Research

Exploiting the random assignment of Medicaid beneficiaries to managed care plans, we find substantial plan-specific spending effects despite plans having identical cost sharing. Enrollment in the lowest-spending plan reduces spending by at least 25 percent—primarily through quantity reductions—relative to enrollment in the highest-spending plan. Rather than reducing "wasteful" spending, lower-spending plans broadly reduce medical service provision—including the provision of low-cost, high-value care—and worsen beneficiary satisfaction and health. Consumer demand follows spending: a 10 percent increase in plan-specific spending is associated with a 40 percent increase in market share. These facts have implications for the government's contracting problem and program cost growth.

Review of the Expert and Academic Literature Assessing Impact of Medicare Access and CHIP Reauthorization Act of 2015

There is no published national research reporting child care professionals’ physical health, depression, or stress during the COVID-19 pandemic. Given their central role in supporting children’s development, child care professionals’ overall physical and mental health is important. In this large-scale national survey, data were collected through an online survey from May 22, 2020 to June 8, 2020. We analyzed the association of sociodemographic characteristics with four physical health conditions (asthma, heart disease, diabetes, and obesity), depression, and stress weighted to national representativeness. Sociodemographic characteristics included race, ethnicity, age, gender, medical insurance status, and child care type. Our findings highlight that child care professionals’ depression rates during the pandemic were much higher than before the pandemic, and depression, stress and asthma rates were higher than U.S. adult depression rates during the pandemic. Given the essential work child care professionals provide during the pandemic, policy makers and public health officials should consider what can be done to support the physical and mental health of child care professionals.

We study the impact of changing choice set size on the quality of choices in health insurance markets. Using novel data on enrolment and medical claims for school district employees in the state of Oregon, we document that the average employee could save $600 by switching to a lower cost plan. Structural modelling reveals large “choice inconsistencies” such as non-equalization of the dollar spent on premiums and out of pocket, and a novel form of “approximate inertia” where enrolees are excessively likely to switch to other plans that are close to the current plan on the plan design spreadsheet. Variation in the number of plan choices across districts and over time shows that enrolees make lower-cost choices when the choice set is smaller. We show that a curated restriction of choice set size improves choices more than the best available information intervention, partly because approximate inertia lowers gains from new information. We explicitly test and reject the assumption that this is because individuals choose worse from larger choice sets, or “choice overload”. Rather, we show that this feature arises from the fact that larger choice sets feature worse choices on average that are not offset by individual re-optimization.

We analyze whether receiving care from higher-priced hospitals leads to lower mortality. We overcome selection issues by using an instrumental variable approach which exploits that ambulance companies are quasi-randomly assigned to transport patients and have strong preferences for certain hospitals. Being admitted to a hospital with two standard deviations higher prices raises spending by 52% and lowers mortality by 1 percentage point (35%). However, the relationship between higher prices and lower mortality is only present at hospitals in less concentrated markets. Receiving care from an expensive hospital in a concentrated market increases spending but has no detectable effect on mortality.

Competition in health insurance markets may fail to improve health outcomes if consumers are not able to identify high-quality plans. We develop and apply a novel instrumental variables framework to quantify the variation in causal mortality effects across plans and measure how much consumers attend to this variation. We first document large differences in the observed mortality rates of Medicare Advantage plans in local markets. We then show that when plans with high mortality rates exit these markets, enrollees tend to switch to more typical plans and subsequently experience lower mortality. We derive and validate a novel “fallback condition” governing the subsequent choices of those affected by plan exits. When the fallback condition is satisfied, plan terminations can be used to estimate the relationship between observed plan mortality rates and causal mortality effects. Applying the framework, we find that mortality rates unbiasedly predict causal mortality effects. We then extend our framework to study other predictors of plan mortality effects and estimate consumer willingness to pay. Higher-spending plans tend to reduce enrollee mortality, but existing quality ratings are uncorrelated with plan mortality effects. Consumers place little weight on mortality effects when choosing plans. Good insurance plans dramatically reduce mortality, and redirecting consumers to such plans could improve beneficiary health.