient Protection and Affordable Care Act, commonly called the Affordable Care Act (ACA). The authors' model implies a significant reduction in the uninsured rate from 22.6 percent to 5.6 percent. The model predicts a moderate positive welfare gain from the ACA because of the redistribution of income through health insurance subsidies at the exchange as well as the Medicaid expansion. About 2.1 million more part-time jobs are created under the ACA at the expense of 1.6 million full-time jobs, mainly because the link between full-time employment and health insurance is weakened. The model predicts a small negative effect on total hours worked (0.36 percent), partly because of the general equilibrium effect.
---------------------
Has the Affordable Care Act increased part-time employment?
Aparna Mathur, Sita Nataraj Slavov & Michael Strain
Applied Economics Letters, forthcoming
Abstract:
We examine the impact of the Affordable Care Act (ACA) on part-time employment. Because the ACA's employer health insurance mandate applies to individuals who work 30 or more hours per week, employers may try to avoid the mandate by cutting workers' hours below the 30-hour threshold in order to avoid having to provide them with health insurance. Although the employer mandate only went into effect in 2015, many observers have argued that forward-looking employers began to shift towards a part-time workforce well in advance of the mandate. To test this hypothesis, we examine relative shifts across two categories of part-time workers (25-29 hours and 31-35 hours). We find some evidence of a shift from the 31-35-hour category into the 25-29-hour category after the passage of ACA in March 2010. However, that shift is not more pronounced among low-wage workers or among workers in industries and occupations most likely to be affected by the mandate. Thus, there is little evidence that the ACA has caused the shift across hours categories, or led to an increase in part-time employment. However, the ACA could cause a shift towards part-time work in the future as the mandate takes effect.
---------------------
Increased Use Of Prescription Drugs Reduces Medical Costs In Medicaid Populations
Christopher Roebuck et al.
Health Affairs, September 2015, Pages 1586-1593
Abstract:
We used data on more than 1.5 million Medicaid enrollees to examine the impact of changes in prescription drug use on medical costs. For three distinct groups of enrollees, we estimated the effects of aggregate prescription drug use - and, more specifically, the use of medications to treat eight chronic noncommunicable diseases - on total nondrug, inpatient, outpatient, and other Medicaid spending. We found that a 1 percent increase in overall prescription drug use was associated with decreases in total nondrug Medicaid costs by 0.108 percent for blind or disabled adults, 0.167 percent for other adults, and 0.041 percent for children. Reductions in combined inpatient and outpatient spending from increased drug utilization in Medicaid were similar to an estimate for Medicare by the Congressional Budget Office. Moving forward, policy makers evaluating proposed changes that alter medication use among the nearly seventy million Medicaid recipients should consider the net effects on program spending to ensure that scarce federal and state health care dollars are allocated efficiently.
---------------------
Mandatory Universal Drug Plan, Access to Health Care and Health: Evidence from Canada
Chao Wang et al.
Journal of Health Economics, December 2015, Pages 80-96
Abstract:
This paper examines the impacts of a mandatory, universal prescription drug insurance program on health care utilization and health outcomes in a public health care system with free physician and hospital services. Using the Canadian National Population Health Survey from 1994 to 2003 and implementing a difference-in-differences estimation strategy, we find that the mandatory program substantially increased drug coverage among the general population. The program also increased medication use and general practitioner visits but had little effect on specialist visits and hospitalization. Findings from quantile regressions suggest that there was a large improvement in the health status of less healthy individuals. Further analysis by pre-policy drug insurance status and the presence of chronic conditions reveals a marked increase in the probability of taking medication and visiting a general practitioner among the previously uninsured and those with a chronic condition.
---------------------
Zarek Brot-Goldberg et al.
