Paying for Health
The Health Wedge and Labor Market Inequality
Amy Finkelstein et al.
NBER Working Paper, March 2023
Abstract:
Over half of the U.S. population receives health insurance through an employer, with employer premium contributions creating a flat "head tax" per worker, independent of their earnings. This paper develops and calibrates a stylized model of the labor market to explore how this uniquely American approach to financing health insurance contributes to labor market inequality. We consider a partial-equilibrium counterfactual in which employer-provided health insurance is instead financed by a statutory payroll tax on firms. We find that, under this counterfactual financing, in 2019 the college wage premium would have been 11 percent lower, non-college annual earnings would have been $1,700 (3 percent) higher, and non-college employment would have been nearly 500,000 higher. These calibrated labor market effects of switching from head-tax to payroll-tax financing are in the same ballpark as estimates of the impact of other leading drivers of labor market inequality, including changes in outsourcing, robot adoption, rising trade, unionization, and the real minimum wage. We also consider a separate partial-equilibrium counterfactual in which the current head-tax financing is maintained, but 2019 U.S. health care spending as a share of GDP is reduced to the Canadian share; here, we estimate that the 2019 college wage premium would have been 5 percent lower and non-college annual earnings would have been 5 percent higher. These findings suggest that health care costs and the financing of health insurance warrant greater attention in both public policy and research on U.S. labor market inequality.
Peltzman Revisited: Quantifying 21st-Century Opportunity Costs of Food and Drug Administration Regulation
Casey Mulligan
Journal of Law and Economics, November 2022, Pages S355–S387
Abstract:
Peltzman’s work is revisited in light of two recent opportunities to quantitatively assess trade-offs in drug regulation. First, reduced regulatory barriers to drug manufacturing associated with the 2017 reauthorization of generic-drug user fee amendments were followed by more entry and lower prices for prescription drugs. A simple, versatile industry model and historical data on entry indicate that easing restrictions on generics discourages innovation, but this cost is more than offset by benefits from enhanced competition, especially after 2016. Second, accelerated vaccine approval in 2020 had unprecedented net benefits as it improved health and changed the trajectory of the wider economy. Evidence suggests that cost-benefit analysis of Food and Drug Administration (FDA) regulation is incomplete without accounting for substitution toward potentially unsafe and ineffective treatments that are outside FDA jurisdiction and heavily utilized before FDA approval. Moreover, the policy processes initiating the regulatory changes show an influence of Peltzman’s findings.
Dying or Lying? For-Profit Hospices and End of Life Care
Jonathan Gruber et al.
NBER Working Paper, March 2023
Abstract:
The Medicare hospice program is intended to provide palliative care to terminal patients, but patients with long stays in hospice are highly profitable, motivating concerns about overuse among the Alzheimer’s and Dementia (ADRD) population in the rapidly growing for-profit sector. We provide the first causal estimates of the effect of for-profit hospice on patient spending using the entry of for-profit hospices over twenty years. We find hospice has saved money for Medicare by offsetting other expensive care among ADRD patients. As a result, policies limiting hospice use including revenue caps and anti-fraud lawsuits are distortionary and deter cost-saving admissions.
Trustee Compensation And Charity Care Provision In US Nonprofit Hospitals
Ge Bai et al.
Health Affairs, April 2023, Pages 526-530
Abstract:
In 2019 more than one-third of US nonprofit hospitals compensated their trustees. These hospitals provided less charity care than nonprofit hospitals that did not compensate their trustees. We found that trustee compensation was negatively associated with hospitals’ charity care provision and that it may affect the self-selection of trustees and their fulfillment of their fiduciary duties.
Nurse Practitioner Scope of Practice and Patient Harm: Evidence from Medical Malpractice Cases and Adverse Action Reports
Sara Markowitz & Andrew Smith
NBER Working Paper, April 2023
Abstract:
Many states have recently changed their scope of practice laws and granted full practice authority to nurse practitioners, allowing them to practice without oversight from physicians. Physician groups have argued against this change, citing patient safety concerns. In this paper, we use a ratio-in-ratio approach to evaluate whether the transition to full practice authority results in harm to patients as proxied by rates of malpractice payouts and adverse action reports against nurse practitioners. We find no evidence of such harm, and instead find that physicians may benefit from the law change in terms of reduced malpractice payouts against them.
