Health Economics

ACA Marketplace Premiums Grew Faster In Areas With Monopoly Insurers Than In Areas With More Competition

Health Affairs 37(8) pg. 1-10 doi: 10.1377/hlthaff.2018.0054

Please note: My response to David Anderson's Letter to the Editor is attached below.

Premiums have increased rapidly in the health insurance Marketplaces, with notable variation across state rating areas. Some experts have speculated that these increases are due to greater enrollment among sicker patients, the expiration of market stabilization policies, or the federal government's discontinuation of funding for cost-sharing subsidies. However, these factors do not explain why some rating areas have experienced rapid premium growth, while others have experienced modest increases. I used a comprehensive database of information about premiums and market characteristics for rating areas in states with federally facilitated Marketplaces to demonstrate that higher premiums are associated with local health insurance monopolies. In 2018, Marketplace premiums were 50 percent ($180) higher, on average, in rating areas with monopolist insurers, compared to those with more than two insurers. This was driven by large premium increases for the monopolist insurers' lowest-cost plans. Understanding how insurer competition has affected enrollment, costs, and quality will help guide future individual-market reforms.

Provider Practice Style and Patient Health Outcomes: The Case of Heart Attacks (with Janet Currie and W. Bentley MacLeod)

Journal of Health Economics 47 pg. 64-80

When a patient arrives at the Emergency Room with acute myocardial infarction (AMI), the provider on duty must quickly decide how aggressively the patient should be treated. Using Florida data on all such patients from 1992 to 2014, we decompose practice style into two components: The provider’s probability of conducting invasive procedures on the average patient (which we characterize as aggressiveness), and the responsiveness of the choice of procedure to the patient’s characteristics. We show that within hospitals and years, patients with more aggressive providers have consistently higher costs and better outcomes. Since all patients benefit from higher utilization of invasive procedures, targeting procedure use to the most appropriate patients benefits these patients at the expense of the less appropriate patients. We also find that the most aggressive and responsive physicians are young, male, and trained in top 20 schools.

Variation in Physician Practice Styles Within and Across Emergency Departments

PLOS One 11(8) pg. 1-19 doi:10.1371/journal.pone.0159882

Despite the significant responsibility that physicians have in healthcare delivery, we know surprisingly little about why physician practice styles vary within or across institutions. Estimating variation in physician practice styles is complicated by the fact that patients are rarely randomly assigned to physicians. This paper uses the quasi-random assignment of patients to physicians in emergency departments (EDs) to show how physicians vary in their treatment of patients with minor injuries. The results reveal a considerable degree of variation in practice styles within EDs; physicians at the 75th percentile of the spending distribution spend 20% more than physicians at the 25th percentile. Observable physician characteristics do not explain much of the variation across physicians, but there is a significant degree of sorting between physicians and EDs over time, with high-cost physicians sorting into high-cost EDs as they gain experience. The results may shed light on why some EDs remain persistently higher-cost than others.