Lives in the balance

Kevin Lewis

July 09, 2018

New Approaches In Medicaid: Work Requirements, Health Savings Accounts, And Health Care Access
Benjamin Sommers et al.
Health Affairs, forthcoming


Alternative approaches in Medicaid are proliferating under the Trump administration. Using a novel telephone survey, we assessed views on health savings accounts, work requirements, and Medicaid expansion. Our sample consisted of 2,739 low-income nonelderly adults in three Midwestern states: Ohio, which expanded eligibility for traditional Medicaid; Indiana, which expanded Medicaid using health savings accounts called POWER accounts; and Kansas, which has not expanded Medicaid. We found that coverage rates in 2017 were significantly higher in the two expansion states than in Kansas. However, cost-related barriers were more common in Indiana than in Ohio. Among Medicaid beneficiaries eligible for Indiana’s waiver program, 39 percent had not heard of POWER accounts, and only 36 percent were making required payments, which means that nearly two-thirds were potentially subject to loss of benefits or coverage. In Kansas, 77 percent of respondents supported expanding Medicaid. With regard to work requirements, 49 percent of potential Medicaid enrollees in Kansas were already employed, 34 percent were disabled, and only 11 percent were not working but would be more likely to look for a job if required by Medicaid. These findings suggest that current Medicaid innovations may lead to unintended consequences for coverage and access.

Predictive modeling of U.S. health care spending in late life
Liran Einav et al.
Science, 29 June 2018, Pages 1462-1465


That one-quarter of Medicare spending in the United States occurs in the last year of life is commonly interpreted as waste. But this interpretation presumes knowledge of who will die and when. Here we analyze how spending is distributed by predicted mortality, based on a machine-learning model of annual mortality risk built using Medicare claims. Death is highly unpredictable. Less than 5% of spending is accounted for by individuals with predicted mortality above 50%. The simple fact that we spend more on the sick — both on those who recover and those who die — accounts for 30 to 50% of the concentration of spending on the dead. Our results suggest that spending on the ex post dead does not necessarily mean that we spend on the ex ante “hopeless.”

Extrapolation using Selection and Moral Hazard Heterogeneity from within the Oregon Health Insurance Experiment
Amanda Kowalski
NBER Working Paper, May 2018


I aim to shed light on why emergency room (ER) utilization increased following the Oregon Health Insurance Experiment but decreased following a Massachusetts policy. To do so, I unite the literatures on insurance and treatment effects. Under an MTE model that assumes no more than the LATE assumptions, comparisons across always takers, compliers, and never takers can inform the impact of polices that expand and contract coverage. Starting from the Oregon experiment as the "gold standard," I make comparisons within Oregon and extrapolate my findings to Massachusetts. Within Oregon, I find adverse selection and heterogeneous moral hazard. Although previous enrollees increased their ER utilization, evidence suggests that subsequent enrollees will be healthier, and they will decrease their ER utilization. Accordingly, I can reconcile the Oregon and Massachusetts results because the Massachusetts policy expanded coverage from a higher baseline, and new enrollees reported better health.

The Political Fallout from Tennessee's Mass Medicaid Disenrollment
Vladimir Kogan
Ohio State University Working Paper, May 2018


Citing concerns about unsustainable costs, Tennessee's Democratic governor made unilateral cuts to the state's Medicaid program in late 2004 that resulted in approximately 170,000 people losing their coverage during the following year. I leverage county-level variation in the magnitude of the ensuing disenrollment to examine the political fallout. When the governor ran for re-election two years later, his share of the major-party vote was 1.2-1.4 percentage points lower for every percentage point decline in Medicaid coverage, but I find no similar effects in down-ballot races. The results speak to the potential political costs of welfare spending cuts and are relevant for anticipating the electoral consequences of ongoing efforts to repeal or otherwise weaken portions of the Affordable Care Act.

