Economics Works

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Analysis of variation in charges and prices paid for vaginal and caesarean section births: a cross-sectional study
(2014) Hsia, Renee Y; Akosa Antwi, Yaa; Weber, Ellerie
This article aims to examine the between-hospital variation of charges and discounted prices for uncomplicated vaginal and caesarean section deliveries, and to determine the institutional and market-level characteristics that influence adjusted charges. Using data from the California Office of Statewide Health Planning and Development (OSHPD), we conducted a cross-sectional study of all privately insured patients admitted to California hospitals in 2011 for uncomplicated vaginal delivery (diagnosis-related group (DRG) 775) or uncomplicated caesarean section (DRG 766). Hospital charges and discounted prices were adjusted for each patient's clinical and demographic characteristics. We analysed 76,766 vaginal deliveries and 32,660 caesarean sections in California in 2011. After adjusting for patient demographic and clinical characteristics, we found that the average California woman could be charged as little as US$3,296 or as much as US$37,227 for a vaginal delivery and US$8,312–US$70,908 for a caesarean section depending on which hospital she was admitted to. The discounted prices were, on an average, 37% of the charges. We found that hospitals in markets with middling competition had significantly lower adjusted charges for vaginal deliveries, while hospitals with higher wage indices and casemixes, as well as for-profit hospitals, had higher adjusted charges. Hospitals in markets with higher uninsurance rates charged significantly less for caesarean sections, while for-profit hospitals and hospitals with higher wage indices charged more. However, the institutional and market-level factors included in our models explained only 35–36% of the between-hospital variation in charges. These results indicate that charges and discounted prices for two common, relatively homogeneous diagnosis groups—uncomplicated vaginal delivery and caesarean section—vary widely between hospitals and are not well explained by observable patient or hospital characteristics.
A bargain at twice the price? California hospital prices in the new millennium.
(2009) Akosa Antwi, Yaa; Gaynor, Martin S.; Vogt, William B.
We use data from California to document and offer possible explanations for the sharp increase in hospital prices charged to private payers after 1999. We find a downward trend in price for private pay patients in the 1990s and a rapid upward trend beginning in 1999, amounting to an annual average increase of 10.6% per year over 1999-2005. Prices in 2006 were almost double prices in 1999. By contrast, there was little discernable trend in prices for Medicare and Medicaid patients, although these prices varied from year-to-year. Surprisingly, the increase in prices is not correlated, geographically, with the change in hospital market concentration. For example, the greatest price rises came from hospitals in monopoly and highly concentrated counties which experienced little or no change over our sample period. Two recent California state hospital regulations, the seismic retrofit mandate and the mandatory nurse staffing ratio affected hospital costs. However, the cost increases due to the nursing staffing regulations are not large enough to account for the price increase, and the price increase is not substantially correlated with the costs of compliance with the seismic retrofit mandate. Therefore, the source of the near-doubling of California hospital prices remains something of a mystery.
Effects of Federal Policy to Insure Young Adults: Evidence from the 2010 Affordable Care Act's Dependent-Coverage Mandate
(2013) Akosa Antwi, Yaa; Moriya, Asako S.; Simon, Kosali
Using data from the Survey of Income and Program Participation (SIPP), we study the health insurance and labor market implications of the recent Affordable Care Act (ACA) provision that allows dependents to remain on parental policies until age 26. Our comparison of outcomes for young adults aged 19-25 with those who are older and younger, before and after the law, shows a high take-up of parental coverage, resulting in substantial reductions in uninsurance and other forms of coverage. We also find preliminary evidence of increased labor market flexibility in the form of reduced work hours.
