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Health Policies

Lightning Round Session

Saturday, Jan. 4, 2025 2:30 PM - 4:30 PM (PST)

Parc 55
Hosted By: American Economic Association
  • Chair: Adrienne Sabety, Stanford University

All or Nothing: Health and the U.S. Social Security Disability Insurance Program

Ivan Suvorov
,
University of North Carolina-Chapel Hill

Abstract

Social Security Disability Insurance (SSDI) policy evaluates applicants’ health as a binary outcome and creates incentives to exaggerate or even exacerbate one’s health problems to acquire eligibility. Existing studies estimate the health effects of disability insurance based on reduced-form models that do not allow for the examination of alternative insurance designs. This paper is the first one to develop and estimate an individual decision-making model that permits the evaluation of the health effects of the changes to SSDI design. Specifically, I focus on the modification that allows partial benefits for the partially disabled. Simulations show this reform can decrease the number of fully disabled by 1% and the annual mortality rate for the near elderly by up to 1% without increasing the total size of benefits awarded. Back-of-the-envelope calculations show the reform can save around 6, 000 lives and decrease the number of
fully disabled Americans by about 50, 000 annually.

Conflict to Consequence: The Intergenerational Impact of the Civil War

Olivia Finan
,
University College Dublin

Abstract

This study examines the long-term impact of early childhood exposure to Sierra Leone’s 1991-2002 civil war on the health outcomes of the first and second-generation. While the direct consequences of war are apparent, there is limited empirical evidence on whether these effects persist across generations. This study uses data from the Demographic and Health Survey and the UCDP Geo-referenced Event Dataset and a difference-in-differences approach to investigate war exposure during childhood on height in adulthood for the first and second generation. An individual’s exposure is defined at a given age as a function of their birth cohort, location, and geographical proximity to conflict. Based on the distinct stages of height growth, there are three treatment groups (intensity of conflict exposure at ages 0 to 3, 4 to 8, and 9 to 16) and two control groups (intensity of conflict exposure at ages 17 to 21 and 22 to 25). Detailed geospatial data on conflict incidents is used to accurately identify the effects of conflict exposure at the village-level.The results demonstrates that women exposed to conflict during childhood, particularly during the second crucial adolescent growth phase, are shorter. For each additional conflict death, a woman’s adult height decreases by 0.22 millimeters. There is also an adverse effect on the second generation’s health outcomes, particularly for girls. Understanding the “hidden costs” of war and the magnitude of intergenerational effects can help inform policymakers to create effective interventions to improve socio-economic conditions for future generations.

Covering the Uninsured with Primary Care Networks: Utilization and Spending Implications

Yaming Cao
,
ZEW Mannheim
Kurt Lavetti
,
Ohio State University
Nicolas Ziebarth
,
ZEW Mannheim and University of Mannheim

Abstract

Whether limited and low-budget public insurance plans could be an option for covering the 25 million uninsured in the United is a heated policy-relevant question. This paper studies utilization and health care spending effects of enrolling uninsured individuals in Primary Care Networks (PCN), a skinny public insurance plan for low-income individuals, available in Utah since 2002. PCN covers primary and emergency care but excludes inpatient and specialty care. To our knowledge, there exists no empirical evidence on the effects of providing limited public insurance for the uninsured.
To empirically study the short- and medium-term effects, we construct a unique administrative database including the universe of inpatient, emergency, and ambulatory care in Utah. Using difference-in-differences and event study models, we find that enrolling previously uninsured individuals in PCN increases their Emergency Room (ER) use by 20%, consistent with the findings of the Oregon and RAND Health Insurance Experiments. Contrarily, PCN enrollees have 34% fewer inpatient days and 39% fewer ambulatory visits leading to hospital healthcare spending that is solely 6% higher compared to pre-enrollment and the control group of regular Medicaid enrollees. We find significant increases in utilization due to mental disorders and depression but none due to heart problems, stroke or diabetes.
Skinny PCN plans appear to strictly limit hospital use to urgent conditions, as intended, suggesting low budget welfare improvements compared to being uninsured. At the same time, it is very likely that unmet health care needs continue to persist under these plans, especially for conditions that require specialists for an appropriate management such as mental health disorders. Further research on the consequences of novel plan designs is crucial, especially in times of budgetary shortfalls and strongly increasing Medicaid spending.

