Different prognoses
Did Obamacare Implementation Cost Clinton the 2016 Election?
Vladimir Kogan & Thomas Wood
Ohio State University Working Paper, November 2017
Abstract:
We combine administrative records from the federal health care exchange with aggregate- and individual-level data on vote choice in the 2016 election. We show that personal experiences with the Affordable Care Act informed voting behavior and that these effects could have altered the election outcome in pivotal states, suggesting that Republican efforts to undermine the law's implementation paid tangible political dividends. We also offer evidence that consumers purchasing coverage through the exchange were sensitive to premium price hikes publicized shortly before the election -- despite most receiving a federal tax credit that shielded them from the increases. We attribute this to the design of the HealthCare.gov website, which reduced the salience of federal subsidies and likely made consumers needlessly sensitive to media coverage focusing on rising premiums. Placebo tests using survey responses collected before the premium information became public suggest that these relationships are indeed causal.
Policy Uptake as Political Behavior: Evidence from the Affordable Care Act
Amy Lerman, Meredith Sadin & Samuel Trachtman
American Political Science Review, November 2017, Pages 755-770
Abstract:
Partisanship is a primary predictor of attitudes toward public policy. However, we do not yet know whether party similarly plays a role in shaping public policy behavior, such as whether to apply for government benefits or take advantage of public services. While existing research has identified numerous factors that increase policy uptake, the role of politics has been almost entirely overlooked. In this paper, we examine the case of the Affordable Care Act to assess whether policy uptake is not only about information and incentives; but also about politics. Using longitudinal data, we find that Republicans have been less likely than Democrats to enroll in an insurance plan through state or federal exchanges, all else equal. Employing a large-scale field experiment, we then show that de-emphasizing the role of government (and highlighting the market's role) can close this partisan gap.
Service-level Selection: Strategic Risk Selection in Medicare Advantage in Response to Risk Adjustment
Sungchul Park et al.
NBER Working Paper, November 2017
Abstract:
The Centers for Medicare and Medicaid Services (CMS) has phased in the Hierarchical Condition Categories (HCC) risk adjustment model during 2004-2006 to more accurately estimate capitated payments to Medicare Advantage (MA) plans to reflect each beneficiary’s health status. However, it is debatable whether the CMS-HCC model has led to strategic evolutions of risk selection. We examine the competing claims and analyze the risk selection behavior of MA plans in response to the CMS-HCC model. We find that the CMS-HCC model reduced the phenomenon that MA plans avoid high-cost beneficiaries in traditional Medicare plans, whereas it led to increased disenrollment of high-cost beneficiaries, conditional on illness severity, from MA plans. We explain this phenomenon in relation to service-level selection. First, we show that MA plans have incentives to effectuate risk selection via service-level selection, by lowering coverage levels for services that are more likely to be used by beneficiaries who could be unprofitable under the CMS-HCC model. Then, we empirically test our theoretical prediction that compared to the pre-implementation period (2001-2003), MA plans have raised copayments disproportionately more for services needed by unprofitable beneficiaries than for other services in the post-implementation period (2007-2009). This induced unprofitable beneficiaries to voluntarily dis-enroll from their MA plans. Further evidence supporting this selection mechanism is that those dissatisfied with out-of-pocket costs were more likely to dis-enroll from MA plans. We estimate that such strategic behavior led MA plans to save $5.2 billion by transferring the costs to the federal government.
Racial Treatment Disparities after Machine Learning Surgical-Appropriateness Adjustment
Noah Hammarlund
Indiana University Working Paper, October 2017
Abstract:
Significant differences in inpatient surgery rates between black and non-black patients suggests a racial treatment disparity. However, these rates need to be adjusted for patient surgical appropriateness. In this paper I focus on the method of adjustment. Using data from the Nationwide Inpatient Sample, I show that the machine learning variable selection methods reveal surgery appropriateness controls from diagnosis codes that decrease the standard adjusted treatment disparities for the cases of acute myocardial infarction and obstetric surgeries by up to 50%. A significant treatment disparity remains after adjusting for many predictive controls, providing further evidence of the racial treatment disparities' persistence.
National Health Care Spending In 2016: Spending And Enrollment Growth Slow After Initial Coverage Expansions
Micah Hartman et al.
