Public Insurance and Mortality: Evidence from Medicaid Implementation
Journal of Political Economy, forthcoming
This paper provides new evidence that Medicaid’s introduction reduced infant and child mortality in the 1960s and 1970s. Mandated coverage of all cash welfare recipients induced substantial cross-state variation in the share of children immediately eligible for the program. Before Medicaid, higher- and lower-eligibility states had similar infant and child mortality trends. After Medicaid, public insurance utilization increased and mortality fell more rapidly among children and infants in high-Medicaid-eligibility states. Mortality among nonwhite children on Medicaid fell by 20 percent, leading to a reduction in aggregate nonwhite child mortality rates of 11 percent.
Early Medicaid Expansion Associated With Reduced Payday Borrowing In California
Heidi Allen et al.
Health Affairs, October 2017, Pages 1769-1776
We examined the impact of California’s early Medicaid expansion under the Affordable Care Act on the use of payday loans, a form of high-interest borrowing used by low- and middle-income Americans. Using a data set for the period 2009–13 (roughly twenty-four months before and twenty-four months after the 2011–12 Medicaid expansion) that covered the universe of payday loans from five large payday lenders with locations around the United States, we used a difference-in-differences research design to assess the effect of the expansion on payday borrowing, comparing trends in early-expansion counties in California to those in counties nationwide that did not expand early. The early Medicaid expansion was associated with an 11 percent reduction in the number of loans taken out each month. It also reduced the number of unique borrowers each month and the amount of payday loan debt. We were unable to determine precisely how and for whom the expansion reduced payday borrowing, since to our knowledge, no data exist that directly link payday lending to insurance status. Nonetheless, our results suggest that Medicaid reduced the demand for high-interest loans and improved the financial health of American families.
Medicaid and Household Savings Behavior: New Evidence from Tax Refunds
Emily Gallagher, Radhakrishnan Gopalan & Jorge Sabat
Washington University in St. Louis Working Paper, October 2017
Using the tax refund savings decisions of over 57,000 low-to-middle income (LMI) tax filers, we estimate the effect of expanded Medicaid access on the propensity of households to save their tax refunds. We instrument a household’s probability of Medicaid eligibility using household demographics, the national income distribution, and changes in the eligibility rules for Medicaid under the Affordable Care Act. Medicaid eligibility has no effect on the savings rate of the average LMI household. However, among those experiencing financial hardship, Medicaid eligibility increases both the propensity to save from the tax refund and the level of liquid assets. Specifically, Medicaid eligibility increases anticipated tax refund savings rates by 3.7-4.1 percentage points or roughly $100 for the average household in financial hardship. Our findings are consistent with uninsured, financially constrained households using default and bankruptcy as a way to manage health care expenditure risk (Mahoney, 2015).
Exploding Asthma and ADHD Caseloads: The Role of Medicaid Managed Care
Anna Chorniy, Janet Currie & Lyudmyla Sonchak
NBER Working Paper, October 2017
In the U.S., nearly 11% of school-age children have been diagnosed with ADHD, and approximately 10% of children suffer from asthma. In the last decade, the number of children diagnosed with these conditions has inexplicably been on the rise. This paper proposes a novel explanation of this trend. First, the increase is concentrated in the Medicaid caseload nationwide. Second, nearly 80% of states transitioned their Medicaid programs from fee-for-service (FFS) reimbursement to managed care (MMC) by 2016. Using Medicaid claims from South Carolina, we show that this change contributed to the increase in asthma and ADHD caseloads. Empirically, we rely on exogenous variation in MMC enrollment due a change in the “default” Medicaid plan from FFS or MMC, and an increase in the availability of MMC. We find that the transition from FFS to MMC explains most of the rise in the number of Medicaid children being treated for ADHD and asthma. These results can be explained by the incentives created by the risk adjustment and quality control systems in MMC.
The moral hazard effects of consumer responses to targeted cost-sharing
Christopher Whaley, Chaoran Guo & Timothy Brown
Journal of Health Economics, December 2017, Pages 201-221
This paper examines the effects of the reference pricing program implemented by the California Public Employees Retirement System (CalPERS) in 2012. The program uses targeted cost-sharing to incentivize patient price shopping. We find that the program leads to a 10.3% increase in the use of low-price providers and reduces the average cost per procedure by 12.5%. We further estimate that the program reduces medical spending by $218.8 per procedure, which we estimate is approximately 53.7% of the excessive spending that is due to patient choice of higher price providers caused by insurance coverage, at the expense of a $94.3 (or 12.5%) reduction in consumer surplus. The cost savings from the reference pricing program is about two to three times as large as the reduction from implementing a high-deductible health plan, while the accompanying consumer surplus reduction is much smaller under reference pricing.
