Managing Healthcare
Interaction of the Labor Market and the Health Insurance System: Employer-Sponsored, Individual, and Public Insurance
Naoki Aizawa & Chao Fu
Journal of Labor Economics, October 2025, Pages 1207-1249
Abstract:
We develop and estimate an equilibrium model with heterogeneous local markets, households, and firms, highlighting the interrelationship between various components of the health insurance system -- employer-sponsored health insurance (ESHI), individual health insurance (HIX), and Medicaid -- and their relationship with the labor market. We estimate the model exploiting variation across states and before and after the Affordable Care Act. We consider counterfactual policies that cross subsidize between ESHI and HIX, including pure ESHI-HIX risk pooling as a special case. We find that such policies would increase household welfare and output and decrease government expenditure and would be more effective with Medicaid expansion.
Medicare Advantage Has Lower Resource Use and Better Quality of Care Than Traditional Medicare
Jeah Jung, Caroline Carlin & Roger Feldman
American Journal of Health Economics, forthcoming
Abstract:
Medicare Advantage (MA) is a private alternative to publicly administered Traditional Medicare (TM). Whether private MA firms deliver Medicare services more efficiently than public TM coverage has long been an important inquiry. We use newly available national MA encounter data to compare resource use and quality of care between MA and TM. We find that adjusted total resource use is $206-$284 (12.8-17.5 percent) per beneficiary per month lower in MA than in TM between 2016 and 2019. The estimates vary depending on how we account for differences in coding intensity and patient characteristics between MA and TM. Quality of care, measured by adverse health events and care process indicators, is better in MA than in TM. Resource use reduction and quality improvement are larger among higher-risk MA patients. Resource use reduction and quality improvement also differ by MA plan type and star ratings. MA's advantage over TM in reducing resource use decreased modestly between 2016 and 2019, and MA's advantage in improving quality of care decreased for one measure.
Regional Price Level Estimates for Medical Services in the United States
Calvin Ackley
Health Services Research, forthcoming
Study Setting and Design: I measure state-level medical price variation using hedonic regression models that control for differences in service mix and patient characteristics. I estimate separate models for inpatient, outpatient, and professional services, and compute expenditure-weighted aggregate price levels. The results are used to construct new utilization measures, quantify the share of spending variation explained by price levels, and examine the relationship between medical and non-medical price levels using price parity estimates from the BEA.
Data Sources and Analytic Sample: I use commercial health care claims from the Health Care Cost Institute (HCCI) database and the Merative MarketScan database from 2018 to 2022.
Principal Findings: Medical prices are 70%-80% higher in the most expensive states than in the least expensive states. Alaska, Wyoming, Wisconsin, Oregon, and California tend to have the highest medical prices, while Alabama, Arkansas, Kentucky, Michigan, and Louisiana tend to have the lowest, although there is considerable heterogeneity across service categories. Medical prices are significantly more disperse than non-medical prices, and the correlation between the two is weak across states (0.27). Price variation explains about one-half of the variation in health care spending per beneficiary. The MarketScan and HCCI databases yield similar estimates.
The Impact of Immunotherapy on Reductions in Cancer Mortality: Evidence from Medicare
Danea Horn et al.
NBER Working Paper, October 2025
Abstract:
Immunotherapy is a breakthrough innovation in cancer care but is also among the most expensive treatments, with costs exceeding $150,000 per patient. We study the introduction of immune checkpoint inhibitors (ICIs), the most widely used class of immunotherapy drugs. In 2022, ICIs accounted for 44% of the $17.5 billion Medicare Part B cancer drug spending. We focus on metastatic melanoma, the first approved indication for ICIs. While overall cancer mortality rates declined since the 1990s, melanoma mortality rates increased through the early 2010s. Following the first ICI approvals in 2011 and 2014, melanoma mortality declined sharply. Using traditional Medicare claims, we estimate the impact of the introduction of ICIs on healthcare utilization, costs, and 1-year survival for patients with metastatic melanoma, relative to metastatic colorectal cancer (CRC), where ICIs were not approved until 2017. Variation in approval timing allows us to isolate the effect of ICIs from broader cancer care trends. We find that ICIs reduced 1-year mortality by 6.2%. Since about 1 in 5 metastatic melanoma patients received ICIs, this implies a 27.5% reduction among treated patients. The introduction of ICIs also reduced chemotherapy and radiation use, but increased Medicare spending by 59.3% or about 260% among ICI-treated patients. Accounting for life expectancy gains beyond one year, the benefits of ICIs for melanoma patients appear comparable, or potentially even greater, than the substantial added Medicare costs. Nonetheless, ICI use remains relatively low given large survival benefits and few alternative treatments, suggesting that costs and other barriers limit patient access.
