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Health Care Industry IO, Policy

Paper Session

Friday, Jan. 7, 2022 10:00 AM - 12:00 PM (EST)

Hosted By: Health Economics Research Organization
  • Chair: Michael Chernew, Harvard University

What Do Insurers Do Differently than One Another? Managed Competition and Value Added

Benjamin Handel
,
University of California-Berkeley
Jonathan Holmes
,
University of California-Berkeley
Jonathan Kolstad
,
University of California-Berkeley
Kurt Lavetti
,
Ohio State University

Abstract

We study differentiation across health insurance providers in the market for employer-sponsored health insurers. Using rich administrative data and firm and employer changes between plans we recover the causal contribution of private insurers/brands to health care spending overall, prices and quantities as well as granular measures of health care utilization. We find clear variation in total spending between private health insurers. E.g. moving from United Health Care to Regence causally increases spending by an average of 40%. We find that changes in spending between insurers are largely explained by differences in extensive margin measures of quantity of care consumed. We find much less differentiation across insurers in terms of bargaining over provider prices or utilization of high versus low value care.

Price Effects of Vertical Integration between Physicians and Hospitals

Anna Sinaiko
,
Harvard University
Meredith Rosenthal
,
Harvard University

Abstract

We examine vertical integration between physicians and hospitals in 2013-2017 using high-quality data on provider affiliations from Massachusetts Health Quality Partners linked to commercial physician prices from the Massachusetts All- Payer Claims Database.
We document a substantial increase over time in vertical integration for primary care physicians as well as specialists. The increase is mainly for smaller and medium-size health systems. We show that these changes in vertical integration are in part driven by large medical groups transitioning among health systems or transitioning from being part of a health system to being independent.
Using within-physician changes in vertical integration status over time, we find that vertical integration leads to moderate price increases, mainly among primary care physicians. We focus on outpatient commercial prices for the major payers in Massachusetts. We construct 2 different measures of a physician-year-level price: an implied price and a price index. The implied price is a physician’s price for her basket of services divided by the state-wide mean price for the same basket of services. The price index is a physician’s price for a basket of services that is fixed across all physicians with the same specialty. Our results are similar with both price measures.
We estimate a difference-in-differences model that includes physician fixed effects and year fixed effects. We also control for physician market concentration at the hospital service area-specialty-year level. Our model relies on variation from physicians transitioning among health systems. We find that vertical integration with 2+ hospital systems led to a moderate increase in prices among primary care physicians and a smaller increase in prices among specialist physicians. Vertical integration with 8+ hospital systems led to a large increase in prices among primary care physicians and a moderate increase in prices among specialist physicians.

The Impact of Organizational Boundaries on Healthcare Coordination and Utilization

Xiaoxi Zhao
,
Boston University
Leila Agha
,
Dartmouth College
Keith Ericson
,
Boston University

Abstract

Patients often receive healthcare from providers spread across different firms. Transaction costs, imperfect information, and other frictions can make it difficult to coordinate production across firm boundaries, but we do not know how these challenges affect healthcare. We define and measure organizational concentration: the distribution across organizations of a patient’s healthcare. Medicare claims show that organizational concentration varies substantially across physicians and regions, and that patients who move to more concentrated regions have lower healthcare utilization. Further, we show that when primary care physicians (PCPs) with higher organizational concentration exit the local market, their patients switch to more typical PCPs with lower organizational concentration and then have higher healthcare utilization. Patients who switch to a PCP with 1 SD higher organizational concentration have 10% lower healthcare utilization. This finding is robust to controlling for the spread of patient care across providers. Increases in organizational concentration have no detectable effect on emergency department utilization or hospitalization rates, but do predict improvements in diabetes care.
JEL Classifications
  • I1 - Health