Standard of caring

Kevin Lewis

April 15, 2019

[Job] Locked and [Un]loaded: The Effect of the Affordable Care Act Dependency Mandate on Reenlistment in the U.S. Army
Michael Kofoed & Wyatt Frasier
Journal of Health Economics, May 2019, Pages 103-116


One concern with employer-based health insurance is job lock or the inability for employees to leave their current employment for better opportunities for fear of losing benefits. We use the implementation of the Affordable Care Act's dependency mandate as a natural experiment. Data from the United States Army overcome some limitations in previous studies including the ability to examine workers with fixed contract expiration dates, uniform pay, and health coverage. We find that the ACA decreased reenlistment rates by 3.13 percent for enlisted soldiers aged 23–25. We also find that younger veterans who leave the Army are more likely to attend college. These findings show that the ACA reduced job lock and increased college-going.

Impacts of the Affordable Care Act Dependent Coverage Provision on Young Adults With Cancer
Justin Barnes et al.
American Journal of Preventive Medicine, forthcoming

Methods: Using a quasi-experimental study design, analyses were conducted in 2017–2018 using 2007 to 2014 data from the Surveillance, Epidemiology, and End Results (SEER) 18 and the National Cancer Database (NCDB). Using difference-in-differences analyses applied to linear probability models, changes in the percentage of policy-eligible individuals aged 19–25 years versus ineligible individuals aged 27–29 years who were insured (excluding Medicaid) and diagnosed at early (Stages 0 and 1) or late (Stage 4) stages following Dependent Coverage Provision enactment were estimated.

Results: A total of 36,901 and 92,358 young adults were included from SEER and NCDB. Consistent increases in the percentage insured (SEER: 3.45 percentage points, 95% CI=2.04, 4.87; NCDB: 3.72 percentage points, 95% CI=2.80, 4.64); variable increases in early-stage diagnoses (2.25 percentage points, 95% CI=0.40, 4.10; 0.69 percentage points, 95% CI= –0.65, 2.02); and decreases in late-stage diagnoses (–1.74 percentage points, 95% CI= –3.10, –0.38; –0.58 percentage points, 95% CI= –1.46, 0.30) were observed in young adults aged 19–25 versus 27–29 years.

Gains in health insurance coverage explain variation in Democratic vote share in the 2008-2016 presidential elections
Alex Hollingsworth et al.
PLoS ONE, April 2019


In the last decade, health care reform has dominated U.S. public policy and political discourse. Double-digit rate increases in premiums in the Health Insurance Marketplaces established by the Affordable Care Act (ACA) in 2018 make this an ongoing issue that could affect future elections. A seminal event that changed the course of policy and politics around health care reform is the 2016 presidential election. The results of the 2016 presidential election departed considerably from polling forecasts. Given the prominence of the Affordable Care Act in the election, we test whether changes in health insurance coverage at the county-level correlate with changes in party vote share in the presidential elections from 2008 through 2016. We find that a one-percentage-point increase in county health insurance coverage was associated with a 0.25-percentage-point increase in the vote share for the Democratic presidential candidate. We further find that these gains on the part of the Democratic candidate came almost fully at the expense of the Republican (as opposed to third-party) presidential candidates. We also estimate models separately for states that did and did not expand Medicaid and find no differential effect of insurance gains on Democratic vote share for states that expanded Medicaid compared to those that did not. Our results are consistent with the hypothesis that outcomes in health insurance markets played a role in the outcome of the 2016 presidential election. The decisions made by the current administration, and how those decisions affect health insurance coverage and costs, may be important factors in future elections as well.

What is the marginal benefit of payment‐induced family care? Impact on Medicaid spending and health of care recipients
Norma Coe et al.
Health Economics, May 2019, Pages 678-692


Research on home‐based long‐term care has centered almost solely on the costs; there has been very little, if any, attention paid to the relative benefits. This study exploits the randomization built into the Cash and Counseling Demonstration and Evaluation program that directly impacted the likelihood of having family involved in home care delivery. Randomization in the trial is used as an instrumental variable for family involvement in care, resulting in a causal estimate of the effect of changing the combination of home health‐care providers on health‐care utilization and health outcomes of the beneficiary. We find that some family involvement in home‐based care significantly decreases health‐care utilization: lower likelihood of emergency room use, Medicaid‐financed inpatient days, any Medicaid hospital expenditures, and fewer months with Medicaid‐paid inpatient use. We find that individuals who have some family involved in home‐based care are less likely to have several adverse health outcomes within the first 9 months of the trial, including lower prevalence of infections, bedsores, or shortness of breath, suggesting that the lower utilization may be due to better health outcomes.