The Impact of Insurance Coverage on Utilization of Prescription Contraceptives: Evidence from the Affordable Care Act
Nora Becker
Journal of Policy Analysis and Management, Summer 2018, Pages 571-601


The Affordable Care Act (ACA) mandates that prescription contraceptives be covered by private health insurance plans with no cost sharing. Using medical and prescription claims from a large national insurer, I estimate individual claim rates and out‐of‐pocket (OOP) costs of prescription contraceptives for 329,642 women aged 13 to 45 who were enrolled in private health insurance between January 2008 and December 2013. I find that OOP spending on contraceptives has decreased sharply since the implementation of the ACA mandate. Using a difference‐in‐difference model that leverages employer‐level variation in compliance with the mandate, I estimate the effect of the mandate on use of both short‐ and long‐term methods of prescription birth control. I find that the mandate has increased insurance claims for short‐term contraceptive methods (the pill, patch, ring, shot, diaphragms/cervical caps, and prescription emergency contraception) by 4.8 percent and increased initiation of long‐term methods (intrauterine devices, implant, or sterilization) by 15.8 percent. Using data from a national survey of reproductive age women during this same time period, a back‐of‐the‐envelope calculation suggests that the mandate increased total use of any method of prescription contraceptive use by 2.95 percentage points among privately insured women in 2013, or a 6.57 percent relative increase. These increases in use of prescription contraceptives among privately insured women in the United States as a result of the ACA mandate have important potential implications for fertility rates, health care spending, and economic outcomes for women and their families.

Quality disclosure and the timing of insurers’ adjustments: Evidence from Medicare Advantage
Ian McCarthy
Journal of Health Economics, forthcoming


Mandatory quality disclosure often includes a period over which the quality of new entrants is unreported. This provides the opportunity for forward-looking firms to adjust product characteristics in advance of disclosure. Using comprehensive data on Medicare Advantage (MA) from 2007-2015, I exploit the design of the MA Star Rating program to examine the presence of forward-looking behavior among insurers. I find that high-quality insurers reduce prices leading up to quality disclosure, while low-quality insurers increase prices in advance of quality disclosure. These dynamics are consistent with firms anticipating a future change in consumer inertia and updating current-period prices accordingly.

The principal–agent problem and owner‐managers: An instrumental variables application to nursing home quality
Sean Shenghsiu Huang & John Bowblis
Health Economics, forthcoming


The literature on provider ownership has primarily focused broadly on for‐profits compared with nonprofits and chains versus nonchains. However, the understanding of more nuanced ownership arrangements within individual facilities is limited. Utilizing the principal–agent and managerial control frameworks, we study the role of managerial ownership and its relationship to quality among for‐profit nursing homes (NHs). We identify NH administrators with more than 5% ownership (owner‐manager) from Ohio Medicaid Cost Reports (2005–2010) and link these data to long‐stay resident records in the Minimum Data Set. Using differential distance to the nearest NHs with a salaried manager relative to an owner‐manager, we address the differential selection into these two types of NHs. After instrumenting for admissions to owner‐managed NHs, quality among long‐stay residents at owner‐managed NHs is generally better than NHs with salaried managers. We find suggestive evidence that the magnitudes of quality difference are larger when the principal–agent problem is likely more pronounced, such as when NHs that are part of a multifacility chain and located in more concentrated markets.

The Efficiency of Slacking Off: Evidence from the Emergency Department
David Chan
Econometrica, May 2018, Pages 997-1030


Work schedules play an important role in utilizing labor in organizations. In this study of emergency department physicians in shift work, schedules induce two distortions: First, physicians “slack off” by accepting fewer patients near end of shift (EOS). Second, physicians distort patient care, incurring higher costs as they spend less time on patients assigned near EOS. Examining how these effects change with shift overlap reveals a tradeoff between the two. Within an hour after the normal time of work completion, physicians are willing to spend hospital resources more than six times their market wage to preserve their leisure. Accounting for overall costs, I find that physicians slack off at approximately second‐best optimal levels.

