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Premium Subsidies, the Mandate, and Medicaid Expansion: Coverage Effects of the Affordable Care Act
Molly Frean, Jonathan Gruber & Benjamin Sommers
NBER Working Paper, April 2016
Abstract:
Using a combination of subsidized premiums for Marketplace coverage, an individual mandate, and expanded Medicaid eligibility, the Affordable Care Act (ACA) has significantly increased insurance coverage rates. We assessed the relative contributions to insurance changes of these different ACA provisions in the law’s first full year, using rating-area level premium data for all 50 states and microdata from the 2012-2014 American Community Survey. We employ a difference-in-difference-in-difference estimation strategy that relies on variation across income groups, areas, and years to causally identify the role of the ACA policy levers. We have four key findings. First, insurance coverage was only moderately responsive to price subsidies, but the subsidies were still large enough to raise coverage by almost one percent of the population; the coverage gains were larger in states that operated their own health insurance exchanges (as opposed to using the federal exchange). Second, the exemptions and tax penalty structure of the individual mandate had little impact on coverage decisions. Third, the law increased Medicaid coverage both among newly eligible populations and those who were previously eligible for Medicaid (the “woodwork” effect), with the latter driven predominantly by states that expanded their programs prior to 2014. Finally, there was no “crowdout” effect of expanded Medicaid on private insurance. Overall, we conclude that exchange premium subsidies produced roughly 40% of the ACA’s 2014 coverage gains, and Medicaid the other 60%, of which 2/3 occurred among previously-eligible individuals.
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‘Government Patent Use’: A Legal Approach To Reducing Drug Spending
Amy Kapczynski & Aaron Kesselheim
Health Affairs, May 2016, Pages 791-797
Abstract:
The high cost of patent-protected brand-name drugs can strain budgets and curb the widespread use of new medicines. An example is the case of direct-acting antiviral drugs for the treatment of hepatitis C. While prices for these drugs have come down in recent months, they still create barriers to treatment. Additionally, prescribing restrictions imposed by insurers put patients at increased risk of medical complications and contribute to transmission of the hepatitis C virus. We propose that the federal government invoke its power under an existing “government patent use” law to reduce excessive prices for important patent-protected medicines. Using this law would permit the government to procure generic versions of patented drugs and in exchange pay the patent-holding companies reasonable royalties to compensate them for research and development. This would allow patients in federal programs, and perhaps beyond, to be treated with inexpensive generic medicines according to clinical need — meaning that many more patients could be reached for no more, and perhaps far less, money than is currently spent. Another benefit would be a reduction in the opportunity for companies to extract monopoly profits that far exceed their risk-adjusted costs of research and development.
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Outcomes are Worse in US Patients Undergoing Surgery on Weekends Compared With Weekdays
Laurent Glance et al.
Medical Care, June 2016, Pages 608–615
Research Design: Using all-payer data, we conducted a retrospective cohort study of 305,853 patients undergoing isolated coronary artery bypass graft surgery, colorectal surgery, open repair of abdominal aortic aneurysm, endovascular repair of abdominal aortic aneurysm, and lower extremity revascularization. We compared in-hospital mortality and major complications for weekday versus weekend surgery using multivariable logistic regression analysis.
Results: After controlling for patient risk and surgery type, weekend elective surgery [adjusted odds ratio (AOR)=3.18; 95% confidence interval (CI), 2.26–4.49; P<0.001] and weekend urgent surgery (AOR=2.11; 95% CI, 1.68–2.66; P<0.001) were associated with a higher risk of death compared with weekday surgery. Weekend elective (AOR=1.58; 95% CI, 1.29–1.93; P<0.001) and weekend urgent surgery (AOR=1.61; 95% CI, 1.42–1.82; P<0.001) were also associated with a higher risk of major complications compared with weekday surgery.
Conclusions: Patients undergoing nonemergent major cardiac and noncardiac surgery on the weekends have a clinically significantly increased risk of death and major complications compared with patients undergoing surgery on weekdays. These findings should prompt decision makers to seek to better understand factors, such physician and nurse staffing, which may contribute to the weekend effect.