Private Equity, Consumers, and Competition: Evidence from the Nursing Home Industry
Ashvin Gandhi, YoungJun Song & Prabhava Upadrashta
NBER Working Paper, October 2025
Abstract:
This paper studies how product market competition shapes the impact of private equity (PE) acquisitions on consumers. We examine nursing home buyouts and observe that PE-owned facilities exhibit greater competitive sensitivity: competing more aggressively when competitive incentives are strong and exploiting market power more aggressively when competitive incentives are weak. We find that PE-owned facilities are more sensitive to local market competition -- even when comparing effects only across facilities purchased as part of the same acquisition -- and are more responsive to a pro-competitive policy helping consumers compare facilities. This suggests that the competitive sensitivity of acquirers and the concentration of markets where acquisitions occur are important factors contributing to the effects of a merger, as well as that pro-competitive polices can reshape the effects of PE ownership on consumers.
How Do Financial Conditions Affect Professional Conduct? Evidence from Opioid Prescriptions
Isil Erel, Shan Ge & Pengfei Ma
NBER Working Paper, September 2025
Abstract:
We examine how healthcare providers' opioid prescriptions are affected by changes in their home values, which proxy for shocks to their wealth. We find that providers increase opioid prescriptions when experiencing adverse financial conditions. Results are robust to including provider office-year fixed effects and using the subsample of providers who live far away from their offices, thereby largely ruling out a patient-demand explanation. Providers living in ZIP codes with price changes in the bottom half in 2007-2009 increased their opioid prescriptions in 2010-2012 by approximately 16% more than others. The effect is stronger among providers facing more provider competition and those serving vulnerable populations. Providers experiencing adverse financial conditions also receive more opioid-related payments from pharmaceutical companies. We also extend our analysis to ADHD medications, demonstrating a similar pattern of increased prescriptions under negative financial shocks, suggesting broader implications for other medical decisions. Our findings offer novel insights into professional conduct under personal financial pressure, with implications extending beyond healthcare.
Nonprofit Hospital CEO Compensation: Does Quality Matter?
Derek Jenkins, Marah Short & Vivian Ho
Medical Care, October 2025, Pages 787-793
Research Design: We estimated linear regressions for 2012 and 2019 of the log of CEO wages on system or independent hospital characteristics, including quality. The regressions were used to construct a Oaxaca decomposition of factors associated with CEO compensation.
Subjects: One thousand forty-seven nonprofit health systems and independent hospitals in 2012 and 812 in 2019.
Measures: CEO compensation, hospital profits, charity care, hospital size, teaching status, system status, 30-day mortality rate for pneumonia patients, hospital-wide 30-day readmission rate.
Results: We find that better quality was more closely associated with higher pay among hospital CEOs in 2012 versus 2019. The inclusion of these quality measures in the analysis somewhat reduced the observed relative return for leading larger hospitals or health systems in 2012, but not in 2019. The link between quality and CEO pay is weaker in 2019 than in 2012.
The Impact of Preferred Provider Incentives on Demand and Negotiated Prices
Calvin Ackley
American Journal of Health Economics, forthcoming
Abstract:
This paper studies the impact of a preferred network design on procedure-level spending for lab services. This plan structure, termed the "Site of Service" design, employs a two-tiered cost-sharing schedule for lab tests: patients incur no out-of-pocket costs at preferred providers but face a deductible at non-preferred providers. Using event-study methods and administrative data on two large carriers, I find that these tiered incentives lead to a considerable reduction in the price paid per lab, with effect sizes ranging from 14 percent to 36 percent across groups and time. I find that the preferred provider program generates savings both by steering consumers toward less expensive providers and by putting downward pressure on negotiated prices. Notably, I present explicit causal evidence linking the preferred network to substantial negotiated price cuts. I find that these price dynamics account for about half of the overall program savings, while the steering mechanism accounts for the remainder.
Hospital- And Private Equity-Affiliated Specialty Physicians Negotiate Higher Prices Than Independent Physicians
Alexander Philips et al.
