Essays in Health Economics and Public Finance

This dissertation focuses on topics in health economics and public finance. I deal with questions that have importance for health policy, and that are simultaneously of general economic interest; in particular, I consider the efficiency impact of privatization, the effects of competition in health care markets, and the effects of incomplete contracting and imperfect competition on rates of pass-through to consumers and governments. In Chapter One, I examine the extent to which contracting out by governments yields efficiency improvements, by looking to Medicaid contracting in New York State. To identify the efficiency impact of private, relative to public Medicaid, I exploit involuntary switching between the two; primarily, I leverage age-based rules forcing individuals to switch from private to public Medicaid at 65. I also leverage unique administrative data, which longitudinally tracks individual utilization across the public and private Medicaid settings. I find evidence that private Medicaid yields efficiency improvements, but find no evidence that these improvements are passed on to either governments or patients. Instead, I find that pass-through is substantially limited by incomplete contracting, with plans shifting costs to medical services that remain under government provision. In Chapter Two, I examine the effects of cost-sharing among a previously understudied population-those dually enrolled in Medicaid and Medicare. I leverage an exogenous court ruling that resulted in loss of Medicaid coverage in Tennessee, among 25,000 individuals who had previously been dually-enrolled. This disenrollment resulted in an increase in average cost-sharing rates, from around 0% to around 20%. I find that this cost-sharing increase resulted in a utilization reduction of about 30%, implying an arc-elasticity in spending of about -.2. In Chapter Three, with Mark Duggan and Amanda Starc, we examine how contracts are affected by their generosity, by looking to the Medicare Advantage program. In doing so, we exploit a substantial policy-induced increase in MA reimbursement in metropolitan areas with a population of 250,000 or more relative to MSAs below this threshold. Our findings also reveal that about one-eighth of the additional reimbursement is passed through to consumers in the form of better coverage

Essays in Health Economics and Public Finance

This dissertation focuses on topics in health economics and public finance. I deal with questions that have importance for health policy, and that are simultaneously of general economic interest; in particular, I consider the efficiency impact of privatization, the effects of competition in health care markets, and the effects of incomplete contracting and imperfect competition on rates of pass-through to consumers and governments. In Chapter One, I examine the extent to which contracting out by governments yields efficiency improvements, by looking to Medicaid contracting in New York State. To identify the efficiency impact of private, relative to public Medicaid, I exploit involuntary switching between the two; primarily, I leverage age-based rules forcing individuals to switch from private to public Medicaid at 65. I also leverage unique administrative data, which longitudinally tracks individual utilization across the public and private Medicaid settings. I find evidence that private Medicaid yields efficiency improvements, but find no evidence that these improvements are passed on to either governments or patients. Instead, I find that pass-through is substantially limited by incomplete contracting, with plans shifting costs to medical services that remain under government provision. In Chapter Two, I examine the effects of cost-sharing among a previously understudied population-those dually enrolled in Medicaid and Medicare. I leverage an exogenous court ruling that resulted in loss of Medicaid coverage in Tennessee, among 25,000 individuals who had previously been dually-enrolled. This disenrollment resulted in an increase in average cost-sharing rates, from around 0% to around 20%. I find that this cost-sharing increase resulted in a utilization reduction of about 30%, implying an arc-elasticity in spending of about -.2. In Chapter Three, with Mark Duggan and Amanda Starc, we examine how contracts are affected by their generosity, by looking to the Medicare Advantage program. In doing so, we exploit a substantial policy-induced increase in MA reimbursement in metropolitan areas with a population of 250,000 or more relative to MSAs below this threshold. Our findings also reveal that about one-eighth of the additional reimbursement is passed through to consumers in the form of better coverage

Essays in Health Economics and Public Finance

This dissertation focuses on topics in health economics and public finance. I deal with questions that have importance for health policy, and that are simultaneously of general economic interest; in particular, I consider the efficiency impact of privatization, the effects of competition in health care markets, and the effects of incomplete contracting and imperfect competition on rates of pass-through to consumers and governments. In Chapter One, I examine the extent to which contracting out by governments yields efficiency improvements, by looking to Medicaid contracting in New York State. To identify the efficiency impact of private, relative to public Medicaid, I exploit involuntary switching between the two; primarily, I leverage age-based rules forcing individuals to switch from private to public Medicaid at 65. I also leverage unique administrative data, which longitudinally tracks individual utilization across the public and private Medicaid settings. I find evidence that private Medicaid yields efficiency improvements, but find no evidence that these improvements are passed on to either governments or patients. Instead, I find that pass-through is substantially limited by incomplete contracting, with plans shifting costs to medical services that remain under government provision. In Chapter Two, I examine the effects of cost-sharing among a previously understudied population-those dually enrolled in Medicaid and Medicare. I leverage an exogenous court ruling that resulted in loss of Medicaid coverage in Tennessee, among 25,000 individuals who had previously been dually-enrolled. This disenrollment resulted in an increase in average cost-sharing rates, from around 0% to around 20%. I find that this cost-sharing increase resulted in a utilization reduction of about 30%, implying an arc-elasticity in spending of about -.2. In Chapter Three, with Mark Duggan and Amanda Starc, we examine how contracts are affected by their generosity, by looking to the Medicare Advantage program. In doing so, we exploit a substantial policy-induced increase in MA reimbursement in metropolitan areas with a population of 250,000 or more relative to MSAs below this threshold. Our findings also reveal that about one-eighth of the additional reimbursement is passed through to consumers in the form of better coverage

The Consequences of Health Care Privatization: Evidence from Medicare Advantage Exits

There is considerable controversy over the use of private insurers to deliver public health insurance benefits. We investigate the consequences of patients enrolling in Medicare Advantage (MA), privately managed care organizations that compete with the traditional fee-for-service Medicare program. We use exogenous shocks to MA enrollment arising from plan exits from New York counties in the early 2000s and utilize unique data that links hospital inpatient utilization to Medicare enrollment records. We find that individuals who were forced out of MA plans due to plan exit saw very large increases in hospital utilization. These increases appear to arise through plans both limiting access to nearby hospitals and reducing elective admissions, yet they are not associated with any measurable reduction in hospital quality or patient mortality