Health Affairs, forthcoming
Abstract:
Total nominal US health care spending increased 4.3 percent and reached $3.3 trillion in 2016. Per capita spending on health care increased by $354, reaching $10,348. The share of gross domestic product devoted to health care spending was 17.9 percent in 2016, up from 17.7 percent in 2015. Health spending growth decelerated in 2016 following faster growth in 2014 and 2015 associated with coverage expansions under the Affordable Care Act (ACA) and strong retail prescription drug spending growth. In 2016 the slowdown was broadly based, as spending for the largest categories by payer and by service decelerated. Enrollment trends drove the slowdown in Medicaid and private health insurance spending growth in 2016, while slower per enrollee spending growth influenced Medicare spending. Furthermore, spending for retail prescription drugs slowed, partly as a result of lower spending for drugs used to treat hepatitis C, while slower use and intensity of services drove the slowdown in hospital care and physician and clinical services.
Marketplace Plans Provide Risk Protection, But Actuarial Values Overstate Realized Coverage For Most Enrollees
Maria Polyakova, Lynn Mei Hua & Kate Bundorf
Health Affairs, December 2017, Pages 2078-2084
Abstract:
The Affordable Care Act (ACA) has increased the number of Americans with health insurance. Yet many policy makers and consumers have questioned the value of Marketplace plan coverage because of the generally high levels of cost sharing. We simulated out-of-pocket spending for bronze, silver, or gold Marketplace plans (those having actuarial values of 60 percent, 70 percent, and 80 percent, respectively). We found that for the vast majority of consumers, the proportion of covered spending paid by the plans is likely to be far less than their actuarial values, the metric commonly used to convey plan generosity. Indeed, only when annual health care spending exceeds $16,500 for bronze plans, $19,500 for silver plans, and $21,500 for gold plans do plans in these metal tiers cover the proportion of costs matching their actuarial values. While Marketplace plans substantially reduce consumers’ exposure to financial risk relative to being uninsured, the use of actuarial values to communicate plan generosity is likely to be misleading to consumers.
Does health insurance coverage fall when nonprofit insurers become for-profits?
Ethan Lieber
Journal of Health Economics, forthcoming
Abstract:
In exchange for tax exemptions, Blue Cross and Blue Shield (BCBS) health insurers were expected to provide health insurance to the “bad risks,” those for whom coverage was unavailable from other insurers. I present evidence that five years after a BCBS plan converted to for-profit status, the probability of having insurance was 1.4 percentage points higher, a 9% reduction in the uninsured. The increase in coverage does not mask reductions among populations often targeted by public policies. However, there is evidence of increased risk selection which suggests that the bad risks might have been worse off after a conversion.
Medicaid and Financial Health
Kenneth Brevoort, Daniel Grodzicki & Martin Hackmann
NBER Working Paper, November 2017
Abstract:
This paper investigates the effects of the Medicaid expansion provision of the Affordable Care Act (ACA) on households' financial health. Our findings indicate that, in addition to reducing the incidence of unpaid medical bills, the reform provided substantial indirect financial benefits to households. Using a nationally representative panel of 5 million credit records, we find that the expansion reduced unpaid medical bills sent to collection by $3.4 billion in its first two years, prevented new delinquencies, and improved credit scores. Using data on credit offers and pricing, we document that improvements in households' financial health led to better terms for available credit valued at $520 million per year. We calculate that the financial benefits of Medicaid double when considering these indirect benefits in addition to the direct reduction in out-of-pocket expenditures.
Privacy Protection, Personalized Medicine, and Genetic Testing
Amalia Miller & Catherine Tucker
Management Science, forthcoming
Abstract:
This paper explores how state genetic privacy laws affect the diffusion of personalized medicine, using data on genetic testing for cancer risks. State genetic privacy regimes employ and combine up to three alternative approaches to protecting patient privacy: Rules requiring that an individual is notified about potential privacy risks; rules restricting discriminatory usage of genetic data by employers or insurance companies; and rules limiting redisclosure without the consent of the individual. We find empirically that approaches to genetic and health privacy that give users control over redisclosure encourage the spread of genetic testing, but that notification deters individuals from obtaining genetic tests. We present some evidence that the latter reflects costs imposed on the supply of genetic testing by hospitals. We find no effects of state genetic antidiscrimination laws on genetic testing rates.
