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To equalize differences in health plan premiums due to differences in risk pools, the German legislature introduced a simple Risk Adjustment Scheme (RAS) based on age, gender and disability status in 1994. In addition, effective 1996, consumers gained the freedom to choose among hundreds of existing health plans, across employers and state-borders. This paper (a) estimates RAS pass-through rates on premiums, financial reserves, and expenditures and assesses the overall RAS impact on market price dispersion. Moreover, it (b) characterizes health plan switchers and investigates their annual and cumulative switching rates over time. Our main findings are based on representative enrollee panel data linked to administrative RAS and health plan data. We show that sickness funds with bad risk pools and high pre-RAS premiums lowered their total premiums by 42 cents per additional euro allocated by the RAS. Consequently, post-RAS, health plan prices converged but not fully. Because switchers are more likely to be white collar, young and healthy, the new consumer choice resulted in more risk segregation and the amount of money redistributed by the RAS increased over time. [ABSTRACT FROM AUTHOR]

Medicare beneficiaries are eligible for health insurance through the public option of traditional Medicare (TM) or may join a private Medicare Advantage (MA) plan. Both are highly subsidized but in different ways. Medicare pays for most of costs directly in TM, and subsidizes MA plans based on a "benchmark" for each beneficiary choosing a private plan. The level of this benchmark is arguably the most important policy decision Medicare makes about the MA program. Many analysts recommend equalizing Medicare's subsidy across the options - referred to in policy circles as a "level playing field." This paper studies the normative question of how to set the level of the benchmark, applying the versatile model developed by Einav and Finkelstein (EF) to Medicare. The EF framework implies unequal subsidies to counteract risk selection across plan types. We also study other reasons to tilt the field: the relative efficiency of MA vs. TM, market power of MA plans, and institutional features of the way Medicare determines subsidies and premiums. After review of the empirical and policy literature, we conclude that in areas where the MA market is competitive, the benchmark should be set below average costs in TM, but in areas characterized by imperfect competition in MA, it should be raised in order to offset output (enrollment) restrictions by plans with market power. We also recommend specific modifications of Medicare rules to make demand for MA more price elastic. [ABSTRACT FROM AUTHOR]

There is widespread agreement that the US healthcare system wastes as much as 5% of GDP, yet much less agreement on the source of the waste. This paper uses the effectively random assignment of patients to ambulance companies to generate comparisons across similar patients treated at different hospitals. We find that assignment to hospitals whose patients receive large amounts of care over the three months following a health emergency have only modestly better survival outcomes compared to hospitals whose patients receive less. Outcomes are related to different forms of spending. Patients assigned to hospitals with high levels of inpatient spending are more likely to survive to one year, while high levels of outpatient spending result in lower survival. In particular, we discovered that downstream spending at skilled nursing facilities (SNF) is a strong predictor of mortality. Our results highlight SNF admissions as a quality measure to complement the commonly used measure of hospital readmissions and suggest that in the search for waste in the US healthcare, post-acute SNF care is a prime candidate. [ABSTRACT FROM AUTHOR]

A primary purpose of health insurance is to protect families from medical expenditure risk. Despite this goal and despite the fact that research has found that Medicaid can crowd out private coverage, little is known about the effect of Medicaid on families' spending patterns. This paper implements a simulated instrumental variables strategy with data from the Consumer Expenditure Survey to estimate the effect of an additional family member becoming eligible for Medicaid on family-level health insurance coverage and spending. The results indicate that an additional family member becoming eligible for Medicaid increases the number of people in the family with Medicaid coverage by about 0.135-0.142 and decreases the likelihood that a family has any medical spending in a quarter by 2.7 percentage points. As previous research often finds with different data sets, I find evidence that Medicaid expansions crowd out some private coverage. Unlike most other data sets, the Consumer Expenditure Survey allows for considering the financial implications of crowd-out. The results indicate that families that transition from private coverage to Medicaid are able to spend significantly less on health insurance expenses, meaning Medicaid expansions can be welfare improving for families even when crowd-out occurs. [ABSTRACT FROM AUTHOR]

