Payers
Saying, “I Don’t”: The Effect of the Affordable Care Act Young Adult Provision on Marriage
Joelle Abramowitz
Journal of Human Resources, Fall 2016, Pages 933-960
Abstract:
This paper investigates the effect of the Affordable Care Act young adult provision on the propensity to marry. The young adult provision expanded options for obtaining insurance coverage outside of marriage. Young adults affected by the provision might have less incentive to marry since one avenue for obtaining health insurance coverage is through marriage. This paper examines this question by applying difference-in-differences-type methods using the 2008–2013 American Community Survey. Results suggest that the provision is associated with decreases in the likelihood of marrying, cohabitation, and spousal health insurance coverage and an increase in the probability of divorce.
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Health Care and the Housing Crisis
Ben Gilbert & Julian Wade
University of Wyoming Working Paper, November 2016
Abstract:
We show that the percentage of people in a county without health insurance in 2005 is a strong and robust predictor of subsequent home value declines in that county during the housing crisis. Our preferred estimates indicate that a 10 percentage point increase in uninsured county residents in 2005 is associated with approximately 4 additional percentage points of home value decline between 2006 and 2010. We also provide evidence that this relationship was essentially nonexistent in Massachussets, where comprehensive health care reform was passed just before the housing crisis began. Our results contribute to the growing literature on the financial benefits of obtaining health insurance, but we are the first to show a link between health insurance and housing market outcomes. We also add to the literature on the household-level determinants of the recession; considering that uninsured households are likely to pay medical debt with consumer credit or home equity loans, our results shed light on one mechanism by which pre-recession household leverage may have exacerbated the recession. These results have important policy implications as the federal government considers a revision of the Affordable Care Act.
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Andrew Goodman-Bacon
NBER Working Paper, December 2016
Abstract:
This paper exploits the original introduction of Medicaid (1966-1970) and the federal mandate that states cover all cash welfare recipients to estimate the effect of childhood Medicaid eligibility on adult health, labor supply, program participation, and income. Cohorts born closer to Medicaid implementation and in states with higher pre-existing welfare-based eligibility accumulated more Medicaid eligibility in childhood but did not differ on a range of other health, socioeconomic, and policy characteristics. Early childhood Medicaid eligibility reduces mortality and disability and, for whites, increases extensive margin labor supply, and reduces receipt of disability transfer programs and public health insurance up to 50 years later. Total income does not change because earnings replace disability benefits. The government earns a discounted annual return of between 2 and 7 percent on the original cost of childhood coverage for these cohorts, most of which comes from lower cash transfer payments.
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Jeffrey Stensland, Zachary Gaumer & Mark Miller
Health Affairs, December 2016, Pages 2282-2288
Abstract:
It is generally believed that most hospitals lose money on Medicaid admissions. The data suggest otherwise. Medicaid admissions are often profitable for hospitals because of payments from both the Medicaid program and the Medicare program, including payments for uncompensated care and from the Medicare disproportionate-share hospital program. On average, adding a single Medicaid patient day in fiscal year 2017 will increase most hospitals’ Medicare payments by more than $300. When added to Medicaid payments, these payments often cause Medicaid patients to be profitable for hospitals. In contrast, adding a single charity care day in the same year will decrease overall Medicare payments by about $20 on average. The Centers for Medicare and Medicaid Services recently announced a proposal to shift some Medicare payments from supporting hospitals’ costs for Medicaid patients to directly supporting their costs for uncompensated care. If that proposal is adopted, hospitals’ profits on Medicaid patients would decrease, but their losses on care for the uninsured would be reduced.
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The Labor-Market Impact of San Francisco's Employer-Benefit Mandate
Carrie Colla, William Dow & Arindrajit Dube
Industrial Relations, January 2017, Pages 122–160
Abstract:
We evaluate a San Francisco policy requiring employers to provide health benefits or contribute to a public-option health plan to better understand the incidence of employer mandates through their effects on wages, employment, and prices. We develop an individual case study approach combining border discontinuity in policies and permutation-type inference using other metropolitan areas. Findings indicate that employment patterns did not change appreciably following the policy, and there is little evidence of significant negative earnings in highly impacted sectors. However, approximately half of the incidence of the mandate in the restaurant sector fell on consumers via surcharges.
