Do Government Subsidies to Low-income Individuals Affect Interstate Migration? Evidence from the Massachusetts Health Care Reform
James Alm & Ali Enami
Regional Science and Urban Economics, September 2017, Pages 119-131
Following the passage of the Patient Protection and Affordable Care Act (ACA) of 2010, many – but not all – states decided to expand their Medicaid program in line with provisions of the new law. Will low-income individuals respond to the incentives of living in a state with better health subsidies by relocating to the state? This paper addresses this question by examining the population growth rate of low-income individuals in Massachusetts following the Massachusetts Health Care Reform (MHCR) of 2006. Like the ACA, the MHCR expanded the Medicaid program, and also provided subsidized health insurance for low-income individuals. Using difference-in-differences and triple-differences models and Internal Revenue Service tax return data, we show that the reform did not have a global effect on the movement of low-income individuals across all cities in Massachusetts. However, we also show that the reform did have a local (or border) effect on the movement into border cities of the state, an effect that is relatively large for cities very close to the border but disappears quickly once the distance to border goes beyond 15 miles.
The Medicaid Expansion and Attitudes toward the Affordable Care Act
Daniel Hopkins & Kalind Parish
University of Pennsylvania Working Paper, June 2017
Enacted in 2010, the Affordable Care Act (ACA) has reshaped U.S. health policy. Yet it remains politically divisive, with overall public opposition having outweighed support for years post-enactment. In a polarized era, can the implementation of a complex program such as the ACA influence public opinion through a policy feedback? To address that question, this paper considers the impact of the Medicaid expansion which took place in select states. Using differences-in-differences estimation and surveys of more than 63,000 American adults between 2010 and 2016, we show that the Medicaid expansion made low-income Americans more supportive of the ACA.
Impacts of the ACA Medicaid Expansion on Health Behaviors: Evidence from Household Panel Data
Chad Cotti, Erik Nesson & Nathan Tefft
University of Wisconsin Working Paper, June 2017
A motivation for increasing health insurance coverage is to improve health outcomes for impacted populations. However, there may also be an increase in risky health behaviors due to ex-ante moral hazard created by increased coverage, and past research on this issue has led to mixed conclusions. This paper uses a panel of household purchases to estimate the effects of the recent state-level Medicaid expansions resulting from the Affordable Care Act (ACA) on consumption goods that present adverse health risks. We utilize within-household variation to identify whether increases in Medicaid availability impacted household purchase patterns of alcohol, tobacco, snack food, or carbonated beverage products. Overall, we find little evidence that the ACA Medicaid expansions led to ex-ante moral hazard. Confidence intervals suggest that any changes in unhealthy food and beverage purchases are economically small in magnitude, although we cannot make a claim regarding economic significance for alcohol and cigarette purchases.
Medicare Advantage Associated With More Racial Disparity Than Traditional Medicare For Hospital Readmissions
Yue Li et al.
Health Affairs, July 2017, Pages 1328-1335
We compared racial disparities in thirty-day readmissions between traditional Medicare and Medicare Advantage beneficiaries who underwent one of six major surgeries in New York State in 2013. We found that Medicare Advantage was associated with greater racial disparity, compared to traditional Medicare. After controlling for patient, hospital, and geographic characteristics in a propensity score based approach, we found that in traditional Medicare, black patients were 33 percent more likely than white patients to be readmitted, whereas in Medicare Advantage, black patients were 64 percent more likely than white patients to be readmitted. Our findings suggest that the risk-reduction strategies adopted by Medicare Advantage plans have not been successful in lowering the markedly higher rate of readmission among black patients, compared to white patients.
Discontinuity of Medicaid Coverage: Impact on Cost and Utilization Among Adult Medicaid Beneficiaries With Major Depression
Xu Ji et al.
Medical Care, August 2017, Pages 735–743
Subjects: A total of 139,164 adults (18–64) with major depression was identified using the 2003–2004 Medicaid Analytic eXtract Files.
Methods: We used generalized linear and two-part models to examine the effect of Medicaid discontinuity on service utilization. To establish causality in this relationship, we used instrumental variables analysis, relying on exogenous variation in a state-level policy for identification.
