Health Insurance

Paper Session

Friday, Jan. 6, 2017 10:15 AM – 12:15 PM

Hyatt Regency Chicago, Plaza A
Hosted By: American Economic Association
  • Chair: Owen Thompson, University of Wisconsin-Milwaukee

The Social Returns to Mental Health Care: Evidence From a Dutch Health Insurance Reform

Bastian Ravesteijn
,
Harvard University
Eli Schachar
,
Harvard University

Abstract

On January 1, 2012, the Dutch government raised the out-of-pocket cost for specialist mental health services (SMHS) by €200. Subsequently, the annual number of patients in treatment declined sharply and persistently by 95,000, or 16.4 percent. Our project uses this reform and detailed administrative data to estimate the effect of SMHS use on a wide variety of indicators of social functioning.

In this presentation, we present preliminary estimates of the effect of continuing treatment on employment for individuals who are in SMHS treatment and face the decision of whether to continue or to stop treatment. Our identification strategy relies on the timing of when these individuals started their SMHS treatment before the reform, which unexpectedly determined the out-of-pocket cost they faced to continue treatment. Using this variation in out-of-pocket cost as an instrumental variable, we find a strong positive effect of continuing SMSH treatment on employment.

What is Behind the Size Effect? The Role of Large Hospitals in the Medicaid DSH Program

Claire S.H. Lim
,
Cornell University

Abstract

We investigate determinants of government subsidy in the U.S. health care industry, focusing on the Medicaid Disproportionate Share Hospital (DSH) program. We find that the amount of Medicaid DSH payment per bed increases significantly with increase in hospital size for government hospitals. This is partially explained by the distinctive role that large government hospitals play in the provision of care to the indigent population. However, costs, financial conditions, or types of services by themselves are not enough to explain DSH payments. Large government hospitals tend to have a higher ratio of DSH payments to Medicaid and uninsured costs. The difference in the DSH payment-to-cost ratio across ownership types increases significantly with increase in hospital size. We argue that these key patterns are unlikely to be driven by unobserved heterogeneity, using Altonji-Elder-Taber-Oster Method. Our results on payment-to-cost ratios are consistent with targeting by the state government to counterbalance disparities in hospitals' capability to cross-subsidize across patient types.

Health Insurance Coverage and Health Care Utilization: Evidence From the Affordable Care Act's Dependent Coverage Mandate

Baris Yoruk
,
State University of New York-Albany

Abstract

This paper investigates the impact of the Affordable Care Act's (ACA's) dependent coverage mandate on health insurance coverage rates and health care utilization among young adults. Using data from the Medical Panel Expenditure Survey, I exploit the discontinuity in health insurance coverage rates at age 26, the new dependent coverage age cutoff enforced by the ACA. Under alternative regression discontinuity design models, I find that 2.5% to 5.3% of young adults lose their health insurance coverage once they turn 26. This effect is mainly driven by those who lose their private health insurance plan coverage and those who lose their health insurance plan coverage, whose main holder resides outside of the household. I also find that the discrete change in health insurance coverage rates at age 26 is associated with significant changes in office-based physician and dental visits, but does not have a significant impact on the utilization of outpatient or emergency department services. Furthermore, the effects of the ACA's dependent coverage mandate on health care spending and out-of-pocket costs are insignificant. These results are robust under alternative model specifications.

Gender Homophily in Referral Networks: Consequences for the Medicare Physician Pay Gap

Dan Zeltzer
,
Princeton University

Abstract

This paper documents a new demand-side channel for the gender gap in earnings: a preference for working with others of the same gender. Analyzing administrative data on 100 million Medicare patient referrals, I document significant gender homophily among U.S. physicians—doctors refer more to specialists of their same gender. Homophily is predominantly due to physicians' gender biased preferences, not sorting. As most referrals are still made by men, biased referrals lower demand for female relative to male specialists, significantly contributing to the average earnings gap among physician specialists. In medicine, results imply that increased participation of female physicians generates positive externalities for females in related specialties. More generally, my findings suggest that homophily contributes to the persistence of gender inequality in context where networking is important.

Delisting of Pharmaceuticals From Insurance Coverage: Effects on Consumption, Pricing, and Expenditures in France

Laura Lasio
,
McGill University

Abstract

This work structurally estimates the impact on demand and supply of public insurance coverage of pharmaceuticals and its removal (so-called delisting). The analysis focuses on the 2008 delisting of oral phlebotonics (drugs to treat venous circulation disorders) in France, where insurance coverage is tied to price regulation: when a drug is delisted, its price becomes unregulated and the manufacturer can set it freely. This regulatory change and the fact that some drugs were never covered before 2008 provide the variation needed to identify price-cost margins and simulate the counterfactual pricing equilibrium without coverage and price regulation. Results suggest that insurance coverage with price regulation stabilizes prices and guarantees demand for some drugs, like generics, which would sell much less in the absence of coverage. Without insurance coverage and price regulation, increased competition and higher price elasticity would result in lower average prices and reduce demand for most drugs on the market, in line with what is observed after 2008 at the delisting of oral phlebotonics.
JEL Classifications
  • I1 - Health