Blinded, randomized trial of sonographer versus AI cardiac function assessment
Bryan He et al.
Nature, forthcoming
Abstract:
Artificial intelligence (AI) has been developed for echocardiography, although it has not yet been tested with blinding and randomization. Here we designed a blinded, randomized non-inferiority clinical trial (ClinicalTrials.gov ID: NCT05140642; no outside funding) of AI versus sonographer initial assessment of left ventricular ejection fraction (LVEF) to evaluate the impact of AI in the interpretation workflow. The primary end point was the change in the LVEF between initial AI or sonographer assessment and final cardiologist assessment, evaluated by the proportion of studies with substantial change (more than 5% change). From 3,769 echocardiographic studies screened, 274 studies were excluded owing to poor image quality. The proportion of studies substantially changed was 16.8% in the AI group and 27.2% in the sonographer group (difference of −10.4%, 95% confidence interval: −13.2% to −7.7%, P < 0.001 for non-inferiority, P < 0.001 for superiority). The mean absolute difference between final cardiologist assessment and independent previous cardiologist assessment was 6.29% in the AI group and 7.23% in the sonographer group (difference of −0.96%, 95% confidence interval: −1.34% to −0.54%, P < 0.001 for superiority). The AI-guided workflow saved time for both sonographers and cardiologists, and cardiologists were not able to distinguish between the initial assessments by AI versus the sonographer (blinding index of 0.088). For patients undergoing echocardiographic quantification of cardiac function, initial assessment of LVEF by AI was non-inferior to assessment by sonographers.
The Relationships Among Cash Prices, Negotiated Rates, And Chargemaster Prices For Shoppable Hospital Services
Yang Wang et al.
Health Affairs, April 2023, Pages 516-525
Abstract:
Hospitals must disclose their cash prices, commercial negotiated rates, and chargemaster prices for seventy common, shoppable services under the hospital price transparency rule. Examining prices reported by 2,379 hospitals as of September 9, 2022, we found that a given hospital’s cash prices and commercial negotiated rates both tended to reflect a predetermined and consistent percentage discount from its chargemaster prices. On average, cash prices and commercial negotiated rates were 64 percent and 58 percent of the corresponding chargemaster prices for the same procedures at the same hospital and in the same service setting, respectively. Cash prices were lower than the median commercial negotiated rates in 47 percent of instances, and most likely so at hospitals with government or nonprofit ownership, located outside of metropolitan areas, or located in counties with relatively high uninsurance rates or low median household incomes. Hospitals with stronger market power were most likely to offer cash prices below their median negotiated rates, whereas hospitals in areas where insurers had stronger market power were less likely to do so.
Physician Management Companies and Neonatology Prices, Utilization, and Clinical Outcomes
Jiani Yu et al.
Pediatrics, April 2023
Methods: We linked commercial claims to PMC-NICU affiliations and conducted difference- in-differences analyses comparing changes in prices paid for physician services per critical or intensive care NICU day, length of the NICU stay, physician spending (total paid amount for physician services during stay), spending on hospital services (total paid amount for hospital services during stay), and clinical outcomes in PMC-affiliated versus non-PMC–affiliated NICUs. The study included 2858 infants admitted to 34 PMC-affiliated NICUs and 92 461 infants admitted to 2348 NICUs without an affiliation.
Results: PMC affiliation was associated with a differential increase in the mean price of the 5 most common types of critical and intensive care days in NICU admissions by $313 per day (95% confidence interval, $207–$419) for PMC-affiliated versus non- PMC-affiliated NICUs. This represents a 70.4% increase in prices, relative to the preaffiliation period PMC and non- PMC-affiliated NICU means. PMC-NICU affiliation was also associated with a differential increase in physician spending by $5161 per NICU stay (95% confidence interval, $3062–$7260), a 56.4% increase. There was no significant association between PMC-NICU affiliation and changes in length of stay, clinical outcomes, or hospital spending.
