Pricing Health
Medical bill shock and imperfect moral hazard
David Anderson, Alex Hoagland & Ed Zhu
Journal of Public Economics, August 2024
Abstract:
Consumers are sensitive to medical prices when consuming care, but delays in price information may distort moral hazard. We study how medical bills affect household spillover spending following utilization of shoppable services, leveraging variation in insurer claim processing times. Households increase spending by 22% after a scheduled service, but then reduce spending by 11% after the bill arrives. Observed bill effects are consistent with resolving price uncertainty; bill effects are strongest when pricing information is particularly salient. A model of demand for healthcare with delayed pricing information suggests households misperceive pricing signals prior to bills, and that correcting these perceptions reduce average (median) spending by 16% (7%) annually.
The Effects of Wealth on Health Care Spending: Evidence from the Housing Market
Michael Lovenheim & Jun Hyun Yun
NBER Working Paper, July 2024
Abstract:
The U.S. healthcare system requires substantial out-of-pocket payments by most consumers, which can prevent some from receiving needed medical services. Recent policy proposals seek to address this problem by increasing government health care spending in order to reduce out-of-pocket costs. The social value of these policies rests in part on the extent to which consumers face credit constraints in financing medical spending. We present a novel analysis of whether elderly households face such credit constraints by estimating the effects of wealth variation from home price changes on out-of-pocket medical expenditures. Using data from the Health and Retirement Study and various measures of home price changes, we find no evidence that housing wealth impacts out-of-pocket medical spending. The estimates are universally small and precise, allowing us to rule out even modest-sized effects. Effects are zero across the expenditure distribution, for specific categories of expenditure, and for different types of consumers split by health insurance status and SES. Our results suggest that further subsidizing health care for elderly homeowners, the majority of older Americans, would increase moral hazard costs without increasing access to needed care.
Associations between the Affordable Care Act's Medicaid expansion and youth violent offense charges and adjudications from 2008 to 2018
Elizabeth Letourneau et al.
Psychology, Public Policy, and Law, August 2024, Pages 363-372
Abstract:
We examined whether Medicaid expansion, a U.S. policy expanding Medicaid eligibility to more low-income adults, is associated with reductions in several types of youth violence, including robbery, assault, and sexual offending. Analyses were informed by two sources of data including juvenile charge and adjudication data from five states and crime report data from the national Uniform Crime Reporting (UCR) program. We limited analyses to cases involving children and youth ages 10-17. We applied a two-way fixed effects difference-in-differences model to compare trends in outcomes within states before and after Medicaid expansion was implemented in 2014 and between states that did and did not expand Medicaid. Analyses informed by the state-level juvenile justice data indicated that Medicaid expansion was associated with significant decreases in rates of first-time robbery, 22%, 95% confidence interval (CI) = [1, 38], and assault charges (19%, 95% CI = [0, 34]), and with first-time robbery (24%, 95% CI = [3, 41]) and assault adjudications (19%, 95% CI = [1, 34]). There was no policy association with sexual offending. Analyses informed by Uniform Crime Reporting data did not indicate an association between Medicaid expansion and any type of violent offense reports. We cautiously concluded that Medicaid expansion may be associated with reductions in youth robbery and assault, possibly as a result of an antipoverty pathway.
Seeking efficiency or price gouging? Evidence from pharmaceutical mergers
Mosab Hammoudeh & Amrita Nain
Journal of Corporate Finance, August 2024
Abstract:
We examine the impact of mergers on drug prices and document significant differences between the post-merger pricing strategies of highly innovative pharmaceutical firms and other firms. While the former raise prices of overlapping drugs, especially brand name drugs that tend to be first-in-class and patented, we find pervasive evidence of price reductions by generic manufacturers. Our evidence suggests that the price reductions are due to cost cuts realized by less innovative firms in overlapping product spaces. We also show that less innovative acquirers cut R&D and shift product development from high-novelty products to cheaper, less-risky products.
The health risk of social disadvantage is transplantable into a new host
Lucie Turcotte et al.
Proceedings of the National Academy of Sciences, 23 July 2024
Abstract:
Low socioeconomic status (SES) is a risk factor for mortality and immune dysfunction across a wide range of diseases, including cancer. However, cancer is distinct in the use of allogeneic hematopoietic cell transplantation (HCT) as a treatment for hematologic malignancies to transfer healthy hematopoietic cells from one person to another. This raises the question of whether social disadvantage of an HCT cell donor, as assessed by low SES, might impact the subsequent health outcomes of the HCT recipient. To evaluate the cellular transplantability of SES-associated health risk, we analyzed the health outcomes of 2,005 HCT recipients who were transplanted for hematologic malignancy at 125 United States transplant centers and tested whether their outcomes differed as a function of their cell donor's SES (controlling for other known HCT-related risk factors). Recipients transplanted with cells from donors in the lowest quartile of SES experienced a 9.7% reduction in overall survival (P = 0.001) and 6.6% increase in treatment-related mortality within 3 y (P = 0.008) compared to those transplanted from donors in the highest SES quartile. These results are consistent with previous research linking socioeconomic disadvantage to altered immune cell function and hematopoiesis, and they reveal an unanticipated persistence of those effects after cells are transferred into a new host environment. These SES-related disparities in health outcomes underscore the need to map the biological mechanisms involved in the social determinants of health and develop interventions to block those effects and enhance the health of both HCT donors and recipients.
Incentives and Habit Formation in Health Screenings: Evidence from the Illinois Workplace Wellness Study
Damon Jones, David Molitor & Julian Reif
NBER Working Paper, July 2024
Abstract:
We study habit formation in annual biometric health screenings using a field experiment that randomly assigned financial incentives to 4,799 employees over three years. Completing the first screening raised subsequent screenings by 32.4-36.0 percentage points (84%-90%) annually. Habit formation was similar whether employees were offered screenings as part of a comprehensive wellness program or just screenings alone, suggesting such habits can develop without frequent interactions. We rule out inattention as an explanation, using a subsample assigned more salient incentives. The long-run effect stems from the initial decision to participate, indicating a habit formation process with a one-shot mechanism.