Till death do us part
The Effect of Prescription Drug Coverage on Mortality: Evidence from Medicaid Implementation
Denise Clayton
Journal of Health Economics, forthcoming
Abstract:
This paper estimates the effect of Medicaid prescription drug spending on mortality. I use the group- and state-specific roll out of Medicaid drug coverage to isolate plausibly exogenous variation in drug expenditures. I find that a $1 increase in Medicaid drug expenditures per resident reduces mortality from internal causes by 2.0 deaths per hundred thousand, a decline of 0.23%. I find relatively large effects for: (1) medically-treated diseases which pose an immediate risk of death, (2) impoverished areas which received a disproportionate share of state Medicaid dollars, and (3) areas with a high ratio of medical to surgical physicians.
The Impact of Insurance Expansions on the Already Insured: The Affordable Care Act and Medicare
Colleen Carey, Sarah Miller & Laura Wherry
NBER Working Paper, October 2018
Abstract:
Some states that have not adopted the Affordable Care Act (ACA) Medicaid expansions have stated concerns that the expansions may impair access to care and utilization for those who are already insured. We investigate such negative spillovers using a large panel of Medicare beneficiaries. Across many subgroups and outcomes, we find no evidence that the expansions reduced utilization among Medicare beneficiaries, and can rule out all but very small changes in utilization or spending. These results suggest that the expansions in Medicaid did not impair access to care or utilization for the Medicare population.
Partial Rating Area Offering in the ACA Marketplaces: Facts, Theory and Evidence
Hanming Fang & Ami Ko
NBER Working Paper, October 2018
Abstract:
In the health insurance marketplaces established by the Affordable Care Act (ACA), each state is divided into a set number of geographic “rating areas.” The ACA mandates that an insurer price its health insurance plan uniformly in all counties within the same rating area, conditional on insurees’ age and smoking status. However, the ACA does not require that an insurer sell its plan in all counties in a rating area. Using the federal marketplace data, we quantify the prevalence of a phenomenon, which we refer to as partial rating area offering, where insurers enter some but not all of the counties in a rating area. To understand why insurers selectively enter a subset of the counties in a rating area, we develop a simple model of insurer competition. The model implies that if common county characteristics, such as the county’s risk distribution, market size and provider availability, are the primary drivers for the partial rating area offering phenomenon, then there would be a positive correlation among insurers’ entry decisions. In contrast, if the partial rating area offering phenomenon is driven by market segmentation, then there would be a negative correlation. We develop a novel nonparametric correlation test and apply it to the federal marketplace data. We find strong evidence for a positive correlation of insurers’ entry decisions, suggesting that common cost factors are the main driver for the partial rating area offering phenomenon. To the extent that it is a concern that many counties now have few insurers, our result suggests that it is important to offer insurers subsidies that are tied to county characteristics.
Deep neural network improves fracture detection by clinicians
Robert Lindsey et al.
Proceedings of the National Academy of Sciences, 6 November 2018, Pages 11591-11596
Abstract:
Suspected fractures are among the most common reasons for patients to visit emergency departments (EDs), and X-ray imaging is the primary diagnostic tool used by clinicians to assess patients for fractures. Missing a fracture in a radiograph often has severe consequences for patients, resulting in delayed treatment and poor recovery of function. Nevertheless, radiographs in emergency settings are often read out of necessity by emergency medicine clinicians who lack subspecialized expertise in orthopedics, and misdiagnosed fractures account for upward of four of every five reported diagnostic errors in certain EDs. In this work, we developed a deep neural network to detect and localize fractures in radiographs. We trained it to accurately emulate the expertise of 18 senior subspecialized orthopedic surgeons by having them annotate 135,409 radiographs. We then ran a controlled experiment with emergency medicine clinicians to evaluate their ability to detect fractures in wrist radiographs with and without the assistance of the deep learning model. The average clinician’s sensitivity was 80.8% (95% CI, 76.7–84.1%) unaided and 91.5% (95% CI, 89.3–92.9%) aided, and specificity was 87.5% (95 CI, 85.3–89.5%) unaided and 93.9% (95% CI, 92.9–94.9%) aided. The average clinician experienced a relative reduction in misinterpretation rate of 47.0% (95% CI, 37.4–53.9%). The significant improvements in diagnostic accuracy that we observed in this study show that deep learning methods are a mechanism by which senior medical specialists can deliver their expertise to generalists on the front lines of medicine, thereby providing substantial improvements to patient care.
