Kevin Lewis

December 15, 2011

The Impact of the Macroeconomy on Health Insurance Coverage: Evidence from the Great Recession

John Cawley, Asako Moriya & Kosali Simon
NBER Working Paper, November 2011

This paper investigates the impact of the macroeconomy on the health insurance coverage of Americans. We examine panel data from the Survey of Income and Program Participation (SIPP) for 2004-2010, a period that includes the Great Recession of 2007-09. We find that a one percentage point increase in the state unemployment rate is associated with a 1.67 percentage point (2.12%) reduction in the probability that men have health insurance; this effect is strongest among college-educated, white, and older (50-64 year old) men. For women and children, the unemployment rate was not significantly correlated with the probability of health insurance coverage through any source. When one examines the source of coverage, it becomes apparent that a one percentage point increase in the unemployment rate is associated with a 1.37 percentage point (4.69%) higher probability that a child is covered by public health insurance. Based on the point estimates in this paper, we estimate that 9.3 million adult Americans, the vast majority of whom were men, lost health insurance due to a higher unemployment rate alone during the 2007-09 recession. This is roughly nine times more than lost health insurance during the previous (2001) recession. We conclude with a discussion of how components of recent health care reform may influence these relationships in the future.


Dynamic Inefficiencies in an Employment-Based Health Insurance System: Theory and Evidence

Hanming Fang & Alessandro Gavazza
American Economic Review, December 2011, Pages 3047-3077

We investigate the effects of the institutional settings of the US health care system on individuals' life-cycle medical expenditures. Health is a form of general human capital; labor turnover and labor-market frictions prevent an employer-employee pair from capturing the entire surplus from investment in an employee's health. Thus, the pair underinvests in health during working years, thereby increasing medical expenditures during retirement. We provide empirical evidence consistent with the comparative statics predictions of our model using the Medical Expenditure Panel Survey (MEPS) and the Health and Retirement Study (HRS). Our estimates suggest significant inefficiencies in health investment in the United States.


Despite Law, Fewer Than One In Eight Completed Studies Of Drugs And Biologics Are Reported On Time On

Michael Law, Yuko Kawasumi & Steven Morgan
Health Affairs, December 2011, Pages 2338-2345

Clinical trial registries are public databases created to prospectively document the methods and measures of prescription drug studies and retrospectively collect a summary of results. In 2007 the US government began requiring that researchers register certain studies and report the results on, a public database of federally and privately supported trials conducted in the United States and abroad. We found that although the mandate briefly increased trial registrations, 39 percent of trials were still registered late after the mandate's deadline, and only 12 percent of completed studies reported results within a year, as required by the mandate. This result is important because there is evidence of selective reporting even among registered trials. Furthermore, we found that trials funded by industry were more than three times as likely to report results than were trials funded by the National Institutes of Health. Thus, additional enforcement may be required to ensure disclosure of all trial results, leading to a better understanding of drug safety and efficacy. Congress should also reconsider the three-year delay in reporting results for products that have been approved by the Food and Drug Administration and are in use by patients.


Epidemic Assistance by the Centers for Disease Control and Prevention: Role of the Epidemic Intelligence Service, 1946-2005

Stephen Thacker, Donna Stroup & David Sencer
American Journal of Epidemiology, 1 December 2011, Pages S4-S15

Since 1946, the Centers for Disease Control and Prevention has responded to urgent requests from US states, federal agencies, and international organizations through epidemic-assistance investigations (Epi-Aids). The authors describe the first 60 years of Epi-Aids, breadth of problems addressed, evolution of methodologies, scope of activities, and impact of investigations on population health. They reviewed Epi-Aid reports and EIS Bulletins, contacted current and former Epidemic Intelligence Service staff, and systematically searched the PubMed and Web of Science databases. They abstracted information on dates, location, staff involved, health problems, methods, and impacts of investigations according to a preplanned protocol. They assessed the methods presented as well as the quality of reports. During 1946-2005, a total of 4,484 investigations of health events were initiated by 2,815 Epidemic Intelligence Service officers. In the early years, the majority were in response to infectious agents, although environmental problems emerged. Investigations in subsequent years focused on occupational conditions, birth defects, reproductive health, tobacco use, cancer, violence, legal debate, and terrorism. These Epi-Aids heralded expansion of the agency's mission and presented new methods in statistics and epidemiology. Recommendations from Epi-Aids led to policy implementation, evaluation, or modification. Epi-Aids provide the Centers for Disease Control and Prevention with the agility to respond rapidly to public health crises.


