Essays in Health Economics

Abstract

Health care expenditures have risen dramatically in the last several decades. Various agents have responded by reforming their practices in an effort to protect their budgets. My dissertation studies the implications of two of these changes on both quality and expenditure dimensions. The first chapter introduces and briefly discusses these topics. The second chapter discusses the implications of hospital mergers. A large body of research has examined their financial consequences, while little has analyzed the effect on patient health and experiences. This chapter aims to fill this gap, utilizing 17 years of hospital discharge data to study the impact of 40 California hospital mergers on changes in treatment choices and health outcomes. I use an empirical strategy that is based on geography of residence to enable a market level analysis. My findings indicate that hospital mergers result in increased utilization of intensive treatments for heart disease, such as bypass surgery and angioplasty. This result could be driven by increased access to intensive procedures as well as a change in hospital treatment practices. I also find evidence of a small increase in inpatient mortality which could be driven by an increase in average travel time to the nearest facility offering cardiac services. In chapter three, co-authored with Mark Duggan, we analyze the implications of a widespread Medicaid reform: contracting out health care treatment of Medicaid recipients to managed care organizations. State governments rapidly shifted Medicaid enrollees into managed care during the 1990s, perhaps partly as a response to increasing Medicaid expenditures. This reform has not previously been studied at the national level. We use state-level aggregate administrative data for the years 1991-2003 in conjunction with a unique data set on mandatory managed care enrollment policies to estimate the average national impact. Results suggest that this policy may have increased the expense of the Medicaid program, particularly for HMO-style insurance plans. We extend our analysis to investigate the impact of these policies on enrollment decisions. Using CPS data, we find mixed responses to mandatory managed care policies, though all changes in take-up were small and did not appear to increase uninsurance rates.