A Cross-Sectional Analysis of Variation in Charges and Prices across California for Percutaneous Coronary Intervention
(2014) Hsia, Renee Y.; Akosa Antwi, Yaa; Weber, Ellerie; Nath, Julia Brownell
Though past studies have shown wide variation in aggregate hospital price indices and specific procedures, few have documented or explained such variation for distinct and common episodes of care. We sought to examine the variability in charges for percutaneous coronary intervention (PCI) with a drug-eluting stent and without major complications (MS-DRG-247), and determine whether hospital and market characteristics influenced these charges. We conducted a cross-sectional analysis of adults admitted to California hospitals in 2011 for MS-DRG-247 using patient discharge data from the California Office of Statewide Health Planning and Development. We used a two-part linear regression model to first estimate hospital-specific charges adjusted for patient characteristics, and then examine whether the between-hospital variation in those estimated charges was explained by hospital and market characteristics. Adjusted charges for the average California patient admitted for uncomplicated PCI ranged from $22,047 to $165,386 (median: $88,350) depending on which hospital the patient visited. Hospitals in areas with the highest cost of living, those in rural areas, and those with more Medicare patients had higher charges, while government-owned hospitals charged less. Overall, our model explained 43% of the variation in adjusted charges. Estimated discounted prices paid by private insurers ranged from $3,421 to $80,903 (median: $28,571). Charges and estimated discounted prices vary widely between hospitals for the average California patient undergoing PCI without major complications, a common and relatively homogeneous episode of care. Though observable hospital characteristics account for some of this variation, the majority remains unexplained.
Variation in charges for 10 common blood tests in California hospitals: A cross-sectional analysis
(2014) Hsia, Renee Y; Akosa Antwi, Yaa; Nath, Julia P
Objectives: To determine the variation in charges for 10 common blood tests across California hospitals in 2011, and to analyse the hospital and market-level factors that may explain any observed variation. Design setting and participants: We conducted a cross-sectional analysis of the degree of charge variation between hospitals for 10 common blood tests using charge data reported by all non-federal California hospitals to the California Office of Statewide Health Planning and Development in 2011. Outcome measures: Charges for 10 common blood tests at California hospitals during 2011. Results: We found that charges for blood tests varied significantly between California hospitals. For example, charges for a lipid panel ranged from US$10 to US$10 169, a thousand-fold difference. Although government hospitals and teaching hospitals were found to charge significantly less than their counterparts for many blood tests, few other hospital characteristics and no market-level predictors significantly predicted charges for blood tests. Our models explained, at most, 21% of the variation between hospitals in charges for the blood test in question. Conclusions: These findings demonstrate the seemingly arbitrary nature of the charge setting process, making it difficult for patients to act as true consumers in this era of ‘consumer-directed healthcare.’
Simpler Standard Errors for Multi-Stage Regression-Based Estimators: Illustrations in Health Economics
(2014-08-25) Terza, Joseph V.
With a view towards lessening the analytic and computational burden faced by researchers in empirical health economics who seek an alternative to bootstrapping for the standard errors of two-stage estimators, we offer heretofore unexploited simplifications of the typical, but somewhat daunting, textbook approach. For the most commonly encountered cases in empirical health economics – two-stage estimators that, in either stage, involve maximum likelihood estimation or the nonlinear least squares method – we show that: 1) the usual textbook formulation of the relevant asymptotic covariance can be substantially reduced in complexity; and 2) nearly all components of our simplified formulation can be retrieved as outputs from packaged regression routines (e.g., in Stata). With the applied researcher in mind, we illustrate these points with two examples in empirical health economics that involve the estimation of causal effects in the presence of endogeneity – a sampling problem that can often be solved via two-stage estimation. As a by-product of this illustrative discussion, we detail four very useful two-stage estimators (and their asymptotic standard errors) that are consistent for the model parameters in such settings, along with their corresponding multi-stage causal effect estimators (and their asymptotic standard errors).
Health Policy Analysis from a Potential Outcomes Perspective: Smoking During Pregnancy and Birth Weight
(2014-08-25) Terza, Joseph V.