Pill or bill? Influence of monetary incentives on the perceived riskiness and the ethical approval of clinical trials
Janine Hoffart & Benjamin Scheibehenne
Judgment and Decision Making, March 2019, Pages 130–134


In clinical trials, incentivizing human research subjects with large amounts of money is often considered unethical, as it may coerce people to participate. This argument implies that people perceive rewards (i.e., incentives) independently of risks (i.e., probability of side-effects) or that they assume that larger rewards are associated with lower risks. However, past research on risk perception indicates that people associate higher rewards with higher risks. To test whether people treat incentives in clinical trials as a proxy for risk, we conducted an online experiment (N = 483) in which people estimated the riskiness of hypothetical clinical trials. We manipulated the monetary incentives that participants of the clinical trials were offered. The results show that people expect more side effects if the monetary incentives for participation are higher. Results further show that the majority of participants were more likely to ethically approve a trial if it offered a high monetary incentive. In contrast to existing ethical guidelines these results suggest that paying large rewards may be less problematic because people implicitly associate them with higher risk and because they trade-off risks and financial benefits.

Who Benefits When Prescription Drug Manufacturers Offer Copay Coupons?
Gregory King, Xiuli Chao & Izak Duenyas
Management Science, forthcoming


The rising cost of prescription drugs is a concern in the United States. To manage drug costs, insurance companies induce patients to choose less-expensive medications by making them pay higher copayments for more-expensive drugs, especially when multiple drug options are available to treat a condition. However, drug manufacturers have responded by offering copay coupons — coupons intended to be used by those already with prescription drug coverage. Recent empirical work has shown that such coupons significantly increase insurer costs without much benefit to patients, who incur lower out-of-pocket expenses with coupons but may eventually see higher costs passed to them. As a result, there is pressure from the insurance industry and consumer advocacy groups to ban copay coupons. In this paper we analyze how copay coupons affect patients, insurance companies, and drug manufacturers, while addressing the question of whether insurance companies would in fact always benefit from a copay coupon ban. We find that copay coupons tend to benefit drug manufacturers with large profit margins relative to other manufacturers, while generally, but not always, benefiting patients; insurer costs tend to increase with coupons from high-price drug manufacturers and decrease with coupons from low-price manufacturers. Although often helping drug manufacturers and increasing insurer costs, we also identify situations in which copay coupons benefit both patients and insurers. Thus, a blanket ban on copay coupons would not necessarily benefit insurance companies. In addition to the policy implications of our work, we make concrete managerial recommendations to insurers. We discuss how they should set formulary selection policies taking into account the fact that drug manufacturers may offer coupons; and we suggest how they can benefit from subsidizing coupons from drug manufacturers with low-price drugs, or from having drug manufacturers compete on price, to receive a favorable formulary position (i.e., copay).

Trends in Hospital Utilization After Medicaid Expansion
Andrew Admon et al.
Medical Care, April 2019, Pages 312–317

Reseearch Design: Difference-in-differences analysis of discharge data from 4 states that expanded Medicaid in 2014 (Arizona, Iowa, New Jersey, and Washington) and 3 comparison states that did not (North Carolina, Nebraska, and Wisconsin).

Subjects: All nonobstetric hospitalizations among patients aged 19–64 years of age admitted between January 2012 and December 2015.

Results: We identified 6,516,576 patients admitted during the study period. Per-capita admissions remained consistent in expansion and nonexpansion states, though Medicaid-covered admissions increased in expansion states (274.6–403.8 per 100,000 people vs. 268.9–262.8 per 100,000; P<0.001). There were no significant differences after Medicaid expansion in hospital utilization, based on per-capita rates of patients-designated emergent, admitted via the emergency department, admitted via clinic, discharged within 1 day, or with lengths of stay ≥7 days. Similarly, there were no differences in diagnosis category at admission, admission severity, comorbidity burden, or mortality associated with Medicaid expansion (P>0.05 for all comparisons).

Conclusions: Medicaid expansion was associated with a shift in payers among nonelderly hospitalized adults without significant changes in case-mix or in several markers of acuity. These findings suggest that Medicaid expansion may reduce uncompensated care without shifting admissions practices or acuity among hospitalized adults.

