Pain and Suffering
Strategic sorting: The role of ordeals in health care
Richard Zeckhauser
Economics & Philosophy, forthcoming
Abstract:
Ordeals are burdens placed on individuals that yield no benefits to others; hence they represent a dead-weight loss. Ordeals – the most common is waiting time – play a prominent role in rationing health care. The recipients most willing to bear them are those receiving the greatest benefit from scarce health-care resources. Health care is heavily subsidized; hence, moral hazard leads to excess use. Ordeals are intended to discourage expenditures yielding little benefit while simultaneously avoiding the undesired consequences of rationing methods such as quotas or pricing. This analysis diagnoses the economic underpinnings of ordeals. Subsidies for nursing-home care versus home care illustrate.
The Electoral Consequences of Roll Call Voting: Health Care and the 2018 Election
Austin Bussing et al.
Political Behavior, forthcoming
Abstract:
For years, Republicans in Congress promised to “repeal and replace” the Affordable Care Act. The results of the 2016 elections put them in position to take action on the seminal domestic policy achievement of outgoing President Barack Obama. Repeal efforts faced many obstacles, including angry constituents crowding town hall style meetings with Republican members. Many members faced a stark choice between voting with their constituents or voting with their party. We use data on the number of town halls held by members to analyze whether members who heard from upset constituents were more likely to oppose the repeal effort. Next, we utilize data on House primaries and the 2018 general election to test whether the member’s position on repeal had any effects on the member’s electoral success. We find clear evidence that member’s voting behavior on the health care repeal had electoral effects in the 2018 general election.
Preventable Deaths Declined More in Medicaid Expansion States
Brandon Yan et al.
University of California Working Paper, May 2020
Abstract:
The Affordable Care Act’s (ACA) expansion of Medicaid in 2014 has improved access to care, but data on its impact on health and mortality is limited. In this study, we use U.S. mortality data from 2011 to 2017 to analyze trends in mortality among adults ages 25-64 before and after Medicaid expansion. We analyze both all-cause mortality and mortality from causes considered amenable to health care and compare states that did and did not expand Medicaid. We found that while all-cause mortality rose steadily for non-elderly adults between 2013 and 2017, health care amenable mortality fell 68% more (-3.70% vs. -2.20%) in states that expanded Medicaid compared to those that did not. Although trends varied widely by state, Medicaid expansion states comprised 13 of the 15 states with the largest reductions in health care amenable mortality. The data suggest that Medicaid expansion may have prevented premature deaths during a period of rising overall mortality.
Do public health activities pay for themselves? The effect of county‐level public health expenditures on county‐level public assistance medical care benefits in California
Timothy Tyler Brown & Vishnu Murthy
Health Economics, forthcoming
Abstract:
This study estimates the effect of county‐level public health expenditures in reducing county‐level public assistance medical care benefits (public assistance medical care benefits is a measure compiled by the US Bureau of Economic Analysis and includes Medicaid and other medical vendor payments). The effect is modeled using a static panel model and estimated using two‐stage limited information maximum likelihood and a valid instrumental variable. For every $1 invested in county‐level public health expenditures, public assistance medical care benefits are reduced by an average of $3.12 (95% confidence interval: −$5.62, −$0.94). Because Medicaid in California is financed via an approximate 50% match of federal dollars with state dollars, savings to the state are approximately one‐half of this, or $1.56 for every $1 invested in county‐level public health expenditures.
How Do Doctors Respond to Incentives? Unintended Consequences of Paying Doctors to Reduce Costs
Diane Alexander
Journal of Political Economy, forthcoming
Abstract:
Billions of dollars have been spent on pilot programs searching for ways to reduce healthcare costs. I study one such program, where hospitals pay doctors bonuses for reducing the total hospital costs of admitted Medicare patients. Doctors respond to the bonuses by becoming more likely to admit patients whose treatment can generate high bonuses, and sorting healthier patients into participating hospitals. Conditional on patient health, however, doctors do not reduce costs or change procedure use. These results highlight the ability of doctors to game incentive schemes, and the risks of basing nationwide healthcare reforms on pilot programs.