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Kosali Simon, Aparna Soni & John Cawley
NBER Working Paper, May 2016
Abstract:
The U.S. population receives suboptimal levels of preventive care and has a high prevalence of risky health behaviors. One goal of the Affordable Care Act (ACA) was to increase preventive care and improve health behaviors by expanding access to health insurance. This paper estimates how the ACA’s state-level expansions of Medicaid in 2014 affected these outcomes. Using data from the Behavioral Risk Factor Surveillance System, and a difference-in-differences model that compares states that did and did not expand Medicaid, we examine the impact of the expansions on preventive care (e.g. dental visits, immunizations, mammograms, cancer screenings) and risky health behaviors (e.g. smoking, heavy drinking, lack of exercise, obesity). We find evidence consistent with increased use of certain forms of preventive care such as dental visits and cancer screenings but little evidence of changes in health behaviors and in particular no evidence of ex ante moral hazard (i.e., no evidence that risky health behaviors increased in response to health insurance coverage). The Medicaid expansions also resulted in modest improvements in self-assessed health and decreases in the number of work days missed due to poor health.
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Medicare Part D and Portfolio Choice
Padmaja Ayyagari & Daifeng He
American Economic Review, May 2016, Pages 339-342
Abstract:
Economic theory suggests that medical spending risk affects the extent to which households are willing to accept financial risk, and consequently their investment portfolios. In this study, we focus on the elderly for whom medical spending represents a substantial risk. We exploit the exogenous reduction in prescription drug spending risk due to the introduction of Medicare Part D in the U.S. in 2006 to identify the causal effect of medical spending risk on portfolio choice. Consistent with theory, we find that Medicare-eligible persons increased risky investment after the introduction of prescription drug coverage, relative to a younger, ineligible cohort.
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Anna Wallace et al.
Academic Medicine, forthcoming
Purpose: To examine associations between board certification of psychiatrists and neurologists and quality-of-care measures, using multilevel models controlling for physician and patient characteristics, and to assess feasibility of linking physician information with patient records to construct quality measures from electronic claims data.
Method: The authors identified quality measures and matched claims data from 2006 to 2012 with 942 board-certified (BC) psychiatrists, 868 non-board-certified (nBC) psychiatrists, 963 BC neurologists, and 328 nBC neurologists. Using the matched data, they identified psychiatrists who treated at least one patient with a schizophrenia diagnosis, and neurologists attending patients discharged with a principal diagnosis of ischemic stroke, and analyzed claims from these patients. For patients with schizophrenia who were prescribed an atypical antipsychotic, quality measures were claims for glucose and lipid tests, duration of any antipsychotic treatment, and concurrent prescription of multiple antipsychotics. For patients with ischemic stroke, quality measures were dysphagia evaluation; speech/language evaluation; and prescription of clopidogrel, low-molecular-weight heparin, intravenous heparin, and warfarin (for patients with co-occurring atrial fibrillation).
Results: Overall, multilevel models (patients nested within physicians) showed no statistically significant differences in quality measures between BC and nBC psychiatrists and neurologists.
Conclusions: The authors demonstrated the feasibility of linking physician information with patient records to construct quality measures from electronic claims data, but there may be only minimal differences in the quality of care between BC and nBC psychiatrists and neurologists, or there may be a difference that could not be measured with the quality measures used.
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What is the Marginal Benefit of Payment-Induced Family Care?
Norma Coe et al.
NBER Working Paper, May 2016
Abstract:
Research on informal and formal long-term care has centered almost solely on costs; to date, there has been very little attention paid to the benefits. This study exploits the randomization in the Cash and Counseling Demonstration and Evaluation program and instrumental variable techniques to gain causal estimates of the effect of family involvement in home-based care on health care utilization and health outcomes. We find that family involvement significantly decreases Medicaid utilization. Importantly, we find family involvement significantly lowers the likelihood of urinary tract infections, respiratory infections, and bedsores, suggesting that the lower utilization is due to better health outcomes.
