A Dynamic Model of Health Insurance Choices and Healthcare Consumption Decisions
Nitin Mehta et al.
Marketing Science, May-June 2017, Pages 338-360
Chronic diseases, which account for 75% of healthcare expenditure, are of particular importance in trying to understand the rapid growth of healthcare costs over the last few decades. Individuals suffering from chronic diseases can consume three types of services: secondary preventive care, which includes diagnostic tests; primary preventive care, which consists of drugs that help prevent the illness from getting worse; and curative care, which includes surgeries and expensive drugs that provide a quantum boost to the patient’s health. Although the majority of cases can be managed by preventive care, most consumers opt for more expensive curative care that leads to a substantial increase in overall costs. To examine these inefficiencies, we build a model of consumers’ annual medical insurance plan decisions and periodic consumption decisions and apply it to a panel data set. Our results indicate that there exists a sizable segment of consumers who purchase more comprehensive plans than needed because of high uncertainty vis-à-vis their health status, and that once in the plan, they opt for curative care even when their illness could be managed through preventive care. We examine how changing cost-sharing characteristics of insurance plans and providing more accurate information to consumers via secondary preventive care can reduce these inefficiencies.
The Effect of Insurance Coverage on Preventive Care
Marika Cabral & Mark Cullen
Economic Inquiry, July 2017, Pages 1452–1467
Despite the growth in health insurance products that differentially cover preventive care and nonpreventive care, little is known about how preventive care utilization responds to targeted changes in coverage. Using administrative data from a large company, this paper examines the implementation of an insurance benefit design which differentially increased the price of nonpreventive care while decreasing the price of prevention. Leveraging a difference-in-differences research strategy, we find that preventive care utilization did not increase and even declined due to the differential price change. This evidence indicates a meaningful negative cross-price effect, suggesting that nonpreventive care and preventive care are complements.
Three-Year Impacts of the Affordable Care Act: Improved Medical Care and Health among Low-Income Adults
Benjamin Sommers et al.
Health Affairs, June 2017, Pages 1119-1128
Major policy uncertainty continues to surround the Affordable Care Act (ACA) at both the state and federal levels. We assessed changes in health care use and self-reported health after three years of the ACA’s coverage expansion, using survey data collected from low-income adults through the end of 2016 in three states: Kentucky, which expanded Medicaid; Arkansas, which expanded private insurance to low-income adults using the federal Marketplace; and Texas, which did not expand coverage. We used a difference-in-differences model with a control group and an instrumental variables model to provide individual-level estimates of the effects of gaining insurance. By the end of 2016 the uninsurance rate in the two expansion states had dropped by more than 20 percentage points relative to the nonexpansion state. For uninsured people gaining coverage, this change was associated with a 41-percentage-point increase in having a usual source of care, a $337 reduction in annual out-of-pocket spending, significant increases in preventive health visits and glucose testing, and a 23-percentage-point increase in “excellent” self-reported health. Among adults with chronic conditions, we found improvements in affordability of care, regular care for those conditions, medication adherence, and self-reported health.
Personal Experience and Public Opinion: A Theory and Test of Conditional Policy Feedback
Amy Lerman & Katherine McCabe
Journal of Politics, April 2017, Pages 624-641
Using a regression discontinuity design, we show that personal experience with public health insurance programs exerts a causal influence on attitudes toward both Medicare and the Affordable Care Act. However, we argue that the conditional dynamics of these policy feedback effects differ from standard models of opinion formation and change. Specifically, we find that personal experience can shape preferences among those whose partisanship might otherwise make them resistant to elite messaging; in the case of support for health policy, we find effects of public programs are most pronounced among Republicans. In addition, we find that the effects of personal experience, unlike attempts to shape attitudes through elite political messaging, are concentrated among low-information voters who might otherwise not be attuned to the political environment.
Are Employer Mandates to Offer Health Insurance Effective in Reducing Subsidized Coverage Crowd-Out of Employer-Sponsored Insurance?