How Did Affordable Care Act Exchanges Affect Individuals’ Willingness to Quit Their Jobs?
Jason Rotter, Alex Gertner & Paul Shafer
University of North Carolina Working Paper, September 2018
Methods: Repeated panels (2006-2015) from the Medical Expenditure Panel Survey (MEPS) contain information on current employment and quitting in five survey rounds over a two-year period. Linear probability models (LPM) with standard errors clustered at the household level predict the probability of quitting, controlling for temporal and seasonal trends using panel/round fixed effects. Models include controls for demographic and socioeconomic characteristics and are weighted using the provided longitudinal weights. The main effect compares the first open enrollment period (Q4 2013-Q1-2014 [panel 17, round 5]) with the same seasonal period (round 5) in different panels (first difference), then controls for time trends by subtracting out the same comparison from a different round (e.g., panel 17, round 2) (second difference).
Results: The sample contains 105,348 individuals, 2,782 of whom quit their current main job over 10 overlapping panels (10 years) of 4 rounds each (round 1 established current job). The unadjusted rate of voluntary quitting in round 5 across all pre-exchange panels was 3.1%. During the first open enrollment (panel 17, round 5), the predicted probability of voluntary quitting was nearly a full percentage point higher than the average of the prior panels [0.93 percentage points (95% CI: 0.01, 1.80)] and consistent for individual years (first difference). Controlling for temporal changes (second difference), using the second and third rounds as referent, the average effects are even stronger [2.01 (0.93, 3.11)] and [1.54 (0.37, 2.70)], respectively. We also observe a stronger effect in earlier panel years (pre-2010), suggesting the period of and following the Great Recession may have dampened willingness to quit. The largest change in reasons for voluntarily quitting a position between the first open enrollment and pre-exchange periods was ‘quit to take care of home/family’ (10.6%) followed by ‘quit to go to school’ (7.58%).
Conclusions: These results show support for the job lock hypothesis, indicating that individuals may be willing to quit their jobs when access to other sources of affordable health insurance become available. The magnitude of this result is small, but generalizable to a sizable population, unlike other previous attempts to characterize the effects of the ACA on labor outcomes. Specifically, we describe the pathway where individuals may be willing to quit their current job differentially around the time of the first ACA open enrollment period. Affordable access to health insurance can improve flexibility to move in and out of the labor force.
The three‐year impact of the Affordable Care Act on disparities in insurance coverage
Charles Courtemanche et al.
Health Services Research, forthcoming
Data Source: The 2011‐2016 waves of the American Community Survey (ACS), with the sample restricted to nonelderly adults.
Design: We estimate a difference‐in‐difference‐in‐differences model to separately identify the effects of the nationwide and Medicaid expansion portions of the ACA using the methodology developed in the recent ACA literature. The differences come from time, state Medicaid expansion status, and local area pre‐ACA uninsured rates. In order to focus on access disparities, we stratify our sample separately by income, race/ethnicity, marital status, age, gender, and geography.
Principal Findings: After three years, the fully implemented ACA eliminated 43% of the coverage gap across income groups, with the Medicaid expansion accounting for this entire reduction. The ACA also reduced coverage disparities across racial groups by 23%, across marital status by 46%, and across age‐groups by 36%, with these changes being partly attributable to both the Medicaid expansion and nationwide components of the law.
Association of Medicaid Expansion With 1-Year Mortality Among Patients With End-Stage Renal Disease
Shailender Swaminathan et al.
Journal of the American Medical Association, forthcoming
Design, Setting, and Participants: Difference-in-differences analysis of nonelderly patients initiating dialysis in Medicaid expansion and nonexpansion states from January 2011 to March 2017.