Long-term Impact of Medicare Managed Care on Patients Treated for Coronary Artery Disease

Marco Huesch
Medical Care, January 2012, Pages 18-26

Background: Planned health insurance reform promises and has started to cut reimbursement to Medicare managed care (MMC) plans. If such plans provide better care, adjusting for possible better health of their enrollees, then such reimbursement changes may have unforeseen quality consequences.

Objectives: To examine whether long-term follow-up outcomes of patients who receive intensive interventional care for coronary artery disease differed by Medicare plan type.

Research Design: Patient-level postdischarge outcomes were multivariate adjusted logistic functions of a patient's insurance type at time of index admission. Data were retrospective secondary percutaneous coronary intervention data from Pennsylvania with 35,417 index admissions in 2004 to 2005 and in-state follow-up hospitalizations within 12 months and in-state death within 3 years of discharge.

Results: MMC insured patients had a consistently estimated 3-year survival benefit (relative risk of death 0.91; P value 0.003) compared with traditional Medicare traditional fee for service patients. Results were robust to propensity score stratification, subset analyses, and rich controls for observed confounders. Implausibly large associations (between an unmeasured confounder and both insurance status and outcomes) would have to be hypothesized to fully explain the observed survival benefit.

Conclusions: Among a large number of Pennsylvanian elderly patients, receiving a very common therapeutic procedure for highly prevalent disease, being insured with MMC was associated with a clinically meaningful long-term survival benefit. Impending health insurance reform that changes the relative attractiveness of MMC plans may have unintended consequences on outcome quality.


Globalization of Health Care Delivery in the United States through Medical Tourism

Sameer Kumar, Richard Breuing & Rajneet Chahal
Journal of Health Communication, forthcoming

This study highlights some of the inefficiencies in the U.S. health care system and determines what effect medical tourism has had on the U.S. and global health care supply chains. This study also calls attention to insufficient health communication efforts to inform uninsured or underinsured medical tourists about the benefits and risks and determines the managerial and cost implications of various surgical procedures on the global health care system into the future. This study evaluated 3 years (2005, 2007, and 2011) of actual and projected surgical cost data. The authors selected 3 countries for analysis: the United States, India, and Thailand. The surgeries chosen for evaluation were total knee replacement (knee arthroplasty), hip replacement (hip arthroplasty), and heart bypass (coronary artery bypass graft). Comparisons of costs were made using Monte Carlo simulation with variability encapsulated by triangular distributions. The results are staggering. In 2005, the amount of money lost to India and Thailand on just these 3 surgeries because of cost inefficiencies in the U.S. health care system was between 1.3 to 2 billion dollars. In 2011, because many more Americans are expected to travel overseas for health care, this amount is anticipated to rise to between 20 and 30.2 billion dollars. Therefore, more attention should be paid to health communication efforts that truly illustrate the benefits/risks of medical travel. The challenge of finding reliable data for surgeries performed and associated surgical cost estimates was mitigated by the use of a Monte Carlo simulation of triangular distributions. The implications from this study are clear: If the U.S. health care industry is unable to eliminate waste and inefficiency and thus curb rising costs, it will continue to lose surgical revenue to foreign health providers.


