Healthy Supply
Who Pays for Rising Health Care Prices? Evidence from Hospital Mergers
Zarek Brot-Goldberg et al.
NBER Working Paper, June 2024
Abstract:
We analyze the economic consequences of rising health care prices in the US. Using exposure to price increases caused by horizontal hospital mergers as an instrument, we show that rising prices raise the cost of labor by increasing employer-sponsored health insurance premiums. A 1% increase in health care prices lowers both payroll and employment at firms outside the health sector by approximately 0.4%. At the county level, a 1% increase in health care prices reduces per capita labor income by 0.27%, increases flows into unemployment by approximately 0.1 percentage points (1%), lowers federal income tax receipts by 0.4%, and increases unemployment insurance payments by 2.5%. The increases in unemployment we observe are concentrated among workers earning between $20,000 and $100,000 annually. Finally, we estimate that a 1% increase in health care prices leads to a 1 per 100,000 population (2.7%) increase in deaths from suicides and overdoses. This implies that approximately 1 in 140 of the individuals who become fully separated from the labor market after health care prices increase die from a suicide or drug overdose.
A randomized controlled trial evaluating the effects of nurse-led triage of 911 calls
Kevin Wilson et al.
Nature Human Behaviour, forthcoming
Abstract:
To better connect non-emergent 911 callers to appropriate care, Washington, DC, routed low-acuity callers to nurses. Nurses could provide non-emergent transportation to a health centre, recommend self-care or return callers to the traditional 911 system. Over about one year, 6,053 callers were randomized (1:1) to receive a business-as-usual response (ncontrol = 3,023) or further triage (ntreatment = 3,030). We report on seven of nine outcomes, which were pre-registered (https://osf.io/xderw). The proportion of calls resulting in an ambulance dispatch dropped from 97% to 56% (β = −1.216 (−1.324, −1.108), P < 0.001), and those resulting in an ambulance transport dropped from 73% to 45% (β = −3.376 (−3.615, −3.137), P < 0.001). Among those callers who were Medicaid beneficiaries, within 24 hours, the proportion of calls resulting in an emergency department visit for issues classified as non-emergent or primary care physician (PCP) treatable dropped from 29.5% to 25.1% (β = −0.230 (−0.391, −0.069), P < 0.001), and the proportion resulting in the caller visiting a PCP rose from 2.5% to 8.2% (β = 1.252 (0.889, 1.615), P < 0.001). Over the longer time span of six months, we failed to detect evidence of impacts on emergency department visits, PCP visits or Medicaid expenditures. From a safety perspective, 13 callers randomized to treatment were eventually diagnosed with a time-sensitive illness, all of whom were quickly triaged to an ambulance response. These short-term effects suggest that nurse-led triage of non-emergent calls can safely connect callers to more appropriate, timely care.
Market Design in Regulated Health Insurance Markets: Risk Adjustment vs. Subsidies
Liran Einav, Amy Finkelstein & Pietro Tebaldi
NBER Working Paper, June 2024
Abstract:
Health insurance is increasingly provided through managed competition, in which subsidies for consumers and risk adjustment for insurers are key market design instruments. We illustrate that subsidies offer two advantages over risk adjustment in markets with adverse selection. They provide greater flexibility in tailoring premiums to heterogeneous buyers, and they produce equilibria with lower markups and greater enrollment. We assess these effects using demand and cost estimates from the California Affordable Care Act marketplace. Holding government spending fixed, we estimate that subsidies can increase enrollment by 16 percentage points (76%) over risk adjustment, while all consumers are weakly better off.
Adverse selection and network design under regulated plan prices: Evidence from Medicaid
Amanda Kreider et al.
Journal of Health Economics, September 2024
Abstract:
Health plans for the poor increasingly limit access to specialty hospitals. We investigate the role of adverse selection in generating this equilibrium among private plans in Medicaid. Studying a network change, we find that covering a top cancer hospital causes severe adverse selection, increasing demand for a plan by 50% among enrollees with cancer versus no impact for others. Medicaid’s fixed insurer payments make offsetting this selection, and the contract distortions it induces, challenging, requiring either infeasibly high payment rates or near-perfect risk adjustment. By contrast, a small explicit bonus for covering the hospital is sufficient to make coverage profitable.
The Impact of Price Transparency in Outpatient Provider Markets
Kayleigh Barnes et al.
NBER Working Paper, June 2024
Abstract:
Medical provider price transparency is often touted as a way to lower health care spending. But the impact of price transparency is theoretically ambiguous: it could lower health care spending via increased consumer price shopping or improved insurer bargaining but could also raise health care prices via improved provider bargaining or provider collusion. We conduct a randomized-controlled trial to examine the impact of a state-wide medical charge transparency tool in outpatient provider markets in New York State. In the experiment, individual providers’ billed charges (list prices) were released randomly at the level of the procedure and three-digit zipcode. We use a comprehensive commercial claims database to assess the impact of this intervention and find that it leads to a small increase in overall billed charges (+0.75%). This effect is concentrated among low-priced providers in markets with low out-of-network spending, suggesting that the transparency tool improves provider pricing information. We find no evidence of quantity effects. Results do not vary consistently across specialty groups, market concentration, frequency of service use, or frequency of website use. These results are consistent with price transparency having a minimal effect on consumer shopping while slightly improving provider information about competitors’ charges.
Turbocharging Profits? Contract Gaming and Revenue Allocation in Healthcare
Atul Gupta, Ambar La Forgia & Adam Sacarny
NBER Working Paper, June 2024
Abstract:
Firms often exploit loopholes in government contracts to boost revenues. The welfare consequences of this behavior depend on how firms use the marginal windfall dollar, yet little evidence exists to guide policymakers. This paper studies how hospitals allocated over $3 billion obtained from gaming a Medicare payment loophole. The average gaming hospital increased both Medicare and total revenue by around 10%, implying large spillovers on other payers. Consistent with theories of organizational behavior, nonprofit hospitals deployed most of the windfall toward operating costs, while for-profits deducted the entire amount off their balance sheet, distributing a substantial portion to executives and shareholders. Accordingly, we detect modest reductions in mortality rates at nonprofits but no changes at for-profits. Our results imply that the consequences of such engineered windfalls vary substantially by hospital ownership.
The impact of Dobbs v. Jackson on medical school applications
Joshua Hess
Economics Letters, August 2024
Abstract:
I examine the relative impact of the Dobbs decision -- which allowed states to restrict abortion access -- and find schools in states with abortion bans saw a 0.65% increase in the 2022 share of women’s applications and a 1.17% increase in the 2023 share, but no measurable changes in the out-of-state share in either year. This is plausibly driven by applicants interested in an OB/GYN specialty.