Wealth and the utilization of long-term care services: evidence from the United States.

Long-term care (LTC) provision and financing has become a major challenge for policymakers in the United States and worldwide. To inform associated policies and more efficiently allocate LTC resources, it is important to understand how demand for different types of LTC services responds to increased wealth. We use data from the United States Health and Retirement Study to examine the use of LTC services following plausibly exogenous positive shocks to wealth. We further account for time-invariant household-level characteristics, including the expectation of a wealth shock at an unknown future time, by employing household fixed effects. We find that large positive wealth shocks lead to a greater probability of purchase of paid home care but not of nursing home care. Our results imply that expanding home and community-based services and insurance coverage of home care for people without sufficient wealth is likely to be efficient and welfare improving and should be considered by policymakers.Please confirm if the author names are presented accurately and in the correct sequence (given name, middle name/initial, family name). Author 4 Given name: [R. Tamara] Last name: [Konetzka]. Also, kindly confirm the details in the metadata are correct.confirmedPlease confirm the city are correct and amend if necessary in Affiliations 1, 2, 3, 4.confirmed.

Do financial incentives matter? Effects of Medicare price shocks on skilled nursing facility care.

Skilled nursing facility (SNF) spending has been one of the fastest growing categories of Medicare spending over the past few decades, and reductions in SNF payments are often recommended as part of Medicare cost containment efforts. Using a quasi-experiment resulting from a policy-driven and facility-specific Medicare payment change, we provide new evidence on how Medicare payment changes affect the amount of SNF care provided to Medicare patients. Specifically, we examine a one-time, plausibly exogenous change in the hospital wage index, an area-level adjustment to SNF payments that affected the majority of SNFs nationwide. Using a panel dataset of SNFs, we model the effects of these payment changes on more than 12,000 SNFs across the United States. We find that increases in Medicare payment rates to SNFs increased the total number of Medicare resident days at SNFs. Specifically, a 5% payment increase raised Medicare resident days by 2.33% at facilities with a 10% Medicare share relative to 0%. Further, the effects were asymmetric: Although Medicare payment increases affected Medicare days, payment decreases did not. Our results have important implications for policies that alter the Medicare base payment rates to SNFs and other health care providers.

Consumer Response to Composite Ratings of Nursing Home Quality.

Health care report cards are intended to address information asymmetries and enable consumers to choose providers of better quality. However, the form of the information may matter to consumers. Nursing Home Compare, a website that publishes report cards for nursing homes, went from publishing a large set of indicators to a composite rating in which nursing homes are assigned one to five stars. We evaluate whether the simplified ratings motivated consumers to choose better-rated nursing homes. We use a regression discontinuity design to estimate changes in new admissions six months after the publication of the ratings. Our main results show that nursing homes that obtained an additional star gained more admissions, with heterogeneous effects depending on baseline number of stars. We conclude that the form of quality reporting matters to consumers, and that the increased use of composite ratings is likely to increase consumer response.

The Role of Medical Expenditure Risk in Portfolio Allocation Decisions.

Economic theory suggests that medical spending risk affects the extent to which households are willing to accept financial risk, and consequently their investment portfolios. In this study, we focus on the elderly for whom medical spending represents a substantial risk. We exploit the exogenous reduction in prescription drug spending risk because of the introduction of Medicare Part D in the U.S. in 2006 to identify the causal effect of medical spending risk on portfolio choice. Consistent with theory, we find that Medicare-eligible persons increased risky investment after the introduction of prescription drug coverage, relative to a younger, ineligible cohort. Copyright © 2016 John Wiley & Sons, Ltd.

Medicare Payment and Hospital Provision of Outpatient Care to the Uninsured.

OBJECTIVE: To describe the amount of hospital outpatient care provided to the uninsured and its association with Medicare payment rate cuts following the implementation of Medicare's Outpatient Prospective Payment System. DATA SOURCES/STUDY SETTING: We use hospital outpatient discharge records from Florida from 1997 through 2008. STUDY DESIGN: We estimate multivariate regression models of hospital outpatient care provided to the uninsured in separate samples of nonprofit and for-profit hospitals. PRINCIPAL FINDINGS: Hospital outpatient departments provide significant amounts of care to the uninsured. As Medicare payment rates fall, total charges and the share of charges for outpatient visits by the uninsured decrease at nonprofit hospitals. At for-profit hospitals, the share of outpatient care provided to uninsured patients increases, but there is no significant change in the number of uninsured discharges. CONCLUSIONS: Nonprofit and for-profit hospitals respond differently to reductions in Medicare payments; thus, studies of the impact of legislated Medicare payment cuts on care of the uninsured should account for differences in hospital ownership in communities. Given that outpatient care to the uninsured includes preventive and diagnostic care procedures, reductions in this care following payment cuts may adversely affect long-run health and health care costs in communities dominated by nonprofit hospitals.

Medicare Part D and Portfolio Choice.

This study evaluates the impact of medical expenditure risk on portfolio choice among the elderly. The risk of large medical expenditures can be substantial for elderly individuals and is only partially mitigated by access to health insurance. The presence of deductibles, copayments, and other cost-sharing mechanisms implies that medical spending risk can be viewed as an undiversifiable background risk. Economic theory suggests that increases in background risk reduce the optimal financial risk that an individual or household is willing to bear (Pratt and Zeckhauser 1987; Elmendorf and Kimball 2000). In this study, we evaluate this hypothesis by estimating the impact of the introduction of the Medicare Part D program, which significantly reduced prescription drug spending risk for seniors, on portfolio choice.