Distributional Consequences of Hospital Heterogeneous Responses to a Blended Payment Scheme Reform

Wei Yan
,
Peking University
Hanmo Yang
,
Stanford University
Junjian Yi
,
Peking University
Chuanchuan Zhang
,
Zhejiang University

Abstract

Many hospital payment schemes are designed to control health expenditure, but they could also influence the allocation of medical resources, which is crucial for efficient healthcare delivery. This paper studies the effects of hospital responses to a blended payment scheme—a diagnosis-based payment scheme with a global budget—and the distributional consequences of hospital heterogeneous responses. Exploiting a quasi-experimental reform in China in 2016, we find hospitals responded along multiple dimensions: upcoding, raising the shares of admissions in categories with higher upcoding potential, and increasing the total number of admissions. Hospitals’ heterogeneous responses led to a widened disparity in hospital payments, which is mainly driven by heterogeneous upcoding across hospitals. Hospitals with more knowledge about coding practices, greater exposure to the reform, higher tier, and larger size respond more strongly to the reform, therefore securing a larger portion of the global budget from the social health insurance fund.

Estimating the Distribution of Elasticities of Medical Expenditures Using a Notch in Out-of-Pocket Cost

Hae-young Hong
,
Seoul National University

Abstract

This paper develops a novel method for estimating the distribution of elasticities of medical expenditures with respect to out-of-pocket costs, using the responses of patients bunching at a notch in South Korea. Using a natural experiment that exploits differences in the out-of-pocket costs for 64- and 65-year-olds within the same calendar year, I develop a strategy to characterize the conditional cumulative distribution of elasticities given medical expenditures as a function of observable variables. I adopt a copula approach to allow for dependence between the elasticities and medical expenditures. Using Korean health insurance administrative data from 2013-2017, I find the upper bound of the elasticities is 0.17 and the mean is 0.1. Counterfactual policy simulations show that introducing a linear coinsurance rate of 21.3% instead of a notch can improve the welfare of patients and clinics without increasing the insurer's spending.

Impacts of Fortified Rice on Children's Outcomes in Cambodia

Yoonjung Lee
,
Virginia Tech

Abstract

Deficiencies in micronutrients such as zinc, iron, and vitamins are critical factors that influence overall nutritional and health status and cognitive performance, particularly in children. Micronutrient deficiency represents a substantial global health concern, especially in middle and low-income countries. To address this challenge, food fortification using staple foods such as rice is employed as a nutrition intervention. The World Food Programme implemented a 6-month project as a part of its school meal program to provide fortified rice to school-aged children in Cambodia in 2012. For this project, 12 schools were randomly selected to receive fortified rice while 4 schools were randomly assigned to receive normal rice among 309 primary schools in Kampong Speu province. Data on nutritional status and cognitive performance of each child were collected both before and after the intervention. Using a difference-in-differences design, I estimate the impacts of fortified rice on children’s nutritional and health outcomes, including the prevalences of anemia and micronutrient deficiencies and nutritional markers which are used to define the deficiencies, such as hemoglobin and zinc concentrations, and cognitive outcomes. I observe that children with fortified rice show a significant decrease in zinc deficiency compared to children receiving normal rice, with no significant impacts in anemia and other micronutrient deficiencies including iron and vitamin A. In addition, I find significant differences in all nutritional markers, except for hemoglobin concentration, between children who received fortified rice and those who received normal rice. However, no significant impact is observed in cognitive outcomes between the groups. I also estimate heterogeneity in treatment effects based on gender, age groups, grade, and types of fortified rice which implies the different composition of micronutrients. Incorporating the findings, I conduct a cost analysis of fortified rice to identify effective intervention for specific target populations, considering the perspective of policy implementation.