This paper provides an analysis of the role of prices in determining food purchases and nutrition using very detailed transaction-level observations for a large, nationally-representative sample of US consumers over the period 2002-2007. Using product-specific nutritional information, we develop a new method of partitioning the product space into relevant nutritional clusters that define a set of nutritionally-bundled goods, which parsimoniously characterize consumer choice sets. We then estimate a large utility-derived demand system over this joint product-nutrient space that allows us to calculate price and expenditure elasticities. Using our structural demand estimates, we simulate the role of product taxes on soda, sugar-sweetened beverages, packaged meals, and snacks, and nutrient taxes on fat, salt, and sugar. We find that a 20% nutrient tax has a significantly larger impact on nutrition than an equivalent product tax, due to the fact that these are broader-based taxes. However, the costs of these taxes in terms of consumer utility are only about 70 cents per household per day. A sugar tax in particular is a powerful tool to induce healthier nutritive bundles among consumers. [ABSTRACT FROM AUTHOR]

This paper estimates the effect of US public health insurance programs for children on health. Previous work in this area has typically focused on the relationship between current program eligibility and current health. But because health is a stock variable which reflects the cumulative influence of health inputs, it would be preferable to estimate the impact of total program eligibility during childhood on longer-term health outcomes. I provide such estimates by using longitudinal data to construct Medicaid and CHIP eligibility measures that are observed from birth through age 18 and estimating the effect of cumulative program exposure on a variety of health outcomes observed in early adulthood. To account for the endogeneity of program eligibility, I exploit variation in Medicaid and CHIP generosity across states and over time for children of different ages. I find that an additional year of public health insurance eligibility during childhood improves a summary index of adult health by.079 standard deviations, and substantially reduces health limitations, chronic conditions and asthma prevalence while improving self-rated health. [ABSTRACT FROM AUTHOR]

Policymakers are increasingly interested in reducing healthcare costs and inefficiencies through innovative payment strategies. These strategies may have heterogeneous impacts across geographic areas, potentially reducing or exacerbating geographic variation in healthcare spending. In this paper, we exploit a major payment reform for home health care to examine whether reductions in reimbursement lead to differential changes in treatment intensity and provider costs depending on the level of competition in a market. Using Medicare claims, we find that while providers in more competitive markets had higher average costs in the pre-reform period, these markets experienced larger proportional reductions in treatment intensity and costs after the reform relative to less competitive markets. This led to a convergence in spending across geographic areas. We find that much of the reduction in provider costs is driven by greater exit of "high-cost" providers in more competitive markets. [ABSTRACT FROM AUTHOR]

This paper explores how provider and insurer market power affect which markets an insurer chooses to operate in. A 2011 policy change required that certain private insurance plans in Medicare form provider networks de novo; in response, insurers cancelled two-thirds of the affected plans. Using detailed data on pre-policy provider and insurer market structure, I compare markets where insurers built networks to those they exited. Overall, insurers in the most concentrated hospital and physician markets were 9 and 13 percentage points more likely to exit, respectively, than those in the least concentrated markets. Conversely, insurers with more market power were less likely to exit than those with less, and an insurer's market power had the largest effect on exit in concentrated hospital markets. These findings suggest that concentrated provider markets contribute to insurer exit and that insurers with less market power have more difficulty surviving in concentrated provider markets. [ABSTRACT FROM AUTHOR]

Medicaid reimburses healthcare providers for services at a lower rate than any other type of insurance coverage. To account for the burden of treating Medicaid patients, providers claim that they must cost-shift by raising the rates of individuals covered by private insurance. Previous investigations of cost-shifting has produced mixed results. In this paper, I exploit a disabled Medicaid expansion where crowd-out was complete to investigate cost-shifting. I find that hospitals reduce the charge rates of the privately insured. Given that Medicaid is expanding in several states under the Affordable Care Act, these results may alleviate cost-shifting concerns of the reform. [ABSTRACT FROM AUTHOR]