Differences in consumer-benefiting misconduct by nonprofit, for-profit, and public organizations
Vanessa Burbano & James Ostler
Organizational Behavior and Human Decision Processes, forthcoming
Abstract:
We examine how organizations of different types – nonprofit, for-profit, and public – engage in consumer-benefiting misconduct (CBM) by examining which patients benefit from hospitals of the three types gaming the market for liver transplants. Consistent with our theory, we find that public firms are the least likely of the three organization types to engage in CBM. We find that for-profit firms engage in CBM for any paying consumers, nonprofit firms engage in CBM for their mission-driven beneficiaries, and public organizations engage in CBM for the set of consumers that their voting constituents direct them to serve. We also examine how the three organization types respond to others’ engagement in CBM, and explore heterogeneity in CBM within nonprofit and public organizations. As the first paper to theoretically predict and empirically examine differences in CBM across nonprofit, public, and for-profit firms, this paper has important implications for our understanding of how distinct governance structures influence misconduct.
Variation in Health Care Prices Across Public and Private Payers
Toren Fronsdal, Jay Bhattacharya & Suzanne Tamang
NBER Working Paper, July 2020
Abstract:
We study a unique all-payer data set spanning 38 states to examine the differences in inpatient reimbursement rates paid by traditional Medicare (TM), Medicare Advantage (MA), Medicaid, and private (under-65) insurers, and the differences in negotiated rates across the 60 largest private insurers. After controlling for enrollee and hospital mix, we find that private insurers pay 37 percent more than TM, and MA pays 10 percent more than TM for the five most common inpatient diagnoses. The correlation in risk-adjusted payments by private insurers and by TM at the same hospital for the same diagnosis is only 0.10. There is significant variation in negotiated prices within and across private payers. Among the five largest US insurers, the most expensive insurer negotiates prices that are 5-26 percent higher than the mean price for the 20 most common inpatient diagnoses. Additionally, we find a 10 percent increase in insurer market share corresponds to a 7 percent decrease in inpatient negotiated prices and a 10 percent decrease in the standard deviation of prices. This finding suggests that increased insurer market power allows payers to negotiate prospective payment contracts – rather than the more common fee-for-service payments – thereby offloading financial risk to providers.
Preconception subsidized insurance: Prenatal care and birth outcomes by race/ethnicity
Makayla Palmer
Health Economics, forthcoming
Abstract:
Low‐income pregnant women have been Medicaid eligible since the 1980s, but the Affordable Care Act (ACA)'s expansion of Medicaid to women preconception has the potential to improve pregnancy and birth outcomes by removing delays in Medicaid enrollment. More substantially, the ACA expanded subsidized nongroup maternity coverage. Pre‐ACA, nongroup health insurance had generally excluded maternity coverage and was prohibitively expensive for low‐income individuals, but the ACA's creation of the Marketplace made maternity coverage mandatory and provides income‐based subsidies. I use a simulated eligibility approach to measure how these two aspects of the ACA impacted pregnancy and birth outcomes for first‐time mothers, paying special attention to racial‐ethnic differences. I find expanding Medicaid to women prior to pregnancy significantly improves the share of women with a prenatal care visit in the first trimester for non‐Hispanic Whites and Blacks. Expansions in non‐Medicaid subsidized insurance, such as Marketplace insurance, significantly reduce the share of births paid by Medicaid and increased breastfeeding across all racial and ethnic groups. Neither type of subsidized insurance had significant, robust impacts on birth outcomes.
