American Economic Journal-Economic Policy

Experimental Evidence on the Effectiveness of Nonexperts for Improving Vaccine Demand
Alsan M and Eichmeyer S
We experimentally vary signals and senders to identify which combination will increase vaccine demand among a disadvantaged population in the United States-Black and White men without a college education. Our main finding is that laypeople (nonexpert concordant senders) are most effective at promoting vaccination, particularly among those least willing to become vaccinated. This finding points to a trade-off between the higher qualifications of experts on the one hand and the lower social proximity to low-socioeconomic-status populations on the other hand, which may undermine credibility in settings of low trust.
Public and Private Options in Practice: The Military Health System
Frakes MD, Gruber J and Justicz T
Recent debates over health care reform, including in the context of the Military Health System (MHS) and Veterans Administration, highlight the dispute between public and private provision of health care services. Using novel data on childbirth claims from the MHS and drawing on the combination of plausibly exogenous patient moves and heterogeneity across bases in the availability of base hospitals, we identify the impact of receiving obstetrical care on versus off military bases. We find evidence that off-base care is associated with slightly greater resource intensity, but also notably better outcomes, suggesting marginal efficiency gains from care privatization.
The Impact of Organizational Boundaries on Healthcare Coordination and Utilization
Agha L, Ericson KM and Zhao X
We measure -the distribution of a patient's healthcare across organizations-to examine how firm boundaries affect healthcare efficiency. First, when patients move to regions where outpatient visits are typically concentrated within a small set of firms, their healthcare utilization falls. Second, for patients whose PCPs exit the market, switching to a PCP with 1 standard deviation higher organizational concentration reduces utilization by 21%. This finding is robust to controlling for the spread of healthcare across providers. Increases in organizational concentration predict improvements in diabetes care and are not associated with greater use of emergency department or inpatient care.
Investing in Ex Ante Regulation: Evidence from Pharmaceutical Patent Examination
Frakes MD and Wasserman MF
We explore how the Patent Office may improve the quality of issued patents on "secondary" drug features by giving examiners more time to review drug-patent applications. Our findings suggest that current time allocations are causing examiners to issue low quality secondary patents on the margin. To assess the merits of expanding ex ante scrutiny of drug-patent applications at the agency, we set forth estimates of the various gains and losses associated with giving examiners more time, including reduced downstream litigation costs and added personnel expenses, along with both the static gains and dynamic innovation losses associated with earlier generic entry.
Healthcare Rationing in Public Insurance Programs: Evidence from Medicaid
Layton TJ, Maestas N, Prinz D and Vabson B
Out of the Woodwork: Enrollment Spillovers in the Oregon Health Insurance Experiment
Sacarny A, Baicker K and Finkelstein A
We analyze the impact of expanded adult Medicaid eligibility on the enrollment of already-eligible children. We analyze the 2008 Oregon Medicaid lottery, in which some low-income uninsured adults were randomly selected to be allowed to apply for Medicaid. Children in these households were eligible for Medicaid irrespective of the lottery outcome. We estimate statistically significant but transitory impacts of adult lottery selection on child Medicaid enrollment: at three months after the lottery, for every 9 adults who enrolled in Medicaid due to winning the lottery, one additional child also enrolled. Our results shed light on the existence, magnitude, and nature of so-called "woodwork effects".
Drug Diffusion Through Peer Networks: The Influence of Industry Payments
Agha L and Zeltzer D
Pharmaceutical companies market to physicians through individual detailing accompanied by monetary or in-kind transfers. Large compensation payments to a small number of physicians account for most of this promotional spending. Studying US promotional payments and prescriptions for anticoagulant drugs, we investigate how peer influence broadens the payments' reach. Following a compensation payment, prescriptions for the marketed drug increase by both the paid physician and the paid physician's peers. Payments increase prescriptions to both recommended and contraindicated patients. Over three years, marketed anticoagulant prescriptions rose 23 percent due to payments, with peer spillovers contributing a quarter of the increase.
A PASSAGE TO AMERICA: UNIVERSITY FUNDING AND INTERNATIONAL STUDENTS
Bound J, Braga B, Khanna G and Turner S
The number of international undergraduate students at U.S. public research universities increased dramatically over the last two decades, alongside concurrent reductions in state support for universities. We show that these trends are closely connected as public research universities relied on foreign students to cushion the effects of falling appropriations. The growing capacity in emerging economies to pay for a U.S. education provided opportunities for universities to recover revenues from full-fare paying foreign students. Between 1996-2012, we estimate that a 10 percent reduction in state appropriations led to an increase in foreign enrollment of 16 percent at public research universities.