Does Formal Employment Reduce Informal Caregiving?

Using the Survey of Income and Program Participation, we examine the impact of formal employment on informal caregiving. We instrument for individual work hours with state unemployment rates. We find that, among women of prime caregiving ages (40-64 years), working 10% more hours per week reduces the probability of providing informal care by about 2 percentage points. The effects are stronger for more time-intensive caregiving and if care recipients are household members. Our results imply that work-promoting policies have the unintended consequence of reducing informal caregiving in an aging society. Copyright © 2015 John Wiley & Sons, Ltd.

Physician responses to rising local unemployment rates: Healthcare provision to Medicare and privately insured patients.

Prior studies suggest that hospital care is countercyclical among Medicare beneficiaries, and if anything, procyclical among the non-elderly. In this paper, we provide the first physician-level analysis of changes in healthcare provision to Medicare and privately insured patients across the business cycle. Using Florida discharge data aggregated to the physician level, we find that as county unemployment rates increase, physicians treat fewer privately insured patients in both inpatient and outpatient settings. In contrast, physicians who are more exposed to income losses during recessions provide more care to Medicare patients as the unemployment rate rises. Further analysis suggests that easing capacity constraints may contribute to this rise in Medicare volume; however, even in areas that are not capacity constrained, care provided to Medicare patients remains countercyclical among physicians with a large share of privately insured patients. This pattern is consistent with demand inducement in response to a negative income shock.

Public Reporting and Demand Rationing: Evidence from the Nursing Home Industry.

This paper examines an under-explored unintended consequence of public reporting: the potential for demand rationing. Public reporting, although intended to increase consumer access to high-quality products, may have provided the perverse incentive for high-quality providers facing fixed capacity and administrative pricing to avoid less profitable types of residents. Using data from the nursing home industry before and after the implementation of the public reporting system in 2002, we find that high-quality nursing homes facing capacity constraints reduced admissions of less profitable Medicaid residents while increasing the more profitable Medicare and private-pay admissions, relative to low-quality nursing homes facing no capacity constraints. These effects, although small in magnitude, are consistent with provider rationing of demand on the basis of profitability and underscore the important role of institutional details in designing effective public reporting systems for regulated industries.

Do changes in hospital outpatient payments affect the setting of care?

OBJECTIVE: To examine whether decreases in Medicare outpatient payment rates under the Outpatient Prospective Payment System (OPPS) caused outpatient care to shift toward the inpatient setting. DATA SOURCES/STUDY SETTING: Hospital inpatient and outpatient discharge files from the Florida Agency for Health Care Administration from 1997 through 2008. STUDY DESIGN: This study focuses on inguinal hernia repair surgery, one of the most commonly performed surgical procedures in the United States. We estimate multivariate regressions of inguinal hernia surgery counts in the outpatient setting and in the inpatient setting. The key explanatory variable is the time-varying Medicare payment rate specific to the procedure and hospital. Control variables include time-varying hospital and county characteristics and hospital and year-fixed effects. PRINCIPAL FINDINGS: Outpatient hernia surgeries fell in response to OPPS-induced rate cuts. The volume of inpatient hernia repair surgeries did not increase in response to reductions in the outpatient reimbursement rate. CONCLUSIONS: Potential substitution from the outpatient setting to the inpatient setting does not pose a serious threat to Medicare's efforts to contain hospital outpatient costs.

Racial and ethnic disparities in the surgical treatment of acute myocardial infarction: the role of hospital and physician effects.

Many studies document disparities between Blacks and Whites in the treatment of acute myocardial infarction on controlling for patient demographic factors and comorbid conditions. Other studies provide evidence of disparities between Hispanics and Whites in cardiac care. Such disparities may be explained by differences in the hospitals where minority and nonminority patients obtain treatment and by differences in the traits of physicians who treat minority and nonminority patients. We used 1997-2005 Florida hospital inpatient discharge data to estimate models of cardiac catheterization, percutaneous transluminal coronary angioplasty, and coronary artery bypass grafting in Medicare fee-for-service patients 65 years and older. Controlling for hospital fixed effects does not explain Black-White disparities in cardiac treatment but largely explains Hispanic-White disparities. Controlling for physician fixed effects accounts for some extent of the racial disparities in treatment and entirely explains the ethnic disparities in treatment.

Hospital volume responses to Medicare's Outpatient Prospective Payment System: evidence from Florida.

Effective in 2000, Medicare's Outpatient Prospective Payment System (OPPS) sets pre-determined reimbursement rates for hospital outpatient services, replacing the prior cost-based methods of reimbursement. Using Florida outpatient discharge data, we study the effect of OPPS on hospital outpatient volume. We find that on average Medicare rate cuts either decreased or had no significant effect on Medicare volume, but increased private fee-for-service (FFS) volume. We also find that responses vary with the hospital's "exposure" to Medicare payment changes, where exposure is measured as the baseline Medicare patient share. Compared to less exposed hospitals, highly exposed hospitals responded with larger increases in private FFS volume and with smaller decreases (in some cases, even increases) in Medicare volume when payment rates fell. Our results are consistent with provider demand inducement.