Treatment effects

Kevin Lewis

August 28, 2017

Issue Advertising and Legislative Voting on the Affordable Care Act
Molly Reynolds & Richard Hall
Political Research Quarterly, forthcoming

During the congressional fight over the Affordable Care Act (ACA), interest groups spent record sums on television issue advertising in targeted efforts to influence members of Congress, but did the money make any difference? We use the literatures on outside lobbying and legislative behavior to develop two hypotheses about issue advertising's effects on members' voting decisions. We test the hypotheses using population-weighted, station-level advertising data mapped into congressional districts. We find negligible evidence that issue advertising had a causal effect on either House committee or floor votes on the ACA, even applying forgiving statistical standards. Neither do we find evidence when we ignore the endogeneity bias that should inflate advertising's effects, employ alternative measures and specifications, or limit the analysis to legislators for whom the probability of vote change was highest. The results justify skepticism that the millions of advertising dollars spent on the ACA had a net effect on members' voting decisions. In conclusion, we consider several reasons why our hypotheses are not borne out and suggest several avenues for future research.

Subsidizing Health Insurance for Low-Income Adults: Evidence from Massachusetts
Amy Finkelstein, Nathaniel Hendren & Mark Shepard
NBER Working Paper, August 2017

How much are low-income individuals willing to pay for health insurance, and what are the implications for insurance markets? Using administrative data from Massachusetts' subsidized insurance exchange, we exploit discontinuities in the subsidy schedule to estimate willingness to pay and costs of insurance among low-income adults. As subsidies decline, insurance take-up falls rapidly, dropping about 25% for each $40 increase in monthly enrollee premiums. Marginal enrollees tend to be lower-cost, consistent with adverse selection into insurance. But across the entire distribution we can observe - approximately the bottom 70% of the willingness to pay distribution - enrollee willingness to pay is always less than half of own expected costs. As a result, we estimate that take-up will be highly incomplete even with generous subsidies: if enrollee premiums were 25% of insurers' average costs, at most half of potential enrollees would buy insurance; even premiums subsidized to 10% of average costs would still leave at least 20% uninsured. We suggest an important role for uncompensated care for the uninsured in explaining these findings and explore normative implications.

Americans Support Price Shopping For Health Care, But Few Actually Seek Out Price Information
Ateev Mehrotra et al.
Health Affairs, August 2017, Pages 1392-1400

The growing awareness of the wide variation in health care prices, increased availability of price data, and increased patient cost sharing are expected to drive patients to shop for lower-cost medical services. We conducted a nationally representative survey of 2,996 nonelderly US adults who had received medical care in the previous twelve months to assess how frequently patients are price shopping for care and the barriers they face in doing so. Only 13 percent of respondents who had some out-of-pocket spending in their last health care encounter had sought information about their expected spending before receiving care, and just 3 percent had compared costs across providers before receiving care. The low rates of price shopping do not appear to be driven by opposition to the idea: The majority of respondents believed that price shopping for care is important and did not believe that higher-cost providers were of higher quality. Common barriers to shopping included difficulty obtaining price information and a desire not to disrupt existing provider relationships.

Firm Investment in Human Health Capital
Sara Holland
Journal of Corporate Finance, forthcoming

In 2005, U.S. employers spent more than $500 billion on health insurance. I argue that firms invest in worker health to mitigate the depreciation in human capital that occurs when workers get sick, which increases the productivity of human and physical capital. Using firm-level health insurance data, I find firms that have higher labor productivity, spend more on research and development, and are larger invest more in health capital. Further, health capital investment positively affects firm value and overall productivity. To identify these effects, I instrument for insurance with state mandates and the number of persons covered by insurance contracts.

Self-rated health, generalized trust, and the Affordable Care Act: A US panel study, 2006-2014
Jan Mewes & Giuseppe Nicola Giordano
Social Science & Medicine, forthcoming

Previous research shows that generalized trust, the belief that most people can be trusted, is conducive to people's health. However, only recently have longitudinal studies suggested an additional reciprocal pathway from health back to trust. Drawing on a diverse body of literature that shows how egalitarian social policy contributes to the promotion of generalized trust, we hypothesize that this other 'reverse' pathway could be sensitive to health insurance context. Drawing on nationally representative US panel data from the General Social Survey, we examine whether the Affordable Care Act of 2010 could have had influence on the deteriorating impact of worsening self-rated health (SRH) on generalized trust. Firstly, using two-wave panel data (2008-2010, N = 1403) and employing random effects regression models, we show that a lack of health insurance coverage negatively determines generalized trust in the United States. However, this association is attenuated when additionally controlling for (perceived) income inequality. Secondly, utilizing data from two separate three-wave panel studies from the US General Social Survey (2006-10; N = 1652; 2010-2014; N = 1187), we employ fixed-effects linear regression analyses to control for unobserved heterogeneity from time-invariant factors. We demonstrate that worsening SRH was a stronger predictor for a decrease in generalized trust prior (2006-2010) to the implementation of the Affordable Care Act. Further, the negative effect of fair/poor SRH seen in the 2006-2010 data becomes attenuated in the 2010-2014 panel data. We thus find evidence for a substantial weakening of the previously established negative impact of decreasing SRH on generalized trust, coinciding with the most significant US healthcare reforms in decades. Social policy and healthcare policy implications are discussed.