Advertising and Environmental Stewardship: Evidence from the BP Oil Spill
Barrage L, Chyn E and Hastings J
This paper explores whether private markets can incentivize environmental stewardship. We examine the consumer response to the 2010 BP oil spill and test how BP's investment in the 2000-2008 "Beyond Petroleum" green advertising campaign affected this response. We find evidence consistent with consumer punishment: BP station margins and volumes declined by 2.9 cents per gallon and 4.2 percent, respectively, in the month after the spill. However, pre-spill advertising significantly dampened the price response, and may have reduced brand switching by BP stations. These results indicate that firms may have incentives to engage in green advertising without investments in environmental stewardship.
Defensive Medicine: Evidence from Military Immunity
Frakes M and Gruber J
We estimate the extent of defensive medicine by physicians, embracing the no-liability counterfactual made possible by the structure of liability rules in the Military Heath System. Active-duty patients seeking treatment from military facilities cannot sue for harms resulting from negligent care, while protections are provided to dependents treated at military facilities and to all patients-active-duty or not-that receive care from civilian facilities. Drawing on this variation and exploiting exogenous shocks to care location choices stemming from base-hospital closures, we find suggestive evidence that liability immunity reduces inpatient spending by 5% with no measurable negative effect on patient outcomes.
Estimating the Value of Public Insurance Using Complementary Private Insurance
Cabral M and Cullen MR
The welfare associated with public insurance is often difficult to quantify because the demand for coverage is unobserved and thus cannot be used to analyze welfare. However, in many settings, individuals can purchase private insurance to supplement public coverage. This paper outlines an approach to use data and variation from private complementary insurance to quantify welfare associated with counterfactuals related to compulsory public insurance. We then apply this approach using administrative data on disability insurance. Our findings suggests that public disability insurance generates substantial surplus for the sample population, and there may be gains to increasing the generosity of coverage.
Screening in Contract Design: Evidence from the ACA Health Insurance Exchanges
Geruso M, Layton T and Prinz D
We study insurers' use of prescription drug formularies to screen consumers in the ACA Health Insurance exchanges. We begin by showing that exchange risk adjustment and reinsurance succeed in neutralizing selection incentives for most, but not all, consumer types. A minority of consumers, identifiable by demand for particular classes of prescription drugs, are predictably unprofitable. We then show that contract features relating to these drugs are distorted in a manner consistent with multidimensional screening. The empirical findings support a long theoretical literature examining how insurance contracts offered in equilibrium can fail to optimally trade off risk protection and moral hazard.
Physician Beliefs and Patient Preferences: A New Look at Regional Variation in Health Care Spendingf
Cutler D, Skinner JS, Stern AD and Wennberg D
There is considerable controversy about the causes of regional variations in health care expenditures. Using vignettes from patient and physician surveys linked to fee-for-service Medicare expenditures, this study asks whether patient demand-side factors or physician supply-side factors explain these variations. The results indicate that patient demand is relatively unimportant in explaining variations. Physician organizational factors matter, but the most important factor is physician beliefs about treatment. In Medicare, we estimate that 35 percent of spending for end-of-life care and 12 percent of spending for heart attack patients (and for all enrollees) is associated with physician beliefs unsupported by clinical evidence. (JEL D83, H75, I11, I18).
Supply-Side Drug Policy in the Presence of Substitutes: Evidence from the Introduction of Abuse-Deterrent Opioids
Alpert A, Powell D and Pacula RL
Overdose deaths from prescription opioid pain relievers nearly quadrupled between 1999 and 2010. We study the consequences of one of the largest supply disruptions to date to abusable opioids - the introduction of an abuse-deterrent version of OxyContin in 2010. Supply-side interventions which limit access to opioids may have the unintended consequence of increasing use of substitute drugs, including heroin. Exploiting cross-state variation in OxyContin exposure, we find that states with the highest initial rates of OxyContin misuse experienced the largest increases in heroin deaths. Our results imply that the recent heroin epidemic is largely due to the reformulation of OxyContin.
