Medicare For All or Medicare For None? A Macroeconomic Analysis of Healthcare Reform
Journal of Macroeconomics, forthcoming
In this study, I develop a novel general equilibrium life cycle model composed of finitely-lived households that differ according to age, skill level, and access to employer-provided health insurance. After introducing a “Medicare for all” health insurance system to the model, I examine how the welfare response to this policy change will differ according to household characteristics. Then, I compare this system to a completely privatized health insurance system that achieves universal health insurance coverage through the creation of utilization-based premium subsidies. In general, both systems tend to improve the welfare of young households at the expense of old households. However, when using average value-of-life as the primary measure of welfare, Medicare for all either benefits unskilled households at the expense of skilled households, or makes both worse off. In contrast, the privatized system improves the average value-of-life of all household groups, regardless of skill level or prior access to employer-provided health insurance.
Medicaid Expansion Associated With Reductions In Preventable Hospitalizations
Hefei Wen et al.
Health Affairs, November 2019, Pages 1845-1849
Hospitalizations for ambulatory care-sensitive conditions indicate barriers to care outside of inpatient settings. We found that Medicaid expansions under the Affordable Care Act were associated with meaningful reductions in these hospitalizations, which suggests the potential of Medicaid expansions to reduce the need for preventable hospitalizations in vulnerable populations and produce cost savings for the US health care system.
Just a Minute: The Effect of Emergency Department Wait Time on the Cost of Care
Lindsey Woodworth & James Holmes
Economic Inquiry, forthcoming
Wait times are rising in U.S. emergency departments (EDs). The longer a patient waits to be seen, the more their condition may worsen. Notably, patients in worse condition can cost more to care for. This study estimates the effect of ED wait time on the cost of care by exploiting the quasi‐random assignment of patients to triage nurses in an instrumental variables framework. The results suggest that prolonging the wait of a patient who arrives with a serious condition by 10 minutes will increase the hospital's cost to care for the patient by an average of 6%. The magnitude of this effect dissipates (fading to zero) among patients who arrive with less serious conditions.
Little Consistency In Evidence Cited By Commercial Plans For Specialty Drug Coverage
James Chambers et al.
Health Affairs, November 2019, Pages 1882-1886
We found wide variation in the evidence that US commercial health plans reported reviewing in their specialty drug coverage policies. There was little consistency in the numbers or types of studies cited by health plans. On average, only 15 percent of health plans’ coverage policies cited the same study evaluating a specific drug for a specific indication.
Unintended consequences of health insurance: Affordable Care Act's free contraception mandate and risky sex
Health Economics, forthcoming
Health insurance is a primary driver of rising medical expenditures. Economic theory suggests that insurance induces an increase in risky behaviors, but previous empirical evidence is mixed. I use a mandate in the Affordable Care Act in which contraceptives were covered at zero cost to consumers to test for unintended effects of insurance on risky sex. Leveraging mandated zero cost‐sharing for contraception and pre‐policy insured rates as a measure of treatment intensity, I provide evidence that this 2012 policy reduced fertility but caused unintended consequences: a decline in condom use and a subsequent increase in sexually transmitted infections (STIs). I discuss shortcomings of controlling for nonparallel pre‐trends using state‐trends, and I suggest an alternative to control for pre‐trends directly in the context of dose‐response difference‐in‐differences. Finally, estimates based on the 2010 dependent coverage mandate indicate health insurance provides an overall net positive effect on insurance and STI prevention.
Hospital-Acquired Condition Reduction Program Is Not Associated With Additional Patient Safety Improvement
Kyle Sheetz et al.
Health Affairs, November 2019, Pages 1858-1865
In 2013 the Centers for Medicare and Medicaid Services announced that it would begin levying penalties against hospitals with the highest rates of hospital-acquired conditions through the Hospital-Acquired Condition Reduction Program. Whether the program has been successful in improving patient safety has not been independently evaluated. We used clinical registry data on rates of hospital-acquired conditions in 2010-18 from a large surgical collaborative in Michigan to estimate the impact of the policy. While rates of all such conditions declined from 133.4 per 1,000 discharges in the pre-program period to 122.2 in the post-program period, greater improvements were observed for nontargeted measures. We conclude that the program did not improve patient safety in Michigan beyond existing trends. These findings raise questions about whether the program will lead to improvements in patient safety as intended.
