Politics and health care spending in the United States: A case study from the passage of the 2003 Medicare Modernization Act.

This paper analyzes the interplay between congressional politics, the actions of the executive branch, and hospitals' regulated Medicare payments. We focus on the 2003 Medicare Modernization Act (MMA) and analyze a provision in the law - Section 508 - that raised certain hospitals' regulated payments. We show, via our analysis of the Section 508 program, that Medicare payments are malleable and can be influenced by political dynamics. In the cross-section, hospitals represented by members of Congress who voted "yea" on the MMA were more likely to receive Section 508 payment increases. We interviewed the Secretary of Health and Human Services who oversaw the MMA, and he described how these payment increases were designed to win support for the law. The Section 508 payment increases raised hospitals' activity and spending. Members of Congress representing recipient hospitals received increased campaign contributions after the Section 508 payment increases were extended. Ultimately, our analysis highlights how Medicare payment increases can serve as an appealing tool for legislative leaders working to win votes for wider pieces of legislation.

Evaluation of an automated response-independent schedule on the behavioral welfare of shelter dogs.

Response-independent schedules involve the delivery of an item independent of a response requirement. Often described in the applied behavior analytic literature as "noncontingent reinforcement," they have also frequently been used to reduce undesired or problematic behaviors. The current study examined the use of an automated response-independent food schedule on the behaviors and sound levels of shelter dogs. Several dogs were included in a 6-week reversal design, where a fixed-time 1 min schedule was compared with a baseline condition. Eleven behaviors were measured, as were two areas of each kennel and the overall and session sound intensity (dB) that occurred during the study. The results demonstrated that the fixed-time schedule increased overall activity while decreasing inactivity and led to a reduction in the overall sound intensity measured. Session and hour-to-hour sound-intensity data were less clear, suggesting a potential contextual conditioning effect as well as a need for adjusted methods to study shelter sound. The above are discussed in terms of their potential welfare benefits for shelter dogs as well as the translational approach that this and similar research could contribute to the application and functional understanding of response-independent schedules.

Behaviour within a Clinical Trial and Implications for Mammography Guidelines.

Mammography guidelines have weakened in response to evidence that mammograms diagnose breast cancers that would never eventually cause symptoms, a phenomenon called "overdiagnosis." Given concerns about overdiagnosis, instead of recommending mammograms, US guidelines encourage women aged 40-49 to get them as they see fit. To assess whether these guidelines target women effectively, I propose an approach that examines mammography behavior within an influential clinical trial that followed participants long enough to find overdiagnosis. I find that women who are more likely to receive mammograms are healthier and have higher socioeconomic status. More importantly, I find that the 20-year level of overdiagnosis is at least 3.5 times higher among women who are most likely to receive mammograms. At least 36% of their cancers are overdiagnosed. These findings imply that US guidelines encourage mammograms among healthier women who are more likely to be overdiagnosed by them. Guidelines in other countries do not.

Reconciling Seemingly Contradictory Results from the Oregon Health Insurance Experiment and the Massachusetts Health Reform.

A headline result from the Oregon Health Insurance Experiment is that emergency room (ER) utilization increased. A seemingly contradictory result from the Massachusetts health reform is that ER utilization decreased. I reconcile both results by identifying treatment effect heterogeneity within the Oregon experiment and extrapolating it to Massachusetts. Even though Oregon compliers increased their ER utilization, they were adversely selected relative to Oregon never takers, who would have decreased their ER utilization. Massachusetts expanded coverage from a higher level to healthier compliers. Therefore, Massachusetts compliers are comparable to a subset of Oregon never takers, which can reconcile the results.

How to Examine External Validity Within an Experiment.

A fundamental concern for researchers who analyze and design experiments is that the estimate obtained from the experiment might not be externally valid for other policies of interest. Researchers often attempt to assess external validity by comparing data from an experiment to external data. In this paper, I discuss approaches from the treatment effects literature that researchers can use to begin the examination of external validity internally, within the data from a single experiment. I focus on presenting the approaches simply using stylized examples.