Picking Your Patients: Selective Admissions in the Nursing Home Industry
Ashvin Gandhi
University of California Working Paper, May 2020
Abstract:
Do healthcare providers pick their patients? This paper uses patient-level administrative data on skilled nursing facilities in California to estimate a structural model of selective admission practices in the nursing home industry. I exploit within-facility covariation between occupancy and admitted patient characteristics to distinguish admission patterns attributable to selective admission practices from those attributable to heterogeneous patient preferences. In spite of anti-discrimination laws, I find strong evidence of selective admission practices that disproportionately harm Medicaid-eligible patients with lengthy anticipated stays. Counterfactual simulations show that enforcing a prohibition on selective admissions would increase access for these residents at the cost of crowding out short-stay non-Medicaid patients from their preferred facilities. I simulate two additional policies intended to mitigate selective admissions: raising the Medicaid reimbursement rate and expanding capacity. I find the latter to be less costly and more effective than the former.
A Medicaid Alternative Payment Model Program In Oregon Led To Reduced Volume Of Imaging Services
Stephan Lindner et al.
Health Affairs, July 2020, Pages 1194-1201
Abstract:
The patient-centered medical home model aspires to fundamentally restructure care processes, but a volume-based payment system may hinder such transformations. In 2013 Oregon’s Medicaid program changed its reimbursement of traditional primary care services for selected community health centers (CHCs) from a per visit to a per patient rate. Using Oregon claims data, we analyzed the price-weighted volume of care for five service areas: traditional primary care services, including imaging, tests, and procedures; other services provided by CHCs that were carved out from the payment reform; emergency department visits; inpatient services; and other services of non-CHC providers. We further subdivided traditional primary care services using Berenson-Eggers Type of Service categories of care. We compared participating and nonparticipating CHCs in Oregon before and after the payment model was implemented. The payment reform was associated with a 42.4 percent relative reduction in price-weighted traditional primary care services, driven fully by decreased use of imaging services. Other outcomes remained unaffected. Oregon’s initiative could provide lessons for other states interested in using payment reform to advance the patient-centered medical home model for the Medicaid population.
Endogenous Quality Investments in the U.S. Hospital Market
Craig Garthwaite, Christopher Ody & Amanda Starc
NBER Working Paper, June 2020
Abstract:
High and increasing hospital prices have led to calls for price regulation. If prices are high because of consolidation, regulating prices could enhance welfare. However, high prices could also reflect increased willingness to pay by privately insured consumers for clinical and non-clinical quality. If so, regulating prices could reduce quality. We present a model of strategic quality choice where hospitals make quality investments to increase private revenue. We confirm the model's predictions across numerous quality measures including patient satisfaction, hospital processes, risk adjusted mortality, the revealed preferences of current Medicare patients, technology adoption, physician quality, and ED wait times.
Physician Characteristics and Patient Survival: Evidence from Physician Availability
Joseph Doyle
NBER Working Paper, July 2020
Abstract:
Measuring physician quality is fundamental to understanding healthcare productivity, yet patient sorting can confound attempts to estimate the types of physicians that improve survival. This paper aims to overcome selection bias by exploiting plausibly exogenous variation in the mix of physicians available to treat patients when they are admitted to the hospital via the emergency department. One innovation is the construction of proxy measures for the types of physicians available using 100% Medicare claims data. Physician characteristics considered include specialty training, medical school quality rankings, sex, years of experience, and patient volume. The main finding is that when heart failure patients enter the hospital when more cardiologists are available, they are more likely to be treated directly by a cardiologist, have more invasive procedures, and survive over the following year.
Mastering the Art of Cookbook Medicine: Machine Learning, Randomized Trials, and Misallocation
Jason Abaluck et al.
NBER Working Paper, July 2020
Abstract:
The application of machine learning (ML) to randomized controlled trials (RCTs) can quantify and improve misallocation in healthcare. We study the decision to prescribe anticoagulants for atrial fibrillation patients; anticoagulation reduces stroke risk but increases hemorrhage risk. We combine observational data on treatment choice and guideline use with ML estimates of heterogeneous treatment effects from eight RCTs. When physicians adopt a clinical guideline, treatment decisions shift towards the recommendation but adherence remains far from perfect. Improving guideline adherence would produce larger gains than informing physicians about guidelines. Adherence to an optimal rule would prevent 47% more strokes without increasing hemorrhages.