Results: Approximately 29.4% of beneficiaries experienced coverage disruptions. In instrumental variables models, those with coverage disruptions incurred an increase of $650 in acute care costs per-person per Medicaid-covered month compared with those with continuous coverage, evidenced by an increase in ED use (0.1 more ED visits per-person-month) and inpatient days (0.6 more days per-person-month). The increase in acute costs contributed to an overall increase in all-cause costs by $310 per-person-month (all P-values<0.001).
The Spillover Effects of Health Insurance Benefit Mandates on Public Insurance Coverage: Evidence from Veterans
Xiaoxue Li & Jinqi Ye
Journal of Health Economics, forthcoming
This study examines how regulations in private health insurance markets affect coverage of public insurance. We focus on mental health parity laws, which mandate private health insurance to provide equal coverage for mental and physical health services. The implementation of mental health parity laws may improve a quality dimension of private health insurance but at increased costs. We graphically develop a conceptual framework and then empirically examine whether the regulations shift individuals from private to public insurance. We exploit state-by-year variation in policy implementation in 1999-2008 and focus on a sample of veterans, who have better access to public insurance than non-veterans. Using data from the Current Population Survey, we find that the parity laws reduce employer-sponsored insurance (ESI) coverage by 2.1 percentage points. The drop in ESI is largely offset by enrollment gains in public insurance, namely through the Veterans Affairs (VA) benefit and Medicaid/Medicare programs.
Wolves in sheep’s clothing: Is non-profit status used to signal quality?
Daniel Jones, Carol Propper & Sarah Smith
Journal of Health Economics, forthcoming
Why do many firms in the healthcare sector adopt non-profit status? One argument is that non-profit status serves as a signal of quality when consumers are not well informed. A testable implication is that an increase in consumer information may lead to a reduction in the number of non-profits in a market. We test this idea empirically by exploiting an exogenous increase in consumer information in the US nursing home industry. We find that the information shock led to a reduction in the share of non-profit homes, driven by a combination of home closure and sector switching. The lowest quality non-profits were the most likely to exit. Our results have important implications for the effects of reforms to increase consumer provision in a number of public services.
A Positive Association Between Hospice Profit Margin And The Rate At Which Patients Are Discharged Before Death
Rachel Dolin et al.
Health Affairs, July 2017, Pages 1291-1298
Hospice care is designed to support patients and families through the final phase of illness and death. Yet for more than a decade, hospices have steadily increased the rate at which they discharge patients before death — a practice known as “live discharge.” Although certain live discharges are consistent with high-quality care, regulators have expressed concern that some hospices’ desire to maximize profits drives them to inappropriately discharge patients. We used Medicare claims data for 2012–13 and cost reports for 2011–13 to explore relationships between hospice-level financial margins and live discharge rates among freestanding hospices. Adjusted analyses showed positive and significant associations between both operating and total margins and hospice-level rates of live discharge: One-unit increases in operating and total margin were associated with increases of 3 percent and 4 percent in expected hospice-level live discharge rates, respectively. These findings suggest that additional research is needed to explore links between profitability and patient-centeredness in the Medicare hospice program.
Demand for health insurance marketplace plans was highly elastic in 2014–2015
Jean Abraham et al.
Economics Letters, forthcoming
A major provision of the Affordable Care Act was the creation of Health Insurance Marketplaces, which began operating for the 2014 plan year. Although enrollment initially grew in these markets, enrollment has fallen recently amid insurer exits and rising premiums. To better understand these markets, we estimate premium elasticity of demand for Marketplace plans, using within-plan premium changes from 2014 to 2015, accounting for state-specific trends and simultaneous changes in generosity. Our preferred estimate implies that a one percent premium increase reduces plan-specific enrollment by 1.7 percent. We argue that this high elasticity reflects the rapid growth and high churn in this market, as well as the high degree of standardization and the availability of many close substitutes.
Health Care Costs, Worker Mobility and Firm Leverage: Evidence from State Health Mandates
Manpreet Singh & Lakshmi Naaraayanan
Georgia Tech Working Paper, July 2017
We study how health insurance-induced 'job-lock' of workers impacts firms' capital structure choices. On the one hand, higher health care costs for firms may induce them to adopt conservative financial policies. On the other hand, it may reduce worker mobility and allow firms to increase financial leverage by lowering financial distress costs. To disentangle these two effects, we use staggered adoption of state-level health mandates, that significantly increase the cost of health insurance borne by firms. We show that following the adoption of high-cost mandates firms significantly increase their corporate leverage. These effects are stronger for firms whose employees value health insurance more, which operate in industries with lower job mobility and in states where employees have less bargaining power. Our results are robust to geographic regression discontinuity design where we focus on firms located in counties adjacent to state borders. Overall, we document that firms benefit from increase in health care costs to the extent employees value associated benefits.