This paper studies the lifetime effects of exogenous changes in health insurance coverage (e.g. Medicare, PPACA, termination of employer-provided plans) on the dynamic optimal allocation (consumption, leisure, health expenditures), status (health and wealth), and welfare. We solve, simulate, and structurally estimate a parsimonious life cycle model with endogenous exposure to morbidity and mortality risks, and exogenous health insurance. By varying coverage, we identify the marginal effects of insurance when young and/or when old on allocations, statuses, and welfare. Our results highlight positive effects of insurance on health, wealth and welfare, as well as mid-life substitution away from healthy leisure in favor of more health expenses, caused by peaking wages, and accelerating health issues. [ABSTRACT FROM AUTHOR]

In this paper, I study tiered cost sharing, an innovative incentive structure designed to steer patients toward low-cost providers using large out-of-pocket price differentials. Using administrative data from New Hampshire, where two large insurers utilize tiered pricing programs, I estimate the effects of tiering on choices and spending for common gastrointestinal endoscopic procedures. I first conduct a difference-in-differences analysis using the rollout of one insurer's tiered option. I then develop and estimate a demand model to explicitly compare the tiered design with other common plans. Both the reduced form and structural models imply that the tiered plans are associated with 4.5%-6.3% less in mean per-episode spending than high-deductible and coinsurance-based plans, and do not affect the likelihood of seeking care. I find evidence that the savings is in part due to a salience or "simple pricing" effect whereby patients respond to tiered out-of-pocket prices but not to traditional deductibles or coinsurance rates. [ABSTRACT FROM AUTHOR]

In many markets, including the new U.S. Marketplaces, health insurance plans are paid by risk-adjusted capitation, sometimes combined with reinsurance and other payment mechanisms. This paper proposes a framework for evaluating the de facto insurer incentives embedded in these complex payment systems. We discuss fit, power and balance, each of which addresses a distinct market failure in health insurance. We implement empirical metrics of fit, power, and balance in a study of Marketplace payment systems. Using data similar to that used to develop the Marketplace risk adjustment scheme, we quantify tradeoffs among the three classes of incentives. We show that an essential tradeoff arises between the goals of limiting costs and limiting cream skimming because risk adjustment, which is aimed at discouraging cream-skimming, weakens cost control incentives in practice. A simple reinsurance system scores better on our measures of fit, power and balance than the risk adjustment scheme in use in the Marketplaces. [ABSTRACT FROM AUTHOR]

This paper examines the long-term impact of exposure to Medicaid in early childhood on adult health and economic status. The staggered timing of Medicaid's adoption across the states created meaningful variation in cumulative exposure to Medicaid for birth cohorts that are now in adulthood. Analyses of the Panel Study of Income Dynamics suggest exposure to Medicaid in early childhood (age 0-5) is associated with statistically significant and meaningful improvements in adult health (age 25-54), and this effect is only seen in subgroups targeted by the program. Results for economic outcomes are imprecise and we are unable to come to definitive conclusions. Using separate data we find evidence of two mechanisms that could plausibly link Medicaid's introduction to long-term outcomes: contemporaneous increases in health services utilization for children and reductions in family medical debt. [ABSTRACT FROM AUTHOR]

This paper evaluates the impact of state-level Medicaid reimbursement rates for obstetric care on prenatal care utilization across demographic groups. It also uses these rates as an instrumental variable to assess the importance of prenatal care on birth weight. The analysis is conducted using a unique dataset of Medicaid reimbursement rates and 2001-2010 Vital Statistics Natality data. Conditional on county fixed effects, the study finds a modest, but statistically significant positive relationship between Medicaid reimbursement rates and the number of prenatal visits obtained by pregnant women. Additionally, higher rates are associated with an increase in the probability of obtaining adequate care, as well as a reduction in the incidence of going without any prenatal care. However, the effect of an additional prenatal visit on birth weight is virtually zero for black disadvantaged mothers, while an additional visit yields a substantial increase in birth weight of over 20 g for white disadvantaged mothers. [ABSTRACT FROM AUTHOR]