The Affordable Care Act and Ambulance Response Times
Charles Courtemanche et al.
NBER Working Paper, August 2017

This study contributes to the literature on supply-side adjustments to insurance expansions by examining the effect of the Affordable Care Act (ACA) on ambulance response times. Exploiting temporal and geographic variation in the implementation of the ACA as well as pre-treatment differences in uninsured rates, we estimate that the expansions of private and Medicaid coverage under the ACA combined to slow ambulance response times by an average of 19%. We conclude that, through extending coverage to individuals who, in its absence, would not have availed themselves of emergency medical services, the ACA added strain to emergency response systems.

Health Insurance and the Boomerang Generation: Did the 2010 ACA Dependent Care Provision affect Geographic Mobility and Living Arrangements among Young Adults?
Pinka Chatterji, Xiangshi Liu & Baris Yoruk
NBER Working Paper, August 2017

We test whether the ACA dependent care provision is associated with young adults' propensity to live with/near parents and to receive food assistance. Data come from the 2008 Survey of Income and Program Participation. Findings indicate that the provision is associated with a 3.0 percentage point increase in young adults' living with parents during the period in which the ACA had been passed but the provision was not effective, and a 6.0 percentage point increase during the time between the provision becoming effective and the end of 2013. In some specifications, the provision is associated with reduced use of food assistance.

The Effects of State Medicaid Expansions for Working-Age Adults on Senior Medicare Beneficiaries
Melissa McInerney, Jennifer Mellor & Lindsay Sabik
American Economic Journal: Economic Policy, August 2017, Pages 408-438

Do Medicaid expansions to working-age adults affect healthcare spending and utilization among older Medicare beneficiaries? Although economic theory provides conflicting predictions about the presence and direction of such spillover effects, it does identify circumstances when spillovers can reduce Medicare spending. Using data on Medicaid expansions during the 2000s and microdata from the Medicare Current Beneficiary Survey, we find that a 1 percentage point rise in the share of working-age adults eligible for Medicaid has modest effects on the average Medicare beneficiary's spending, but reduces average spending by $477 among dual eligibles. Importantly, we find no evidence of adverse health effects.

State Medicaid Expansion and Citizens' Quality of Life
Patrick Flavin
Social Science Quarterly, forthcoming

Methods: I evaluate changes from 2010 to 2014 in low-income citizens' subjective well-being (SWB) using Gallup-Healthways survey data and a difference-in-differences estimation strategy.

Results: Average levels of SWB increased among low-income citizens in states that expanded Medicaid eligibility compared to states that did not. In a series of placebo tests, I also demonstrate that the expansion had no effect on the SWB of middle- or high-income citizens who are unlikely to directly benefit from more generous Medicaid eligibility requirements.

Medicaid Expansion And State Trends In Supplemental Security Income Program Participation
Aparna Soni et al.
Health Affairs, August 2017, Pages 1485-1488

The Affordable Care Act made low-income nonelderly adults eligible for Medicaid in 2014 without requiring them to obtain disabled status through the Supplemental Security Income (SSI) program. In states that participated in the Medicaid expansion, we found that SSI participation decreased by about 3 percent after 2014.

The Landscape of US Generic Prescription Drug Markets, 2004-2016
Ernst Berndt, Rena Conti & Stephen Murphy
NBER Working Paper, July 2017

