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NBER Working Papers and Publications
|August 2017||Politics, Hospital Behavior, and Health Care Spending|
with Amanda E Kowalski, Eleanor N Powell, Jennifer Wu: w23748
This paper examines the link between legislative politics, hospital behavior, and health care spending. When trying to pass sweeping legislation, congressional leaders can attract votes by adding targeted provisions that steer money toward the districts of reluctant legislators. This targeted spending provides tangible local benefits that legislators can highlight when fundraising or running for reelection. We study a provision - Section 508 – that was added to the 2003 Medicare Modernization Act (MMA). Section 508 created a pathway for hospitals to apply to get their Medicare payment rates increased. We find that hospitals represented by members of the House of Representatives who voted ‘Yea’ on the MMA were significantly more likely to receive a 508 waiver than hospitals represented by m...
|July 2017||Surprise! Out-of-Network Billing for Emergency Care in the United States|
with Fiona Scott Morton, Nathan Shekita: w23623
Hospitals and physicians independently negotiate contracts with insurers. As a result, a privately insured individual can attend an in-network hospital, but receive care from an out-of-network physician. Because patients do not choose their emergency physician, emergency physicians can remain out-of-network and charge high prices without losing volume. This strong outside option improves their bargaining power with insurers. We show that emergency physician outsourcing firms take advantage of this strong outside option by either remaining out-of-network or by using it to negotiate higher in-network rates. We propose a policy that would restore competition to the ED physician market and protect consumers.
|December 2015||The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured|
with Stuart V. Craig, Martin Gaynor, John Van Reenen: w21815
We use insurance claims data covering 28 percent of individuals with employer-sponsored health insurance in the US to study the variation in health spending on the privately insured, examine the structure of insurer-hospital contracts, and analyze the variation in hospital prices across the nation. Health spending per privately insured beneficiary differs by a factor of three across geographic areas and has a very low correlation with Medicare spending. For the privately insured, half of the spending variation is driven by price variation across regions and half is driven by quantity variation. Prices vary substantially across regions, across hospitals within regions, and even within hospitals. For example, even for a near homogenous service such as lower-limb MRIs, about a fifth of the to...