Long Run Impacts of Folic Acid Fortification

Wenjie Zhan
,
University of California-Davis

Abstract

Folate is a crucial micronutrient for neurodevelopment in children, with deficiencies during pregnancy leading to significant central nervous system birth defects and postnatal cognitive challenges (Roth et al., 2011; Irvine et al., 2022). Recognizing the risks of folate deficiency, the U.S. Food and Drug Administration (FDA) mandated the fortification of enriched grain products with 40µg/100g of folic acid in March 1996, a move that has effectively reduced folate deficiency and associated birth defects according to public health literature. However, the long-term economic impacts of this policy have not been extensively studied. This paper examines the long-term effects of folic acid fortification on children's human capital outcomes, leveraging geographical variations in congenital central nervous system anomalies (CNS Anomaly) at birth and the timing of folic acid fortification implementation to ascertain the program's effects. Compiling multiple first-stage evidence, this study first demonstrates that pre-existing CNS anomalies plausibly reflect local folate deficiency levels. By linking this variation with data from multiple national surveys, I find that maternal exposure to folic acid fortification significantly enhances human capital investment in young adulthood, as evidenced by increased college and graduate/professional school enrollment and reduced labor supply. These findings are consistent across various model specifications and measures of exposure. Moreover, the research reveals that folic acid fortification is associated with a higher percentage of live births among young mothers and an increased probability of preterm births, indicating an elevation in the survival rates of less healthy births. This suggests that the positive impacts of the policy on birth outcomes and subsequent human capital formation may be even more substantial than initially estimated.

Medicaid Hearing Aid Mandates and Hearing Aid Purchasing Among the Elderly

Reginald Hebert
,
Georgia State University
Michelle Arnold
,
University of South Florida
Brandy Lipton
,
University of California-Irvine
Michael Pesko
,
University of Missouri
Benjamin Ukert
,
Texas A&M University

Abstract

As many as 23 million Americans over the age of 50 suffer from untreated hearing loss, many of them of lower socioeconomic status. 32 states have some form of Medicaid hearing aid mandate in place as of 2023, but little is known about whether and the extent to which these mandates affect hearing aid use. This paper attempts to estimate the causal impact of these Medicaid mandates on hearing aid use. We examine a longitudinal data set of Medicare-eligibles over-65, the National Health and Aging Trends Study (NHATS), from 2011-2022, using two-way fixed effects and a two-stage difference-in-differences estimator that accounts for heterogeneous treatment effects. Our results show a 26.8% increase in hearing aid use among the dual-eligible population from a base of 9.7%. Our results are largely similar when using a sample of income-eligible individuals, and when using alternative estimators.

Minimum Wages, Medicaid Expansion and the Mix of Benefits

Anwita Mahajan
,
Georgetown University

Abstract

I examine the empirical effects of state level minimum wage increases between 2013 and 2016 on low income workers' participation in Medicaid. I explore the role of the Affordable Care Act Medicaid expansion in generating heterogeneity in these effects. I find that contrary to mechanical predictions, minimum wage hikes result in increased take-up of Medicaid in both Medicaid expansion and non-expansion states. But I suggest that the mechanisms causing these effects differ between the two types of states. Increases in Medicaid take-up in Medicaid expansion states are more consistent with a crowd-out effect – faced with higher labor costs, employers take advantage of the availability of Medicaid and reduce the generosity of employer sponsored insurance, prompting workers’ substitution towards Medicaid. In Medicaid non-expansion states, increases in Medicaid take-up are more consistent with reductions in uninsurance – minimum wage increases are not associated with declines in employer-sponsored insurance but with losses of benefits from other public programs. Consequently, workers take up Medicaid to replace the lost benefits. Overall, minimum wage increases affect the mix of benefits a worker receives from the government and firms, and this mix depends on the status of Medicaid expansion.

The Market Effects of Mergers on Incumbent Behavior and Entry: Evidence from Dialysis

Anwita Mahajan
,
Georgetown University
Francisco Garrido
,
Mexico Autonomous Institute of Technology
Adrian Rubli
,
Mexico Autonomous Institute of Technology

Abstract

We study the effects of large chain mergers on incumbent behavior and firm entry in the U.S. dialysis industry. Using an event-study approach, we find that facilities and dialysis stations decrease in markets exposed to mergers, relative to markets without any merger activity. This is driven by a sharp reduction in both variables by the merged entity, which is only partially offset by an increase by non-merging incumbent firms. We do not find evidence for novel entry. Additionally, we find declines in inputs (nurses and technicians) per station at merging firms with the opposite effects at non-merging firms. Consistent with effects on capacity and quality, we find increased patient deaths at merging firms and higher patient recovery at non-merging firms. We suggest that these heterogeneous firm responses have important implications for merger review practices and dialysis patient welfare.
JEL Classifications
  • I1 - Health