Can Public Reporting Cure Healthcare? The Role of Quality Transparency in Improving Patient-Provider Alignment
Soroush Saghafian & Wallace Hopp
Harvard Working Paper, November 2017
Abstract:
Increasing quality transparency is widely regarded as a strong mechanism for improving the alignment between patient choices and provider capabilities, and thus, is widely pursued by policymakers as an option for improving the healthcare system. We study the effect of increasing quality transparency on patient choices, hospital investments, societal outcomes (e.g., patients’ social welfare and inequality), and the healthcare market structure (e.g., medical or geographical specialization). We also examine potential reasons behind the failure of previous public reporting efforts, and use our analysis to identify ways in which such efforts can become more effective in future. Our analytical and numerical results calibrated with data reveal that increasing quality transparency promotes increased medical specialization, decreased geographical specialization, and induces hospitals to invest in their strength rather than their weakness. Furthermore, increasing quality transparency in the short-term typically improves the social welfare as well as the inequality among patients. In the long-term, however, we find that increasing transparency can decrease social welfare, and even a fully transparent system may not yield socially optimal outcomes. Hence, a policymaker concerned with societal outcomes needs to accompany increasing quality transparency with other policies that correct the allocation of patients to hospitals. Among such policies, we find that policies that incentivize hospitals are usually more effective than policies that incentivize patients. Finally, our results indicate that, to achieve maximal benefits from increasing quality transparency, policymakers should target younger, more affluent, or urban (i.e., high hospital density area) patients, or those with diseases that can be deferred.
Personalized Medicine When Physicians Induce Demand
David Howard, Jason Hockenberry & Guy David
NBER Working Paper, November 2017
Abstract:
Advocates for “personalized medicine” tests claim they can reduce health care spending by identifying patients unlikely to benefit from costly treatments. But most tests are imperfect, and so physicians have considerable discretion in how they use the results. We show that when physicians face incentives to provide a treatment, the introduction of an imperfect prognostic test will increase treatment rates. We study the interaction of incentives and information in physicians’ choice between conventional radiotherapy and intensity modulated radiation therapy (IMRT) for Medicare patients with breast cancer. IMRT is far more costly. Patients with left-side tumors are more likely to benefit from IMRT, though it is unnecessary for the vast majority of patients. IMRT use is 18 percentage points higher in freestanding clinics, where physician-owners share in the lucrative fees generated by IMRT, than in hospital-based clinics. Patients with left-side tumors are more likely to receive IMRT in both types of clinics. However, IMRT use in patients with right-side tumors (the low benefit group) treated in freestanding clinics is actually higher than use in patients with left-side tumors (high benefit group) treated in hospital-based clinics. Prognostic information affects use but does nothing to counter incentives to overuse IMRT.
Impact of Consumer-Directed Health Plans on Low-Value Healthcare
Rachel Reid, Brendan Rabideau & Neeraj Sood
American Journal of Managed Care, forthcoming
Study Design: We performed a quasi-experimental analysis using insurance claims data from 376,091 patients aged 18 to 63 years continuously enrolled in a plan from a large national commercial insurer from 2011 to 2013. We measured spending on 26 low-value healthcare services that offer unclear or no clinical benefit.
Methods: Employing a difference-in-differences approach, we compared the change in spending on low-value services for patients switching from a traditional health plan to a CDHP with the change in spending on low-value services for matched patients remaining in a traditional plan.
Results: Switching to a CDHP was associated with a $231.60 reduction in annual outpatient spending (95% CI, –$341.65 to –$121.53); however, no significant reductions were observed in annual spending on the 26 low-value services (–$3.64; 95% CI, –$9.60 to $2.31) or on these low-value services relative to overall outpatient spending (–$7.86 per $10,000 in outpatient spending; 95% CI, –$18.43 to $2.72). Similarly, a small reduction was noted for low-value spending on imaging (–$1.76; 95% CI, –$3.39 to –$0.14), but not relative to overall imaging spending, and no significant reductions were noted in low-value laboratory spending.