Inequality in Infant Mortality: Cross-State Variation and Medical System Institutions
Social Problems, forthcoming
This article examines variation in the association between maternal education and infant mortality across the 50 U.S. states. An analysis of 22,967,018 Vital Statistics records from 1997-2002, reveals evidence of dramatic cross-state differences. In some states, infants born to mothers with less than 12 years of schooling are more than twice as likely to die as infants of mothers with 4 years of college or more. Other states see far more equality between these groups. I then evaluate two components of state medical systems that are predicted to be associated with this variation in the magnitude of inequalities in infant mortality: neonatal intensive care units and primary care physician supply. More widespread availability of neonatal intensive care is associated with reduced inequalities in infant mortality. In contrast, the supply of primary care is linked to slightly larger differences in infant mortality between mothers with low and high education.
Implications of Medicaid Financing Reform for State Government Budgets
Jeffrey Clemens & Benedic Ippolito
NBER Working Paper, October 2017
We analyze potential reforms to Medicaid financing through the lens of fiscal federalism. Because substantial dollars are at stake, both the economic and political sides of intergovernmental transfers have high relevance in this setting. We show that changes in Medicaid financing formulas can shift amounts exceeding several hundred dollars per capita from "winning" states to "losing" states. In some cases, these amounts exceed 10 percent of states' own-source revenues. States' balanced budget requirements imply that such changes would, if not phased in gradually, require significant budgetary adjustment over short time horizons. We next show that alternative Medicaid financing structures have significant implications for states' exposure to budgetary stress during recessions. During the Great Recession, an acyclical block grant structure would have increased states' shortfalls by 2-3.5 percent of own-source revenues relative to either an explicitly countercyclical block grant or the current matching system. Finally, we assess the implications of several financing structures for the extent to which they subsidize states' decisions on both the "extensive" and "intensive" margins of coverage generosity over the short and long term.
Millennials Almost Twice As Likely To Be Registered Nurses As Baby Boomers Were
David Auerbach, Peter Buerhaus & Douglas Staiger
Health Affairs, October 2017, Pages 1804-1807
Baby-boomer registered nurses (RNs), the largest segment of the RN workforce from 1981 to 2012, are now retiring. This would have led to nurse shortages but for the surprising embrace of the profession by millennials — who are entering the nurse workforce at nearly double the rate of the boomers. Still, the boomers’ retirement will reduce growth in the size of the RN workforce to 1.3 percent per year for the period 2015–30.
Trends in the Contribution of Emergency Departments to the Provision of Health Care in the USA
David Marcozzi et al.
International Journal of Health Services, forthcoming
Traditional approaches to assessing the health of populations focus on the use of primary care and the delivery of care through patient-centered homes, managed care resources, and accountable care organizations. The use of emergency departments (EDs) has largely not been given consideration in these models. Our study aimed to determine the contribution of EDs to the health care received by Americans between 1996 and 2010 and to compare it with the contribution of outpatient and inpatient services using National Ambulatory Medical Care Survey and National Hospital Discharge Survey databases. We found that EDs contributed an average of 47.7% of the medical care delivered in the United States, and this percentage increased steadily over the 14-year study period. EDs are a major source of medical care in the United States, especially for vulnerable populations, and this contribution increased throughout the study period. Including emergency care within health reform and population health efforts would prove valuable to supporting the health of the nation.
A Dose of Managed Care: Controlling Drug Spending in Medicaid
David Dranove, Christopher Ody & Amanda Starc
NBER Working Paper, October 2017
Effectively designed market mechanisms may reduce growth in health care spending. In this paper, we study the impact of privatizing the delivery of Medicaid drug benefits on drug spending. Exploiting granular data that allow us to examine drug utilization, we find that drug spending would fall by 22.4 percent if the drug benefit was fully administered by Medicaid Managed Care Organizations (MCOs), largely through lower point-of-sale prices and greater generic usage. The effects are driven by MCOs’ ability to design drug benefits and steer consumers toward lower cost drugs and pharmacies. MCOs do not appear to skimp on performance, either by reducing overall drug consumption as measured by prescriptions per enrollee or reducing utilization of drugs that offset other medical spending.