Estimates of the Price Elasticity of Switching Between Branded and Generic Drugs
Sabrina Terrizzi & Chad Meyerhoefer
Contemporary Economic Policy, forthcoming


We estimate price elasticities of switching from branded to generic drugs for two widely used drugs: Prozac and Zocor. We find the price elasticity of switching varies by drug and is between 0.01 and 0.10. While elasticity estimates for Zocor are robust to the inclusion of controls for supply‐side factors, those for Prozac are not. Our results indicate consumers in managed care plans are most responsive to differences in out‐of‐pocket (OOP) cost, and we estimate that a 10% increase in the OOP cost difference between Zocor and generic Simvastatin increases an individual's probability of switching to the generic by approximately 0.3%. This would result in a modest total savings of $36,700 among our sample of 114,218 privately insured Zocor users. Our finding that individuals are relatively unresponsive to the lower prices caused by generic introduction implies that policies targeting supply‐side behavior are likely to have a larger effect on generic uptake than price‐based inducements. If generic‐uptake did occur immediately within the first 18 months after generic introduction, the total savings among individuals and insurance companies within our sample would be approximately $7 million for Zocor and $255,000 for Prozac.

Patient responses to physician disclosures of industry conflicts of interest: A randomized field experiment
Susannah Rose et al.
Organizational Behavior and Human Decision Processes, forthcoming


Most patients in the United States depend on physicians who have financial relationships with the healthcare industry. These physician-industry relationships represent a conflict of interest: a potential clash between the physicians’ professional responsibilities and their self-interest. We conducted a randomized field experiment to assess the impact of written disclosures of physicians’ conflict of interest on patients’ appointment attendance, knowledge of these conflicts of interest, and their trust in their physician and hospital. Patients (N = 1903) attending outpatient clinics at a large U.S. academic hospital from 2015 to 2016 who had appointments with physicians earning more than $20,000 from industry in the last year were randomized to receive (or not receive) disclosures of their physicians’ financial conflicts of interest (with or without explanation of the risks and/or benefits of such conflicts) in their appointment-reminder letters. There were no differences across condition in missed or cancelled appointments. For patients who attended eligible appointments with their physician and completed the post-appointment survey (N = 867/1276; 68% response rate), the disclosure intervention revealed significant improvement in patients’ knowledge of their physicians’ financial relationships but no significant differences in patients’ trust in their physician or hospital. Risk and benefit framings of financial relationships did not significantly affect any outcomes. These findings highlight that although mailed financial conflict of interest disclosures are effective as an educational tool, disclosure cannot be a panacea to addressing physician-industry relationships if the intended purpose is for patients to assimilate the information into their decision-making and account for potential physician bias.

Ambulance diversions following public hospital emergency department closures
Charleen Hsuan et al.
Health Services Research, forthcoming

Objective: To examine whether hospitals are more likely to temporarily close their emergency departments (EDs) to ambulances (through ambulance diversions) if neighboring diverting hospitals are public vs private.

Data Sources/Study Setting: Ambulance diversion logs for California hospitals, discharge data, and hospital characteristics data from California's Office of Statewide Health Planning and Development and the American Hospital Association (2007).

Study Design: We match public and private (nonprofit or for‐profit) hospitals by distance and size. We use random‐effects models examining diversion probability and timing of private hospitals following diversions by neighboring public vs matched private hospitals.

Principal Findings: Hospitals are 3.6 percent more likely to declare diversions if neighboring diverting hospitals are public vs private (P < 0.001). Hospitals declaring diversions have lower ED occupancy (P < 0.001) after neighboring public (vs private) hospitals divert. Hospitals have 4.2 percent shorter diversions if neighboring diverting hospitals are public vs private (P < 0.001). When the neighboring hospital ends its diversion first, hospitals terminate diversions 4.2 percent sooner if the neighboring hospital is public vs private (P = 0.022).

Conclusions: Sample hospitals respond differently to diversions by neighboring public (vs private) hospitals, suggesting that these hospitals might be strategically declaring ambulance diversions to avoid treating low‐paying patients served by public hospitals.

Evaluating Consumers' Choices of Medicare Part D Plans: A Study in Behavioral Welfare Economics
Michael Keane et al.
NBER Working Paper, March 2019


We propose new methods to model behavior and conduct welfare analysis in complex environments where some choices are unlikely to reveal preferences. We develop a mixture-of-experts model that incorporates heterogeneity in consumers’ preferences and in their choice processes. We also develop a method to decompose logit errors into latent preferences versus optimization errors. Applying these methods to Medicare beneficiaries’ prescription drug insurance choices suggests that: (1) average welfare losses from suboptimal choices are small, (2) beneficiaries with dementia and depression have larger losses, and (3) policies that simplify choice sets offer small average benefits, helping some people but harming others.

