NBER Working Papers by Jeffrey Clemens

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Working Papers

February 2014Regulatory Redistribution in the Market for Health Insurance
Community rating regulations equalize the insurance premiums faced by the healthy and the unhealthy. Intended reductions in the unhealthy's premiums can be undone, however, if the healthy forgo coverage. The severity of this adverse selection problem hinges largely on how health care costs are distributed across market participants. Theoretically, I show that Medicaid expansions can combat adverse selection by removing high cost individuals from the relevant risk pool. Empirically, I find that private coverage rates improved significantly in community rated markets when states expanded Medicaid's coverage of relatively unhealthy adults. The effects of Medicaid expansions and community rating regulations are fundamentally linked.
December 2013The Effect of U.S. Health Insurance Expansions on Medical Innovation
I study the channels through which health insurance influences medical innovation. Following Medicare and Medicaid's passage, I find that U.S.-based medical-equipment patenting rose by 40 to 50 percent relative to both other U.S. patenting and foreign medical-equipment patenting. Within the United States, increases in medical-equipment patenting were most dramatic in states where the Great Society insurance expansions were largest and in which there were large baseline numbers of physicians per resident. Consistent with historical case studies, Medical innovation's determinants extend beyond the potential revenues associated with global market size; a physician driven process of innovation-while-doing appears to play a central role. An extrapolation of the evidence suggests that the la...
October 2013Who Pays for Public Employee Health Costs?
with David M. Cutler: w19574
We analyze the incidence of public-employee health benefits. Because these benefits are negotiated through the political process, relevant labor market institutions deviate significantly from the competitive, private-sector benchmark. Empirically, we find that roughly 15 percent of the cost of recent benefit growth was passed onto school district employees through reductions in wages and salaries. Strong teachers' unions were associated with relatively strong linkages between benefit growth and growth in total compensation. We further find that when economic conditions are poor, straining public budgets, benefit growth is more readily shifted back to public employees. Our analysis is consistent with the view that the costs of public workers' benefits are difficult to monitor, contribu...

Forthcoming: Who Pays for Public Employee Health Costs?, Jeffrey Clemens, David M. Cutler. in State and Local Health Plans for Active and Retired Public Employees, Clark and Newhouse. 2014

Bargaining in the Shadow of a Giant: Medicare's Influence on Private Payment Systems
with Joshua D. Gottlieb: w19503
We analyze Medicare's influence on private payments for physicians' services. Using a large administrative change in surgical relative to medical reimbursements, we find that private prices follow Medicare's lead. A $1 change in Medicare's relative payments moves private payments by $1.20. Results are similar when Medicare alters overall reimbursement levels. Medicare thus strongly influences both relative valuations and aggregate expenditures. Medicare's price transmission is strongest when physician groups are numerous and competitive. Transaction and bargaining costs may lead the development of payment systems to suffer from a classic coordination problem. Improvements in Medicare's payment models may therefore be public goods.

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