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Health Policy in 2017 and Beyond

Paper Session

Saturday, Jan. 7, 2017 5:30 PM – 7:15 PM

Hyatt Regency Chicago, Plaza A
Hosted By: Health Economics Research Organization
  • Chair: Amanda Ellen Kowalski, Yale University

Hospital Cost Shifting and the Affordable Care Act

Christopher Ody
,
Northwestern University
Craig Garthwaite
,
Northwestern University
David Dranove
,
Northwestern University

Abstract

The Affordable Care Act (ACA) is changing the amount and location of uncompensated care that hospitals provide. Many have argued that this positive profit shock will lead to negative "cost shifting". i.e., that nonprofit hospitals will redistribute this profit shock by lowering the prices that they charge privately insured patients. This argument was cited by the Obama administration during the ACA’s debate, and by the Roberts Court in justifying the individual mandate. And yet, the academic literature on cost shifting either relies on dated data or relies on profit shocks lacking in external validity when extrapolating to the ACA’s effects. We exploit variation in state decisions as to whether to expand Medicaid, combined with information about the income of patients within a hospital's cachement area to construct a measure of how treated each hospital is by the ACA's coverage expansions. We use this variation to test whether hospitals have engaged in negative “cost shifting” in response to the ACA. Standard data sources lack the ability to track the prices that privately insured patients pay. Many sources fail to track the contractual discounts that hospitals provide to insurers and the best publicly available data sources cannot cleanly separate reimbursements for privately insured and Medicaid patients. Furthermore, the ACA may have altered the composition of the pool of the insured. We tackle these challenges by leveraging data from the Healthcare Cost Institute, which allows us to measure the actual transaction prices for each of the hospital discharges of three large national insurers (e.g., Aetna, Humana, UnitedHealthcare). Our results have implications for DSH payments, nonprofit tax policy, and also provide new evidence on the role of nonprofits in the US healthcare system.

Regulated Age-Based Pricing in Subsidized Health Insurance Exchanges

Pietro Tebaldi
,
University of Chicago
Joe Orsini
,
Nuna Health

Abstract

We analyze the effect of restricted age-rating adjustments in the state-level health insurance marketplaces introduced by the Affordable Care Act (ACA). In these markets the vast majority of buyers are beneficiaries of federal subsidies, and for this group the level of post-subsidy premiums is approximately constant across ages. Consequently, although restricted age-rating adjustments affect insurers’ revenues for any given age-composition of enrollment, such composition is largely determined by the generosity of subsidies rather than by insurers’ pricing decisions. We estimate that the combination of these two regulations substantially raised pre-subsidy premiums for young buyers while reducing pre-subsidy premiums for older adults. At the current level of subsidies older adults represent the majority of enrollees, hence the primary effect of restricted age-rating adjustments was to decrease government spending in subsidies by approximately $2.3 billion per-year. Geographic heterogeneity of the age-composition of the uninsured leads to corresponding heterogeneity in the impact of age-rating restrictions on premiums and subsidy outlays. We discuss possible implications of tailoring the parameters of age-rating regulations to how the age-composition of the uninsured varies across states.

Measuring the Returns of Nurses: Evidence from a Parental Leave Program

Martin Hackmann
,
Pennsylvania State University
Benjamin Friedrich
,
Yale University

Abstract

Nurses define the largest health profession. In this paper, we measure the return of nurses on health care delivery and patient health outcomes using a natural experiment, which led to a sudden, unintended, and persistent 12% reduction in nurse employment. Our findings indicate detrimental effects on hospital care delivery as indicated by an increase in 30-day readmission rates and a distortion of technology utilization. Our findings for nursing homes are more drastic indicating a 14% increase in nursing home mortality among the elderly aged 85 and older.
Discussant(s)
Michael Chernew
,
Harvard University
Amanda Starc
,
Northwestern University
Mark Pauly
,
University of Pennsylvania
JEL Classifications
  • I0 - General