American Journal of Health Economics, forthcoming
In 2015, the Affordable Care Act began requiring large employers to offer affordable health insurance coverage to their full-time employees or pay a penalty. Will this mandate significantly affect the take-up of employer health insurance? This paper analyzes the Massachusetts Health Care and Insurance Reform Law of 2006 to gain some insight on the impact of employer mandates on coverage distributions. Results suggest that the large-firm employer mandate to offer health insurance was effective at reducing subsidized insurance crowd-out of employer-sponsored health insurance among workers who were income-eligible for subsidies. Using a triple-differences identification strategy and a synthetic control group approach, this paper finds that roughly half of those newly taking up employer-sponsored insurance in large firms subjected to the mandate would have enrolled in subsidized coverage had their employer been exempted from or subjected to a more lenient employer mandate.
Did the Affordable Care Act Young Adult Provision Affect Labor Market Outcomes? Analysis Using Tax Data
Bradley Heim, Ithai Lurie & Kosali Simon
NBER Working Paper, June 2017
We study the impact of the Affordable Care Act (ACA) young adult dependent coverage requirement on labor market-related outcomes, including measures of employment status, job characteristics, and post-secondary education, using a data set of U.S. tax records spanning 2008-2013. We find that the ACA provision did not result in substantial changes in labor market outcomes. Our results show that employment and self-employment were not statistically significantly affected. While we find some evidence of increased likelihood of young adults earning lower wages, not receiving fringe benefits, enrolling as full-time or graduate students, and young men being self-employed, the magnitudes imply extremely small impacts on these outcomes in absolute terms and when compared to other estimates in the literature. These results are consistent with health insurance being less salient to young adults when making labor market decisions compared to other populations.
Did the Affordable Care Act's Dependent Coverage Expansion Affect Race/Ethnic Disparities in Health Insurance Coverage?
Joshua Breslau et al.
Health Services Research, forthcoming
Objective: To test the impact of the dependent coverage expansion (DCE) on insurance disparities across race/ethnic groups.
Data Sources/Study Setting: Survey data from the National Survey of Drug Use and Health (NSDUH).
Study Design: Triple-difference (DDD) models were applied to repeated cross-sectional surveys of the U.S. adult population.
Data Collection/Extraction Methods: Data from 6 years (2008–2013) of the NSDUH were combined.
Principal Findings: Following the DCE, the relative odds of insurance increased 1.5 times (95 percent CI 1.1, 1.9) among whites compared to blacks and 1.4 times (95 percent CI 1.1, 1.8) among whites compared to Hispanics.
For Selected Services, Blacks and Hispanics More Likely to Receive Low-Value Care than Whites
William Schpero et al.
Health Affairs, June 2017, Pages 1065-1069
US minority populations receive fewer effective health services than whites. Using Medicare administrative data for 2006–11, we found no consistent, corresponding protection against the receipt of ineffective health services. Compared with whites, blacks and Hispanics were often more likely to receive the low-value services studied.
Racial Disparities in Surgical Mortality: The Gap Appears to Have Narrowed
Winta Tsegay Mehtsun et al.
Health Affairs, June 2017, Pages 1057-1064
Despite substantial attention to the greater likelihood of poor clinical outcomes among black versus white surgical patients, little is known about whether racial disparities in postoperative mortality in the United States have narrowed over time. Using nationwide Medicare inpatient claims data for the period 2005–14, we examined trends in thirty-day postoperative mortality rates in black and white patients for five high-risk and three low-risk procedures. Overall, national mortality trends improved for both black and white patients, by 0.10 percent per year and 0.07 percent per year, respectively — which significantly narrowed the black-white difference. The reduction occurred primarily within hospitals, rather than between hospitals. Certain subsets of hospitals, such as small hospitals in the Midwest or West that were not minority-serving (that is, not among the top 10 percent of hospitals by volume of black patients served), improved more than others. In spite of concerns that quality improvement efforts may widen disparities, these findings suggest that national racial disparities in surgical mortality are narrowing.