Job loss in the United States is associated with reductions in income and long-term increases in mortality rates. This paper examines the short-run changes in health, health care access, and health care utilization after job loss that lead to these long-term effects. Using a sample with more than 10,000 individual job losses and longitudinal data on a wide variety of health-related outcomes, we show that job loss results in worse self-reported health, activity limitations, and worse mental health, but is not associated with statistically significant increases in a variety of specific chronic conditions. Among the full sample of workers, we see reductions in insurance coverage, but little evidence of reductions in health care utilization after job loss. Among the subset of displaced workers with chronic conditions and those for whom the lost job was their primary source of insurance we do see reductions in doctor's visits and prescription drug usage. [ABSTRACT FROM AUTHOR]

This paper investigates the effects of a large-scale paid maternity leave program on birth outcomes in the United States. In 1978, states with Temporary Disability Insurance (TDI) programs were required to start providing wage replacement benefits to pregnant women, substantially increasing access to antenatal and postnatal paid leave for working mothers. Using natality data, I find that TDI paid maternity leave reduces the share of low birth weight births by 3.2 percent, and the estimated treatment-on-the-treated effect is over 10 percent. It also decreases the likelihood of early term birth by 6.6 percent. Paid maternity leave has particularly large impacts on the children of unmarried and black mothers. [ABSTRACT FROM AUTHOR]

This paper examines the extensive margin of selection into employer-sponsored health insurance (ESHI) using data from the Medical Expenditures Panel Survey 2001-2010 and 2014-2016 and the National Longitudinal Survey of Youth'97 in 2010. Controlling for a large set of firm and job characteristics, I find that before the implementation of the Affordable Care Act (ACA) in 2014, workers aged 25-40 who declined ESHI and remained privately uninsured had significantly higher health risk than those who enrolled. No correlation between health and insurance take-up is found in the 41-64 age group. These results are partly explained by differences in income and Medicaid crowding out ESHI for high risk workers. The paper sheds light on the characteristics of uninsured workers, their incentives for declining insurance and the interaction between private and public health insurance. The allocation of ESHI remained unchanged after the ACA was introduced due to the provisions' counteracting effects. [ABSTRACT FROM AUTHOR]

The patient-provider relationship is considered a cornerstone to delivering high-value healthcare. However, in Medicaid managed care settings, disruptions to this relationship are disproportionately common. In this paper, I evaluate the impact of a primary provider's exit from a Medicaid managed care plan on adult beneficiary healthcare utilization and outcomes. Using an event study approach, I estimate a 5% decrease in the number of beneficiaries with primary care visits in the year following the exit, with slightly larger effects in terms of percentage points for patients with chronic conditions. Additionally, I observe a nearly 50% increase in the number of beneficiaries with a chronic condition who are hospitalized following a disruption. [ABSTRACT FROM AUTHOR]

This paper explores the economic incentives for medical procedure innovation. Using a proprietary dataset on billing code applications for emerging medical procedures, we highlight two mechanisms that could hinder innovation. First, the administrative hurdle of securing permanent, reimbursable billing codes substantially delays innovation diffusion. We find that Medicare utilization of innovative procedures increases nearly nine-fold after the billing codes are promoted to permanent (reimbursable) from provisional (non-reimbursable). However, only 29 percent of the provisional codes are promoted within the five-year probation period. Second, medical procedures lack intellectual property rights, especially those without patented devices. When appropriability is limited, specialty medical societies lead the applications for billing codes. We indicate that the ad hoc process for securing billing codes for procedure innovations creates uncertainty about both the development process and the allocation and enforceability of property rights. This stands in stark contrast to the more deliberate regulatory oversight for pharmaceutical innovations. [ABSTRACT FROM AUTHOR]