Evidence of Upcoding in Pay-for-Performance Programs
Hamsa Bastani, Joel Goh & Mohsen Bayati
Management Science, forthcoming


Recent Medicare legislation seeks to improve patient care quality by financially penalizing providers for hospital-acquired infections (HAIs). However, Medicare cannot directly monitor HAI rates and instead relies on providers accurately self-reporting HAIs in claims to correctly assess penalties. Consequently, the incentives for providers to improve service quality may disappear if providers upcode, i.e., misreport HAIs (possibly unintentionally) in a manner that increases reimbursement or avoids financial penalties. Identifying upcoding in claims data is challenging because of unobservable confounders (e.g., patient risk). We leverage state-level variations in adverse event reporting regulations and instrumental variables to discover contradictions in HAI and present-on-admission (POA) infection reporting rates that are strongly suggestive of upcoding. We conservatively estimate that 10,000 out of 60,000 annual reimbursed claims for POA infections (18.5%) were upcoded HAIs, costing Medicare $200 million. Our findings suggest that self-reported quality metrics are unreliable and, thus, that recent legislation may result in unintended consequences.

Do Academic Medical Centers Disproportionately Benefit The Sickest Patients?
Laura Burke et al.
Health Affairs, June 2018, Pages 864-872 


Academic medical centers are widely considered to have higher costs than nonteaching hospitals, which has led some policy makers to suggest that the centers should be reserved for patients with the most complex conditions. While prior studies have shown lower mortality at the centers, it is unclear how this varies by patient severity. We examined more than 11.8 million hospitalizations in the period 2012–14 for Medicare beneficiaries ages sixty-five and older and found that, after adjustment for patient and hospital characteristics, high-severity patients had 7 percent lower odds, medium-severity patients had 13 percent lower odds, and low-severity patients had 17 percent lower odds of thirty-day mortality when treated at an academic medical center for common medical conditions, compared to similar patients treated at a nonteaching hospital. For surgical procedures, high-severity patients had 17 percent lower odds of mortality, medium-severity patients had 10 percent lower odds, and there was no difference for low-severity patients. The availability of technology explained some, but not all, of these differences. Taken together, these findings suggest that efforts to limit care at academic medical centers have the potential to lead to worse outcomes, as mortality rates for even low-severity patients seem to be lower at the centers.

Narrow Provider Networks and Willingness to Pay for Continuity of Care and Network Breadth
Lucas Higuera, Caroline Carlin & Bryan Dowd
Journal of Health Economics, July 2018, Pages 90-97


Tiered and narrow provider networks are mechanisms implemented by health plans to reduce health care costs. The benefits of narrow networks for consumers usually come in the form of lower premiums in exchange for access to fewer providers. Narrow networks may disrupt continuity of care and access to usual sources of care. We examine choices of health plans in a private health insurance exchange where consumers choose among one broad network and four narrow network plans. Using a discrete choice model with repeated choices, we estimate the willingness to pay for a health plan that covers consumers’ usual sources of care. Willingness to pay for a network that covers consumers’ usual source of care is between $84 and $275/month (for primary care) and between $0 and $115/month (for specialists). We find that, given that a network covers their usual source of care, consumers show aversion only to the narrowest networks.

Goal conflict when making decisions for others
Rebecca Ferrer, Edward Orehek & Lynne Padgett
Journal of Experimental Social Psychology, September 2018, Pages 93–103


Some of life's most important and difficult decisions are made on behalf of others. However, little is known about how goal conflict influences high-stakes decisions made on behalf of others. A nationally representative sample of U.S. healthcare providers (n = 502) read a statement presenting curative and palliative care goals as conflicting or complementary. We predicted and found that providers who received a goal conflict (vs. complementary) message perceived greater conflict, and rated palliative goals as less important. Providers who received a goal conflict (vs. complementarity) message also rated curative goals as less important. Moreover, there was an indirect link from goal conflict condition to willingness to provide palliative care, mediated by perceived goal conflict. A self-affirmation manipulation reduced providers' willingness to provide palliative care, but did not influence the effect of goal conflict on decision-making. Findings suggest that goal conflict is consequential for high-stakes decisions made for others, and that goal conflict (vs. complementarity) lowers importance of, and increases disengagement from, conflicting goals.

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