Since the 1984 passage of the Waxman-Hatch Act, generic prescription drugs have become central to disease treatment and generic drug entry and price competition has been vigorous in the U.S. Nonetheless, recent policy concern has focused on potential supply inadequacy and price increases among selected generic drugs. Details regarding the supply of generic drugs throughout the product life cycle are surprisingly unstudied. Here, we examine manufacturer entry, exit, the extent of competition and the relationship between supply structure and inflation adjusted prices among generic drugs. Our empirical approach is descriptive and reduced form, following recent innovations on the older structure-conduct-performance tradition. We employ quarterly national data on quantities, wholesale dollar sales and manufacturers from QuintilesIMS National Sales Perspective data, 2004Q4-2016Q3. Defining a market as the molecule-dosage-form, we observe that median sizes of drug markets are predominantly small, with annual inflation adjusted sales revenues of less than $10 million but increasing over time. The median number of manufacturers in each market is about two, the mean about four. We find evidence to suggest decreasing numbers of suppliers over our study period, particularly following implementation of the Affordable Care Act in 2010 and the Generic Drug User Fee Amendments of 2012, attributable both to more exit and less entry. Approximately 40 percent of markets are supplied by one manufacturer; the share of markets supplied by one or two manufacturers is observed to increase over time and is more likely among non-oral drugs and those belonging to selected therapeutic classes. We find evidence to suggest prices of generic drugs are statistically significantly increasing over time, particularly following the implementation of the 2010 Affordable Care Act and the 2012 Generic Drug User Fee Amendments. Price increases are positively correlated with reduced manufacturer counts and alternative measures of increased supplier concentration, holding all else constant. Our results suggest the market for generic drugs is largely comprised of small revenue products the supply of which has tended towards duopoly or monopoly in recent years. Therefore, it is surprising generic drug prices have not been observed to be higher and potentially risen more over our study period. This issue merits further study; we suggest several testable hypotheses based in economic theory.

The Generic Drug User Fee Amendments: An Economic Perspective
Ernst Berndt, Rena Conti & Stephen Murphy
NBER Working Paper, August 2017

Regulation can influence the structure, conduct and performance of consumer product markets and the structure of product markets can influence regulation. Since the vast majority of prescription drugs consumed by Americans are generic, the structure of the U.S. generic prescription drug market is of wide interest. The supply of prescription drugs in the U.S. is also heavily regulated by the U.S. Food and Drug Administration (FDA). We describe events leading up to the passage and implementation of the Generic Drug User Fee Amendments in 2012 (GDUFA I), and compare its FDA commitments, provisions, goals and fee structure to that of the 1992 Prescription Drug User Fee Act (PDUFA) for branded drugs. Although GDUFA I expires September 30, 2017, reauthorization for GDUFA II is currently underway and is likely to shift the user fee structure away from annual facility fees to annual program fees. We explain how the fee structure of GDUFA I, and that being considered for GDUFA II, erects barriers to entry and creates scale and scope economies for incumbent manufacturers of generic drugs. Furthermore, in order to implement fees under GDUFA I, FDA required the submission of self-reported data on generic manufacturing practices including domestic and foreign active pharmaceutical ingredient (API) and finished dosage form (FDF) facilities. These data provide an unprecedented window into the recent evolution of generic drug manufacturing markets. Our analyses of these data suggest that generic drug manufacturing in 2017 is quite concentrated: a very large portion of ANDA holders have small portfolios consisting of less than five ANDAs, while a small number of very large ANDA holders have portfolios consisting of hundreds or even thousands of ANDAs. The number of API and FDF facilities have each declined by approximately 10-11% between 2013 and 2017. Furthermore, in 2017, generic manufacturing is largely foreign and has become increasingly so since 2013. We discuss the implications of the current structure of the U.S. generic prescription drug market for GDUFA II ratification and implementation.

Offering A Price Transparency Tool Did Not Reduce Overall Spending Among California Public Employees And Retirees
Sunita Desai et al.
Health Affairs, August 2017, Pages 1401-1407

Insurers, employers, and states increasingly encourage price transparency so that patients can compare health care prices across providers. However, the evidence on whether price transparency tools encourage patients to receive lower-cost care and reduce overall spending remains limited and mixed. We examined the experience of a large insured population that was offered a price transparency tool, focusing on a set of "shoppable" services (lab tests, office visits, and advanced imaging services). Overall, offering the tool was not associated with lower shoppable services spending. Only 12 percent of employees who were offered the tool used it in the first fifteen months after it was introduced, and use of the tool was not associated with lower prices for lab tests or office visits. The average price paid for imaging services preceded by a price search was 14 percent lower than that paid for imaging services not preceded by a price search. However, only 1 percent of those who received advanced imaging conducted a price search. Simply offering a price transparency tool is not sufficient to meaningfully decrease health care prices or spending.

Hospital systems and bargaining power: Evidence from out-of-market acquisitions
Matthew Lewis & Kevin Pflum
RAND Journal of Economics, Fall 2017, Pages 579-610

Analyses of hospital mergers typically focus on acquisitions that alter local market concentration. However, as prices are negotiated between hospital systems and insurers, this focus may overlook the impact of cross-market interdependence in the bargaining outcome. Using data on out-of-market acquisitions occurring across the United States from 2000-2010, we investigate the impact of cross-market dependencies on negotiated prices. We find that prices at hospitals acquired by out-of-market systems increase by about 17% more than unacquired, stand-alone hospitals and confirm that out-of-market mergers result in a relaxation of competition, the prices of nearby competitors to acquired hospitals increase by around 8%.

