In 1966, Southern hospitals were barred from participating in the Medicare program unless they discontinued their long-standing practice of racial segregation. Using data from five Deep South states and exploiting county-level variation in Medicare certification dates, Anderson, Charles, and Rees find that gaining access to an ostensibly integrated hospital had no effect on the Black-White infant mortality gap, although it may have discouraged small numbers of Black mothers from giving birth at home attended by a midwife. These results are consistent with descriptions of the federal hospital desegregation campaign as producing only cosmetic changes and illustrate the limits of anti-discrimination policies imposed upon reluctant actors.
This paper was distributed as Working Paper 27970, where an updated version may be available.
Biasi, Moser, and Dahl investigates the career effects of mental health, focusing on depression, schizophrenia, and bipolar disorder (BD). Individual-level registry data from Denmark show that these disorders carry large earnings penalties, ranging from 34 percent for depression and 38 percent for BD to 74 percent for schizophrenia. To investigate the causal effects of mental health on a person’s career the researchers exploit the approval of lithium as a maintenance treatment for BD in 1976. Baseline estimates compare career outcomes for people with and without access in their 20s, the typical age of onset for BD. These estimates show that access to treatment eliminates one-third of the earnings penalty associated with BD and greatly reduces the risks of low or no earnings. Importantly, access to treatment reduces the risk of disability for a person with BD by more than half.
Do healthcare providers pick their patients? Gandhi uses patient-level administrative data on skilled nursing facilities in California to estimate a structural model of selective admission practices in the nursing home industry. They exploit within-facility covariation between occupancy and admitted patient characteristics to distinguish admission patterns attributable to selective admission practices from those attributable to heterogeneous patient preferences. In spite of anti-discrimination laws, they find strong evidence of selective admission practices that disproportionately harm Medicaid-eligible patients with lengthy anticipated stays. Counterfactual simulations show that enforcing a prohibition on selective admissions would increase access for these residents at the cost of crowding out short-stay non-Medicaid patients from their preferred facilities. Gandhi simulates two additional policies intended to mitigate selective admissions: raising the Medicaid reimbursement rate and expanding capacity. They find the latter to be less costly and more effective than the former.
While the mechanism design paradigm emphasizes notions of efficiency based on agent preferences, policymakers often focus on alternative objectives. School districts emphasize educational achievement, and transplantation communities focus on patient survival. It is unclear whether choice-based mechanisms perform well when assessed based on these outcomes. Agarwal, Somaini, and Hodgson evaluate the assignment mechanism for allocating deceased donor kidneys on the basis of patient life-years from transplantion (LYFT). They examine the role of choice in increasing LYFT and compare equilibrium assignments to benchmarks that remove choice. The model combines choices and outcomes in order to study how selection induced in the mechanism affects LYFT. The researchers show how to identify and estimate the model using quasi-experimental variation resulting from the mechanism. The estimates suggest that the design in use selects patients with better post-transplant survival prospects and matches them well, resulting in an average LYFT of 8.78, which is 0.92 years more than a random assignment. However, the aggregate LYFT can be increased to 13.84. Realizing the majority of the gains requires transplanting relatively healthy patients, who would have longer life expectancies even without a transplant. Therefore, a policymaker faces a dilemma between transplanting patients who are sicker and those for whom life will be extended the longest.
Eliason, League, Heebsh, McDevitt, and Roberts consider how health care providers respond to bundled payments. Using claims data from dialysis patients, they show that facilities halved their use of injectable anemia drugs following Medicare's transition from fee-for-service reimbursements to a bundle. The researchers identify the causal effects of the payment reform using a novel instrumental variable -- patients at higher elevations naturally require lower doses of anemia drugs -- and find that lower doses caused a decrease in mortality but an increase in blood transfusions. Allocative efficiency increased from this change as providers reduced doses more for patients who benefit little from the drug.
State governments face the classic "make or buy" decision for the provision of Medicaid services. Over the past two decades, the majority of states have outsourced the provision of social insurance through Medicaid Managed Care (MMC) programs. These programs have been extensively studied in the literature - with little evidence of large positive or negative effects. However, most states allowed older and sicker enrollees to remain enrolled in the government run fee for service (FFS) programs. It is possible that these more fragile enrollees could have a different experience in managed care. Duggan, Garthwaite, and Wang study California's mandatory enrollment of the senior and persons with disabilities (SPD) population in MMC. They find this mandatory enrollment caused an increased use of the emergency department and transfers between hospitals. This was not simply a hassle cost for enrollees -- the researchers also estimate an increase in mortality for the affected population. These effects were strongest for enrollees who had the greatest use of medical services prior to enrollment in MMC -- the types of enrollees that might be expected to have a different experience with managed care. The results suggest the adverse impact of MMC varies by the health of enrollees, which should inform the optimal outsourcing decision for governments.