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Provider Competition, Spillovers, and Health Care Productivity

Paper Session

Friday, Jan. 3, 2020 8:00 AM - 10:00 AM (PST)

Manchester Grand Hyatt, Solana Beach AB
Hosted By: Health Economics Research Organization
  • Chair: Michael Chernew, Harvard University

Physician Practice Styles, Public Insurance Interventions, and Private Insurance Spillovers

Michael L. Barnett
,
Harvard University
Andrew Olenski
,
Columbia University
Adam Sacarny
,
Columbia University

Abstract

Government efforts to raise the productivity of public sector spending can spill over to the private sector if it is costly for suppliers to utilize distinct production functions by payer. In health care, spillovers will occur when physicians use the same medical practice styles across insurers. We exploit a randomized letter that aimed to curtail overprescribing of antipsychotics to Medicare patients and test its impacts on commercially insured patients, which the letters did not target. Preliminary findings suggest that physicians reduced prescribing to commercially insured patients by 12% and to Medicare patients by 16%; the difference in effects was not statistically significant. Given that the intended shock was narrowly tailored to public insurance, our results imply that physicians experience large costs to differentiating practice styles across payers. We discuss the implications of our findings for the welfare consequences of public interventions that seek to raise the productivity of health care and other sectors.

Spillover Effects of Health Insurance Payments: Evidence from a Randomized Controlled Trial

Liran Einav
,
Stanford University
Amy Finkelstein
,
Massachusetts Institute of Technology
Yunan Ji
,
Harvard University
Neale Mahoney
,
University of Chicago

Abstract

Changes in health insurance payments may affect not only directly targeted patients but can also have spillover effects on non-targeted patients. Yet creditably estimating such spillovers can be challenging, as effects on non-targeted patients is difficult to distinguish from a falsification test gone wrong. We overcome this issue by studying the spillovers effects of a Medicare payment reform that tested the impact of bundled payments using a nationwide, MSA-level randomized-controlled trial. We estimate that the payment reform – which targeted Traditional Medicare patients – had effects of similar size and magnitude on non-targeted Medicare Advantage patients. We discuss the implications of these findings for estimates of the impact of health insurance payment reforms and for the design of health insurance policy.

How Important Is Price Variation Between Health Insurers?

Stuart Craig
,
University of Pennsylvania
Keith Marzilli Ericson
,
Boston University
Amanda Starc
,
Northwestern University

Abstract

Prices negotiated between payers and providers affect a health insurance contract's value via enrollees' cost-sharing and self-insured employers' costs. However, price variation across payers is hard to observe. We measure negotiated prices for hospital-payer pairs in Massachusetts and characterize price variation. Between-payer price variation is similar in magnitude to between- hospital price variation. Administrative-services-only contracts, in which insurers do not bear risk, have higher prices. We model negotiation incentives and show that contractual form and demand responsiveness to negotiated prices are important determinants of negotiated prices.
Discussant(s)
Lawrence Baker
,
Stanford University
Leila Agha
,
Dartmouth College
Joshua Gottlieb
,
University of Chicago
JEL Classifications
  • I1 - Health
  • I1 - Health