Kellogg School of Management
2001 Sheridan Road
Evanston, IL 60208
NBER Working Papers and Publications
|October 2016||When Discounts Raise Costs: The Effect of Copay Coupons on Generic Utilization|
with Leemore Dafny, Matthew Schmitt: w22745
Branded pharmaceutical manufacturers frequently offer "copay coupons'" that insulate consumers from cost-sharing, thereby undermining insurers' ability to influence drug utilization. We study the impact of copay coupons on branded drugs first facing generic entry between 2007 and 2010. To overcome endogeneity concerns, we exploit cross-state and cross-consumer variation in coupon legality. We find that coupons increase branded sales by 60+ percent, entirely by reducing the sales of bioequivalent generics. During the five years following generic entry, we estimate that coupons increase total spending by $30 to $120 million per drug, or $700 million to $2.7 billion for our sample alone.
Published: Leemore Dafny & Christopher Ody & Matt Schmitt, 2017. "When Discounts Raise Costs: The Effect of Copay Coupons on Generic Utilization," American Economic Journal: Economic Policy, vol 9(2), pages 91-123.
|October 2014||Investment Subsidies and the Adoption of Electronic Medical Records in Hospitals|
with David Dranove, Craig Garthwaite, Bingyang Li: w20553
In February 2009 the U.S. Congress unexpectedly passed the Health Information Technology for Economic and Clinical Health Act (HITECH). HITECH provides up to $27 billion to promote adoption and appropriate use of Electronic Medical Records (EMR) by hospitals. We measure the extent to which HITECH incentive payments spurred EMR adoption by independent hospitals. Adoption rates for all independent hospitals grew from 48 percent in 2008 to 77 percent by 2011. Absent HITECH incentives, we estimate that the adoption rate would have instead been 67 percent in 2011. When we consider that HITECH funds were available for all hospitals and not just marginal adopters, we estimate that the cost of generating an additional adoption was $48 million. We also estimate that in the absence of HITECH incenti...
Published: David Dranove & Craig Garthwaite & Bingyang Li & Christopher Ody, 2015. "Investment subsidies and the adoption of electronic medical records in hospitals," Journal of Health Economics, vol 44, pages 309-319.
|May 2014||More Insurers Lower Premiums: Evidence from Initial Pricing in the Health Insurance Marketplaces|
with Leemore Dafny, Jonathan Gruber: w20140
First-year insurer participation in the Health Insurance Marketplaces (HIMs) established by the Affordable Care Act is limited in many areas of the country. There are 3.9 participants, on (population-weighted) average, in the 395 ratings areas spanning the 34 states with federally facilitated marketplaces (FFMs). Using data on the plans offered in the FFMs, together with predicted market shares for HIM participants (estimated using 2011 insurer-state market shares in the individual insurance market), we study the impact of competition on premiums. We exploit variation in ratings-area-level competition induced by UnitedHealthcare's decision not to participate in any of the FFMs. We estimate that the second-lowest-price silver premium (which is directly linked to federal subsidies) would hav...
Published: Leemore Dafny & Jonathan Gruber & Christopher Ody, 2015. "More Insurers Lower Premiums," American Journal of Health Economics, vol 1(1), pages 53-81.
|February 2013||How do Hospitals Respond to Negative Financial Shocks? The Impact of the 2008 Stock Market Crash|
with David Dranove, Craig Garthwaite: w18853
The theory of cost-shifting posits that nonprofit hospitals respond to negative financial shocks by raising prices for privately insured patients. We examine how hospitals responded to the sharp reductions in their endowments caused by the 2008 stock market collapse. We find that the average hospital did not engage in cost-shifting, but average hospitals that likely have substantial market power did cost-shift. Investigating further how hospitals responded to the financial setback, we found no evidence of reductions in treatment costs. However, hospitals with large endowment losses delayed purchases of health information technology and curtailed the offering of unprofitable services.