Private provision of social insurance: drug-specific price elasticities and cost sharing in Medicare Part D
Einav L, Finkelstein A and Polyakova M
We explore how private drug plans set cost-sharing in the context of Medicare Part D. While publicly-provided drug coverage typically involves uniform cost-sharing across drugs, we document substantial heterogeneity in the cost-sharing for different drugs within privately-provided plans. We also document that private plans systematically set higher consumer cost sharing for drugs or classes associated with more elastic demand; to do so we estimate price elasticities of demand across more than 150 drugs and across more than 100 therapeutic classes. We conclude by discussing the various channels that likely affect private plans' cost-sharing decisions.
Strategic Formulary Design in Medicare Part D Plans
Lavetti K and Simon K
The design of Medicare Part D causes most beneficiaries to receive fragmented health insurance, with drug and medical coverage separated. Fragmentation is potentially inefficient since separate insurers optimize over only one component of healthcare spending, despite complementarities and substitutabilities between healthcare types. Fragmentation of only some plans can also lead to market distortions due to differential adverse selection, as integrated plans may use drug formularies to induce enrollment by patients that are profitable in the medical insurance market. We study the design of insurance plans in Medicare Part D, and find that formularies reflects these two differences in incentives.
The Evolution of Physician Practice Styles: Evidence from Cardiologist Migration
Molitor D
Physician treatment choices for observably similar patients vary dramatically across regions. This paper exploits cardiologist migration to disentangle the role of physician-specific factors such as preferences and learned behavior versus environment-level factors such as hospital capacity and productivity spillovers on physician behavior. Physicians starting in the same region and subsequently moving to dissimilar regions practice similarly before the move. After the move, physician behavior in the first year changes by 0.6-0.8 percentage points for each percentage point change in practice environment, with no further changes over time. This suggests environment factors explain between 60-80 percent of regional disparities in physician behavior.
Causal Spousal Health Spillover Effects and Implications for Program Evaluation
Fletcher J and Marksteiner R
Current methods of cost effectiveness analysis implicitly assume zero spillovers among social ties. This can underestimate the benefits of health interventions and misallocate resources toward interventions with lower comprehensive effects. We discuss the implications of social spillovers for program evaluation and document the first evidence of causal spillovers of health behaviors between spouses by leveraging experimental data from the Lung Health Study (smoking) and COMBINE Study (drinking). We find large decreases in spousal substance use from treatments with a therapy component, which reduces the incremental cost effectiveness ratios of some treatments by 12 to 18 percent.
Health Insurance Mandates, Mammography, and Breast Cancer Diagnoses
Bitler MP and Carpenter CS
We examine the effects of state health insurance mandates requiring coverage of screening mammograms. We find evidence that mammography mandates significantly increased mammography screenings by 4.5-25 percent. Effects are larger for women with less than a high school degree in states that ban deductibles, a policy similar to a provision of federal health reform that eliminates cost-sharing for preventive care. We also find that mandates increased detection of early stage in-situ pre-cancers. Finally, we find a substantial proportion of the increased screenings were attributable to mandates that are not consistent with current recommendations of the American Cancer Society.
Capacity and Utilization in Health Care: The Effect of Empty Beds on Neonatal Intensive Care Admission
Freedman S
Because geographic variation in medical care utilization is jointly determined by both supply and demand, it is difficult to empirically estimate whether capacity itself has a causal impact on utilization in health care. In this paper, I exploit short-term variation in Neonatal Intensive Care Unit (NICU) capacity that is unlikely to be correlated with unobserved demand determinants. I find that available NICU beds have little to no effect on NICU utilization for the sickest infants, but do increase utilization for those in the range of birth weights where admission decisions are likely to be more discretionary.
The Effects of Medicare on Medical Expenditure Risk and Financial Strain
Barcellos SH and Jacobson M
Medicare offers substantial protection from medical expenditure risk, protection that has increased in recent years. At age 65, out-of-pocket expenditures drop by 33 percent at the mean and 53 percent at the ninety-fifth percentile. Medical-related financial strain, such as difficulty paying bills and collections agency contact, is dramatically reduced. Nonetheless, using a stylized expected utility framework, the gain from reducing out-of-pocket expenditures accounts for only 18 percent of the social costs of financing Medicare. This calculation ignores any direct health benefits from Medicare or any indirect health effects due to reductions in financial stress.