Effect of the Affordable Care Act on Disparities in Breastfeeding: The Case of Maine
Summer Sherburne Hawkins, Alice Noble & Christopher Baum
American Journal of Public Health, July 2017, Pages 1119-1121
Methods: We used the All-Payer Claims Database from Maine (2012–2014) to compare health insurance claims for lactation classes and breast pumps between women with private insurance and women with Medicaid (1) before the ACA breastfeeding provision, (2) after the provision came into effect, and (3) after health insurance expansion through the Marketplace.
Results: We found limited change in claims for lactation classes over the study period. By contrast, the number of claims for breast pumps among women with private insurance increased from 70 claims in the third quarter of 2012 to 629 claims 1 year later and 803 claims in the third quarter of 2014. Women with Medicaid had only 11 claims for breast pumps over the entire study period.
Conclusions: This 11-fold rise in claims for breast pumps by women with private insurance suggests that these women will likely increase breastfeeding initiation or duration; however, without additional support for women with Medicaid, disparities in breastfeeding may increase.
Variation in Emergency Department vs Internal Medicine Excess Charges in the United States
Tim Xu et al.
JAMA Internal Medicine, forthcoming
Importance: Uninsured and insured but out-of-network emergency department (ED) patients are often billed hospital chargemaster prices, which exceed amounts typically paid by insurers.
Design, Setting, and Participants: Retrospective analysis was conducted of professional fee payment claims made by the Centers for Medicare & Medicaid Services for all services provided to Medicare Part B fee-for-service beneficiaries in calendar year 2013. Data analysis was conducted from January 1 to July 31, 2016.
Main Outcomes and Measures: Markup ratios for ED and internal medicine professional services, defined as the charges submitted by the hospital divided by the Medicare allowable amount.
Results: Our analysis included 12 337 emergency medicine physicians from 2707 hospitals and 57 607 internal medicine physicians from 3669 hospitals in all 50 states. Services provided by emergency medicine physicians had an overall markup ratio of 4.4 (340% excess charges), which was greater than the markup ratio of 2.1 (110% excess charges) for all services performed by internal medicine physicians. Markup ratios for all ED services ranged by hospital from 1.0 to 12.6 (median, 4.2; interquartile range [IQR], 3.3-5.8); markup ratios for all internal medicine services ranged by hospital from 1.0 to 14.1 (median, 2.0; IQR, 1.7-2.5). The median markup ratio by hospital for ED evaluation and management procedure codes varied between 4.0 and 5.0. Among the most common ED services, laceration repair had the highest median markup ratio (7.0); emergency medicine physician review of a head computed tomographic scan had the greatest interhospital variation (range, 1.6-27.7). Across hospitals, markups in the ED were often substantially higher than those in the internal medicine department for the same services. Higher ED markup ratios were associated with hospital for-profit ownership (median, 5.7; IQR, 4.0-7.1), a greater percentage of uninsured patients seen (median, 5.0; IQR, 3.5-6.7 for ≥20% uninsured), and location (median, 5.3; IQR, 3.8-6.8 for the southeastern United States).
The Effect of Malpractice Law on Physician Supply: Evidence from Negligence-Standard Reforms
Michael Frakes, Matthew Frank & Seth Seabury
NBER Working Paper, May 2017
We explore whether the composition of the physician work force is impacted by the clinical standards imposed on physicians under medical liability rules. We theorize that physicians of particular backgrounds will be attracted to regions when the malpractice laws of those regions favor the type of medicine characteristic of those backgrounds. To test this prediction, we rely on a quasi-experiment made possible by states shifting from local to national customs as the basis for setting standards at court, a distinction that captures meaningful differences in the clinical expectations of the law in light of the well documented phenomenon of regional variations in medical practices. Using data from the Area Health Resource File from 1977 to 2005, we find that the rate of surgeons among practicing physicians increases by 2-2.4 log points following the adoption of national-standard laws in initially low surgery-rate regions — i.e., following a change in the law that effectively expects physicians to increase practice intensities. We find that this response is nearly three times greater in rural counties. We also find that this supply effect is unidirectional, with no evidence to suggest that surgeons retreat when initially high-surgery-rate regions change their laws so as to expect less intensive practice styles.