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Association Between Availability of a Price Transparency Tool and Outpatient Spending
Sunita Desai et al.
Journal of the American Medical Association, 3 May 2016, Pages 1874-1881
Design, Setting, and Participants: Two large employers represented in multiple market areas across the United States offered an online health care price transparency tool to their employees. One introduced it on April 1, 2011, and the other on January 1, 2012. The tool provided users information about what they would pay out of pocket for services from different physicians, hospitals, or other clinical sites. Using a matched difference-in-differences design, outpatient spending among employees offered the tool (n=148 655) was compared with that among employees from other companies not offered the tool (n=295 983) in the year before and after it was introduced.
Results: Mean outpatient spending among employees offered the tool was $2021 in the year before the tool was introduced and $2233 in the year after. In comparison, among controls, mean outpatient spending changed from $1985 to $2138. After adjusting for demographic and health characteristics, being offered the tool was associated with a mean $59 (95% CI, $25-$93) increase in outpatient spending. Mean outpatient out-of-pocket spending among those offered the tool was $507 in the year before introduction of the tool and $555 in the year after. Among the comparison group, mean outpatient out-of-pocket spending changed from $490 to $520. Being offered the price transparency tool was associated with a mean $18 (95% CI, $12-$25) increase in out-of-pocket spending after adjusting for relevant factors. In the first 12 months, 10% of employees who were offered the tool used it at least once.
Conclusions and Relevance: Among employees at 2 large companies, offering a price transparency tool was not associated with lower health care spending. The tool was used by only a small percentage of eligible employees.
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The Deservingness Heuristic and the Politics of Health Care
Carsten Jensen & Michael Bang Petersen
American Journal of Political Science, forthcoming
Abstract:
Citizens’ social policy opinions are strongly influenced by a simple heuristic: Are the recipients of social benefits deserving or not? Adding to this growing literature, we provide evidence that the deservingness heuristic does not treat all social benefits alike. Already at the level of preconscious processing, the heuristic displays a bias toward tagging the recipients of health care — that is, sick individuals — as deserving. This powerful, implicit effect overrides other opinion factors and produces broad-based support among the public for health care — across levels of self-interest, media frames, ideological divides, and national cultures. In contrast, when the deservingness heuristic is utilized for reasoning about unemployment benefits, implicit psychological constraints are fewer and political conflict erupts depending on differences in interest and worldviews. Using a variety of methodologies, we track this fundamental difference between the politics of health care and unemployment benefits from the level of implicit processing to the level of political attitudes.
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Alberto Galasso & Hong Luo
Harvard Working Paper, February 2016
Abstract:
Current academic and policy debates focus on the impact of tort reforms on physicians’ behavior and medical costs. This paper examines whether these reforms also affect incentives to develop new technologies. We find that laws which limit the liability exposure of healthcare providers are associated with a 13 percent reduction in medical device patenting. Tort reforms have the strongest impact in medical fields in which malpractice litigation is more frequent, and do not seem to affect the propensity to develop technologies of the highest and lowest quality. Our results underscore the importance of considering dynamic effects in economic analysis of tort laws.
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Are Settlements in Patent Litigation Collusive? Evidence from Paragraph IV Challenges
Eric Helland & Seth Seabury
NBER Working Paper, April 2016
Abstract:
The use of “pay-for-delay” settlements in patent litigation – in which a branded manufacturer and generic entrant settle a Paragraph IV patent challenge and agree to forestall entry – has come under considerable scrutiny in recent years. Critics argue that these settlements are collusive and lower consumer welfare by maintaining monopoly prices after patents should have expired, while proponents argue they reinforce incentives for innovation. We estimate the impact of settlements to Paragraph IV challenges on generic entry and evaluate the implications for drug prices and quantity. To address the potential endogeneity of Paragraph IV challenges and settlements we estimate the model using instrumental variables. Our instruments include standard measures of patent strength and a measure of settlement legality based on a split between several Circuit Courts of Appeal. We find that Paragraph IV challenges increase generic entry, lower drug prices and increase quantity, while settlements effectively reverse the effect. These effects persist over time, inflating price and depressing quantity for up to 5 years after the challenge. We also find that eliminating settlements would result in a relatively small reduction in research and development (R&D) expenditures.