Mammograms and Mortality: How Has the Evidence Evolved?

Decades of evidence reveal a complicated relationship between mammograms and mortality. Mammograms may detect deadly cancers early, but they may also lead to the diagnosis and potentially fatal treatment of cancers that would never progress to cause symptoms. I provide a brief history of the evidence on mammograms and mortality, focusing on evidence from clinical trials, and I discuss how this evidence informs mammography guidelines. I then explore the evolution of all-cause mortality relative to breast cancer mortality within an influential clinical trial. I conclude with some responses to the evolving evidence.

Evaluation of Combined Financial Incentives and Deposit Contract Intervention for Smoking Cessation: A Randomized Controlled Trial.

INTRODUCTION: We evaluate whether a combination of financial incentives and deposit contracts improves cessation rates among low- to moderate-income smokers. METHODS: We randomly assigned 311 smokers covered by Medicaid at 12 health clinics in Connecticut to usual care or one of the three treatment arms. Each treatment arm received financial incentives for two months and either (i) nothing further ("incentives only"), (ii) the option to start a deposit contract with incentive earnings after the incentives ended ("commitment"), or (iii) the option to precommit any earned incentives into a deposit contract starting after the incentives ended ("precommitment"). Smoking cessation was confirmed biochemically at two, six, and twelve months. RESULTS: At two, six, and twelve months after baseline, our estimated treatment effects on cessation are positive but imprecise, with confidence intervals containing effect sizes estimated by prior studies of financial incentives alone and deposit contracts alone. At two months, the odds ratio for quitting was 1.4 in the incentive-only condition (95% CI: 0.5 to 3.5), 2.0 for incentives followed by commitment (95% CI: 0.6 to 6.1), and 1.9 for incentives and precommitment (95% CI: 0.7 to 5.3). CONCLUSIONS: A combined incentive and deposit contract program for Medicaid enrollees, with incentives offering up to $300 for smoking cessation and use of support services, produced a positive but imprecisely estimated effect on biochemically verified cessation relative to usual care and with no detectable difference in cessation rates between the different treatment arms.

Long-Term Impacts of Childhood Medicaid Expansions on Outcomes in Adulthood.

We use administrative data from the IRS to examine long-term impacts of childhood Medicaid eligibility expansions on outcomes in adulthood at each age from 19-28. Greater Medicaid eligibility increases college enrollment and decreases fertility, especially through age 21. Starting at age 23, females have higher contemporaneous wage income, although male increases are imprecise. Together, both genders have lower mortality. These adults collect less from the earned income tax credit and pay more in taxes. Cumulatively from ages 19-28, at a 3% discount rate, the federal government recoups 58 cents of each dollar of its "investment" in childhood Medicaid.

Mandate-based health reform and the labor market: Evidence from the Massachusetts reform.

We model the labor market impact of the key provisions of the national and Massachusetts "mandate-based" health reforms: individual mandates, employer mandates, and subsidies. We characterize the compensating differential for employer-sponsored health insurance (ESHI) and the welfare impact of reform in terms of "sufficient statistics." We compare welfare under mandate-based reform to welfare in a counterfactual world where individuals do not value ESHI. Relying on the Massachusetts reform, we find that jobs with ESHI pay $2812 less annually, somewhat less than the cost of ESHI to employers. Accordingly, the deadweight loss of mandate-based health reform was approximately 8 percent of its potential size.

Censored Quantile Instrumental Variable Estimates of the Price Elasticity of Expenditure on Medical Care.

Efforts to control medical care costs depend critically on how individuals respond to prices. I estimate the price elasticity of expenditure on medical care using a censored quantile instrumental variable (CQIV) estimator. CQIV allows estimates to vary across the conditional expenditure distribution, relaxes traditional censored model assumptions, and addresses endogeneity with an instrumental variable. My instrumental variable strategy uses a family member's injury to induce variation in an individual's own price. Across the conditional deciles of the expenditure distribution, I find elasticities that vary from -0.76 to -1.49, which are an order of magnitude larger than previous estimates.