Examining Drivers of Health Care Spending: Evidence on Self-referral Among a Privately Insured Population
Jean Mitchell et al.
Medical Care, July 2017, Pages 684–692
Objectives: We analyzed health insurance claims records from a large private insurer in Texas to evaluate the effects of physician self-referral arrangements involving physical therapy on the treatment of patients with frozen shoulder syndrome, elbow tendinopathy or tendinitis, and patellofemoral pain syndrome.
Study Design: We used regression analysis to evaluate the effects of episode self-referral status on: (1) initiation of physical therapy; (2) physical therapy visits and services for those who had at least 1 visit; and (3) total condition-related insurer allowed amounts per episode.
Results: For all 3 conditions, we found that patients treated by physician owners were much more likely to be referred for a course of physical therapy when compared with patients seen by physician nonowners. A consistent pattern emerged among patients who had at least 1 physical therapy visit; non–self-referred episodes included more physical therapy visits, and more physical therapy services per episode in comparison with episodes classified as self-referral. Most self-referred episodes were short and the initial visit did not include an evaluation.
Conclusion: Physician owners of physical therapy services refer significantly higher percentages of patients to physical therapy and many are equivocal cases.
Changes in Hospital Quality Associated with Hospital Value-Based Purchasing
Andrew Ryan et al.
New England Journal of Medicine, 15 June 2017, Pages 2358-2366
Background: Starting in fiscal year 2013, the Hospital Value-Based Purchasing (HVBP) program introduced quality performance–based adjustments of up to 1% to Medicare reimbursements for acute care hospitals.
Methods: We evaluated whether quality improved more in acute care hospitals that were exposed to HVBP than in control hospitals (Critical Access Hospitals, which were not exposed to HVBP). The measures of quality were composite measures of clinical process and patient experience (measured in units of standard deviations, with a value of 1 indicating performance that was 1 standard deviation [SD] above the hospital mean) and 30-day risk-standardized mortality among patients who were admitted to the hospital for acute myocardial infarction, heart failure, or pneumonia. The changes in quality measures after the introduction of HVBP were assessed for matched samples of acute care hospitals (the number of hospitals included in the analyses ranged from 1364 for mortality among patients admitted for acute myocardial infarction to 2615 for mortality among patients admitted for pneumonia) and control hospitals (number of hospitals ranged from 31 to 617). Matching was based on preintervention performance with regard to the quality measures. We evaluated performance over the first 4 years of HVBP.
Results: Improvements in clinical-process and patient-experience measures were not significantly greater among hospitals exposed to HVBP than among control hospitals, with difference-in-differences estimates of 0.079 SD (95% confidence interval [CI], −0.140 to 0.299) for clinical process and −0.092 SD (95% CI, −0.307 to 0.122) for patient experience. HVBP was not associated with significant reductions in mortality among patients who were admitted for acute myocardial infarction (difference-in-differences estimate, −0.282 percentage points [95% CI, −1.715 to 1.152]) or heart failure (−0.212 percentage points [95% CI, −0.532 to 0.108]), but it was associated with a significant reduction in mortality among patients who were admitted for pneumonia (−0.431 percentage points [95% CI, −0.714 to −0.148]).
Conclusions: In our study, HVBP was not associated with improvements in measures of clinical process or patient experience and was not associated with significant reductions in two of three mortality measures.
