This research investigates financial incentives in publicly provided health care in three projects. The first two projects study how to design health insurance markets to provide insurance plans with incentives to raise quality and reduce costs. Specifically, the investigator examines market distortions -- such as adverse selection and market power -- and potential corrective policies in the Medicare Advantage (MA) and Affordable Care Act (ACA) markets. The third project studies how to design financial incentives for medical providers to efficiently supply health care, focusing on the case of Medicare payments for Long Term Care Hospitals.
This research uses rich micro-data and quasi-experimental variation in contract terms. The first project on MA uses costs and utilization data from State Inpatient Databases and mortality data from the Medicare denominator file. The investigator further exploits difference-in-differences variations in MA coverage generated by the Benefits Improvement and Protection Act of 2000 and studies the utilization and mortality effects of MA coverage. The second project on the ACA markets estimates the degree of selection using claims-level data from the Health Care Cost Institute and research designs that exploit (i) the variation in enrollment stemming from the heterogeneous effect of the ACA across geographic areas and age groups, and (ii) the variation in premiums caused by idiosyncrasies in the age-rating formula. The third project on provider incentives exploits a large "jump" in payments to Long Term Care Hospitals to estimate the effect of financial incentives on patient treatment patterns, government costs, and patient health using Medicare claims data. Using this variation, the investigator estimates a dynamic model of provider behavior to quantify the importance of financial incentives and estimate the consequences of counterfactual financial contracts.