Regression Discontinuity Designs with an Endogenous Forcing Variable and an Application to Contracting in Health Care

Patrick Bajari et al.
NBER Working Paper, December 2011

Regression discontinuity designs (RDDs) are a popular method to estimate treatment effects. However, RDDs may fail to yield consistent estimates if the forcing variable can be manipulated by the agent. In this paper, we examine one interesting set of economic models with such a feature. Specifically, we examine the case where there is a structural relationship between the forcing variable and the outcome variable because they are determined simultaneously. We propose a modified RDD estimator for such models and derive the conditions under which it is consistent. As an application of our method, we study contracts between a large managed care organization and leading hospitals for the provision of organ and tissue transplants. Exploiting "donut holes" in the reimbursement contracts we estimate how the total claims filed by the hospitals depend on the generosity of the reimbursement structure. Our results show that hospitals submit significantly larger bills when the reimbursement rate is higher, indicating informational asymmetries between the payer and hospitals in this market.


Variations in the Use of an Innovative Technology by Payer: The Case of Drug-Eluting Stents

Andrew Epstein et al.
Medical Care, January 2012, Pages 1-9

Background: Despite receiving identical reimbursement for treating heart disease patients with bare metal stents (BMS) or drug-eluting coronary stents (DES), cardiologists' use of the new technology (DES) may have varied by patient payer type as DES diffused. Payer-related factors that differ between hospitals and/or differential treatment inside hospitals might explain any overall differences by payer type.

Objectives: To assess the association between payer and DES use and to examine between-hospital and within-hospital variation in DES use over time.

Methods: We conducted a retrospective analysis of 4.1 million hospitalizations involving DES or BMS from 2003 to 2008 Nationwide Inpatient Sample. We estimated hybrid-fixed effects logit models and calculated the adjusted within-quarter, cross-payer differences in DES use.

Results: Coronary stent patients with Medicaid or without insurance were significantly less likely to receive DES than were patients with private insurance throughout the study period. The differences fluctuated over time as the popularity of DES relative to BMS increased and decreased. The within-hospital gaps paralleled the overall differences, and were largest in Q3 2003 (Medicaid: 11.9, uninsured: 10.9% points) and Q4 2008 (Medicaid: 12.8, uninsured: 20.7% points), and smallest in Q4 2004 (Medicaid: 1.4, uninsured: 1.1% points). The between-hospital adjusted differences in DES use by payer were small and rarely significant.

Conclusions: We found substantial differences in DES use by payer within hospitals, suggesting physicians selected the new technology for patients in a manner associated with patients' payer type.


The Impact of Insurance Subsidies on Self-Employment: Do State Non-Group Health Insurance Regulations Matter?

Bradley Heim & Ithai Lurie
Contemporary Economic Policy, forthcoming

This paper tests whether the effect of tax-based subsidies for self-employed health insurance on the level of self-employment differs with the type of non-group insurance regulatory regime at the state level. Using a panel of tax returns from 1999 to 2004, we estimate fixed effects instrumental variable regressions for the probability of being self-employed, allowing the effect of the after-tax price of self-employed health insurance to differ by regulatory regime. Our results suggest that states with community rating and guaranteed issue regulations had significantly smaller increases in the fraction of taxpayers reporting some amount of self-employment income as a result of a decrease in the after-tax price of self-employed health insurance. However, there is suggestive evidence that heavily regulated states experienced a larger increase in exclusive self-employment, particularly among older taxpayers.


Can Governments Do It Better? Merger Mania and Hospital Outcomes in the English NHS

Martin Gaynor, Mauro Laudicella & Carol Propper
NBER Working Paper, November 2011

The literature on mergers between private hospitals suggests that such mergers often produce little benefit. Despite this, the UK government has pursued an active policy of hospital merger. These mergers are initiated by a regulator, acting on behalf of the public, and justified on the grounds that merger will improve outcomes. We examine whether this promise is met. We exploit the fact that between 1997 and 2006 in England around half the short term general hospitals were involved in a merger, but that politics means that selection for a merger may be random with respect to future performance. We examine the impact of mergers on a large set of outcomes including financial performance, productivity, waiting times and clinical quality and find little evidence that mergers achieved gains other than a reduction in activity. In addition, mergers reduce the scope for competition between hospitals.


