Kevin Lewis

October 11, 2021

The effect of Affordable Care Act Medicaid expansions on foster care admissions
Louis-Philippe Beland, Jason Huh & Dongwoo Kim
Health Economics, November 2021, Pages 2943-2951

Recent papers have documented positive externalities of Medicaid expansions on several non-health related variables, such as crime, financial stress, child support, and child abuse. In this paper, we investigate the relationship between access to public health insurance and foster care admissions following state decisions to expand Medicaid coverage after the Affordable Care Act. Over 70% of all foster care admissions are related to child abuse incidents, which have been found to decrease following the Medicaid expansions. Our results suggest that the Medicaid expansions are associated with a large decrease in foster care admissions, driven by neglect incidents. 

Impact of Medicaid Expansion on Reported Incidents of Child Neglect and Physical Abuse
Emma McGinty et al.
American Journal of Preventive Medicine, forthcoming

The 2008–2018 National Child Abuse and Neglect Data System was analyzed using an extension of the difference-in-differences approach that accounts for staggered policy implementation across time. Owing to evidence of nonparallel preperiod trends in the 6 states that expanded Medicaid from 2015 to 2017, the main analyses included 20 states that newly expanded Medicaid in 2014 and 18 states that did not expand Medicaid from 2008 to 2018. Analyses were conducted in 2020–2021.

Medicaid expansion states were associated with reductions of 13.4% (95% CI= −24.2, −9.6), 14.8% (95% CI= −26.4, −1.4), and 16.0% (−27.6, −2.6) in the average rate of child neglect reports per 100,000 children aged 0–5, 6–12, and 13–17 years, per state-year, relative to control states. Expansion was associated with a 17.3% (95% CI= −28.9, −3.8) reduction in the rate of first-time neglect reports among children aged 0–5 years and with 16.6% (95% CI= −29.3, −1.6) and 18.7% (95% CI= −32.5, −2.1) reductions in the rates of repeat neglect reports among children aged 6–12 and 13–17 years, respectively. There were no statistically significant associations between Medicaid expansion and the rates of physical abuse among children in any age group. 

Technology Adoption and Market Allocation: The Case of Robotic Surgery
Danea Horn, Adam Sacarny & Annetta Zhou
NBER Working Paper, September 2021

The adoption of healthcare technology is central to improving productivity in this sector. To provide new evidence on how technology affects healthcare markets, we focus on one area where adoption has been particularly rapid: surgery for prostate cancer. Over just six years, robotic surgery grew to become the dominant intensive prostate cancer treatment method. Using a difference-in-differences design, we show that adopting a robot drives prostate cancer patients to the hospital. To test whether this result reflects market expansion or business stealing, we also consider market-level effects of adoption and find they are significant but smaller, suggesting that adoption expands the market while also reallocating some patients across hospitals. Marginal patients are relatively young and healthy, inconsistent with the concern that adoption broadens the criteria for intervention to patients who would gain little from it. We conclude by discussing implications for the social value of technology diffusion in healthcare markets. 

R&D and market size: Who benefits from orphan drug legislation?
Simona Gamba, Laura Magazzini & Paolo Pertile
Journal of Health Economics, forthcoming

Since the early 80s, incentives have been introduced to stimulate R&D for rare diseases. We develop a theoretical model to study the impact of push and pull incentives on the intensive and extensive margin of optimal R&D investments. The model describes the mechanisms by which the type of incentives provided may favor R&D for orphan diseases with comparatively high prevalence. In our empirical analysis, we merge data on orphan drug designations by the Food and Drug Administration with Orphanet data on disease characteristics. In line with the theoretical results, we find evidence supporting the idea that the incentives adopted may have contributed substantially to widening the gap between more and less rare diseases classified as orphan. Our theoretical and empirical findings together suggest that, if providing some therapeutic option to patients with very rare diseases is a priority, a revision of the current system of incentives should be considered. 

