Supply of Care

Kevin Lewis

December 28, 2020

The Impact of Organizational Boundaries on Healthcare Coordination and Utilization
Leila Agha, Keith Marzilli Ericson & Xiaoxi Zhao
NBER Working Paper, December 2020


Patients often receive healthcare from providers spread across different firms. Transaction costs, imperfect information, and other frictions can make it difficult to coordinate production across firm boundaries, but we do not know how these challenges affect healthcare. We define and measure organizational concentration: the distribution across organizations of a patient's healthcare. Medicare claims show that organizational concentration varies substantially across physicians and regions, and that patients who move to more concentrated regions have lower healthcare utilization. Further, we show that when primary care physicians (PCPs) with higher organizational concentration exit the local market, their patients switch to more typical PCPs with lower organizational concentration and then have higher healthcare utilization. Patients who switch to a PCP with 1 SD higher organizational concentration have 10% lower healthcare utilization. This finding is robust to controlling for the spread of patient care across providers. Increases in organizational concentration have no detectable effect on emergency department utilization or hospitalization rates, but do predict improvements in diabetes care.

Missouri's Medicaid Contraction and Consumer Financial Outcomes
James Bailey, Nathan Blascak & Vyacheslav Mikhed
Federal Reserve Working Paper, November 2020


In July 2005, a set of cuts to Medicaid eligibility and coverage went into effect in the state of Missouri. These cuts resulted in the elimination of the Medical Assistance for Workers with Disabilities program, more stringent eligibility requirements, and less generous Medicaid coverage for those who retained their eligibility. Overall, these cuts removed about 100,000 Missourians from the program and reduced the value of the insurance for the remaining enrollees. Using data from the Medical Expenditure Panel Survey, we show how these cuts increased out-of-pocket medical spending for individuals living in Missouri. Using data from the Federal Reserve Bank of New York/Equifax Consumer Credit Panel (CCP) and employing a border discontinuity differences-in-differences empirical strategy, we show that the Medicaid reform led to increases in both credit card borrowing and debt in third-party collections. When comparing our results with the broader literature on Medicaid and consumer finance, which has generally measured the effects of Medicaid expansions rather than cuts, our results suggest there are important asymmetries in the financial effects of shrinking a public health insurance program when compared with a public health insurance expansion.

Levels of Employment and Community Engagement among Low-Income Adults: Implications for Medicaid Work Requirements
Aparna Soni et al.
Journal of Health Politics, Policy and Law, December 2020, Pages 1059–1082

Context: Twenty states are pursuing community engagement requirements (“work requirements”) in Medicaid, though legal challenges are ongoing. While most nondisabled low-income individuals work, it is less clear how many engage in the required number of hours of qualifying community engagement activities and what heterogeneity may exist by race/ethnicity, age, and gender. The authors' objective was to estimate current levels of employment and other community engagement activities among potential Medicaid beneficiaries.

Methods: The authors analyzed the US Census Bureau's national time-use survey data for the years 2015 through 2018. Their main sample consisted of nondisabled adults between 19 and 64 years with family incomes less than 138% of the federal poverty level (N = 2,551).

Findings: Nationally, low-income adults who might become subject to Medicaid work requirements already spent an average of 30 hours per week on community engagement activities. However, 22% of the low-income population — particularly women, older adults, and those with less education — would not currently satisfy a 20-hour-per-week requirement.

Gender Identity, Race, and Ethnicity Discrimination in Access to Mental Health Care: Preliminary Evidence from a Multi-Wave Audit Field Experiment
Patrick Button et al.
NBER Working Paper, December 2020


A broad body of interdisciplinary research establishes that transgender and non-binary individuals face discrimination across many contexts, including healthcare. Simultaneously, transgender individuals face various mental health disparities, including higher rates of depression and anxiety, suicidality, and PTSD. Therefore, understanding the role of discrimination in access to mental health care is essential. However, no previous research quantifies the extent to which transgender and non-binary people face discrimination in mental healthcare markets. We provide the first experimental evidence, using an audit study, of the extent to which cisgender women, transgender women, transgender men, non-binary people, and racial and ethnic minorities (African American and Hispanic individuals) face discrimination in access to mental health services. While data collection is ongoing, we find significant discrimination against transgender or non-binary African Americans and Hispanics in access to mental health care appointments.

The impact of global budget payment reform on systemic overuse in Maryland
Allison Oakes, Aditi Sen & Jodi Segal
Healthcare, forthcoming

Background: Medical overuse is a leading contributor to the high cost of the US health care system and is a definitive misuse of resources. Elimination of overuse could improve health care efficiency. In 2014, the State of Maryland placed the majority of its hospitals under an all-payer, annual, global budget for inpatient and outpatient hospital services. This program aims to control hospital use and spending.

Methods: We conducted a retrospective analysis of deidentified claims for 18–64 year old adults from the IBM MarketScan® Commercial Claims and Encounters Database. We matched 2 Maryland Metropolitan Statistical Areas (MSAs) to 6 out-of-state comparison MSAs. In a difference-in-differences analysis, we compared changes in systemic overuse in Maryland vs the comparison MSAs before (2011–2013) and after implementation (2014–2015) of the global budget program. Systemic overuse was measured using a semiannual Johns Hopkins Overuse Index.

Results: Global budgets were not associated with a reduction in systemic overuse. Over the first 1.5 years of the program, we estimated a nonsignificant differential change of −0.002 points (95%CI, −0.372 to 0.369; p = 0.993) relative to the comparison group. This result was robust to multiple model assumptions and sensitivity analyses.