Reference Health and the Demand for Medical Care
Matthew Harris & Jennifer Kohn
Economic Journal, forthcoming
We propose that health in prior periods, termed reference health, is theoretically and empirically relevant to the demand for medical care. To address non-normality in the distributions of medical care spending, consumption, and health, we use a conditional density estimator nested in a finite mixture framework. We find that reference health can help explain the variation in spending among individuals with the same contemporaneous health, particularly in the top tail of the spending distribution. We demonstrate that omitting reference health understates the potential cost-savings of healthy-aging initiatives by 50 percent.
Expanding Medicaid Access without Expanding Medicaid: Why Did Some Nonexpansion States Continue the Primary Care Fee Bump?
Adam Wilk, Leigh Evans & David Jones
Journal of Health Politics, Policy and Law, forthcoming
Six states that have rejected the Patient Protection and Affordable Care Act's (ACA) Medicaid expansion nonetheless extended the primary care “fee bump,” by which the federal government increased Medicaid fees for primary care services up to 100 percent of Medicare fees during 2013–14. We conducted semistructured interviews with leaders in five of these states, as well as in three comparison states, to examine why they would continue a provision of the ACA that moderately expands access at significant state expense while rejecting the expansion and its large federal match, focusing on relevant economic, political, and procedural factors. We found that fee bump extension proposals were more successful where they were dissociated from major national policy debates, actionable with the input of relatively few stakeholder entities, and well aligned with preexisting policy-making structures and decision trends. Republican proposals to cap or reduce federal funding for Medicaid, if enacted, would compel states to contain program costs. In this context, states' established decision-making processes for updating Medicaid fee schedules, which we elucidate in this study, may shape the future of the Medicaid program.
Low-Cost, High-Volume Health Services Contribute The Most To Unnecessary Health Spending
John Mafi et al.
Health Affairs, October 2017, Pages 1701-1704
An analysis of data for 2014 about forty-four low-value health services in the Virginia All Payer Claims Database revealed more than $586 million in unnecessary costs. Among these low-value services, those that were low and very low cost ($538 or less per service) were delivered far more frequently than services that were high and very high cost ($539 or more). The combined costs of the former group were nearly twice those of the latter (65 percent versus 35 percent).
Association of Prehospital Mode of Transport With Mortality in Penetrating Trauma: A Trauma System–Level Assessment of Private Vehicle Transportation vs Ground Emergency Medical Services
Michael Wandling et al.
JAMA Surgery, forthcoming
Design, Setting, and Participants: Retrospective cohort study of data included in the National Trauma Data Bank from January 1, 2010, through December 31, 2012, comprising 298 level 1 and level 2 trauma centers that contribute data to the National Trauma Data Bank that are located within the 100 most populous metropolitan areas in the United States. Of 2 329 446 patients assessed for eligibility, 103 029 were included in this study. All patients were 16 years or older, had a gunshot wound or stab wound, and were transported by ground EMS or private vehicle.
Results: Of the 2 329 446 records assessed for eligibility, 103 029 individuals at 298 urban level 1 and level 2 trauma centers were included in the analysis. The study population was predominantly male (87.6%), with a mean age of 32.3 years. Among those included, 47.9% were black, 26.3% were white, and 18.4% were Hispanic. Following risk adjustment, individuals with penetrating injuries transported by private vehicle were less likely to die than patients transported by ground EMS (odds ratio [OR], 0.38; 95% CI, 0.31-0.47). This association remained statistically significant on stratified analysis of the gunshot wound (OR, 0.45; 95% CI, 0.36-0.56) and stab wound (OR, 0.32; 95% CI, 0.20-0.52) subgroups.
Conclusions and Relevance: Private vehicle transport is associated with a significantly lower likelihood of death when compared with ground EMS transport for individuals with gunshot wounds and stab wounds in urban US trauma systems. System-level evidence such as this can be a valuable tool for those responsible for developing and implementing policies at the trauma system level.
Does Multispecialty Practice Enhance Physician Market Power?