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The Effect of the Affordable Care Act Medicaid Expansion on Migration
Lucas Goodman
Journal of Policy Analysis and Management, Winter 2017, Pages 211–238
Abstract:
The expansion of Medicaid to low-income nondisabled adults is a key component of the Affordable Care Act's strategy to increase health insurance coverage, but many states have chosen not to take up the expansion. As a result, for many low-income adults, there has been stark variation across states in access to Medicaid since the expansions took effect in 2014. This study investigates whether individuals migrate in order to gain access to these benefits. Using an empirical model in the spirit of a difference-in-differences, this study finds that migration from non-expansion states to expansion states did not increase in 2014 relative to migration in the reverse direction. The estimates are sufficiently precise to rule out a migration effect that would meaningfully affect the number of enrollees in expansion states, which suggests that Medicaid expansion decisions do not impose a meaningful fiscal externality on other states.
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Screening in Contract Design: Evidence from the ACA Health Insurance Exchanges
Michael Geruso, Timothy Layton & Daniel Prinz
NBER Working Paper, November 2016
Abstract:
By steering patients to cost-effective substitutes, the tiered design of prescription drug formularies can improve the efficiency of healthcare consumption in the presence of moral hazard. However, a long theoretical literature describes how contract design can also be used to screen consumers by profitability. In this paper, we study this type of screening in the ACA Health Insurance Exchanges. We first show that despite large regulatory transfers that neutralize selection incentives for most consumer types, some consumers are unprofitable in a way that is predictable by their prescription drug demand. Then, using a difference-in-differences strategy that compares Exchange formularies where these selection incentives exist to employer plan formularies where they do not, we show that Exchange insurers design formularies as screening devices that are differentially unattractive to unprofitable consumer types. This results in inefficiently low levels of coverage for the corresponding drugs in equilibrium. Although this type of contract distortion has been highlighted in the prior theoretical literature, until now empirical evidence has been rare. The impact on out-of-pocket costs for consumers affected by the distortion is substantial — potentially thousands of dollars per year — and the distortion creates an equilibrium in which contracts that efficiently trade off moral hazard and risk protection cannot exist.
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Improving the Quality of Choices in Health Insurance Markets
Jason Abaluck & Jonathan Gruber
NBER Working Paper, December 2016
Abstract:
Insurance product choice is a central feature of health insurance markets in the United States, yet there is ongoing concern over whether consumers choose appropriately in such markets – and little evidence on solutions to any choice inconsistencies. This paper addresses these omissions from the literature using novel data and a series of policy interventions across school districts in the state of Oregon. Using data on enrollment and medical claims for school district employees, we first document large choice inconsistencies, with the typical employee foregoing savings of more than $600 in their insurance plan choice. We then consider three types of interventions designed to improve choice quality. We first show that interventions to promote more active choice are unlikely to improve choice quality based on existing patterns of plan switching. We then implement a randomized trial of decision support software to illustrate that it has little impact on plan choices, largely because of consumer avoidance of the recommendations. Finally, we show that restricting the choice set size facing individuals does significantly reduce their foregone saving and total costs. This is not because individuals choose worse with larger choice sets, but rather because larger choice sets feature worse choices on average that are not offset by individual re-optimization.
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Claims-Shifting: The Problem of Parallel Reimbursement Regimes
Olesya Fomenko & Jonathan Gruber
Journal of Health Economics, forthcoming
Abstract:
Parallel reimbursement regimes, under which providers have some discretion over which payer gets billed for patient treatment, are a common feature of health care markets. In the U.S., the largest such system is under Workers’ Compensation (WC), where the treatment workers with injuries that are not definitively tied to a work accident may be billed either under group health insurance plans or under WC. We document that there is significant reclassification of injuries from group health plans into WC, or “claims shifting”, when the financial incentives to do so are strongest. In particular, we find that injuries to workers enrolled in capitated group health plans (such as HMOs) see a higher incidence of their claims for soft-tissue injuries (which are hard to classify specifically as work related) under WC than under group health, relative to those in non-capitated plans. Such a pattern is not evident for workers with traumatic injuries. Moreover, we find that such reclassification is more common in states with higher WC fees, once again for soft tissue but not traumatic injuries. Our results imply that a significant shift towards capitated reimbursement, or reimbursement reductions, under GH could lead to a large rise in the cost of WC plans.
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Early Impact of the Affordable Care Act's Medicaid Expansion on Dental Care Use
Kamyar Nasseh & Marko Vujicic
Health Services Research, forthcoming
Objective: To examine the impact of the Affordable Care Act on dental care use among poor adults ages 21–64 in 2014.
Data: 2010–2014 Gallup-Healthways Wellbeing Index Survey.