What drives insurer participation and premiums in the Federally-Facilitated Marketplace?
Jean Abraham et al.
International Journal of Health Economics and Management, December 2017, Pages 395–412
Abstract:
We investigate determinants of market entry and premiums within the context of the Affordable Care Act’s Marketplaces for individual insurance. Using Bresnahan and Reiss (1991) as the conceptual framework, we study how competition and firm heterogeneity relate to premiums in 36 states using Federally Facilitated or Supported Marketplaces in 2016. Our primary data source is the Qualified Health Plan Landscape File, augmented with market characteristics from the American Community Survey and Area Health Resource File as well as insurer-level information from federal Medical Loss Ratio annual reports. We first estimate a model of insurer entry and then investigate the relationship between a market’s predicted number of entrants and insurer-level premiums. Our entry model results suggest that competition is increasing with the number of insurers, most notably as the market size increases from 3 to 4 entrants. Results from the premium regression suggest that each additional entrant is associated with approximately 4% lower premiums, controlling for other factors. An alternative explanation for the relationship between entrants and premiums is that more efficient insurers (who can price lower) are the ones that enter markets with many entrants, and this is reflected in lower premiums. An exploratory analysis of insurers’ non-claims costs (a proxy for insurer efficiency) reveals that average costs among entrants are rising slightly with the number of insurers in the market. This pattern does not support the hypothesis that premiums decrease with more entrants because those entrants are more efficient, suggesting instead that the results are being driven mostly by price competition.
The Impact of State Medical Malpractice Reform on Individual-Level Health Care Expenditures
Hao Yu, Michael Greenberg & Amelia Haviland
Health Services Research, December 2017, Pages 2018–2037
Methods: We merged the Database of State Tort Law Reforms with the Medical Expenditure Panel Survey between 1996 and 2012. We took a difference-in-differences approach to specify a two-part model for analyzing individual-level health spending. We applied the recycled prediction method and the bootstrapping technique to examining the difference in health spending growth between states with and without a reform. All expenditures were converted to 2010 U.S. dollars.
Results: Only two of the 10 major state-level malpractice reforms had significant impacts on the growth of individual-level health expenditures. The average annual expenditures in states with caps on attorney contingency fees increased less than that in states without the reform (p < .05). Compared with states with traditional contributory negligence rule, the average annual expenditures increased more in both states with a pure comparative fault reform (p < .05) and states with a comparative fault reform that barred recovery if the plaintiff's fault was equal to or greater than the defendant's (p < .05).
The Effect of Information Disclosure on Industry Payments to Physicians
Tong Guo, S. Sriram & Puneet Manchanda
University of Michigan Working Paper, October 2017
Abstract:
U.S. pharmaceutical companies paid $2.6 billion to physicians in the form of gifts to promote their medicine in 2015. Offering financial incentives to prescribers creates concerns about potential conflict of interest. To curb the inappropriate financial relationships between healthcare providers and firms, several states instituted disclosure laws wherein firms were required to publicly declare the payments that they made to physicians. In 2013, this law was rolled out to all 50 states as part of the Affordable Care Act. A consequence of the public disclosure is that all players in the market - patients, physicians, rival firms, and payers (insurance companies and the government) - can observe which physicians are being targeted by which firms as well as the amount of marketing expenditure directed towards each physician. We investigate the causal impact of this increased transparency on subsequent payments between firms and physicians. Combining machine learning with quasi-experimental difference-in-difference research design, we find control "clones" for every physician-product pair in the treated states using the Causal Forest algorithm (Wager and Athey 2017). The algorithm is computationally efficient and robust to model mis-specifications, while preserving consistency and asymptotic normality. Using a 29-month national panel covering $100 million-dollar payments between 16 anti-diabetics brands and 50,000 physicians, we find that the monthly payments declined by 2% on average due to disclosure. However, there is considerable heterogeneity in the treatment effects with 14% of the drug-physician pairs showing a significant increase in their monthly payment. Moreover, the decline in payment is smaller among drugs with larger marketing expenditure and prescription volumes, and among physicians who were paid more heavily pre-disclosure and prescribed more heavily. Thus, while information disclosure did lead to reduction in payments on average (as intended by policy makers), the effect is limited for big drugs and popular physicians. We further explore potential mechanisms that are consistent with the data pattern. This paper takes the first step towards shedding light on the role of public disclosure policy in solving conflict-of-interest issues in the pharmaceutical industry, especially in reducing payments made by pharmaceutical firms to physicians.