A Game Theoretic Analysis of Voluntary Euthanasia and Physician Assisted Suicide
Rodrigo Harrison & Francisco Silva
Economic Inquiry, forthcoming
In countries/states where voluntary euthanasia (VE) or physician‐assisted suicide (PAS) is legal, the patient's decision about whether to request VE or PAS heavily relies on the information others provide. We use the tools of microeconomic theory to study how communication between the patient, his family and his physician influences the patient's decision. We argue that families have considerable power over the patient and that the amount of information that is transmitted from physician to patient might be severely diminished as a result of legalizing VE or PAS. We discuss our main results in the context of the ongoing normative debate over the legalization of VE and PAS.
Safety Net Cutbacks and Hospital Service Provision: Evidence from Psychiatric Care
Harvard Working Paper, November 2019
This paper explores how the closure of unprofitable safety net care at one hospital affects the utilization of services at nearby hospitals, the capacity choices of those nearby hospitals, and patient outcomes. I focus on the effects of inpatient psychiatric unit closures, one of the least profitable services for hospitals. Exploiting sharp variation in the timing of psychiatric unit closures across local hospital markets in California, I find that neighboring hospitals treat less than a third of the number of patients that would have been seen in the closing units. Psychiatric unit losses double at neighboring hospitals due to spillovers of the least profitable and most severe patients. Nearby hospitals strategically respond to closures by decreasing their supply of psychiatric services. Lower access to inpatient psychiatric care shifts patients to high-cost emergency room settings and has spillovers onto the criminal justice system. Taken together, my findings suggest that preventing cutbacks at one hospital can have a multiplier effect in preserving market-level access to care for vulnerable populations.
Selection with Variation in Diagnostic Skill: Evidence from Radiologists
David Chan, Matthew Gentzkow & Chuan Yu
NBER Working Paper, November 2019
Physicians, judges, teachers, and agents in many other settings differ systematically in the decisions they make when faced with similar cases. Standard approaches to interpreting and exploiting such differences assume they arise solely from variation in preferences. We develop an alternative framework that allows variation in both preferences and diagnostic skill, and show that both dimensions are identified in standard settings under quasi-random assignment. We apply this framework to study pneumonia diagnoses by radiologists. Diagnosis rates vary widely among radiologists, and descriptive evidence suggests that a large component of this variation is due to differences in diagnostic skill. Our estimated model suggests that radiologists view failing to diagnose a patient with pneumonia as more costly than incorrectly diagnosing one without, and that this leads less-skilled radiologists to optimally choose lower diagnosis thresholds. Variation in skill can explain 44 percent of the variation in diagnostic decisions, and policies that improve skill perform better than uniform decision guidelines. Failing to account for skill variation can lead to highly misleading results in research designs that use agent assignments as instruments.
Association Of Medicare’s Annual Wellness Visit With Cancer Screening, Referrals, Utilization, And Spending
Ishani Ganguli et al.
Health Affairs, November 2019, Pages 1927-1935
Medicare’s annual wellness visit was introduced in 2011 to promote evidence-based preventive care and identify risk factors and undiagnosed conditions in aging adults. Use of the visit has risen steadily since then, yet its benefits remain unclear. Using national Medicare data for 2008-15, we examined claims from fee-for-service Medicare beneficiaries attributed to practices that did or did not adopt the visit. We performed difference-in-differences analysis to compare differential changes in appropriate and low-value cancer screening, functional and neuropsychiatric care, emergency department visits, hospitalizations, and total spending. Examining 17.8 million beneficiary-years, we found modest differential improvements in rates of evidence-based screening and declines in emergency department visits. However, when we accounted for trends that predated the introduction of the visit, none of these benefits persisted. In sum, we found no substantive association between annual wellness visits and improvements in care.
Genetic variation in health insurance coverage
George Wehby & Dan Shane
International Journal of Health Economics and Management, December 2019, Pages 301-316
We provide the first investigation into whether and how much genes explain having health insurance coverage or not and possible mechanisms for genetic variation. Using a twin-design that compares identical and non-identical twins from a national sample of US twins from the National Survey of Midlife Development in the United States, we find that genetic effects explain over 40% of the variation in whether a person has any health coverage versus not, and nearly 50% of the variation in whether individuals younger than 65 have private coverage versus whether they have no coverage at all. Nearly one third of the genetic variation in being uninsured versus having private coverage is explained by employment industry, self-employment status, and income, and together with education, they explain over 40% of the genetic influence. Marital status, number of children, and available measures of health status, risk preferences, and prevention effort do not appear to be important channels for genetic effects. That genes have meaningful effects on the insurance status suggests an important source of heterogeneity in insurance take up.