NBER Working Paper, October 2015
Abstract:
Measuring consumer responsiveness to medical care prices is a central issue in health economics and a key ingredient in the optimal design and regulation of health insurance markets. We study consumer responsiveness to medical care prices, leveraging a natural experiment that occurred at a large self-insured firm which forced all of its employees to switch from an insurance plan that provided free health care to a non-linear, high deductible plan. The switch caused a spending reduction between 11.79%-13.80% of total firm-wide health spending ($100 million lower spending per year). We decompose this spending reduction into the components of (i) consumer price shopping (ii) quantity reductions (iii) quantity substitutions, finding that spending reductions are entirely due to outright reductions in quantity. We find no evidence of consumers learning to price shop after two years in high-deductible coverage. Consumers reduce quantities across the spectrum of health care services, including potentially valuable care (e.g. preventive services) and potentially wasteful care (e.g. imaging services). We then leverage the unique data environment to study how consumers respond to the complex structure of the high-deductible contract. We find that consumers respond heavily to spot prices at the time of care, and reduce their spending by 42% when under the deductible, conditional on their true expected end-of-year shadow price and their prior year end-of-year marginal price. In the first-year post plan change, 90% of all spending reductions occur in months that consumers began under the deductible, with 49% of all reductions coming for the ex ante sickest half of consumers under the deductible, despite the fact that these consumers have quite low shadow prices. There is no evidence of learning to respond to the true shadow price in the second year post-switch.
---------------------
Adverse selection, moral hazard and the demand for Medigap insurance
Michael Keane & Olena Stavrunova
Journal of Econometrics, forthcoming
Abstract:
In this paper we study the adverse selection and moral hazard effects of Medicare supplemental insurance (Medigap). While both have been studied separately, this is the first paper to analyze them in a unified econometric framework. We find that adverse selection into Medigap is weak, but the moral hazard effect is substantial. On average, Medigap coverage increases health care spending by 24%, with especially large effects for relatively healthy individuals. These results have important policy implications. For instance, they imply that conventional remedies for inefficiencies created by adverse selection (e.g., mandatory enrolment) may lead to substantial health care cost increases.
---------------------
Regulation of Insurance with Adverse Selection and Switching Costs: Evidence from Medicare Part D
Maria Polyakova
NBER Working Paper, September 2015
Abstract:
I take advantage of regulatory and pricing dynamics in Medicare Part D to empirically explore interactions among adverse selection, switching costs, and regulation. I first document novel evidence of adverse selection and switching costs within Part D using detailed administrative data. I then estimate a contract choice and pricing model in order to quantify the importance of switching costs for risk-sorting, and for policies that may affect risk sorting. I first find that in Part D, switching costs help sustain an adversely-selected equilibrium and are likely to mute the ability of ACA policies to improve risk allocation across contracts, leading to higher premiums for some enrollees. I then estimate that, overall, decreasing the cost of active decision-making in the Part D environment could lead to a substantial gain in consumer surplus of on average $400-$600 per capita, which is around 20%-30% of average annual per capita drug spending.
---------------------
Does health plan generosity enhance hospital market power?
Laurence Baker, Kate Bundorf & Daniel Kessler
Journal of Health Economics, December 2015, Pages 54-62
Abstract:
We test whether the generosity of employer-sponsored health insurance facilitates the exercise of market power by hospitals. We construct indices of health plan generosity and the price and volume of hospital services using data from Truven MarketScan for 601 counties from 2001-2007. We use variation in the industry and union status of covered workers within a county over time to identify the causal effects of generosity. Although OLS estimates fail to reject the hypothesis that generosity facilitates the exercise of hospital market power, IV estimates show a statistically significant and economically important positive effect of plan generosity on hospital prices in uncompetitive markets, but not in competitive markets. Our results suggest that most of the aggregate effect of hospital market structure on prices found in previous work may be coming from areas with generous plans.