Laurence Baker, Kate Bundorf & Daniel Kessler
NBER Working Paper, September 2017
In markets for health services, vertical integration – common ownership of producers of complementary services – may have both pro- and anti-competitive effects. Despite this, no empirical research has examined the consequences of multispecialty physician practice – a common and increasing form of vertical integration – for physician prices. We use data on 40 million commercially insured individuals from the Health Care Cost Institute to construct indices of the price of a standard office visit to general-practice and specialist physicians for the years 2008-2012. We match this to measures of the characteristics of physician practices and physician markets based on Medicare Part B claims, aggregating physicians into practices based on their receipt of payments under a common Taxpayer Identification Number. Holding fixed the degree of competition in their own specialty, we find that generalist physicians charge higher prices when they are integrated with specialist physicians, and that the effect of integration is larger in uncompetitive specialist markets. We find the same thing in the reciprocal setting – specialist prices are higher when they are integrated with generalists, and the effect is stronger in uncompetitive generalist markets. Our results suggest that multispecialty practice has anticompetitive effects.
Changes in Resident Well-Being at One Institution Across a Decade of Progressive Work Hours Limitations
Michael Krug et al.
Academic Medicine, October 2017, Pages 1480–1484
Purpose: To measure changes in markers of resident well-being over time as progressive work hours limitations (WHLs) were enforced, and to investigate resident perceptions of the 2011 WHLs.
Method: A survey study of internal medicine residents was conducted at the University of Washington’s multihospital residency program in 2012. The survey included validated well-being questions: the Maslach Burnout Inventory, the two-question PRIME-MD depression screen, and career satisfaction questions. Chi-square tests were used to compare 2012 well-being questionnaire responses against nearly identical surveys conducted in 2001 and 2004 at the same institution. In addition, residents were asked to rate the impact of WHLs on resident well-being and education as well as patient care, and to state preferences for future WHLs.
Results: Significantly different proportions of residents met burnout criteria across time, with fewer meeting criteria in 2012 than in 2001 (2001: 76% [87/115]; 2004: 64% [75/118]; 2012: 61% [68/112]; P = .039). Depression screening results also differed across time, with fewer screening positive in 2012 than in 2004 (2001: 45% [52/115]; 2004: 55% [65/118]; 2012 [35/112]: 31%; P = .001). Residents, especially seniors, reported perceived negative impacts of WHLs on their well-being, education, and patient care. Most senior residents favored reverting to the pre-July 2011 system of WHLs. Interns were more divided.
Effects of Episode-Based Payment on Health Care Spending and Utilization: Evidence from Perinatal Care in Arkansas
Caitlin Carroll et al.
NBER Working Paper, October 2017
We study how physicians respond to financial incentives imposed by episode-based bundled payment (EBP), which encourages lower spending and improved quality for an entire episode of care. Specifically, we study the impact of the Arkansas Health Care Payment Improvement Initiative, a multi-payer program that requires providers in the state to enter into EBP arrangements for perinatal care. Because of its multi-payer nature and the requirement that providers participate, the program covers the vast majority of births in the state. Unlike fee-for-service reimbursement, EBP holds physicians responsible for all care within a discrete clinical episode, rewarding physicians not only for efficient use of their own services but also for efficient management of other health care inputs. In a difference-in-differences analysis of commercial claims, we find that perinatal spending decreased by 3.8% overall in Arkansas after the introduction of EBP, compared to surrounding states. We find that the decrease was driven by reduced spending on non-physician health care inputs, specifically the prices paid for inpatient facility care, and that our results are robust to a number of sensitivity and placebo tests. We additionally find that EBP was associated with a limited improvement in quality of care.
Incentive Design and Quality Improvements: Evidence from State Medicaid Nursing Home Pay-for-Performance Programs
Tamara Konetzka, Meghan Skira & Rachel Werner
American Journal of Health Economics, forthcoming
Pay-for-performance (P4P) programs have become a popular policy tool aimed at improving health care quality. We analyze how incentive design affects quality improvements in the nursing home setting, where several state Medicaid agencies have implemented P4P programs that vary in incentive structure. Using the Minimum Data Set and the Online Survey, Certification, and Reporting data from 2001 to 2009, we examine how the weights put on various performance measures that are tied to P4P bonuses, such as clinical outcomes, inspection deficiencies, and staffing levels, affect improvements in those measures. We find larger weights on clinical outcomes often lead to larger improvements, but small weights can lead to no improvement or worsening of some clinical outcomes. We find a qualifier for P4P eligibility based on having few or no severe inspection deficiencies is more effective at decreasing inspection deficiencies than using weights, suggesting simple rules for participation may incent larger improvement.