The Spillover Effects of Health IT Investments on Regional Healthcare Costs
Hilal Atasoy, Pei-yu Chen & Kartik Ganju
Management Science, forthcoming
Electronic health records (EHR) are often presumed to reduce the significant and accelerating healthcare costs in the United States. However, evidence on the relationship between EHR adoption and costs is mixed, leading to skepticism about the effectiveness of EHR in decreasing costs. We argue that simply looking at the hospital-level effects can be misleading because the benefits of EHR can go beyond the adopting hospital by creating regional spillovers via information and patient sharing. When patients move between hospitals, timely and high-quality records received at one hospital can affect the costs of care at another hospital. We provide evidence that although EHR adoption increases the costs of the adopting hospital, it has significant spillover effects by reducing the costs of neighboring hospitals. We further show that these spillovers are linked to information and patient sharing. Specifically, the spillovers are stronger when more hospitals in the region are in health information exchange networks and in the same integrated delivery systems, which can share information more easily. Furthermore, utilizing regional characteristics that can affect the extent of patient sharing such as urban versus rural areas, population density, average distance between hospitals, and hospital density, we find that locations with higher patient and hospital concentration experience stronger regional spillovers. Additionally, spillovers are stronger after the HITECH (Health Information Technology for Economic and Clinical Health) Act that increased EHR adoption and use. Overall, our findings suggest that we need to take into account externalities to understand the benefits of health IT investments and form policy decisions.
The Impact of Health Information Exchanges on Emergency Department Length of Stay
Turgay Ayer et al.
Georgia Institute of Technology Working Paper, May 2017
Health information exchanges (HIEs) are expected to improve poor information coordination in Emergency departments (EDs); however, whether and when HIEs are associated with better operational outcomes remains poorly understood. In this work, we study HIE and length of stay (LOS) relationship using a large dataset from the Healthcare Cost and Utilization Project consisting of about 5.8 million treat-and-release visits made to 63 EDs in Massachusetts. Overall, we find that HIE adoption is associated with a 11.1% reduction in LOS and the percentage reduction increases to 16.5% when a patient has a previous visit to an HIE-carrying hospital. We further find that 1) teaching hospitals benefit more from HIE adoption compared with non-teaching hospitals, 2) HIE is less effective in reducing LOS when EDs are crowded, 3) patients with severe or multiple comorbid conditions spend less time in the ED under HIE presence, and 4) there exist variations in HIE and LOS relationship across primary diseases/conditions that the patient is visiting the ED for. Together, these results imply that 1) HIE adoption reduces overall ED LOS, 2) wider HIE adoption would scale up the benefits for individual hospitals, and 3) the size of the reduction depends on certain contextual moderating factors. Given that Massachusetts has been considered a mini-model for the implementation of the Affordable Care Act, we believe that our findings have important implications and may inform policymakers regarding the nationwide HIE adoption.
Do Health Information Exchanges Deter Repetition of Medical Services?
Saeede Eftekhari et al.
State University of New York Working Paper, May 2017
Repetition of medical services by providers is one of the major sources of healthcare costs. The lack of access to previous medical information on a patient at the point of care often leads a physician to perform medical procedures that have already been done. Multiple healthcare initiatives and legislations at both federal and state levels have mandated Health Information Exchange (HIE) systems to address this problem. This study aims to assess the extent to which HIE could reduce these repetitions, using data from Centers for Medicare & Medicaid Services (CMS) and a regional HIE organization. A 2SLS model is developed to predict the impact of HIE on repetitions of two classes of procedures: diagnostic and therapeutic. The first stage is a predictive analytic model that estimates the duration of tenure of each HIE member-practice. Based on these estimates, the second stage predicts the effect of providers’ HIE tenure on their repetition of medical services. The model incorporates moderating effects of a federal quality assurance program and the complexity of medical procedures with a set of control variables. Our analyses show that a practice’s tenure with HIE significantly lowers the repetition of therapeutic medical procedures, while diagnostic procedures are not impacted. The medical reasons for the effects observed in each class of procedures are discussed. The results will inform healthcare policy makers and provide insights on the business models of HIE platforms.