Supply-side effects from public insurance expansions: Evidence from physician labor markets
Alice Chen, Anthony Lo Sasso & Michael Richards
Health Economics, forthcoming
Abstract:
Medicaid and the Child Health Insurance Programs (CHIP) are key sources of coverage for U.S. children. Established in 1997, CHIP allocated $40 billion of federal funds across the first 10 years but continued support required reauthorization. After 2 failed attempts in Congress, CHIP was finally reauthorized and significantly expanded in 2009. Although much is known about the demand-side policy effects, much less is understood about the policy's impact on providers. In this paper, we leverage a unique physician dataset to examine if and how pediatricians responded to the expansion of the public insurance program. We find that newly trained pediatricians are 8 percentage points more likely to subspecialize and as much as 17 percentage points more likely to enter private practice after the law passed. There is also suggestive evidence of greater private practice growth in more rural locations. The sharp supply-side changes that we observe indicate that expanding public insurance can have important spillover effects on provider training and practice choices.
Effect of privatized managed care on public insurance spending and generosity: Evidence from Medicaid
Victoria Perez
Health Economics, forthcoming
Abstract:
States choose to provide Medicaid coverage via managed care or traditional fee-for-service. Managed care provided by private insurers poses higher contracting costs and information asymmetry than traditional fee-for-service but potentially improves efficiency and reduces spending. Evaluating the effect of managed care on Medicaid spending is challenging because adoption of managed care is nonrandom and may be driven by local economic shocks that simultaneously affect Medicaid spending. This study implements a dynamic panel framework to estimate the effect of managed care enrollment on spending levels and program design. Results show reductions in Medicaid spending larger than previously found in cross-state studies: A 10% increase of managed care enrollment reduces state Medicaid spending by 2.94%, or approximately $55 million. The study identifies which areas of spending are differentially affected by managed care enrollment and whether savings from managed care affect Medicaid design, specifically coverage generosity.
Association of the Hospital Readmissions Reduction Program Implementation With Readmission and Mortality Outcomes in Heart Failure
Ankur Gupta et al.
JAMA Cardiology, forthcoming
Design, Setting, and Participants: Interrupted time-series and survival analyses of index heart failure hospitalizations were conducted from January 1, 2006, to December 31, 2014. This study included 115 245 fee-for-service Medicare beneficiaries across 416 US hospital sites participating in the American Heart Association Get With The Guidelines-Heart Failure registry. Data analysis took place from January 1, 2017, to June 8, 2017.
Results: The mean (SD) age of the study population (n = 115 245) was 80.5 (8.4) years, 62 927 (54.6%) were women, and 91 996 (81.3%) were white and 11 037 (9.7%) were black. The 30-day risk-adjusted readmission rate declined from 20.0% before the HRRP implementation to 18.4% in the HRRP penalties phase (hazard ratio (HR) after vs before the HRRP implementation, 0.91; 95% CI, 0.87-0.95; P < .001). In contrast, the 30-day risk-adjusted mortality rate increased from 7.2% before the HRRP implementation to 8.6% in the HRRP penalties phase (HR after vs before the HRRP implementation, 1.18; 95% CI, 1.10-1.27; P < .001). The 1-year risk-adjusted readmission and mortality rates followed a similar pattern as the 30-day outcomes. The 1-year risk-adjusted readmission rate declined from 57.2% to 56.3% (HR, 0.92; 95% CI, 0.89-0.96; P < .001), and the 1-year risk-adjusted mortality rate increased from 31.3% to 36.3% (HR, 1.10; 95% CI, 1.06-1.14; P < .001) after vs before the HRRP implementation.
Conclusions and Relevance: Among fee-for-service Medicare beneficiaries discharged after heart failure hospitalizations, implementation of the HRRP was temporally associated with a reduction in 30-day and 1-year readmissions but an increase in 30-day and 1-year mortality. If confirmed, this finding may require reconsideration of the HRRP in heart failure.
