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Reconciling Seemingly Contradictory Results from the Oregon Health Insurance Experiment and the Massachusetts Health Reform

Amanda E. Kowalski

NBER Working Paper No. 24647
Issued in May 2018, Revised in February 2019
NBER Program(s):Aging, Health Care, Health Economics, Public Economics, Technical Working Papers

I aim to shed light on why emergency room (ER) utilization increased following the Oregon Health Insurance Experiment but decreased following a Massachusetts policy. To do so, I unite the literatures on insurance and treatment effects. Under an MTE model that assumes no more than the LATE assumptions, comparisons across always takers, compliers, and never takers can inform the impact of polices that expand and contract coverage. Starting from the Oregon experiment as the "gold standard," I make comparisons within Oregon and extrapolate my findings to Massachusetts. Within Oregon, I find adverse selection and heterogeneous moral hazard. Although previous enrollees increased their ER utilization, evidence suggests that subsequent enrollees will be healthier, and they will decrease their ER utilization. Accordingly, I can reconcile the Oregon and Massachusetts results because the Massachusetts policy expanded coverage from a higher baseline, and new enrollees reported better health.

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Document Object Identifier (DOI): 10.3386/w24647

 
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