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Journal of Health Economics

Timothy J Layton, Thomas G McGuire, Richard C van Kleef
Risk-adjustment is critical to the functioning of regulated health insurance markets. To date, estimation and evaluation of a risk-adjustment model has been based on statistical rather than economic objective functions. We develop a framework where the objective of risk-adjustment is to minimize the efficiency loss from service-level distortions due to adverse selection, and we use the framework to develop a welfare-grounded method for estimating risk-adjustment weights. We show that when the number of risk adjustor variables exceeds the number of decisions plans make about service allocations, incentives for service-level distortion can always be eliminated via a constrained least-squares regression...
July 23, 2018: Journal of Health Economics
Daria Pelech
This paper explores the relationship between insurer competition and health plan benefit generosity by examining the impact of a regulatory change that caused the cancellation of 40% of the private plans in Medicare. I isolate cancellation's causal effect by using variation induced by insurers canceling all plans nationally. Results show that insurers in markets affected by cancellation reduced the benefit generosity of the plans remaining in the market. In the average market, out-of-pocket costs for a representative beneficiary enrolled in plans not directly affected by the policy increased by $91 annually...
July 9, 2018: Journal of Health Economics
Marc K Chan, Guohua Zeng
We examine the effects of a "per-episode fee limit" that was recently implemented as a cost-control policy in China's health care system. Using hospital administrative data on a rural public health insurance program in China, we find that hospital departments dynamically adjust episode fees in response to the level of stress under fee limits. We also document anomalous cycles in the fees and length of stay of discharged episodes, which are consistent with the dynamically optimizing behavior to comply with the fee limit...
June 30, 2018: Journal of Health Economics
Ian M McCarthy
Mandatory quality disclosure often includes a period over which the quality of new entrants is unreported. This provides the opportunity for forward-looking firms to adjust product characteristics in advance of disclosure. Using comprehensive data on Medicare Advantage (MA) from 2007 to 2015, I exploit the design of the MA Star Rating program to examine the presence of forward-looking behavior among insurers. I find that high-quality insurers reduce prices leading up to quality disclosure, while low-quality insurers increase prices in advance of quality disclosure...
June 30, 2018: Journal of Health Economics
David Granlund, Mats A Bergman
We study the short- and long-term price effects of the number of competing firms, using panel-data on 1303 distinct pharmaceutical markets for 78 months within a reference-price system. We use actual transaction prices in an institutional setting with little scope for non-price competition and where simultaneity problems can be addressed effectively. In the long term, the price of generics is found to decrease by 81% when the number of firms selling generics with the same strength, form and similar package size is increased from 1 to 10...
June 30, 2018: Journal of Health Economics
Jenny Jans, Per Johansson, J Peter Nilsson
Normally, the temperature decreases with altitude, allowing air pollutants to rise and disperse. During inversion episodes, warmer air at higher altitude traps air pollutants at the ground. By merging vertical temperature profile data from NASA with pollution monitors and health care records, we show that inversions increase the PM10 levels by 25% and children's respiratory health problems by 5.5%. Low-income children are particularly affected, and differences in baseline health seem to be a key mediating factor behind the effect of pollution on the SES health gap...
September 2018: Journal of Health Economics
Chad Cotti, Erik Nesson, Nathan Tefft
We use the Nielsen Consumer Panel to investigate the impact of tobacco control policies on purchases of electronic cigarettes (e-cigarettes), cigarettes, and smoking cessation products. We measure product quantity, product type, nicotine content, and liquid volume of e-cigarettes, and product quantity and nicotine content of cigarettes. Higher cigarette excise taxes decrease both cigarette and e-cigarette purchases, suggesting that cigarettes and e-cigarettes are complements, and higher cigarette excise taxes reduce the aggregate amount of nicotine purchased from cigarettes and e-cigarettes...
September 2018: Journal of Health Economics
Adam Leive
This paper compares mortality between Gold and Silver medalists in Olympic Track and Field to study how achievement influences health. Contrary to conventional wisdom, winners die over one year earlier than losers. I find strong evidence of differences in earnings and occupational choices as a mechanism. Losers pursued higher-paying occupations than winners according to individual Census records. I find no evidence consistent with selection or risk-taking. How people respond to success or failure in pivotal life events may produce long-lasting consequences for health...
September 2018: Journal of Health Economics
Tomi Kyyrä, Tuuli Paukkeri
We study whether the experience rating of employers' disability insurance premiums affects the inflow to disability benefits in Finland. To identify the causal effect of experience rating, we exploit kinks in the rule that specifies the degree of experience rating as a function of firm size. Using comprehensive matched employer-employee panel data, we estimate the effects of experience rating on the inflow to sickness and disability benefits. We find that experience rating has little or no effect on either of these outcomes...
September 2018: Journal of Health Economics
Simone Balestra
In light of the ongoing debate over tighter firearm regulations, this paper considers the relationship between gun prevalence and suicide. I exploit a reform in Switzerland that reduced the prevalence of military-issued guns in private households. In Switzerland, military service is compulsory for men, and military-issued guns account for nearly half of the total number of firearms available. The results show that the firearm suicide rate decreases by 9% for a reduction in gun prevalence of 1000 guns per 100,000 inhabitants...