Medicare Part D plans provide prescription drug coverage to 45 million seniors. The recent past has seen significant consolidation amongst plan providers, notable CVS's 2018 acquisition of Aetna and Cigna's 2018 acquisition of Express Scripts. In this paper, we analyze the effect of consolidation of standalone Part D plan providers on premiums using plausibly exogenous variation in concentration induced by the 2011 merger between CVS and Universal American. We find that the increase in concentration for standalone Medicare Part D plans that resulted from this merger led to higher average premiums, a total of nearly $170 million per year. We find further that, consistent with the assumptions behind standard antitrust practice, the effects of the increase in concentration were heterogeneous: moderately (or more) concentrated markets that saw a meaningful increase in concentration saw significant increases in premiums, while premiums in other markets did not change significantly. [ABSTRACT FROM AUTHOR]

Low-income children are less likely to receive recommended health services than their high-income counterparts. This paper examines whether the design of parental Medicaid benefit packages could serve as a mechanism for reducing income-based disparities in unmet health care needs, considering dental benefits as a case study. Leveraging state-level changes to adult dental benefits over time, I find that coverage is associated with increases of 14 and 5 percentage points, respectively, in the likelihood of a recent dental visit among parents and children directly exposed to the policy. Child effects appear to be concentrated among younger children under age 12. [ABSTRACT FROM AUTHOR]

This paper empirically investigates the long-run effects of major health improvements on income growth in the United States. To isolate exogenous changes in health, the econometric model uses quasi-experimental variation in cardiovascular disease mortality across states over time. Based on data for the white population, the results show that there is a causal link between health and income per person, and they provide novel evidence that health dynamics shape life-cycle incomes. Life-cycle income profiles slope more strongly at the beginning and at the end of work life in 2000 than in 1960, indicating that age becomes a more prominent determinant of income dynamics over this period. The channels for this transformation include better health, higher educational attainment, and changing labor supply. [ABSTRACT FROM AUTHOR]

This paper studies the effects of the 2012 Deferred Action for Childhood Arrivals (DACA) initiative on health insurance coverage, access to care, health care use, and health outcomes. We exploit a difference-in-differences setup that relies on the discontinuities in the program eligibility criteria. We find that DACA increased insurance coverage. In states that granted access to Medicaid, the increase was driven by an increase in public insurance take-up. Where public coverage was not available, DACA eligibility increased individually purchased insurance. Despite the increase in insurance coverage, we find small or non-significant increases in health care use. There is some evidence that DACA increased demand for mental health services. After 2012, DACA-eligible individuals were also more likely to report a usual place of care and less likely to delay care because of financial restrictions. Finally, we find some evidence that DACA improved self-reported health and reduced depression symptoms, indicators of stress and anxiety, and hypertension. These improvements are concentrated among individuals with income below the federal poverty level. [ABSTRACT FROM AUTHOR]

This paper provides evidence that daily fluctuations in the stock market have important - and hitherto neglected - spillover effects on fatal car accidents. Using the universe of fatal car accidents in the United States from 1990 to 2015, we find that a one standard deviation reduction in daily stock market returns is associated with a 0.6% increase in fatal car accidents that happen after the stock market opening. A battery of falsification tests supports a causal interpretation of this finding. Our results are consistent with immediate emotions stirred by a negative stock market performance influencing the number of fatal accidents, in particular among inexperienced investors. [ABSTRACT FROM AUTHOR]

Generic drugs are sold at a fraction of the original brand price. Yet, generic entry typically produces a drop in the quantity market share of the molecule losing exclusivity. This effect is economically and statistically significant for a large dataset covering hundreds of prescription drugs sold in the US during the period 1994Q1-2003Q4. This paper proposes the first systematic analysis of what appears to be a market anomaly. We propose a model to characterize the market equilibrium before and after generic entry. We identify precise conditions under which entry reduces the quantity market share of the molecule. Intriguingly, this is more likely to occur when the remaining patent-protected molecules feature low horizontal differentiation. We test this and other theoretical predictions of the model and find they are validated empirically. [ABSTRACT FROM AUTHOR]