How Does Cost-Sharing Impact Spending Growth and Cost-Effective Treatments? Evidence from Deductibles
Claudio Lucarelli et al.
NBER Working Paper, November 2020


The growth of health care spending has been a longstanding policy concern. Over the years, several innovations have been proposed to lower levels of health care spending; however, their impact has been limited and not sustained over time. Costly new technology, while often an improvement to existing care, has been identified as a principal driver of health care spending growth. Recent literature has shown that high deductible health plans (HDHP) can have an immediate impact on levels of health care spending, but their medium- and long-run effects on spending growth remain unknown. In this paper, we use multiple-employer-group claims data from a large national insurer to (i) study whether HDHPs reduce the growth in spending over four years compared to lower deductible alternatives; and (ii) explore the mechanisms behind any reductions in growth by looking at whether HDHPs reduce the use of low- vs. high-value treatments. We find that HDHPs have a limited effect on spending growth, with a statistically significant reduction observed only for prescription drugs. HDHPs are not associated with significantly lower growth in spending on highly cost-effective medicines in a sample of drugs but do reduce spending growth for less cost-effective drugs.

Deterrence Effects of Antifraud and Abuse Enforcement in Health Care
David Howard & Ian McCarthy
Journal of Health Economics, forthcoming


Estimates of the benefits of antifraud enforcement in health care typically focus on direct monetary damages. Deterrence effects are acknowledged but unquantified. We evaluate the impact of a Department of Justice investigation of hospitals accused of billing Medicare for unnecessary implantable cardiac defibrillator (ICD) procedures on their use. Using 100% inpatient and outpatient procedure data from Florida, we estimate that the investigation caused a 22% decline in ICD implantations. The present value of savings nationally over a 10 year period is $2.7 billion, nearly 10 times larger than the $280 million in settlements the Department of Justice recovered from hospitals. The investigation had a large and long-lasting effect on physician behavior, indicating the utility of antifraud enforcement as a tool for reducing wasteful medical care.

When wanting closure reduces patients’ patience
Annabelle Roberts & Ayelet Fishbach
Organizational Behavior and Human Decision Processes, November 2020, Pages 85-94


What makes patients impatient? We find that people both make impatient health decisions and experience impatience when waiting for healthcare partially because they are eager to achieve psychological closure on their goals. Across five preregistered studies (N = 1806), we first document an increased preference for a worse health device (Study 1) and more painful treatment (Study 2) when they allow for earlier goal closure, even though they would not provide remedy sooner. We next find that because the desire to achieve closure increases with proximity to a goal, the experience of impatience increases closer to the completion of a medical checkup (Studies 3–5). We discuss the implications of people’s desire to reach goal closure on the pursuit of both health habits and health care.

Independent freestanding emergency departments and implications for the rural emergency physician workforce in Texas
Qian Luo, Nicholas Chong & Candice Chen
Health Services Research, December 2020, Pages 1013-1020

Objective: Independent freestanding emergency departments (IFEDs) have proliferated over the last decade, largely in Texas. We examined the IFED physician workforce composition and changes in emergency physician workforce supply across states and in rural Texas over the period of IFED proliferation following a 2009 legislation allowing the licensing of these sites.

Study Design: Descriptive analysis of the IFED physician workforce; quasi‐experimental difference‐in‐difference analysis of Texas emergency physician movement into and out of the state; and difference‐in‐difference‐in‐difference analysis of the change in emergency physician supply between rural and urban areas in Texas compared with other states.

Principal Findings: In 2019, 545 physicians practiced in Texas IFEDs, of which 515 (94.5%) were emergency physicians. We located 533 in previous practice, of whom 522 (97.9%) previously practiced in Disproportionate Share Hospitals and 100 (18.8%) in rural areas. Following legislation to begin licensing IFEDs in 2009, there were on average 42.1 (P < .01) moving into Texas and 17.0 (P < .01) fewer moving out compared with all other states. Our results also indicated that the difference in emergency physician supply between rural and urban Texas was 1,002 (P < .01) fewer than for other states.

Does Increasing Access-to-Care Delay Accessing of Care? Evidence from Kidney Transplantation
Sarah Stith & Xiaoxue Li
Economics & Human Biology, forthcoming


Policies increasing healthcare availability might decrease the cost of delaying accessing of care, leading to potential negative consequences if patients delay treatment. We analyze a policy designed to increase access to kidney transplantation through the use of time since dialysis inception to prioritize patients for transplant, which was piloted at 26 of the 271 kidney transplant centers in the United States in 2006 and 2007. We model the patient’s optimization problem comparing the benefits and costs of early waitlisting and predict that the policy change will lead to delayed waitlisting. To empirically test this prediction, we use difference-in-differences fixed effects panel regression techniques to analyze data on patients who began dialysis between 1/1/2000 and 12/31/2009. The results support the model’s prediction; patients on dialysis who waitlist for kidney transplantation increase pre-waitlist dialysis duration by 11.6 percent or approximately 76 days from a pre-policy mean of 652 days (SD = 654). With regard to waitlist outcomes, the policy is associated with a 4.5 percentage point decrease in the probability of receiving a deceased donor transplant, somewhat offset by 3.0 percentage point increase in the probability of receiving a live donor transplant. On the extensive margin, patients on dialysis decrease their likelihood of ever waitlisting by 1.5 percentage points. We find an increase in pre-waitlist dialysis time and a decrease in the likelihood of waitlisting at all especially among populations likely to have experienced increased access to transplantation through the policy change: patients self-identifying as black or Hispanic rather than non-Hispanic white, and patients without private insurance.


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