This paper studies the effect of hospital closure on the cost and quality of health care in rural markets. Hospital closure can be welfare improving if it reallocates patients to more efficient facilities but can also lead to treatment delay and worsened health outcomes. I find support for both sides of this debate. Using a difference-in-differences analysis of Medicare claims, I show that rural hospital closure led to both a decrease in Medicare spending and an increase in mortality among enrollees with time-sensitive health conditions. I study the implications of forestalling hospital closure in the context of the Critical Access Hospital (CAH) program, a large-scale payment reform that increased Medicare revenues for nearly half of all rural hospitals. I show that the CAH program led to a reduction in hospital closures and an improvement in mortality, but the program’s expenditures were substantial relative to these effects.
While a substantial literature has studied the influence of malpractice pressure on physician behavior, existing research has not found that malpractice concerns influence physicians to any great extent. However, these studies generally focus on variation in state laws governing malpractice exposure. In this project, we test how physicians respond to malpractice allegations made against them – both those that are successful and those that are not. We study the impact of malpractice reports on the practice patterns of Emergency Department physicians, exploiting variation in the timing of unexpected malpractice allegations across doctors. We find that physician labor supply decreases by 7% after malpractice allegations and that this reduction is persistent over time. Our results are driven by intensive margin responses, specifically that physicians reduce the number of discharges they oversee but maintain practice in the state. We also find that physicians increase total charges per discharge by about 4% after an allegation. Lastly, we explore whether physicians respond optimally to malpractice allegations, testing whether physicians change their behavior according to the information content of the claim.
We study how physicians respond to financial incentives imposed by episode-based payment (EBP), which encourages lower spending and improved quality for an entire episode of care. Specifically, we study the impact of the Arkansas Health Care Payment improvement Initiative, a multi-payer program that requires providers to enter into EBP arrangements for perinatal care, covering the majority of births in the state. Unlike fee-for-service reimbursement, EBP holds physicians responsible for all care within a discrete episode, rewarding physicians for efficient use of their own services and for efficient management of other health care inputs. In a difference-in-differences analysis of commercial claims, we find that perinatal spending in Arkansas decreased by 3.8% overall under EBP, compared to surrounding states. The decrease was driven by reduced spending on non-physician health care inputs, specifically the prices paid for inpatient facility care. We additionally find a limited improvement in quality of care under EBP.
There are large differences in US health insurance coverage by racial and ethnic groups, yet there have been no estimates to date on how implementation of the Affordable Care Act will affect the distribution of coverage by race and ethnicity. We used a microsimulation model to show that racial and ethnic differentials in coverage could be greatly reduced, potentially cutting the eight-percentage-point black-white differential in uninsurance rates by more than half and the nineteen-percentage-point Hispanic-white differential by just under one-quarter. However, blacks and Hispanics are still projected to remain more likely to be uninsured than whites. Achieving low uninsurance under the Affordable Care Act will depend on effective state policies to attain high enrollment in Medicaid and the Children’s Health Insurance Program and the new insurance exchanges. Coverage gains among Hispanics will probably depend on adoption of strategies that address language and related barriers to enrollment and retention in California and Texas, where almost half of Hispanics live. If uninsurance is reduced to the extent projected in this analysis, sizable reductions in long-standing racial and ethnic differentials in access to health care and health status are likely to follow.