How do Hospitals Respond to Payment Incentives?
Gautam Gowrisankaran, Keith Joiner & Jianjing Lin
NBER Working Paper, November 2019
A literature has found that medical providers inflate bills and report more conditions given financial incentives. We evaluate whether Medicare reimbursement incentives are driven more by bill inflation or coding costs. Medicare reformed its payment mechanism for inpatient hospitalizations in 2007, increasing coding costs. We first examine whether increased extra reimbursements from reporting more diagnoses lead hospitals to report more high bill codes. We find that increases in reimbursements within narrow patient groups led to more high bill codes before 2007 but not after. Using the payment reform, we then test for costly coding by comparing hospitals that adopted electronic medical records (EMRs) to others. Adopters reported relatively more top bill codes from secondary diagnoses after the reform, exclusively for medical patients, with a negative effect for surgical patients. This is consistent with EMRs lowering coding costs for medical discharges but increasing them for surgical ones. We further use a 2008 policy where Medicare implemented financial penalties for certain hospital-acquired conditions. EMR hospitals coded relatively more of these conditions following the penalization, lowering revenues. Together, this evidence is contrary to bill inflation but consistent with costly coding. Reducing coding costs may increase inpatient Medicare costs by $1.04 billion annually.
Did Hospital Readmissions Fall Because Per Capita Admission Rates Fell?
Michael McWilliams et al.
Health Affairs, November 2019, Pages 1840-1844
Recent reductions in hospital readmission rates have been attributed to the Hospital Readmissions Reduction Program. However, admission rates also declined during the same period. We found that because the probability of an admission occurring soon after another is lower when there are fewer admissions per patient, the reduction in admission rates may explain much of the reduction in readmission rates.
Effect of revealing authors’ conflicts of interests in peer review: Randomized controlled trial
Leslie John et al.
British Medical Journal, November 2019
Setting: Manuscript review process at the Annals of Emergency Medicine.
Participants: Reviewers (n=838) who reviewed manuscripts submitted between 2 June 2014 and 23 January 2018 inclusive (n=1480 manuscripts).
Intervention: Reviewers were randomized to either receive (treatment) or not receive (control) authors’ full International Committee of Medical Journal Editors format conflict of interest disclosures before reviewing manuscripts. Reviewers rated the manuscripts as usual on eight quality ratings and were then surveyed to obtain “counterfactual scores” - that is, the scores they believed they would have given had they been assigned to the opposite arm - as well as attitudes toward conflicts of interest.
Results: Providing authors’ conflict of interest disclosures did not affect reviewers’ mean ratings of manuscript quality (Mcontrol=2.70 (SD 1.11) out of 5; Mtreatment=2.74 (1.13) out of 5; mean difference 0.04, 95% confidence interval -0.05 to 0.14), even for manuscripts with disclosed conflicts (Mcontrol= 2.85 (1.12) out of 5; Mtreatment=2.96 (1.16) out of 5; mean difference 0.11, -0.05 to 0.26). Similarly, no effect of the treatment was seen on any of the other seven quality ratings that the reviewers assigned. Reviewers acknowledged conflicts of interest as an important matter and believed that they could correct for them when they were disclosed. However, their counterfactual scores did not differ from actual scores (Mactual=2.69; Mcounterfactual=2.67; difference in means 0.02, 0.01 to 0.02). When conflicts were reported, a comparison of different source types (for example, government, for-profit corporation) found no difference in effect.
The Impact of Health Insurance on Stockholding: A Regression Discontinuity Approach
Dimitris Christelis, Dimitris Georgarakos & Anna Sanz-de-Galdeano
Journal of Health Economics, forthcoming
Economic theory predicts that a reduction in background risk should induce financial risk-taking, particularly for individuals with low stock market participation costs. Hence, health insurance coverage could affect financial risk-taking by offsetting health-related background risk. We use a regression discontinuity design to examine whether Medicare eligibility at age 65 increases stockholding in the US and find that it does so for those with college education, but not for their less-educated counterparts who face higher stock market participation costs. Our results are unlikely due to the reduction of medical expenses associated with Medicare coverage because the latter does not affect bondholding.