Health Affairs, October 2025, Pages 1226-1234
Abstract:
Hospital and private equity (PE) consolidation in health care is altering the physician practice landscape, with more than three-quarters of physicians employed by these corporate entities as of 2023. We examined practice affiliation patterns for specialist physicians and those patterns' association with commercial prices for cardiology and gastroenterology services. We found that in 2023, the majority of specialists (approximately 72 percent of cardiologists and 57 percent of gastroenterologists) were employed by hospitals, whereas PE-affiliated specialists constituted a lower share and were concentrated in certain geographic regions. Hospital-affiliated specialists negotiated prices that were 16.3 percent higher for cardiology procedures and 20.7 percent higher for gastroenterology procedures compared with specialists in independent practices. PE-affiliated specialists negotiated prices that were 6.0 percent higher for cardiology and 10.0 percent higher for gastroenterology procedures. If hospital- and PE-affiliated specialists charged prices equivalent to those of independent practices, commercial health care spending would decrease by approximately $2.9 billion and $156 million, respectively. As corporate consolidation of physician practices continues to accelerate, greater antitrust enforcement and enhanced transparency in ownership structures and pricing will be essential tools for policy makers to use in containing health care costs while preserving patients' access to high-quality specialty care.
Commercial Insurers Paid More For Procedures At Hospital Outpatient Departments Than At Ambulatory Surgical Centers
Matthew Maughan et al.
Health Affairs, October 2025, Pages 1291-1297
Abstract:
Site neutrality in payment practices has become a salient issue in the US health care debate, as rising prices have brought increased pressure for policy action. Although Medicare has received disproportionate attention, these policies could also apply to commercial insurers, particularly to address payment differentials between hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs). Using 2024 Transparency in Coverage data provided by Clarify Health on commercial prices for three insurers (UnitedHealthcare, Cigna, and BlueCross BlueShield), we compared payments for thirteen common procedures across settings. Overall, in 2024, commercial prices were $1,489 (78 percent) higher in HOPDs than in ASCs, whereas Medicare prices were $633 (97 percent) higher. However, site payment differentials varied substantially across payers: Cigna had the lowest differentials between HOPDs and ASCs ($327), whereas United had the highest ($1,673). Cigna achieved this through provider selection, contracting with only 14 percent of HOPDs in applicable markets compared with an average of 76 percent for United and BlueCross BlueShield. If United and BlueCross BlueShield paid Cigna's average HOPD rates for these procedures, together they would save approximately $1.4 billion a year. Our results suggest that payers can reduce site differentials through provider selection; they also imply that larger insurers with broader networks may continue to reimburse different sites differently in the absence of either government action or a shift in market dynamics.
Identifying Coding Intensity in Medicare Advantage Through Switchers
Paul Jacobs & Timothy Layton
Health Services Research, October 2025
Objective: To estimate the extent of differential coding of health risk in traditional Medicare (TM) compared with Medicare Advantage (MA).
Study Setting and Design: Payments to MA plans are based on reported medical conditions, and research has shown the number and severity of diagnoses are larger when beneficiaries are enrolled in MA plans rather than TM. We compare the risk scores of Medicare beneficiaries who switch from TM into MA over the 2013-2021 period to the scores of beneficiaries who stay in TM, incorporating heterogeneous treatment effects across switching cohorts and over time.
Data Sources and Analytic Sample: We use a 10% sample of Centers for Medicare and Medicaid Services data containing individual risk scores and enrollment status for 2012-21. After applying exclusion criteria, our sample consists of 1,911,968 beneficiaries with data available for each year. We also link administrative data to the Medicare Current Beneficiary Survey to assess measures of health status.
Principal Findings: We find the risk scores of switchers to MA were 0.120 points (12.4%; 95% confidence interval [CI]: 12.0%-12.8%) higher than stayers in the second year, 0.166 points (17.2%; 95% CI: 16.7%-17.6%) higher in the third year, and 0.216 points (22.3%; 95% CI: 21.7%-22.9%) higher by the sixth year after switching. Averaged over all MA enrollees in 2021, our estimates suggest coding intensity in MA led to risk scores that were 18.6% higher than for comparable enrollees in TM.
Price-Shifting? Spillovers of Medicare Advantage Network Inclusion on Hospital Prices Paid by Commercial Insurers
Jeffrey Marr, Daniel Polsky & Mark Meiselbach
Health Services Research, October 2025
Study Setting and Design: We compared inpatient negotiated commercial prices between insurers at the same hospital that do not include the hospital in their MA network and those that do. We used Poisson regression with hospital fixed effects, adjusting for insurer fixed effects and insurer-market covariates.
Data Sources and Analytic Sample: Using data from Turquoise Health, the American Hospital Association survey, and Clarivate DRG, we identified 5654 insurer-hospital pairs for seven large insurers that participate in both the commercial and MA markets.
Principal Findings: Insurers pay 4.7% higher commercial prices for major joint replacements when the hospital is in their MA network (95% confidence interval: 2.0, 7.5%). The average adjusted negotiated commercial price in our sample was $28,889.91 when the insurer did not have the hospital in its MA network but $30,249.16 when it did. We find similar magnitudes for the four other "shoppable service" diagnosis related groups commonly reported in the transparency data.