Estimating the Tradeoff Between Risk Protection and Moral Hazard with a Nonlinear Budget Set Model of Health Insurance.

Insurance induces a tradeoff between the welfare gains from risk protection and the welfare losses from moral hazard. Empirical work traditionally estimates each side of the tradeoff separately, potentially yielding mutually inconsistent results. I develop a nonlinear budget set model of health insurance that allows for both simultaneously. Nonlinearities in the budget set arise from deductibles, coinsurance rates, and stoplosses that alter moral hazard as well as risk protection. I illustrate the properties of my model by estimating it using data on employer sponsored health insurance from a large firm.

Adverse Selection and an Individual Mandate: When Theory Meets Practice.

We develop a model of selection that incorporates a key element of recent health reforms: an individual mandate. Using data from Massachusetts, we estimate the parameters of the model. In the individual market for health insurance, we find that premiums and average costs decreased significantly in response to the individual mandate. We find an annual welfare gain of 4.1% per person or $51.1 million annually in Massachusetts as a result of the reduction in adverse selection. We also find smaller post-reform markups.

The Impact of Health Care Reform on Hospital and Preventive Care: Evidence from Massachusetts(☆).

In April 2006, Massachusetts passed legislation aimed at achieving near-universal health insurance coverage. The key features of this legislation were a model for national health reform, passed in March 2010. The reform gives us a novel opportunity to examine the impact of expansion to near-universal coverage state-wide. Among hospital discharges in Massachusetts, we find that the reform decreased uninsurance by 36% relative to its initial level and to other states. Reform affected utilization by decreasing length of stay, the number of inpatient admissions originating from the emergency room, and preventable admissions. At the same time, hospital cost growth did not increase.

The role of hospital heterogeneity in measuring marginal returns to medical care: a reply to Barreca, Guldi, Lindo, and Waddell.

In Almond et al. (2010), we describe how marginal returns to medical care can be estimated by comparing patients on either side of diagnostic thresholds. Our application examines at-risk newborns near the very low birth weight threshold at 1500 g. We estimate large discontinuities in medical care and mortality at this threshold, with effects concentrated at "low-quality" hospitals. Although our preferred estimates retain newborns near the threshold, when they are excluded the estimated marginal returns decline, although they remain large. In low-quality hospitals, our estimates are similar in magnitude regardless of whether these newborns are included or excluded.

ESTIMATING MARGINAL RETURNS TO MEDICAL CARE: EVIDENCE FROM AT-RISK NEWBORNS.

A key policy question is whether the benefits of additional medical expenditures exceed their costs. We propose a new approach for estimating marginal returns to medical spending based on variation in medical inputs generated by diagnostic thresholds. Specifically, we combine regression discontinuity estimates that compare health outcomes and medical treatment provision for newborns on either side of the very low birth weight threshold at 1500 grams. First, using data on the census of US births in available years from 1983-2002, we find that newborns with birth weights just below 1500 grams have lower one-year mortality rates than do newborns with birth weights just above this cutoff, even though mortality risk tends to decrease with birth weight. One-year mortality falls by approximately one percentage point as birth weight crosses 1500 grams from above, which is large relative to mean infant mortality of 5.5% just above 1500 grams. Second, using hospital discharge records for births in five states in available years from 1991-2006, we find that newborns with birth weights just below 1500 grams have discontinuously higher charges and frequencies of specific medical inputs. Hospital costs increase by approximately $4,000 as birth weight crosses 1500 grams from above, relative to mean hospital costs of $40,000 just above 1500 grams. Under an assumption that observed medical spending fully captures the impact of the "very low birth weight" designation on mortality, our estimates suggest that the cost of saving a statistical life of a newborn with birth weight near 1500 grams is on the order of $550,000 in 2006 dollars.