Study Design: Among poor adults with income at or below 138% of the Federal Poverty Level, a differences-in-differences analysis was used to compare the changes in dental care use in states with different Medicaid expansion and adult dental policies.
Principal Findings: Relative to the pre-reform period and other states, in Medicaid expansion states with adult dental benefits, dental care use increased between 2 and 6 percent points in the second half of 2014, but most of these changes were not statistically significant.
Conclusions: Early evidence suggests that the Affordable Care Act may either not be having a substantial impact on dental care use or it is too early to assess the impact.
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Natalia Chalmers, Jane Grover & Rob Compton
Health Affairs, December 2016, Pages 2268-2276
Abstract:
Access to oral health care is a critical need for the adult Medicaid population. Following the 2014 expansion of Medicaid eligibility in Kentucky, millions of adults became eligible to receive dental benefits. We examined the impact of the expansion on adult Medicaid enrollees’ use of hospital emergency departments (EDs) for conditions related to dental or oral health in the period 2010–14. Based on our analysis of data for Kentucky from the State Emergency Department Databases, we found that the rate of discharges for these conditions from the ED increased significantly, from 1,833 per 100,000 population in 2013 to 5,635 in 2014. Adults covered by Medicaid who used the ED for treatment of oral health conditions in 2014 had high levels of chronic comorbidities and were more likely to be male and nonwhite than those in earlier years. To avoid costly and inappropriate use of the ED, states considering adding an adult Medicaid dental benefit should consider also making changes to assist beneficiaries in obtaining access to the dental health care delivery system.
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The Evolution of Health Insurer Costs in Massachusetts, 2010-12
Kate Ho, Ariel Pakes & Mark Shepard
NBER Working Paper, November 2016
Abstract:
We analyze the evolution of health insurer costs in Massachusetts between 2010-2012, a period in which the use of physician cost control incentives spread among insurers. We show that the growth of costs and its relationship to the introduction of cost control incentives cannot be understood without accounting for (i) consumers’ switching between plans, and (ii) differences in cost characteristics between new entrants and those leaving the market. New entrants are markedly less costly than those leaving (and their costs fall after their entering year), so cost growth of those who stay in a plan is significantly higher than average per-member cost growth. Cost control incentives were used by Health Maintenance Organizations (HMOs). Relatively high-cost HMO members switched to Preferred Provider Organizations (PPOs) while low-cost PPO members switched to HMOs. As a result, the impact of cost control incentives on HMO costs is likely different from their impact on market-wide insurer costs.
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Dropped Out or Pushed Out? Insurance Market Exit and Provider Market Power in Medicare Advantage
Daria Pelech
Journal of Health Economics, forthcoming
Abstract:
This paper explores how provider and insurer market power affect which markets an insurer chooses to operate in. A 2011 policy change required that certain private insurance plans in Medicare form provider networks de novo; in response, insurers cancelled two-thirds of the affected plans. Using detailed data on pre-policy provider and insurer market structure, I compare markets where insurers built networks to those they exited. Overall, insurers in the most concentrated hospital and physician markets were 9 and 13 percentage points more likely to exit, respectively, than those in the least concentrated markets. Conversely, insurers with more market power were less likely to exit than those with less, and an insurer's market power had the largest effect on exit in concentrated hospital markets. These findings suggest that concentrated provider markets contribute to insurer exit and that insurers with less market power have more difficulty surviving in concentrated provider markets.
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Insurers' Response to Selection Risk: Evidence from Medicare Enrollment Reforms
Francesco Decarolis & Andrea Guglielmo
NBER Working Paper, December 2016
Abstract:
Evidence on insurers behavior in environments with both risk selection and market power is largely missing. We fill this gap by providing one of the first empirical accounts of how insurers adjust plan features when faced with potential changes in selection. Our strategy exploits a 2012 reform allowing Medicare enrollees to switch to 5-star contracts at any time. This policy increased enrollment into 5-star contracts, but without risk selection worsening. Our findings show that this is due to 5-star plans lowering both premiums and generosity, thus becoming more appealing for most beneficiaries, but less so for those in worse health conditions.
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For Disproportionate-Share Hospitals, Taxes And Fees Curtail Medicaid Payments
Robert Nelb et al.
Health Affairs, December 2016, Pages 2277-2281
Abstract:
After accounting for supplemental payments, we found that in 2011, disproportionate-share hospitals, on average, received gross Medicaid payments that totaled 108 percent of their costs for treating Medicaid patients but only 89 percent of their costs for Medicaid and uninsured patients combined. However, these payments were reduced by approximately 4–11 percent after we accounted for provider taxes and local government contributions that are used to help finance Medicaid payments.