---------------------
The Effect of Hospital/Physician Integration on Hospital Choice
Laurence Baker, Kate Bundorf & Daniel Kessler
NBER Working Paper, August 2015
Abstract:
In this paper, we estimate how hospital ownership of physicians' practices affects their patients' hospital choices. We match data on the hospital admissions of Medicare beneficiaries, including the identity of their admitting physician, with data on the identity of the owner of the admitting physician's practice. We find that a hospital's ownership of an admitting physician's practice dramatically increases the probability that the physician's patients will choose the owning hospital. We also find that patients are more likely to choose a high-cost, low-quality hospital when their admitting physician's practice is owned by that hospital.
---------------------
Momotazur Rahman et al.
Health Affairs, October 2015, Pages 1675-1681
Abstract:
Medicare Advantage payment regulations include risk-adjusted capitated reimbursement, which was implemented to discourage favorable risk selection and encourage the retention of members who incur high costs. However, the extent to which risk-adjusted capitation has succeeded is not clear, especially for members using high-cost services not previously considered in assessments of risk selection. We examined the rates at which participants who used three high-cost services switched between Medicare Advantage and traditional Medicare. We found that the switching rate from 2010 to 2011 away from Medicare Advantage and to traditional Medicare exceeded the switching rate in the opposite direction for participants who used long-term nursing home care (17 percent versus 3 percent), short-term nursing home care (9 percent versus 4 percent), and home health care (8 percent versus 3 percent). These results were magnified among people who were enrolled in both Medicare and Medicaid. Our findings raise questions about the role of Medicare Advantage plans in serving high-cost patients with complex care needs, who account for a disproportionately high amount of total health care spending.
---------------------
Jason Turner et al.
Medical Care Research and Review, forthcoming
Abstract:
Designation as a tax-exempt, not-for-profit entity carries with it specific tax benefits. In exchange for tax exemptions, not-for-profit entities are expected to provide benefits to their communities. To evaluate whether hospitals provide community benefits (CBs) equivalent to the financial subsidies and advantages extended to them, tax liabilities and financial support were projected for all Maryland acute care hospitals between 2010 and 2012 and in the aggregate over the 3 years of this study. A comparison was then made between the provision of CBs and the financial support that governments provide to the hospitals. The results indicate that hospitals provide significantly and substantially more CBs than the material financial support they receive. Even after modeling changes in CB activities and the associated tax liabilities that may result from transitioning to taxable status, the benefits that hospitals provide to the communities they serve continue to exceed the potential government tax revenues.
---------------------
Healthcare Exceptionalism? Performance and Allocation in the U.S. Healthcare Sector
Amitabh Chandra et al.
NBER Working Paper, October 2015
Abstract:
The conventional wisdom in health economics is that idiosyncratic features of the healthcare sector leave little scope for market forces to allocate consumers to higher performance producers. However, we find robust evidence across a variety of conditions and performance measures that higher quality hospitals tend to have higher market shares at a point in time and expand more over time. Moreover, we find that the relationship between performance and allocation is stronger among patients who have greater scope for hospital choice, suggesting a role for patient demand in allocation in the hospital sector. Our findings suggest that the healthcare sector may have more in common with "traditional" sectors subject to standard market forces than is often assumed.
---------------------
Will the RN Workforce Weather the Retirement of the Baby Boomers?
David Auerbach, Peter Buerhaus & Douglas Staiger
Medical Care, October 2015, Pages 850-856
Setting: Data on employed RNs from the United States Bureau of the Census Current Population Survey (1979-2000, N=72,222) and American Community Survey (2001-2013, N=342,712).
Results: Annual retirements from the nursing workforce will accelerate from 20,000 a decade ago to near 80,000 in the next decade as baby boomer RNs continue to age. We project that this outflow will be more than offset by continued strong entry of new RNs into the workforce. Overall, we project that the registered nursing workforce will increase from roughly 2.7 million FTE RNs in 2013 to 3.3 million in 2030. We also find that the workforce will reach its peak average age in 2015 at 44.4. This increase in workforce size, which was not expected in forecasts made a decade ago, is contingent on new entry into nursing continuing at its current rate. Even then, supply would still fall short of demand as recently projected by the Health Resources and Services Agency in the year 2025 by 128,000 RNs (4%).
