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Health information technology (IT) adoption, it is argued, will dramatically improve patient care. We study the impact of hospital IT adoption on patient outcomes focusing on the role of patient and organizational heterogeneity. We link detailed hospital discharge data on all Medicare fee-for-service admissions from 2002–2007 to detailed hospital-level IT adoption information. For all IT-sensitive conditions, we find that health IT adoption reduces mortality for the most complex patients but does not affect outcomes for the median patient. Benefits from health IT are primarily experienced by patients whose diagnoses require cross-specialty care coordination and extensive clinical information management.

On June 28, 2012, the Supreme Court of the United States (SCOTUS) upheld most of the provisions of the Patient Protection and Affordable Care Act and the health care provisions of the Health Care and Education Reconciliation Act (P.L. 111-148 and P.L. 111-152; henceforth referred to as the ACA).1 Starting in 2014, individuals without an offer of insurance from their employer and small businesses will be able to buy insurance on state and federal exchanges, with premium subsidies depending on their incomes. Certain employers that do not offer health insurance will be penalized, and individuals will be required to have coverage or pay a penalty. At the same time, however, the Supreme Court ruled that states could opt out of the ACA expansion of Medicaid coverage for all individuals up to age 65 with incomes less than 133 percent of poverty. Under the ACA as enacted, but before the Supreme Court ruling, the Medicaid expansion was mandatory for states that wanted to keep their federal matching funds for any part of the Medicaid program. The Supreme Court's decision immediately raised the prospect that some states might opt out of the Medicaid expansion. The U.S. Congressional Budget Office (CBO 2012) estimated that 6 million people previously covered by the Medicaid expansion in its March 2012 baseline would not be covered; some of these would enroll in exchanges, but the number of uninsured people would rise by 4 million. Our research has two goals. First, we predict how many people will take up private health insurance under provisions of the ACA. Second, we predict Medicaid take-up under several possible patterns for states opting out of the Medicaid expansion. Unlike the CBO, which did not make estimates for specific states but instead utilized average probabilities of opting out, we make predictions for specific states.2 We also predict enrollment in specific types of private plans (e.g., the “metallic” plans offered in health insurance exchanges). We find the ACA will increase coverage substantially in the private health insurance market and Medicaid. However, if states opt out of the Medicaid expansion, this could increase the federal cost of health reform, while reducing the number of newly covered lives. If six states (Florida, Louisiana, Mississippi, Nebraska, South Carolina, and Texas) opt out, the number of uninsured people will increase by 7.9 million with a drop in Medicaid coverage of 4.4 million by 2021, compared with the pre-SCOTUS situation. Our predictions are based on a microsimulation model of health plan choice that we originally developed to predict the effect of the Medicare Modernization Act of 2003 (MMA) on take-up of high-deductible health plans in the individual health insurance market (Feldman et al. 2005; Parente et al. 2005).3 We begin the study with a section that describes the model. This is followed by our simulation of the ACA effects on private health insurance and Medicaid take-up.

The objective of this analysis is to simulate the difference between national and state-specific individual insurance markets on take-up of individual health insurance. This simulation analysis was completed in three steps. First, we reviewed the literature to characterize the state-specific individ ual insurance markets with respect to state regulations and to identify the effect of those regulations on health insurance premiums. Second, we used empirical data to develop premium estimates for the simulation that reflect case-mix as well as state-specific differences in health care markets. Third, we used a revised version of the 2005 Medical Expenditure Panel Survey (MEPS) to complete a set of simulations to identify the impact of three differ ent scenarios for national market development. (National market estimates are based on the simulation model with competition among all 50 states and moderate impact assumptions.) We find evidence of a significant op portunity to reduce the number of uninsured under a proposal to allow the purchase of health insurance across state lines. The best scenario to reduce the uninsured, numerically, is competition among all 50 states with one clear winner. The most pragmatic scenario, with a good impact, is one winner in each regional market.

Objectives To compare pharmaceutical spending and utilization in a consumer driven health plan (CDHP) with a three-tier pharmacy benefit design, and to examine whether the CDHP creates incentives to reduce pharmaceutical spending and utilization for chronically ill patients, generic or brand name drugs, and mail-order drugs.

Objective. To compare medical care costs and utilization in a consumer-driven health plan (CDHP) to other health insurance plans. Study Design. We examine claims and employee demographic data from one large employer that adopted a CDHP in 2001. A quasi-experimental pre–post design is used to assign employees to three cohorts: (1) enrolled in a health maintenance organization (HMO) from 2000 to 2002, (2) enrolled in a preferred provider organization (PPO) from 2000 to 2002, or (3) enrolled in a CDHP in 2001 and 2002, after previously enrolling in either an HMO or PPO in 2000. Using this approach we estimate a difference-in-difference regression model for expenditure and utilization measures to identify the impact of CDHP. Principal Findings. By 2002, the CDHP cohort experienced lower total expenditures than the PPO cohort but higher expenditures than the HMO cohort. Physician visits and pharmaceutical use and costs were lower in the CDHP cohort compared to the other groups. Hospital costs and admission rates for CDHP enrollees, as well as total physician expenditures, were significantly higher than for enrollees in the HMO and PPO plans. Conclusions. An early evaluation of CDHP expenditures and utilization reveals that the new health plan is a viable alternative to existing health plan designs. Enrollees in the CDHP have lower total expenditures than PPO enrollees, but higher utilization of resource-intensive hospital admissions after an initially favorable selection.