Regulating Hospital Prices Based On Market Concentration Is Likely To Leave High-Price Hospitals Unaffected
Maximilian Pany, Michael Chernew & Leemore Dafny
Health Affairs, September 2021, Pages 1386-1394 

Concern about high hospital prices for commercially insured patients has motivated several proposals to regulate these prices. Such proposals often limit regulations to highly concentrated hospital markets. Using a large sample of 2017 US commercial insurance claims, we demonstrate that under the market definition commonly used in these proposals, most high-price hospitals are in markets that would be deemed competitive or “moderately concentrated,” using antitrust guidelines. Limiting policy actions to concentrated hospital markets, particularly when those markets are defined broadly, would likely result in poor targeting of high-price hospitals. Policies that target the undesired outcome of high price directly, whether as a trigger or as a screen for action, are likely to be more effective than those that limit action based on market concentration. 

Heterogeneous Effects of Consolidation on Premiums in Medicare Part D
Nicholas Hill & Mathis Wagner
Journal of Health Economics, forthcoming

Medicare Part D plans provide prescription drug coverage to 45 million seniors. The recent past has seen significant consolidation amongst plan providers, notable CVS's 2018 acquisition of Aetna and Cigna's 2018 acquisition of Express Scripts. In this paper, we analyze the effect of consolidation of standalone Part D plan providers on premiums using plausibly exogenous variation in concentration induced by the 2011 merger between CVS and Universal American. We find that the increase in concentration for standalone Medicare Part D plans that resulted from this merger led to higher average premiums, a total of nearly $170 million per year. We find further that, consistent with the assumptions behind standard antitrust practice, the effects of the increase in concentration were heterogeneous: moderately (or more) concentrated markets that saw a meaningful increase in concentration saw significant increases in premiums, while premiums in other markets did not change significantly. 

Good for your fiscal health? The effect of the Affordable Care Act on healthcare borrowing costs
Pengjie Gao, Chang Lee & Dermot Murphy
Journal of Financial Economics, forthcoming

We study the effect of the US Affordable Care Act (ACA) on healthcare borrowing costs. The ACA provides insurance subsidies to low-income enrollees. States could accept funding to expand Medicaid, although many declined, citing the cost burden. The ACA significantly reduced healthcare yields after a favorable 2012 Supreme Court ruling. Furthermore, hospital investment spending increased, and investment-cash flow sensitivities decreased. The yield effect was double in Medicaid expansion states, and insignificant in rural areas of non-expansion states. Our results highlight how the municipal market can be used to evaluate the heterogeneous effects of public policy and guide a targeted policy approach. 

Price Differences To Insurers For Infused Cancer Drugs In Hospital Outpatient Departments And Physician Offices
James Robinson, Christopher Whaley & Timothy Brown
Health Affairs, September 2021, Pages 1395-1401

The prices paid in 2019 by Blue Cross Blue Shield health plans in hospital outpatient departments were double those paid in physician offices for biologics, chemotherapies, and other infused cancer drugs (99–104 percent higher) and for infused hormonal therapies (68 percent higher). Had these plans excluded hospital clinics from their networks, channeling all of the infusions to physician offices, they would have saved $1.28 billion per year, or 26 percent of what they actually paid. Had they relied on cost-sharing incentives to channel infusions to physician offices — with either uniform 20 percent coinsurance or reference pricing — they would have realized savings but increased the financial burden on patients who received care at the higher-price hospital clinics. Under 20 percent coinsurance, patients’ payment obligations for care at hospital clinics would have exceeded those for care in physician offices by a median of 67 percent for biologics, 72 percent for chemotherapies, 87 percent for hormonal therapies, and 75 percent for other cancer drugs. Large savings are potentially available to commercial insurers from shifting cancer infusion care to nonhospital settings, but cost-sharing burdens could become very high for patients. 

Team Relationships and Performance: Evidence from Healthcare Referral Networks
Leila Agha et al.
Management Science, forthcoming

We examine the teams that emerge when a primary care physician (PCP) refers patients to specialists. When PCPs concentrate their specialist referrals — for instance, by sending their cardiology patients to fewer distinct cardiologists — repeat interactions between PCPs and specialists are encouraged. Repeated interactions provide more opportunities and incentives to develop productive team relationships. Using data from the Massachusetts All Payer Claims Database, we construct a new measure of PCP team referral concentration and document that it varies widely across PCPs, even among PCPs in the same organization. Chronically ill patients treated by PCPs with a one standard deviation higher team referral concentration have 4% lower healthcare utilization on average, with no discernible reduction in quality. We corroborate this finding using a national sample of Medicare claims and show that it holds under various identification strategies that account for observed and unobserved patient and physician characteristics. The results suggest that repeated PCP-specialist interactions improve team performance. 