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The Effect of Physician and Hospital Market Structure on Medical Technology Diffusion
Pinar Karaca-Mandic, Robert Town & Andrew Wilcock
Health Services Research, forthcoming
Objective: To examine the influence of physician and hospital market structures on medical technology diffusion, studying the diffusion of drug-eluting stents (DESs), which became available in April 2003.
Data Sources/Study Setting: Medicare claims linked to physician demographic data from the American Medical Association and to hospital characteristics from the American Hospital Association Survey.
Data Collection/Extraction Methods: All fee-for-service Medicare beneficiaries who received a percutaneous coronary intervention (PCI) with a cardiac stent in 2003 or 2004. Each PCI record was joined to characteristics on the patient, the procedure, the cardiologist, and the hospital where the PCI was delivered. We accounted for the endogeneity of physician and hospital market structure using exogenous variation in the distances between patient, physician, and hospital locations. We estimated multivariate linear probability models that related the use of a DES in the PCI on market structure while controlling for patient, physician, and hospital characteristics.
Principal Findings: DESs diffused faster in markets where cardiology practices faced more competition. Conversely, we found no evidence that the structure of the hospital market mattered.
Conclusions: Competitive pressure to maintain or expand PCI volume shares compelled cardiologists to adopt DESs more quickly.
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Productivity Dispersion in Medicine and Manufacturing
Amitabh Chandra et al.
American Economic Review, May 2016, Pages 99-103
Abstract:
The conventional wisdom in health economics is that large differences in average productivity across US hospitals are the result of idiosyncratic features of the healthcare sector which dull the role of market forces. Strikingly, however, we find that productivity dispersion in heart attack treatment across hospitals is, if anything, smaller than in narrowly defined manufacturing industries such as ready-mixed concrete. While this fact admits multiple interpretations, it suggests that healthcare may have more in common with "traditional" sectors than is often assumed, and relatedly, that insights from research on productivity and allocation in other sectors may enrich analysis of healthcare.
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Jacob Wallace & Zirui Song
Health Affairs, May 2016, Pages 864-872
Abstract:
To slow the growth of Medicare spending, some policy makers have advocated raising the Medicare eligibility age from the current sixty-five years to sixty-seven years. For the majority of affected adults, this would delay entry into Medicare and increase the time they are covered by private insurance. Despite its policy importance, little is known about how such a change would affect national health care spending, which is the sum of health care spending for all consumers and payers — including governments. We examined how spending differed between Medicare and private insurance using longitudinal data on imaging and procedures for a national cohort of individuals who switched from private insurance to Medicare at age sixty-five. Using a regression discontinuity design, we found that spending fell by $38.56 per beneficiary per quarter — or 32.4 percent — upon entry into Medicare at age sixty-five. In contrast, we found no changes in the volume of services at age sixty-five. For the previously insured, entry into Medicare led to a large drop in spending driven by lower provider prices, which may reflect Medicare’s purchasing power as a large insurer. These findings imply that increasing the Medicare eligibility age may raise national health care spending by replacing Medicare coverage with private insurance, which pays higher provider prices than Medicare does.
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Charles Courtemanche et al.