Widespread Third-Party Tracking On Hospital Websites Poses Privacy Risks For Patients And Legal Liability For Hospitals
Ari Friedman et al.
Health Affairs, April 2023, Pages 508-515
Abstract:
Computer code that transfers data to third parties (third-party tracking) is common across the web and is subject to few federal privacy regulations. We determined the presence of potentially privacy-compromising data transfers to third parties on a census of US nonfederal acute care hospital websites, and we used descriptive statistics and regression analyses to determine the hospital characteristics associated with a greater number of third-party data transfers. We found that third-party tracking is present on 98.6 percent of hospital websites, including transfers to large technology companies, social media companies, advertising firms, and data brokers. Hospitals in health systems, hospitals with a medical school affiliation, and hospitals serving more urban patient populations all exposed visitors to higher levels of tracking in adjusted analyses. By including third-party tracking code on their websites, hospitals are facilitating the profiling of their patients by third parties. These practices can lead to dignitary harms, which occur when third parties gain access to sensitive health information that a person would not wish to share. These practices may also lead to increased health-related advertising that targets patients, as well as to legal liability for hospitals.
Medicaid Reimbursement For Psychiatric Services: Comparisons Across States And With Medicare
Jane Zhu et al.
Health Affairs, April 2023, Pages 556-565
Abstract:
Medicaid is characterized by low rates of provider participation, often attributed to reimbursement rates below those of commercial insurance or Medicare. Understanding the extent to which Medicaid reimbursement for mental health services varies across states may help illuminate one lever for increasing Medicaid participation among psychiatrists. We used publicly available Medicaid fee-for-service schedules from state Medicaid agency websites in 2022 to construct two indices for a common set of mental health services provided by psychiatrists: a Medicaid-to-Medicare index to benchmark each state’s Medicaid reimbursement with that of Medicare for the same set of services, and a state-to-national Medicaid index comparing each state’s Medicaid reimbursement with an enrollment-weighted national average. On average, Medicaid paid psychiatrists at 81.0 percent of Medicare rates, and a majority of states had a Medicaid-to-Medicare index that was less than 1.0 (median, 0.76). State-to-national Medicaid indices for psychiatrists’ mental health services ranged from 0.46 (Pennsylvania) to 2.34 (Nebraska) but did not correlate with the supply of Medicaid-participating psychiatrists. As policy makers look to reimbursement rates as one strategy to address ongoing mental health workforce shortages, comparing Medicaid payment across states may help benchmark ongoing state and federal proposals.
Market Size and Trade in Medical Services
Jonathan Dingel et al.
NBER Working Paper, March 2023
Abstract:
We measure the importance of increasing returns to scale and trade in medical services. Using Medicare claims data, we document that “imported” medical care — services produced by a medical provider in a different region — constitute about one-fifth of US healthcare consumption. Larger regions specialize in producing less common procedures, which are traded more. These patterns reflect economies of scale: larger regions produce higher-quality services because they serve more patients. Because of increasing returns and trade costs, policies to improve access to care face a proximity-concentration tradeoff. Production subsidies and travel subsidies can impose contrasting spillovers on neighboring regions.
Reducing Medicare Advantage Benchmarks Will Decrease Plan Generosity, But Those Effects Will Likely Be Modest
Michael Chernew et al.
Health Affairs, April 2023, Pages 479-487
Abstract:
Concerns that Medicare Advantage (MA) plans are overpaid have motivated calls to reduce MA benchmarks—the dollar amounts set by the Centers for Medicare and Medicaid Services (CMS) against which MA plans bid to set premiums and fund extra benefits. However, cutting benchmarks may lead to higher MA enrollee premiums and decreased plan generosity. We assessed the relationships between MA benchmarks and plan generosity and benefits. We estimated that a $1,000 per year decrease in benchmarks would lead to small increases in annual premiums of about $60 and increases in annual deductibles of about $27. Copays would also increase modestly, and the propensity to offer benefits would generally decline by less than 5 percentage points, with the greatest impact being on the availability of dental, hearing, and vision benefits. These results suggest that although cuts to MA benchmarks would adversely affect plan generosity, those effects would be modest.