Conclusions: The unexpected surge of entry of new RNs into the workforce will lead to continued net growth of the nursing workforce, both in absolute FTE and FTE per capita. While this growth may not be sufficient to meet demand, such projections are uncertain in the face of a rapidly evolving health care delivery system.
---------------------
The Effect of Health Savings Accounts on Group Health Insurance Coverage
Jinqi Ye
Journal of Health Economics, forthcoming
Abstract:
This paper presents new empirical evidence on the impact of tax subsidies for Health Savings Accounts (HSAs) on group insurance coverage. HSAs are tax-free health care expenditure savings accounts. Coupled with high deductible health insurance plans (HDHPs), they together represent new health insurance options. The tax advantage of HSAs expands the group health insurance market by making health care more affordable. Using individual level data from the Current Population Survey and exploiting policy variation by state and year from 2004 to 2012, I find that HSA tax subsidies increase small-group coverage by a statistically significant 2.5 percentage points, although not coverage in larger firms. Moreover, if the tax price of HSA contribution decreases by 10 cents, small-group insurance coverage increases by almost 2 percentage points. I also find that for older workers or less-educated workers, HSA subsidies are associated with 2-3 percentage point increase in their group insurance coverage.
---------------------
Less Physician Practice Competition Is Associated With Higher Prices Paid For Common Procedures
Daniel Austin & Laurence Baker
Health Affairs, October 2015, Pages 1753-1760
Abstract:
Concentration among physician groups has been steadily increasing, which may affect prices for physician services. We assessed the relationship in 2010 between physician competition and prices paid by private preferred provider organizations for fifteen common, high-cost procedures to understand whether higher concentration of physician practices and accompanying increased market power were associated with higher prices for services. Using county-level measures of the concentration of physician practices and county average prices, and statistically controlling for a range of other regional characteristics, we found that physician practice concentration and prices were significantly associated for twelve of the fifteen procedures we studied. For these procedures, counties with the highest average physician concentrations had prices 8-26 percent higher than prices in the lowest counties. We concluded that physician competition is frequently associated with prices. Policies that would influence physician practice organization should take this into consideration.
---------------------
The Effect of Medicaid on Adult Hospitalizations: Evidence from Tennessee's Medicaid Contraction
Ausmita Ghosh & Kosali Simon
NBER Working Paper, September 2015
Abstract:
The 2010 Affordable Care Act (ACA) Medicaid expansions aimed to improve access to care and health status among low-income non-elderly adults. Previous work has established a link between Medicaid coverage expansion and reduced mortality (Sommers, Baicker and Epstein, 2012), but the mechanism of this reduction is not clearly understood. Prior to the ACA, one of the largest policy changes in non-elderly adult Medicaid access was a 2005 contraction through which nearly 170,000 enrollees lost Medicaid coverage in Tennessee. We exploit this change in Medicaid coverage to estimate its causal impact on inpatient hospitalizations. We find evidence that the contraction decreased the share of hospitalizations covered by Medicaid by 21 percent and increased the share uninsured by nearly 61 percent, relative to the pre-reform levels and to other states. We also find that 75 percent of the increase in uninsured hospitalizations originated from emergency department visits, a pattern consistent with losing access to medical homes. However, uninsured hospitalizations increased for both avoidable and unavoidable conditions at the same rate, which does not suggest a lack of preventive care. Although there may be limited symmetry in response to Medicaid expansion and contraction, these findings are also consistent with the substantial decrease in uncompensated care costs in the states that have thus far expanded Medicaid under the ACA. These results also help shed light on the mechanisms by which Medicaid might affect mortality for non-elderly adults.
---------------------
Robert Rapoport et al.