NBER Working Paper, April 2016
Abstract:
The Affordable Care Act (ACA) aimed to achieve nearly universal health insurance coverage in the United States through a combination of insurance market reforms, mandates, subsidies, health insurance exchanges, and Medicaid expansions, most of which took effect in 2014. This paper estimates the causal effects of the ACA on health insurance coverage using data from the American Community Survey. We utilize difference-in-difference-in-differences models that exploit cross-sectional variation in the intensity of treatment arising from state participation in the Medicaid expansion and local area pre-ACA uninsured rates. This strategy allows us to identify the effects of the ACA in both Medicaid expansion and non-expansion states. Our preferred specification suggests that, at the average pre-treatment uninsured rate, the full ACA increased the proportion of residents with insurance by 5.9 percentage points compared to 3.0 percentage points in states that did not expand Medicaid. Private insurance expansions from the ACA were due to increases in both employer-provided and non-group coverage. The coverage gains from the full ACA were largest for those with incomes below the Medicaid eligibility threshold, non-whites, young adults, and unmarried individuals. We find some evidence that the Medicaid expansion partially crowded out private coverage among low-income individuals.
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Differing Impacts Of Market Concentration On Affordable Care Act Marketplace Premiums
Richard Scheffler et al.
Health Affairs, May 2016, Pages 880-888
Abstract:
Recent increases in market concentration among health plans, hospitals, and medical groups raise questions about what impact such mergers are having on costs to consumers. We examined the impact of market concentration on the growth of health insurance premiums between 2014 and 2015 in two Affordable Care Act state-based Marketplaces: Covered California and NY State of Health. We measured health plan, hospital, and medical group market concentration using the well-known Herfindahl-Hirschman Index (HHI) and used a multivariate regression model to relate these measures to premium growth. Both states exhibited a positive association between hospital concentration and premium growth and a positive (but not statistically significant) association between medical group concentration and premium growth. Our results for health plan concentration differed between the two states: It was positively associated with premium growth in New York but negatively associated with premium growth in California. The health plan concentration finding in Covered California may be the result of its selectively contracting with health plans.
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The Affordable Care Act, State Policies and Demand for Primary Care Physicians
Marco Huesch, Truls Ostbye & Lloyd Michener
Duke University Working Paper, April 2016
Abstract:
The Affordable Care Act is designed to increase healthcare access nationwide. Such foreseeable new demand in the face of a fixed supply of physicians could lead to greater, and/or more intensive, recruitment of primary care physicians. We analyzed all primary care advertisements on three important national physician recruitment websites by ‘scraping’ all content on two days one year apart and parsed the content using text analytic tools. We expected greater increases in recruitment activity in those states expanding Medicaid and which partnered with the federal government to construct insurance exchanges. Contrary to hypothesis, physician labor markets did not consistently respond to foreseeable increases in patient demand by increased recruitment activities.
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Supervised autonomous robotic soft tissue surgery
Azad Shademan et al.
Science Translational Medicine, 4 May 2016
Abstract:
The current paradigm of robot-assisted surgeries (RASs) depends entirely on an individual surgeon’s manual capability. Autonomous robotic surgery — removing the surgeon’s hands — promises enhanced efficacy, safety, and improved access to optimized surgical techniques. Surgeries involving soft tissue have not been performed autonomously because of technological limitations, including lack of vision systems that can distinguish and track the target tissues in dynamic surgical environments and lack of intelligent algorithms that can execute complex surgical tasks. We demonstrate in vivo supervised autonomous soft tissue surgery in an open surgical setting, enabled by a plenoptic three-dimensional and near-infrared fluorescent (NIRF) imaging system and an autonomous suturing algorithm. Inspired by the best human surgical practices, a computer program generates a plan to complete complex surgical tasks on deformable soft tissue, such as suturing and intestinal anastomosis. We compared metrics of anastomosis — including the consistency of suturing informed by the average suture spacing, the pressure at which the anastomosis leaked, the number of mistakes that required removing the needle from the tissue, completion time, and lumen reduction in intestinal anastomoses—between our supervised autonomous system, manual laparoscopic surgery, and clinically used RAS approaches. Despite dynamic scene changes and tissue movement during surgery, we demonstrate that the outcome of supervised autonomous procedures is superior to surgery performed by expert surgeons and RAS techniques in ex vivo porcine tissues and in living pigs. These results demonstrate the potential for autonomous robots to improve the efficacy, consistency, functional outcome, and accessibility of surgical techniques.