Delayed Entry Settlements at the Patent Office
Erik Hovenkamp & Jorge Lemus
International Review of Law and Economics, forthcoming
Abstract:
The Patent Trial and Appeal Board (PTAB) is a recently-formed division of the Patent Office in which patents can be challenged as invalid, and which differs from federal courts in a number of respects. We investigate whether monopolist-patentees and their prospective rivals are using the PTAB — which has not previously received antitrust attention—as a platform for striking settlements that delay the rivals’ entry. Such settlements are common in pharmaceutical markets, and are typically antitrust violations in cases where the patentee pays the challenger (“pay for delay”). However, problematic statutory inducements lead to excessively-delayed competition even in lieu of such payments. Our empirical findings suggest that delayed entry settlements are now commonly executed in the PTAB, and that they comprise a large majority of all PTAB settlements reached between pharmaceutical rivals. Further, nearly half of the delayed entry settlements were reached after the relevant patent claims were deemed “reasonably likely” to be invalid.
Collective Bargaining and Technological Investment: The Case of Nurses’ Unions and the Transition from Paper-Based to Electronic Health Records
Adam Seth Litwin
British Journal of Industrial Relations, December 2017, Pages 802–830
Abstract:
Does the presence of a unionized nursing workforce retard US hospitals’ transition from paper-based to electronic health records (EHRs)? After tying archival data on hospitals’ structural features and health information technology (IT) investment patterns to self-gathered data on unionism, I find that hospitals that bargain collectively with their registered nurses (RNs) appear to delay or forego the transition away from paper, consistent with existing theory and research in industrial relations and institutional economics. However, this relationship is fully mediated by a hospital's payer mix: those serving a larger share of less lucrative, elderly, disabled and indigent patients are more likely to adopt EHRs if they are unionized than if they are not, a result that holds even at the median payer mix. Indeed, this accords with research on the interplay of labour and technology as the aforementioned dynamics are driven entirely by RN-exclusive bargaining units for whom the new IT serves as a complement rather than as a substitute in production. Given the outsized role that unions play in the US healthcare sector, the overall sluggish performance of the sector, and the expectations that policymakers have for EHRs, evidence that these unions are welfare-enhancing should be welcome news.
Advanced Imaging Reduces Cost Compared to Standard of Care in Emergency Department of Triage of Acute Chest Pain
Pamela Noack, Jhanna Moore & Michael Poon
Health Services Research, forthcoming
Data Source/Study Setting: Primary data, from 2008 to 2010. We used patient registry data to evaluate cost and quality performance of coronary computed tomography angiography (CCTA) in triaging chest pain patients in our tertiary care emergency department and to model financial performance under Medicare's two midnight rule.
Study Design: Using generalized linear modeling, we retrospectively compared estimated expenditures for evaluation of low-to-intermediate-risk chest pain for demographic and medically risk matched samples of 894 patients each, triaged with CCTA or local standard of care (SOC) using Medicare reimbursement as a proxy.
Principle Findings: We found that predicted standard of care costs were 2.5 times higher on the initial visit and 1.98 times higher over 30 days (p < .001) than those using CCTA. Predicted cost was 1.6 times higher when we applied our two midnight rule model (p < .001).
Long-Term Impact of a Postdischarge Community Health Worker Intervention on Health Care Costs in a Safety-Net System
Alison Galbraith et al.
Health Services Research, December 2017, Pages 2061–2078
Objective: Patient navigators (PNs) may represent a cost-effective strategy to improve transitional care and reduce hospital readmissions. We evaluated the impact of a PN intervention on health system costs in the 180 days after discharge for high-risk patients in a safety-net system.
Study Design: We compared per-patient utilization and costs, overall and by age, for high-risk, medical service patients randomized to the PN intervention relative to usual care between October 2011 and April 2013. Intervention patients received hospital visits and telephone outreach from PNs for 30 days after every qualifying discharge.
Principal Findings: Total costs per patient over the 180 days postindex discharge for those aged ≥60 years were significantly lower for PN patients compared to controls ($5,676 vs. $7,640, p = .03); differences for patients aged <60 ($9,942 vs. $9,046, p = .58) or for the entire cohort ($7,092 vs. $7,953, p = .27) were not significant.