“Consumer-driven” health plans (CDHPs) have moved beyond the concept stage and are now available to employees of many large companies. Established insurers, such as Aetna, Humana, Cigna, UnitedHealth Group, and WellPoint are introducing their own CDHPs to compete with products offered by start-up companies such as Definity Health, Luminos, MyHealthBank, and others (Freudenheim 2001). It appears that these products appeal to employers in a period when health insurance premiums are rising at double-digit rates (BNA 2001; Gabel, et al. 2001) and a return to more restrictive forms of managed care seems unpalatable to employees (Galvin and Milstein 2002; Iglehart 2002). A database now exists for assessing the early experience of employers and employees with these plans. Using data from a survey of employees at the University of Minnesota, matched to information from the university's payroll system, we address the question: Who chooses to join a CDHP and, specifically, does this plan attract the healthier employees in a company's risk pool? The research provides important, early information on the impact of CDHPs and the research and policy issues that are likely to arise if they become more commonly available as a health benefit option.

The label “consumer-driven health plan” (CDHP) has been used to describe a wide variety of different health benefit designs that shift more health care costs to consumers at the point of service, on the presumption that it is desirable to give consumers incentives to pay greater attention to the cost and quality consequences of their health care choices (Shaller et al. 2003). Recently, however, the most common use of the term has been in reference to benefit plans with three core features: a personal care account; insurance coverage designed to create a “gap” between the dollars in the account and the level at which a deductible is reached; and various Internet support tools intended to facilitate more extensive, better-informed consumer involvement in health care decisions (Christianson, Parente, and Taylor 2002). These features distinguish CDHPs from other benefit designs, such as tiered hospital networks, that also are intended to provide incentives for consumers to consider cost and quality in selecting providers. Consumer-driven health plans with these core features are offered now by a relatively small number of employers, but they seem to be gaining momentum, with several large national firms recently adding them as benefit options and established insurers expanding their product lines to include CDHPs (Davis 2003a). Consumer-driven health plans generally are not marketed to employers as an immediate “solution” to their rising health care costs, but rather as a constructive employer response to employee demands for more choice, fewer restrictions, and less involvement on the part of employers and health plans in health care decisions. Employer advocates of CDHPs believe the plans have the potential to moderate employer cost increases in the long run, as employees become more involved in their health care decisions, more conscious of prices and better equipped to make price–quality trade-offs (Gabel, Lo Sasso, and Rice 2002). From a broader perspective, some analysts forecast a “consumer revolution” in health care with CDHPs and similar insurance arrangements in the vanguard. They expect this revolution to eventually change traditional relationships between consumers and health care providers resulting in a more efficient, more responsive health care system (Davis 2003c). In contrast, skeptics see CDHPs as simply being vehicles for shifting a greater share of health care costs to consumers, especially consumers with high medical care needs (Swartz 2001/2002), and doubt the ability of a diffuse, consumer-driven market to create change in an increasingly concentrated provider system (Devers et al. 2003). They also point to the complexity of the CDHP benefit design as potentially impeding the ability of enrollees to act as aggressive, informed health care consumers, and they question whether consumers actually want to play this role (Gabel, Lo Sasso, and Rice 2002). Clearly, assumptions about consumers and their behaviors are central to how one views CDHPs and their potential impact on America's health care system. However, at this time, little data are available that relate directly to the experience of enrollees in CDHPs. How satisfied are they with these plans? How do they use the plan features touted by CDHPs, and how satisfied are they with these features? How does the experience of CDHP enrollees vary by individual characteristics? In this article, we begin to address these issues using data collected through a survey of employees at the University of Minnesota. Because our analysis is based on employees from one employed group enrolled in a single CDHP in one health care market at a specific point in time, it should be viewed as a first, limited attempt to shed light on the important consumer issues raised by CDHPs. In the concluding discussion, we suggest directions for future research, based on the results of our analysis.

In 1992, the United States Centers for Medicare and Medicaid Services (CMS) introduced new insurance coverage for two preventive services – influenza vaccinations and mammograms. Economists typically assume transactions occur with perfect information and foresight. As a test of the value of information, we estimate the effect of consumer knowledge of these benefits on their demand. Treating knowledge as endogenous in a two-part model of demand, we find that consumer knowledge has a substantial positive effect on the use of preventive services. Our findings suggest that strategies to educate the insured Medicare population about coverage of preventive services may have substantial social value. Copyright © 2004 John Wiley & Sons, Ltd.