Medicaid and Wealth: A Re-Examination

Maury Gittleman
B.E. Journal of Economic Analysis & Policy, November 2011

Do public insurance programs crowd out private savings? I examine the relationship between Medicaid and wealth and make a contribution to the literature on this issue in two primary ways. First, I apply the instrumental-variables approach developed by Gruber and Yelowitz (1999) to a different dataset, the National Longitudinal Survey of Youth, 1979 (NLSY79), while at the same time examining an alternative instrument. The results turn out to differ depending on the instrument and, for one of the instruments, to be sensitive to assumptions needed to identify Medicaid's effects. Second, I make use of the SIPP data employed by Gruber and Yelowitz themselves, and examine the sensitivity of their conclusions to omitted factors that may be related to both Medicaid eligibility and to wealth accumulation. While more robust than the results using the NLSY79, the SIPP estimates are found to depend both on the sample used and on certain specification restrictions. Taken together, the results suggest caution in making inferences about the impact of Medicaid on wealth.


Impact of Public Reporting of Coronary Artery Bypass Graft Surgery Performance Data on Market Share, Mortality, and Patient Selection

Patrick Romano et al.
Medical Care, December 2011, Pages 1118-1125

Background: The impact of publicly reporting risk-adjusted outcomes for hospitals and surgeons remains controversial, with particular concern about unintended consequences.

Objectives: We evaluated the impact of 3 reports from the voluntary California CABG Mortality Reporting Program (CCMRP) on hospital market share, hospital mortality, and patient selection for coronary artery bypass graft (CABG) surgery.

Research Design and Participants: We analyzed data from January 2000 to December 2005 for all patients receiving isolated CABG surgery in California. We compared hospital groups based on their quality classification, including low-mortality outliers ("better"), high-mortality outliers ("worse"), and nonoutliers, as well as participation in the CCMRP.

Measures: We compared changes in market share, risk-adjusted mortality, and hospital caseload of high-risk patients for isolated CABG surgeries before and after the public release of 3 CCMRP reports (July 2001, August 2003, and February 2005).

Results: Low-mortality outlier hospitals experienced significantly increased market share for isolated CABG surgery in the first 6 months after the public release of the CCMRP reports (relative change in adjusted mean market share=8.9%, P=0.002). We found no evidence to suggest reduced risk adjusted mortality after the release of the CCMRP reports, but high-mortality outlier hospitals, on average, operated on less sick patients (relative change in mean expected mortality=25%, P=0.02).

Conclusions: The release of public CABG hospital performance reports in California was associated with increased volume at low-mortality hospitals, and may have reduced referrals of high-risk patients to high-mortality hospitals (or risk avoidance).


Market factors and electronic medical record adoption in medical practices

Nir Menachemi et al.
Health Care Management Review, January/March 2012, Pages 14-22

Background: Previous studies identified individual or practice factors that influence practice-based physicians' electronic medical record (EMR) adoption. Less is known about the market factors that influence physicians'
EMR adoption.

Purpose: The aim of this study was to explore the relationship between environmental market characteristics and physicians' EMR adoption.

Methods: The Health Tracking Physician Survey 2008 and Area Resource File (2008) were combined and analyzed. Binary logistic regression was used to examine the relationship between three dimensions of the market environment (munificence, dynamism, and complexity) and EMR adoption controlling for several physician and practice characteristics.

Results: In a nationally representative sample of 4,720 physicians, measures of market dynamism including increases in unemployment, odds ratio (OR) = 0.95, 95% confidence interval (CI) [0.91, 0.99], or poverty rates, OR = 0.93, 95% CI [0.89, 0.96], were negatively associated with EMR adoption. Health maintenance organization penetration, OR = 3.01, 95% CI [1.49, 6.05], another measure of dynamism, was positively associated with EMR adoption. Physicians practicing in areas with a malpractice crisis, OR = 0.82, 95% CI [0.71, 0.94], representing environmental complexity, had lower EMR adoption rates.


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