Targeting with In-Kind Transfers: Evidence from Medicaid Home Care
Ethan Lieber & Lee Lockwood
Northwestern University Working Paper, January 2017
Many of the most important government programs make transfers in kind as opposed to in cash. Making transfers in kind has the obvious cost that recipients would at least weakly prefer cost-equivalent cash transfers. But making transfers in kind can have benefits as well, including better targeting transfers to desired recipients. In this paper, we exploit large-scale randomized experiments run by three state Medicaid programs to investigate this central tradeoff for in-kind provision. Despite the large distortion from the in-kind provision of formal home care, the benefit from better targeting transfers to high-marginal utility types appears to be even greater. This highlights an important cost of recent policy reforms toward more flexible, cash-like benefits.
Effect of Outreach Messages on Medicaid Enrollment
Jeffrey Hom et al.
American Journal of Public Health, June 2017, Pages S71-S73
Methods: Between March 2015 and April 2016, we conducted a series of experiments using mail-based outreach that encouraged individuals to enroll in Pennsylvania’s expanded Medicaid program. Recipients were randomized to receive 1 of 4 different messages describing the benefits of health insurance. The primary outcome was the response rate to each letter.
Results: We mailed outreach letters to 32 993 adults in Philadelphia. Messages that emphasized the dental benefits of insurance were significantly more likely to result in a response than messages emphasizing the health benefits (odds ratio = 1.33; 95% confidence interval = 1.10, 1.61).
State insurance mandates and off-label use of chemotherapy
Fabrice Smieliauskas et al.
Health Economics, forthcoming
Access to cancer drugs used off-label is important to cancer patients but may drive up healthcare costs with little evidence of clinical benefit. We hypothesized that state health insurance mandates for private insurers to provide coverage for off-label use of cancer drugs cause higher rates of off-label use. We used Truven MarketScan data from 1999 to 2007 on utilization of 35 infused chemotherapy drugs in private health plans in the United States, covering the period when eight states implemented off-label coverage laws. We studied trends in off-label use of drugs, distinguishing between appropriate and inappropriate off-label use according to drug compendia, and estimated difference-in-difference regressions of the effect of state laws on off-label use. We estimate 41% of utilization was off-label, including 17% of use conservatively defined as inappropriate. Trends show gradual declines in off-label use over time. We also find no discernable effect of state laws mandating coverage of off-label use of cancer drugs on utilization patterns under multiple empirical specifications. Our conclusion is that policymakers should consider shifting away from mandating coverage as a way to ensure access to drugs off-label and towards incentivizing adherence to clinical practice guidelines to improve the quality and value of off-label use.
Graduating into a downturn: Are physicians recession proof?
Alice Chen, Anthony Lo Sasso & Michael Richards
Health Economics, forthcoming
An extensive literature documents immediate and persistent adverse labor market outcomes for individuals graduating into an economic downturn, but these effects are heterogeneous across sectors, occupations, and skill levels. In particular, the impact of recessions on the labor market outcomes for new physician graduates remains unknown. We leverage a unique dataset on New York physicians to analyze if and how the Great Recession impacted the labor market of physicians who have completed their residency and fellowship training and are seeking their first job. We find that these physicians do not delay labor market entry and their job searches and other employment outcomes are unaffected by the business cycle. The collage of evidence demonstrates that new graduates were largely unfazed by the recent downturn, which sharply contrasts with other highly educated, high remunerating occupations.
Check Up Before You Check Out: Retail Clinics and Emergency Room Use
Diane Alexander, Janet Currie & Molly Schnell
NBER Working Paper, July 2017
Retail clinics are an innovation that has the potential to improve competition in health care markets. We use the universe of emergency room (ER) visits in New Jersey from 2006-2014 to examine the impact of retail clinics on ER usage. We find significant effects of retail clinics on ER visits for both minor and preventable conditions; Residents residing close to an open clinic are 4.1-12.3 percent less likely to use an ER for these conditions. Our estimates suggest annual cost savings from reduced ER usage of over $70 million if retail clinics were made readily available across New Jersey.