Most empirical research in health economics is conducted with the goal of providing scientific evidence that will serve to inform current and future health policy. The use of parametric nonlinear regression (NR) methods for empirical analysis in health economics abounds. Studies that offer clear policy-relevant interpretations of NR results are, however, rare. We offer a comprehensive policy analytic framework within which the applied researcher can: 1) clearly define the policy-relevant estimation objective; 2) consistently estimate that objective using NR methods designed to account for the possible endogeneity of the policy variable of interest; 3) conduct correct asymptotic inference; and 4) offer policy-relevant interpretations of the empirical results. For binary policies, Rubin (1974, 1977) developed the potential outcomes framework (POF). We propose a generally applicable extension of the POF (EPOF) which covers a broad range of policy analytic contexts. In particular, our EPOF accommodates: a) a non-binary policy variable of interest (Xp ); b) policy-relevant counterfactual versions of Xp that are not fixed values; and c) a policy-defining increment to Xp that is not constant. Moreover, our EPOF facilitates the use of extant nonlinear regression (NR) methods that correct for potential bias due to the endogeneity of Xp . As a case in point, we consider the analysis of potential gains in infant birth weight that may result from a prenatal smoking prevention and cessation policy which, if fully effective, would maintain zero levels of smoking for non-smokers (prevention) and convince smokers to quit before becoming pregnant (cessation). In the context of our EPOF, using endogeneity-correcting NR methods, we re-analyze the data examined by Mullahy (1997) and estimate the potential effect of the smoking prevention/cessation policy described above. The EPOF should serve as a useful guide to applied health policy analysts.
Access to Health Insurance and the Use of Inpatient Medical Care: Evidence from the Affordable Care Act Young Adult Mandate
(Elsevier, 2015-01) Antwi, Yaa Akosa; Moriya, Asako S.; Simon, Kosali; Department of Economics, School of Liberal Arts
The Affordable Care Act of 2010 expanded coverage to young adults by allowing them to remain on their parent's private health insurance until they turn 26 years old. While there is evidence on insurance effects, we know very little about use of general or specific forms of medical care. We study the implications of the expansion on inpatient hospitalizations. Given the prevalence of mental health needs for young adults, we also specifically study mental health related inpatient care. We find evidence that compared to those aged 27–29 years, treated young adults aged 19–25 years increased their inpatient visits by 3.5 percent while mental illness visits increased 9.0 percent. The prevalence of uninsurance among hospitalized young adults decreased by 12.5 percent; however, it does not appear that the intensity of inpatient treatment changed despite the change in reimbursement composition of patients.
Information Disclosure and the Equivalence of Prospective Payment and Cost Reimbursement
(Elsevier, 2015-09) Ma, Ching-to Albert; Mak, Henry Y.; Department of Economics, School of Liberal Arts
A health care provider chooses unobservable service-quality and cost-reduction efforts. The efforts produce quality and cost efficiency. An insurer observes quality and cost, and chooses how to disclose this information to consumers. The insurer also decides how to pay the provider. In prospective payment, the insurer fully discloses quality, and sets a prospective payment price. In cost reimbursement, the insurer discloses a value index, a weighted average of quality and cost efficiency, and pays a margin above cost. The first-best quality and cost efforts can be implemented by prospective payment and by cost reimbursement. Cost reimbursement with value index eliminates dumping and cream skimming. Prospective payment with quality index eliminates cream skimming.
The Role of Marriage in the Causal Pathway from Economic Conditions Early in Life to Mortality
(Elsevier, 2015-03) van den Berg, Gerard J.; Gupta, Sumedha; Department of Economics, School of Liberal Arts
This paper analyzes the interplay between early-life conditions and marital status, as determinants of adult mortality. We use individual data from Dutch registers (years 1815–2000), combined with business cycle conditions in childhood as indicators of early-life conditions. The empirical analysis estimates bivariate duration models of marriage and mortality, allowing for unobserved heterogeneity. Results show that conditions around birth and school going ages are important for marriage and mortality. Men typically enjoy a protective effect of marriage, whereas women suffer during childbearing ages. However, having been born under favorable economic conditions reduces female mortality during childbearing ages.

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