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Dental Care And Medicare Beneficiaries: Access Gaps, Cost Burdens, And Policy Options
Amber Willink, Cathy Schoen & Karen Davis
Health Affairs, December 2016, Pages 2241-2248
Abstract:
Despite the wealth of evidence that oral health is related to physical health, Medicare explicitly excludes dental care from coverage, leaving beneficiaries at risk for tooth decay and periodontal disease and exposed to high out-of-pocket spending. To profile these risks, we examined access to dental care across income groups and types of insurance coverage in 2012. High-income beneficiaries were almost three times as likely to have received dental care in the previous twelve months, compared to low-income beneficiaries — 74 percent of whom received no dental care. We also describe two illustrative policies that would expand access, in part by providing income-related subsidies. One would offer a voluntary, premium-financed benefit similar to those offered by Part D prescription drug plans, with an estimated premium of $29 per month. The other would cover basic dental care in core Medicare Part B benefits, financed in part by premiums ($7 or $15 per month, depending on whether premiums covered 25 percent or 50 percent of the cost) and in part by general revenues. The fact that beneficiaries are forgoing dental care and are exposed to significant costs if they seek care underscores the need for action. The policies offer pathways for improving health and financial independence for older adults.
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Tianyan Hu & Karoline Mortensen
Health Services Research, forthcoming
Objective: To investigate the impact of implementation of the Statewide Medicaid Managed Care (SMMC) program in Florida on access to and quality of primary care for Medicaid enrollees, measured by hospitalizations for ambulatory care sensitive conditions (ACSCs).
Data Sources: We examine inpatient data obtained from the Agency for Health Care Administration for 285 hospitals in Florida from January 2010 to June 2015. The analysis includes 3,645,515 discharges for Florida residents between the ages 18 and 64 with a primary payer of Medicaid or private insurance.
Study Design: We use a difference-in-differences approach, comparing the change in the incidence of ACSC-related inpatient visits among Medicaid patients before and after the implementation of SMMC, relative to the change among the privately insured.
Principal Findings: After implementation of SMMC, Medicaid patients experienced a 0.35 percentage point slower growth in overall ACSC-related inpatient visits, and a 0.21 percentage point slower growth in chronic ACSC-related inpatient visits. The effects were significant in counties with above median Medicaid managed care penetration rates.
Conclusions: Implementing mandatory managed care in Medicaid in Florida leads to slower growth in inpatient visits for conditions that can potentially be prevented with improved access to outpatient care.
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Jonathan Gruber et al.
NBER Working Paper, December 2016
Abstract:
In this study we examine the impact of a value-based insurance design (V-BID) program implemented between 2010 and 2013 at a large public employer in the state of Oregon. The program substantially increased cost-sharing, specifically copayments and coinsurance, for several healthcare services believed to be of low value and overused (sleep studies, endoscopies, advanced imaging, and surgeries). Using a differences-in-differences design coupled with granular, administrative health insurance claims data, we estimate the change in low value healthcare service utilization among beneficiaries before and after program implementation relative to a comparison group of beneficiaries who were not exposed to the V-BID. Our findings suggest that the V-BID significantly reduced utilization of targeted services. These findings have important implications for both public and private healthcare policies as V-BID principles are rapidly proliferating in healthcare markets.
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Trends in Access to Health Care Services for US Children: 2000–2014
Kandyce Larson et al.
Pediatrics, December 2016
Methods: Analysis of 178 038 children ages 0 to 17 from the 2000 to 2014 National Health Interview Survey. Trends are examined for health insurance and 5 access indicators: no well-child visit in the year, no doctor office visit, no dental visit, no usual source of care, and unmet health needs. Logistic regression models add controls for sociodemographics and child health status. Statistical interactions test whether trends vary by race/ethnicity and income.
Results: Among all children, uninsured rates declined from 12.1% in 2000 to 5.3% in 2014, with improvement across all 5 access indicators. Along with steep declines in the uninsured rate, Hispanic children had sizeable improvement for no doctor office (19.8% to 11.9%), no dental visit (43.2% to 21.8%), and no usual source of care (13.9% to 6.3%). Black children and those in poor and near-poor families also had large gains. Results from adjusted statistical interaction models showed more improvement for black and Hispanic children versus whites for 3 of 5 access indicators and for children in poor and near-poor families for 4 of 5 access indicators.
Conclusions: Children’s access to health services has improved since 2000 with greater gains in vulnerable population groups. Findings support a need for continued support of health insurance for all children.