Results: A total of 142 724 patients in expansion states (mean age, 50.2 years; 40.2% women) and 93 522 patients in nonexpansion states (mean age, 49.7; 42.4% women) were included. In Medicaid expansion states, 1-year mortality following dialysis initiation declined from 6.9% in the preexpansion period to 6.1% after expansion (change, −0.8 percentage points; 95% CI, −1.1 to −0.5). In nonexpansion states, mortality rates were 7.0% before expansion and 6.8% after expansion (change, −0.2 percentage points; 95% CI, −0.5 to 0.2), yielding an adjusted absolute reduction in mortality in expansion states of −0.6 percentage points (95% CI, −1.0 to −0.2). Mortality reductions were largest for black patients (−1.4 percentage points; 95% CI, −2.2, −0.7; P=.04 for interaction) and patients aged 19 to 44 years (−1.1 percentage points; 95% CI, −2.1 to −0.3; P=.01 for interaction). Expansion was associated with a 10.5-percentage-point (95% CI, 7.7-13.2) increase in Medicaid coverage at dialysis initiation, a −4.2-percentage-point (95% CI, −6.0 to −2.3) decrease in being uninsured, and a 2.3-percentage-point (95% CI, 0.6-4.1) increase in the presence of an arteriovenous fistula or graft. Changes in predialysis nephrology care were not significant.
Conclusions and Relevance: Among patients with ESRD initiating dialysis, living in a state that expanded Medicaid under the Affordable Care Act was associated with lower 1-year mortality. If this association is causal, further research is needed to understand what factors may have contributed to this finding.
Better together: Coexistence of for-profit and nonprofit firms with an application to the U.S. Hospice Industry
Christina Marsh Dalton & David Bradford
Journal of Health Economics, forthcoming
Abstract:
Many markets maintain a nontrivial mix of both nonprofit and for-profit firms, particularly in health care industries such as hospice, nursing homes, and home health. What are the effects of coexistence versus dominance of one ownership type? We show how the presence of both ownership types can lead to greater diversity in consumer types served, even if both firms merely profit-maximize. This is the case where firms serve consumers for multiple consumption durations, but where donations are part of a nonprofit firm objective function and happen after services have been provided. This finding is strengthened if the good or service has value beyond immediate consumption or the direct consumer. We show these predictions empirically in the hospice industry, using data containing over 90 percent of freestanding U.S. hospices, 2000-2008. Nonprofit and for-profit providers split the patient market according to length of stay, leading to a wider range of patients being served than in the absence of this coexistence.
Patient vs. Provider Incentives in Long Term Care
Martin Hackmann & Vincent Pohl
NBER Working Paper, October 2018
Abstract:
How do patient and provider incentives affect mode and cost of long-term care? Our analysis of 1 million nursing home stays yields three main insights. First, Medicaid-covered residents prolong their stays instead of transitioning to community-based care due to limited cost-sharing. Second, nursing homes shorten Medicaid stays when capacity binds to admit more profitable out-of-pocket payers. Third, providers react more elastically to financial incentives than patients, so moving to episode-based provider reimbursement is more effective in shortening Medicaid stays than increasing resident cost-sharing. Moreover, we do not find evidence for health improvements due to longer stays for marginal Medicaid beneficiaries.
Beyond Physicians: The Effect of Licensing and Liability Laws on the Supply of Nurse Practitioners and Physician Assistants
Benjamin McMichael
Journal of Empirical Legal Studies, December 2018, Pages 732-771
Abstract:
The increased use of nurse practitioners (NPs) and physician assistants (PAs) represents an important option for increasing access to healthcare. I explore the effect of two types of laws on the supply of NPs and PAs: occupational licensing laws that limit the practices of NPs and PAs and caps on noneconomic damages. Relaxing licensing laws to allow NPs to practice with less physician oversight increases the supply of NPs in areas with few practicing physicians by 60 percent — though the size of this increase decreases as the supply of physicians grows. I find similar, but weaker, evidence for granting PAs more autonomy. Noneconomic damages caps increase the supply of both NPs and PAs by about 60 percent at the lowest levels of physician supply. Examining the effects of these laws on the prevalence of health professional shortage areas, I find that licensing laws have meaningful effects on access to care.
How Important Is Price Variation Between Health Insurers?
Stuart Craig, Keith Marzilli Ericson & Amanda Starc
NBER Working Paper, October 2018
Abstract:
Prices negotiated between payers and providers affect a health insurance contract's value via enrollees' cost-sharing and self-insured employers' costs. However, price variation across payers is hard to observe. We measure negotiated prices for hospital-payer pairs in Massachusetts and characterize price variation. Between-payer price variation is similar in magnitude to between-hospital price variation. Administrative-services-only contracts, in which insurers do not bear risk, have higher prices. We model negotiation incentives and show that contractual form and demand responsiveness to negotiated prices are important determinants of negotiated prices.
Effects Of A Communication-And-Resolution Program On Hospitals’ Malpractice Claims And Costs
Allen Kachalia et al.