September 2018: Journal of Health Economics
John Mullahy
While many results from the treatment-effect and related literatures are familiar and have been applied productively in health economics evaluations, other potentially useful results from those literatures have had little influence on health economics practice. With the intent of demonstrating the value and use of some of these results in health economics applications, this paper focuses on one particular class of parameters that describe probabilities that one outcome is larger or smaller than other outcomes ("inequality probabilities")...
September 2018: Journal of Health Economics
Elaine L Hill
This research exploits the introduction of shale gas wells in Pennsylvania in response to growing controversy around the drilling method of hydraulic fracturing. Using detailed location data on maternal addresses and GIS coordinates of gas wells, this study examines singleton births to mothers residing close to a shale gas well from 2003 to 2010 in Pennsylvania. The introduction of drilling increased low birth weight and decreased term birth weight on average among mothers living within 2.5 km of a well compared to mothers living within 2...
September 2018: Journal of Health Economics
Christopher M Whaley, Timothy T Brown
This paper examines how health care providers respond to a reference pricing insurance program that increases consumer cost sharing when consumers choose high-priced surgical providers. We use geographic variation in the population covered by the program to estimate supply-side responses. We find limited evidence of market segmentation and price reductions for providers with baseline prices above the reference price. Finally, approximately 75% of the reduction in provider prices is in the form of a positive externality that benefits a population not subject to the program...
September 2018: Journal of Health Economics
Caitlin Carroll, Michael Chernew, A Mark Fendrick, Joe Thompson, Sherri Rose
We study how physicians respond to financial incentives imposed by episode-based payment (EBP), which encourages lower spending and improved quality for an entire episode of care. Specifically, we study the impact of the Arkansas Health Care Payment Improvement Initiative, a multi-payer program that requires providers to enter into EBP arrangements for perinatal care, covering the majority of births in the state. Unlike fee-for-service reimbursement, EBP holds physicians responsible for all care within a discrete episode, rewarding physicians for efficient use of their own services and for efficient management of other health care inputs...
September 2018: Journal of Health Economics
Edward C Norton, Jun Li, Anup Das, Lena M Chen
US policymakers place high priority on tying Medicare payments to the value of care delivered. A critical part of this effort is the Hospital Value-based Purchasing Program (HVBP), which rewards or penalizes hospitals based on their quality and episode-based costs of care and incentivizes integration between hospitals and post-acute care providers. Within HVBP, each patient affects hospital performance on a variety of quality and spending measures, and performance translates directly to changes in program points and ultimately dollars...
September 2018: Journal of Health Economics
Adam Sacarny
Performance-raising practices tend to diffuse slowly in the health care sector. To understand how incentives drive adoption, I study a practice that generates revenue for hospitals: submitting detailed documentation about patients. After a 2008 reform, hospitals could raise their Medicare revenue over 2% by always specifying a patient's type of heart failure. Hospitals only captured around half of this revenue, indicating that large frictions impeded takeup. Exploiting the fact that many doctors practice at multiple hospitals, I find that four-fifths of the dispersion in adoption reflects differences in the ability of hospitals to extract documentation from physicians...
July 2018: Journal of Health Economics
Angélica Meinhofer, Allison E Witman
We estimate the effect of health insurance coverage on opioid use disorder treatment utilization and availability by exploiting cross-state variation in effective dates of Medicaid expansions under the Affordable Care Act. Using a difference-in-differences design, we find that aggregate opioid admissions to specialty treatment facilities increased 18% in expansion states, most of which involved outpatient medication-assisted treatment (MAT). Opioid admissions from Medicaid beneficiaries increased 113% without crowding out admissions from individuals with other health insurance...
July 2018: Journal of Health Economics
Sherry Glied, Kai Hong
This paper examines, theoretically and empirically, how changes in the demand for health insurance and medical services in the non-Medicare population - coverage eligibility changes for parents and the firm size composition of employment - spill over and affect health insurance coverage and how these factors affect per beneficiary Medicare spending. We find that factors that increase coverage and hence demand for medical services in the non-Medicare population generate contemporaneous decreases in per beneficiary Medicare spending and utilization, particularly for high variation services...
July 2018: Journal of Health Economics
Elodie Djemai
I here use GIS and HIV data from five African countries to estimate the effect of road proximity on HIV infection. I find a negative effect of the distance to the nearest paved road on the probability of being infected with HIV: a one standard-deviation fall in this distance (approximately 2.4 km) increases the probability of infection by 0.6-2.0 percentage points. Using slope as an instrument for road distance continues to produce a negative and significant estimated coefficient. However this relationship may also reflect selection and reverse causality in individual choice of location, and I extensively discuss the role of migration...
July 2018: Journal of Health Economics
Walter Beckert
This paper considers the micro-econometric analysis of patients' hospital choice for elective medical procedures when their choice set is pre-selected by a general practitioner (GP). GPs have a dual role with regard to elective referrals in the English NHS, advising patients and at the same time taking account of the financial implications of referral decisions on local health budgets. The paper proposes a two-stage choice model that encompasses both patient and GP level optimization. It demonstrates that estimators that do not take account of strategic pre-selection of choice sets may be biased and inconsistent...
July 2018: Journal of Health Economics
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