Browsing by Subject "Health economics"

In this dissertation, I investigate the impact of administrative burdens on the US health care sector. Using observational data---particularly medical claims from Medicare----and policy variation in the administrative burdens to which health care providers are exposed, I use causal inference methods to understand the effects of various administrative burdens on economic, health, and fiscal outcomes in multiple contexts within the US health care system. I also use theoretical and structural modeling techniques to highlight and quantify the trade-offs faced by economic agents in the health care system and the impact of policy choices. Using turnover in the identity of private contractors that administer Traditional Medicare, I first find that exposing providers to the increased administrative burden imposed by higher-denial contractors does not reduce Medicare spending despite increasing claim denials. The increased administrative burden also leads providers to invest in billing effort, consolidate into larger firms, and earn lower profits. Next, I use similar variation across contractors to show that Medicare coverage restrictions slow the adoption of new medical procedures. Furthermore, I find that the diffusion patterns induced by these administrative burdens are consistent with social learning by providers about the value of the innovations, motivating a structural model of provider learning that indicates that coverage restrictions slow the learning process of the medical community. Finally, I use the staggered roll out of a prior authorization regulation along with criminal and civil lawsuits to identify the effects of ``pay-and-chase" litigation and an administrative burden regulation on the prevalence of health care fraud. I find that prior authorization was extremely effective at reducing health care spending without causing any adverse patient health outcomes, while litigation was much less effective. In conclusion, this dissertation finds that the administrative burdens that permeate the US health care sector have major impacts on market structure, innovation, and health care fraud, with the benefits and costs of these burdens being highlight context dependent.

My dissertation focuses on employing microeconomic techniques to study markets and questions that are important and complex, and also have potential policy implications. Two of my chapters analyze the health industry with an emphasis on hospitals, patient welfare, and regulation. The remaining chapter focuses on the housing market in Los Angeles and explores real estate flipping.

The second chapter of my dissertation studies the impact of state level regulations on hospital bed capacity decisions. The regulations are intended to decrease hospital investments without diminishing patient access. I find that the regulation decreases total hospital investment in bed capacity as expected. When running simulations to estimate how hospitals would behave differently were the regulatory policy changed, I find that total patient utility is negatively affected by the presence of the regulation as many patients get turned away from their preferred hospital due to overcrowding. This analysis has important policy implications as it suggests that the regulation has been ineffective in ensuring that patient welfare was unharmed by the restrictions.

The third chapter is based on joint research with Patrick Bayer and James W. Roberts and studies the housing market in the Los Angeles metropolitan area from 1988 to 2009. Using novel data, I identify which housing transactions involve flippers who aim not to live in the house, but rather to quickly resell it for financial gain. I find that flipper behavior varies based on how frequently I observe the individual engage in such behavior. Experienced flippers, who are observed to flip many houses in the data, target homes being sold at below market value and earn their returns from buying them at a discount. Their effect on long term prices in the neighborhood is negligable. Inexperienced flippers who are less active, seek to earn their profits by timing the market and are more active when house prices were rapidly appreciating from 1999 to 2005. Their activity increases housing prices in the neighborhood in the short term, but decreases them in the long term. Such results are consistent with the claim that real estate flipping contributed to the housing bubble.

The fourth chapter of my dissertation again focuses on the hospital industry and looks at the question of how patient composition changes as a hospital becomes busier and has to turn patients away. I develop a theoretical model which predicts that hospitals are more likely to turn away less profitable patients. As a result, when a hospital becomes more full and therefore is more likely to have to turn patients away, its composition of patients will change and become more profitable on the whole. I test this theory by empirically analyzing the effect of hospital congestion on the composition of hospital patients using hospital discharge data. The findings are consistent with my theoretical model as when hospitals become more crowded, the fraction of uninsured patients and mental health patients (who are typically not profitable to a hospital) decreases. This result suggests that hospitals are more likely to turn away unprofitable patients while continuing to admit more profitable patients.

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This dissertation consists of three essays that analyze healthcare and health insurance markets in relation to healthcare reform, and particularly in the context of the Affordable Care Act (ACA). The first essay uses a nationwide datasets of plan offerings, premiums, and network sizes for the ACA Health Insurance Marketplaces in 2014 to document patterns relating to the effects of competition on premiums and plan network characteristics. The results suggest that greater competition is associated with lower premiums, and that narrow network plans do offer lower premiums. This study also documents heterogeneity along these dimensions across types of insurance plans by ownership structure (not-for-profit, for-profit, and CO-OP). This heterogeneity suggests that a market's overall welfare may depend on the equilibrium market shares and ownership types of the competing firms.

The second and third essays use the State of Colorado's new All-Payer Claims Database (APCD) to examine the welfare consequences in the state's non-group health insurance market, which includes the ACA Marketplace. In the second essay, I test for adverse selection into the ACA Marketplace, and evaluate policies that may help to ameliorate the welfare loss due to adverse selection. Specifically, I use plausibly exogenous premium variation generated by geographic discontinuities to provide evidence of adverse selection, whereby low-cost individuals exit the market in response to rising premiums. Specifically, a 1% increase in premiums causes a 0.8% increase in medical expenditures of the insured population. The estimates indicate that additional premium subsidies, and especially age-targeted subsidies, would enhance welfare. These results offer the first quasi-experimental evidence of selection in the ACA Exchanges.

In the third essay, my co-author Eli Liebman and I extend this analysis to take into account imperfect competition in both health insurance and hospital markets. We bring together the literatures on insurer-hospital bargaining and selection in imperfectly competitive insurance markets to propose a model that captures features salient to the health insurance marketplaces. In particular, although insurance markets tend to be concentrated, the ACA aimed to foster competitive marketplaces, highlighting the importance for understanding the interaction between imperfect competition and selection. The degree of competition among insurance plans affects both selection across plans and on the extensive margin, as well as simultaneously affecting the prices negotiated with providers. We show theoretically that provider market power and adverse selection can interact to amplify the welfare loss due to either one of these two channels individually. We also show why ignoring adverse selection will lead to biased estimates of bargaining parameters in the standard model of hospital-insurer bargaining. Finally, we use medical claims from the State of Colorado, to quantify the welfare consequences for that market. These considerations are relevant for evaluating the effects of policy interventions in the ACA's health insurance marketplaces that affect insurer entry/exit and premium setting.