Health Affairs, November 2018, Pages 1836-1844
Abstract:
To promote communication with patients after medical injuries and improve patient safety, numerous hospitals have implemented communication-and-resolution programs (CRPs). Through these programs, hospitals communicate transparently with patients after adverse events; investigate what happened and offer an explanation; and, when warranted, apologize, take responsibility, and proactively offer compensation. Despite growing consensus that CRPs are the right thing to do, concerns over liability risks remain. We evaluated the liability effects of CRP implementation at four Massachusetts hospitals by examining before-and-after trends in claims volume, cost, and time to resolution and comparing them to trends among nonimplementing peer institutions. CRP implementation was associated with improved trends in the rate of new claims and legal defense costs at some hospitals, but it did not significantly alter trends in other outcomes. None of the hospitals experienced worsening liability trends after CRP implementation, which suggests that transparency, apology, and proactive compensation can be pursued without adverse financial consequences.
Moving Beyond the Valley of Death: Regulation and Venture Capital Investments in Early-Stage Biopharmaceutical Firms
Yujin Kim, Chirantan Chatterjee & Matthew Higgins
NBER Working Paper, October 2018
Abstract:
Venture capitalists (VCs) traditionally invest in risky, early-stage innovations. Recent research suggests, however, that VCs may be herding into less risky, later-stage projects. Such a shift can create funding gaps for early-stage firms. Can regulation reverse this trend by providing information that may reduce the risk of early-stage investments? Using the regulatory setting of the European Union and the passage of the Orphan Drug Act (EU-ODA), we examine this question in the biopharmaceutical industry. We provide causal evidence that VCs are more likely to invest in early-stage biopharmaceutical firms operating in sub-fields disproportionately affected by EU-ODA. We also find that the level of syndication declined for early-stage investments and exit performance improved. Importantly, the shift towards early-stage investment did not lead to any higher proportion of bankruptcies. Collectively, our results suggest that the information provided by EU-ODA helped alleviate information asymmetries faced by VCs investing in early-stage biopharmaceutical firms. We conclude by discussing implications for entrepreneurial finance and innovation policy.
New Medicare Diabetes Prevention Coverage May Limit Beneficiary Access and Widen Health Disparities
Natalie Ritchie & Robert Gritz
Medical Care, November 2018, Pages 908–911
Background: The Centers for Medicare and Medicaid Services recently issued final rules for the Medicare Diabetes Prevention Program (MDPP), offering an unprecedented opportunity to provide lifestyle intervention to Medicare beneficiaries with prediabetes via a pay-for-performance model. The MDPP is based on the widely disseminated, yearlong National Diabetes Prevention Program (NDPP), which has lesser but still beneficial risk-reduction outcomes among minority and low-income participants.
Objectives: We compare projected payments based on outcomes of a diverse sample of Medicare beneficiaries to service delivery costs, and explore resulting implications for MDPP access and sustainability.
Methods: We delivered NDPP in a safety-net health care system from 2013 to 2017 and conducted an analysis of service cost, beneficiary performance, and projected MDPP reimbursement.
Results: Among 1165 total participants, 213 (18.3%) were Medicare beneficiaries. Participating beneficiaries were 40.6% Hispanic, 31.6% non-Hispanic black, and 26.9% non-Hispanic white and 69.5% low-income. Overall beneficiary performance would result in an average reimbursement of $138.52 (interquartile range=162.50). Program delivery costs were $800 per participant, leaving an average gap of $661 per beneficiary.
Does Nursing Home Compare Reflect Patient Safety In Nursing Homes?
Daniel Brauner et al.
Health Affairs, November 2018, Pages 1770-1778
Abstract:
The past several decades have seen significant policy efforts to improve the quality of care in nursing homes, but the patient safety movement has largely ignored this setting. In this study we compared nursing homes’ performance on several composite quality measures from Nursing Home Compare, the most prominent recent example of a national policy aimed at improving the quality of nursing home care, to their performance on measures of patient safety in nursing homes such as pressure sores, infections, falls, and medication errors. Although Nursing Home Compare captures some aspects of patient safety, we found the relationship to be weak and somewhat inconsistent, leaving consumers who care about patient safety with little guidance. We recommend that Nursing Home Compare be refined to provide a clearer picture of patient safety and quality of life, allowing consumers to weight these domains according to their preferences and priorities.