State-level structural sexism and cesarean sections in the United States
Amanda Nagle & Goleen Samari
Social Science & Medicine, forthcoming 

The United States (U.S.) has one of the highest cesarean rates in the world yet little research considers structural factors, like racism and sexism, associated with the higher than recommended cesarean rate. New research operationalizes and quantifies structural sexism across U.S. states, which allows for consideration of how social norms and values around women and their bodies relate to the overmedicalization of birth through cesarean sections. We obtained restricted natality data for 2018 from the U.S. National Center for Health Statistics. In 2018, among people 15–49 years, 987,187 births fit the criteria for low-risk of cesarean section. Structural sexism scores were derived from 6 elements covering economic, political, cultural, and physical arenas that were totaled and standardized to create an aggregate index for each state and DC (scores range from −1.06 to 1.4). Using multivariable logistic and multilevel mixed effects logistic regression models, we examined the associations between structural sexism and low-risk cesarean section for all fifty states and the District of Columbia, controlling for relevant confounders. We found that structural sexism in 2018 was highest in historically religious mountain states and the South. Nationally, the low-risk cesarean rate was 25.1%. Multilevel models show that people living in states with higher structural sexism scores were more likely to have a cesarean section (OR = 1.22, 95% CI: 1.07–1.39). Structural sexism is related to low-risk cesarean rates in U.S., providing evidence that social ideas and norms about women and their bodies are related to overmedicalization of birth. Health policymakers, providers and scholars should pay attention to structural drivers, including structural sexism, as a factor that affects overmedicalization of birth and subsequent health outcomes for pregnant people and their infants. 

The Relationship Between States’ Staffing Regulations And Hospitalizations Of Assisted Living Residents
Kali Thomas et al.
Health Affairs, September 2021, Pages 1377-1385

Assisted living provides housing and long-term care services to more than 811,000 older adults in the United States daily and is regulated by the states. This article describes changes in the specificity of state regulations governing the staffing in assisted living settings (that is, requirements for sufficient staffing or staffing ratios or levels) between 2007 and 2018 and the association between these changes and rates of hospitalization among a national sample of assisted living residents, including a subgroup with dementia. We found that increased regulatory specificity for direct care workers (for example, a change from requiring “sufficient” direct care worker staffing to requiring a specific staffing ratio or level) was associated with a 4 percent reduction in the monthly risk for hospitalization among residents in our sample and a 6 percent reduction among the subgroup with dementia. However, an increase in regulatory specificity for licensed practical nurses was associated with a 2.5 percent increase in the monthly risk for hospitalization and a 5 percent increase among the subgroup with dementia. Given that no federal requirements exist for the number of staff members or composition of staff in assisted living, these findings can inform states’ policy decisions about staffing requirements for assisted living settings. 

Raising the Stakes: Physician Facility Investments and Provider Agency
Elizabeth Munnich et al.
RAND Working Paper, May 2021

Principal-agent concerns have led to a patchwork of medical regulations, including prohibitions on certain provider financial arrangements. However, ambulatory surgery centers (ASCs), which compete with hospitals, have physician investors that are controversially shielded from such “anti-kickback” laws. It is unknown whether ASC ownership perversely affects physician behavior. We combine novel facility ownership data with all-payer hospital discharge data as well as a 100% sample of Medicare claims to show that physicians strongly substitute away from hospital settings toward ASCs following their investments. We find no evidence of patient cream skimming or care quality erosion. Medicare, specifically, spends less on net. 

Physician Investment in Hospitals: Specialization, Selection, and Quality in Cardiac Care
Ashley Swanson
Journal of Health Economics, forthcoming


Physician ownership of hospitals involves several competing economic forces. Physician-owners may be incentivized to “cherry-pick” and treat profitable patients at their facilities. However, physician-owned hospitals are often specialized and may provide higher-quality care for well-matched patients. Using multiple identification approaches, I document no significant mortality improvement for cardiac patients treated at physician-owned hospitals. Using aggregate data on ownership to infer physician-owner preferences in a hospital choice model, my results rule out significant cherry-picking within physician-owners’ patient populations. However, both facility location and a healthier overall patient population among physician-owners drive advantageous selection of patients into physician-owned hospitals.


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