Medical Care Research and Review, forthcoming
Abstract:
A decade of rapidly rising outpatient advanced imaging utilization ended toward the end of the past decade, with slow growth since. This has been attributed to repetitive reimbursement cuts, medical radiation exposure concerns, increasing deductibles and patient copayments, and the influence of radiology benefit management companies. State Medicaid programs have been reluctant to institute radiology benefit management preauthorization programs since the time burden for obtaining test approval could cause providers to drop out. Also, these patients may lack the knowledge to appeal denials, and medically necessary tests could be denied with adverse outcomes. Little data exist demonstrating the efficacy of such programs in decreasing utilization and cost. We report a 2-year experience with an outpatient advanced imaging prior notification program for a large state Medicaid fee-for-service population. The program did not allow any denials, but nevertheless the data reveal a large, durable decrease in advanced imaging utilization and cost.
---------------------
Ezra Golberstein, Gilbert Gonzales & Benjamin Sommers
Health Affairs, October 2015, Pages 1688-1694
Abstract:
The Affordable Care Act (ACA) expanded eligibility for Medicaid to millions of low-income adults. While many expanding states implemented their expansion in 2014, five states and the District of Columbia expanded eligibility as early as 2010 by taking advantage of provisions in the ACA and Medicaid waivers. We used restricted data from the National Health Interview Survey to examine the impact of California's Low Income Health Program, an early expansion program that began in 2011. Our study demonstrates that the county-by-county rollout of expanded public insurance coverage in California significantly increased coverage, by 7 percentage points, and significantly reduced the likelihood of any family out-of-pocket medical spending in the previous year, by 10 percentage points, among low-income adults.
---------------------
Use of Insurance Against a Small Loss as an Incentive Strategy
Daniella Meeker et al.
Decision Analysis, September 2015, Pages 122-129
Abstract:
The success of extended warranties and buyer protection plans suggests that insurance against a small loss has high decision utility. We explore whether the behavioral insight that people are highly averse to small chances of loss can be used to create a powerful incentive that has very low expected value. We compare decisions of individuals offered fixed payments for healthy choices to those offered insurance in exchange for healthy choices. We test the prediction that aversion to small losses will result in very high rates of health behavior uptake in exchange for insurance. Three hundred participants endowed with a $2 bonus randomly received one of two incentives for completing a scheduled health risk assessment: (1) an insurance guarantee against the 1% risk of losing the $2 bonus or (2) a fixed payment at the expected value of the insurance. Relative to the fixed payment condition, participants in the insurance intervention were 70% more likely to meet their health risk assessment appointment (p < 0.01). Fixed payments of $2.59 were needed for every $1 spent on insurance to achieve the same behavioral effect. Loss aversion, probability weighting, and the certainty effect may account for this result. Incentive design may benefit from utilizing an insurance paradigm.
---------------------
PQRS Participation, Inappropriate Utilization of Health Care Services, and Medicare Expenditures
Bryan Dowd et al.
Medical Care Research and Review, forthcoming
Abstract:
Medicare's Physician Quality Reporting System (PQRS) is the largest quality-reporting system in the U.S. health care system and a basis for the new value-based modifier system for physician payment. The PQRS allows health care providers to report measures of quality of care that include both the process of care and physiological outcomes. Using a multivariate difference-in-differences model, we examine the relationship of PQRS participation to three claims-computable measures of inappropriate utilization of health care services and risk-adjusted per capita Medicare expenditures. The data are a national random sample of PQRS-participating providers matched to nonparticipating providers by zip code and caseload. We found few significant relationships in the overall analysis. However, the magnitude and statistical significance of the desirable associations increased in subgroups of providers and beneficiaries more prone to overutilization (e.g., males, older beneficiaries, beneficiaries treated in larger medical practices or by nonphysicians, and practices in rural areas), and among beneficiaries with heart conditions, diabetes, and eye problems.