Sticking points: Common‐agency problems and contracting in the US healthcare system
Brigham Frandsen, Michael Powell & James Rebitzer
RAND Journal of Economics, forthcoming


We propose a “common‐agency” model for explaining inefficient contracting in the US healthcare system. Common‐agency problems arise when multiple payers seek to motivate a provider to invest in improved care coordination. We highlight the possibility of “sticking points,” that is, Pareto‐dominated equilibria in which payers coordinate around contracts which give weak incentives to the provider. Sticking points rationalize three hard‐to‐explain features of the US healthcare system: widespread fee‐for‐service arrangements; problematic care coordination; and the historical reliance on single‐specialty practices to deliver care. The model also analyzes the effects of policies promoting more efficient contracting between payers and providers.

Reference Pricing: The Case of Screening Colonoscopies
Marion Aouad, Timothy Brown & Christopher Whaley
Journal of Health Economics, forthcoming


We study the introduction of reference pricing to the California Public Employees’ Retirement System. Reference pricing changes the relative price of using a hospital versus an ambulatory surgery center (ASC) for patients receiving a colonoscopy, leading to as good as random variation in patients’ use of ASCs. We find a 10 percentage point increase in the share of patients using an ASC, leading to a $2300 to $1700 reduction in prices paid for patients who switch to ASCs. Our results suggest that the use of ASCs has a causal effect on prices paid and has no negative effect on patient health outcomes.

Medicare’s Bundled Payments For Care Improvement Initiative Maintained Quality Of Care For Vulnerable Patients
Brandon Maughan et al.
Health Affairs, April 2019, Pages 561-568


The Bundled Payments for Care Improvement (BPCI) initiative established four models to test whether linking payments for an episode of care could reduce Medicare payments while maintaining or improving quality. Evaluations concluded that model 2, the largest, generally lowered payments without reducing quality for the average beneficiary, but these global results could mask adverse findings among vulnerable subpopulations. We analyzed changes in emergency department visits, unplanned hospital readmissions, and all-cause mortality within ninety days of hospital discharge among beneficiaries with one or more of three vulnerable characteristics — dementia, dual eligibility for Medicare and Medicaid, and recent institutional care — in 105,458 beneficiary episodes in the period October 2013–December 2016. The results for twelve types of medical and surgical BPCI episodes were evaluated relative to results in matched comparison groups. Our findings suggest that BPCI model 2 did not adversely affect care quality for beneficiaries with vulnerabilities. While this conclusion does not discourage the further development of bundled payment models, policy makers should support ongoing research to ensure that vulnerable populations are not adversely affected by these approaches.

The Demise of Community Responsibility: Unintended Consequences of Coverage Expansions on California Public Hospitals
Simon Haeder
Journal of Health Politics, Policy and Law, April 2019, Pages 173-219


Long before the establishment of Medicaid or the passage of the Affordable Care Act, California counties provided their poorest residents with access to comprehensive medical care. This article analyzes the creation and closure of public hospitals in the state of California. It combines both qualitative historical research and event history analysis to assess what led first to the creation of the nation's most comprehensive public health network and then to its gradual demise. Strong evidence is presented that the implementation of Medicaid in California significantly altered the calculus of local governments with regard to the operation of public hospitals. In particular, Medicaid shifted county hospitals from the realm of allocational politics to that of redistributive politics. Subsequently, reforms at the state and federal levels further encouraged this development. Because of this shift, many counties decided to close their hospitals. Moreover, as expected for redistributive policies, the continued operation of public hospitals was driven not by need but instead merely by fiscal capacity: more affluent counties continue to maintain them while poorer, needier counties close their doors.

Physician age and the abandonment of episiotomy
David Howard & Jason Hockenberry
Health Services Research, forthcoming

Data Sources/Study Setting: Hospital discharge data from Pennsylvania for the period 1994 to 2010.

Study design: We examined the impact of the year in which physicians started delivering babies (a proxy for age) in Pennsylvania on episiotomy rates using a linear probability model with hospital fixed effects.

Principal Findings: The average physician‐level episiotomy rate declined from 54 percent in 1994 to 13 percent in 2010. Rates declined among older and younger physicians, but, at any point in time, women treated by older physicians were more likely to have an episiotomy. A 10‐year difference in physician age is associated with a 6 percentage point increase in episiotomy rates.

to your National Affairs subscriber account.

Already a subscriber? Activate your account.


Unlimited access to intelligent essays on the nation’s affairs.

Subscribe to National Affairs.