The Impact of the Affordable Care Act's Dependent Coverage Mandate on Use of Dental Treatments and Preventive Services
Dan Shane & George Wehby
Medical Care, September 2017, Pages 841-847

Objectives: To evaluate whether increased private dental insurance due to the spillover effect of the ACA-dependent coverage health insurance mandate affected utilization of dental services among a group of affected young adults.

Data: 2006-2013 Medical Expenditure Panel Surveys.

Study Design: We used a difference-in-difference regression approach comparing changes in dental care utilization for 25-year olds affected by the policy to unaffected 27-year olds. We evaluate effects on dental treatments and preventive services

Results: Compared to 27-year olds, 25-year olds were 8 percentage points more likely to have private dental coverage in the 3 years following the mandate. We do not find compelling evidence that young adults increased their use of preventive dental services in response to gaining insurance. We do find a nearly 5 percentage point increase in the likelihood of dental treatments among 25-year olds following the mandate, an effect that appears concentrated among women.

The Impact of Primary Care Provider Availability on Patient Care
Hessam Bavafa et al.
University of Pennsylvania Working Paper, June 2017

Emergency room (ER) overcrowding and overuse are significant problems in the United States, and prior studies have shown that a large portion of ER patients could have been treated by a primary care provider. If this is the case, why do patients spend hours waiting in the ER for a problem that their primary care physician could have addressed? One common answer is that primary care providers are too busy to provide timely appointments, making the ER a more attractive alternative for their patients. In this paper, we use a large dataset from the Veterans Health Administration to shed light on this claim. Our empirical analyses reveal that decreased provider availability leads to increases in non-emergent ER visits (care not needed within 12 hours), but we find no evidence linking provider availability to emergent, primary care treatable ER visits. Overall, changes to provider availability can account for up to 2.4% of all ER visits. Decreased provider availability also leads to delays in routine care, as measured by the likelihood of a 30-day follow-up appointment after an ER visit.

HITECH Act Drove Large Gains In Hospital Electronic Health Record Adoption
Julia Adler-Milstein & Ashish Jha
Health Affairs, August 2017, Pages 1416-1422

The extent to which recent large increases in hospitals' adoption of electronic health record (EHR) systems can be attributed to the Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009 is uncertain and debated. Because only short-term acute care hospitals were eligible for the act's meaningful-use incentive program, we used national hospital data to examine the differential effect of HITECH on EHR adoption among eligible and ineligible hospitals in the periods before (2008-10) and after (2011-15) implementation of the program. We found that annual increases in EHR adoption rates among eligible hospitals went from 3.2 percent in the pre period to 14.2 percent in the post period. Ineligible hospitals experienced much smaller annual increases of 0.1 percent in the pre period and 3.3 percent in the post period, a significant difference-in-differences of 7.9 percentage points. Our results support the argument that recent gains in EHR adoption can be attributed specifically to HITECH, which suggests that the act could serve as a model for ways to drive the adoption of other valuable technologies.

The impact of tailored intervention services on charges and mortality for adult super-utilizers
Josh Durfee et al.
Healthcare, forthcoming

Background: Interventions designed to improve care and reduce costs for patients with the highest rates of hospital utilization (super-utilizers) continue to proliferate, despite conflicting evidence of cost savings.

Methods: We evaluated a practice transformation intervention that implemented team-based care and risk-stratification to match specific primary care resources based on need. This included an intensive outpatient clinic for super-utilizers. We used multivariate regression and a difference-in-differences approach to compare changes in mortality, utilization, and charges between the intervention group and a historical control. Sensitivity analyses tested the robustness of findings and revealed the inherent challenges associated with quasi-experimental designs.

Results: Observed charges for the intervention group were significantly lower than expected charges as derived by the trend of the historical control (p<0.04) resulting in total charge avoidance of approximately $26 million. While inpatient admissions were significantly higher (p<0.01), charges associated with total inpatient (p=0.01), intensive-care unit (p<0.05, not robust to sensitivity analyses), and surgery (p<0.01) were significantly lower than expected in the intervention group. One year mortality was significantly less in the intervention group (12.6% vs 11.5%, p<0.01).

Conclusions: The use of tailored services, including a dedicated intensive outpatient clinic, for super-utilizers within a larger primary care practice transformation reduced mortality and provided significant savings, even while total hospitalizations increased. These savings were achieved through a reduction in the intensity of inpatient services. The unexpected finding of a reduction in ICU charges deserves further exploration.

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