My Papers

Last Friday I was the keynote speaker for the Pinal County (Arizona) Health Care Delivery System - 2008 Conference. The conference had an interesting mix of speakers (see agenda).

Speakers included Lisa Garcia, the Assistant County Manager of Health and Human Services, two academics from the University of Arizona (Gary Hart and Keith Joiner), and the CEO of a local community college (Dennis Jenkins). Also, CEOs of three hospitals (Casa Grande, Banner Ironwood, Northwest Medical Center Oro Valley), representatives from Blue Cross Blue Shield Arizona and the Director of the Arizona Medicaid and SCHIP program (AHCCCS) also presented.

My talk was titled “Health Care Economics: An Introduction.” The power point presentation is available here. The other speakers presentations are available here.

Below is an abstract of a working paper I am writing with Dr. John Fontanesi and two other co-authors at the CDC.  The complete paper is available on my website.

Influenza is the 7th leading killer in the United States. In order an attempt to attenuate the threat of an influenza outbreak, the Centers for Disease Control and Prevention (CDC) have established guidelines recommending that all parents of children between 0 and 60 months old should be vaccinated. Insurance companies, however, will not reimburse pediatricians who administer influenza vaccinations to adults. This seemingly innocuous insurance company restriction, however, is creating significant costs for society. Using a new observational dataset we estimate the cost of this insurance restriction and find that the cost of the insurance restriction to be between $4.5 and $142.8 million. If proposed CDC policies to vaccinate parents of all children 0-18 years old were adopted, the cost of the insurance company restriction could increase to a figure as large as $400 million. While narrowly the paper advocates allowing pediatricians to vaccinate adults, more generally it warns of the costs inherent when third party entities inhibit the scope of physician-patient interaction.

I have recently finished the latest draft of a working paper titled “Operating on commission: Analyzing how physician financial incentives affect surgery rates using nationally representative household data.” It should be interesting to readers who wonder how financial incentives affect specialist care provision. Below is the paper’s abstract. Any comments regarding the paper’s contents would be greatly appreciated.

Measuring how physician financial incentives impact on medical service provision has been a preoccupation of healthcare economists for many years. While the literature has explored the financial incentives of primary care physicians in great detail, the fields in which specialist physicians work has been largely overlooked. In this paper, a theoretical model is developed in which the quantity of specialist medical services is a function of both specialist and primary care physician financial incentives. The empirical section of the paper employs the Restricted Use 1996/1997 Community Tracking Study (CTS) dataset to test the model’s predictions using surgery rates as a proxy for the quantity of specialist services. The CTS is a household based survey which includes observational data on both primary care and specialist compensation. Using a variety of econometric specifications and controlling for adverse selection, I find the financial compensation has a large effect on surgery rates. When specialists are paid through a fee-for-system (FFS) methodology rather than a capitation or salaried basis, surgery rates increase 155%. There is suggestive evidence that surgery rates fall when primary care physicians are paid on a fee-for-service basis compared to capitation or salaried payments.

I have recently completed a paper titled Job Lock: A Literature Review, which has been posted in the ‘Papers by HC Economist‘ page. Here is a brief excerpt from the beginning of the paper.

“Three in 10 Americans say they or someone in their household have at some time stayed in a job they wanted to leave mainly to keep the health benefits, according to a New York Times/CBS News Poll. The survey provides some of the strongest evidence yet of pervasive concern about the costs of medical insurance and care.”

“We will strengthen health savings accounts — making sure individuals and small business employees can buy insurance with the same advantages that people working for big businesses now get. We will do more to make this coverage portable, so workers can switch jobs without having to worry about losing their health insurance.”
- President George W. Bush,
- State of the Union Address, 2006

INTRODUCTION

Health insurance is a major issue in the United States. Nearly
everyday, residents can pick up a newspaper and read a story
expounding on the worsening `health care crisis.’ Many workers
fear losing their job, not simply due to the loss in wages, but
even more due to the loss in health insurance coverage. In fact
many workers decide to stay at a job whose compensation is less
than their marginal product because they fear the loss of their
health insurance. This phenomenon is known as `job lock.’ The
term has received much publicity both in the economics literature
and in the popular press. The economics literature seeks to
answer the following three questions:

1. Does job lock exists?
2. If job lock does exist, what is its impact on social welfare?
3. Does current regulation aimed at combatting job lock improve social welfare?

In the following literature review, I will show how the field of
Economics has attempted to answer these questions.

In the United States today, many employees receive compensation in the form of health insurance in addition to pecuniary remuneration. Health insurance, however, is tax deductible when it is received from an individual’s employer while wages are not. A Health Affairs report shows that this tax expenditure from excluding health insurance from the federal income tax cost the government over $100 billion in 2004.

Is this tax expenditure worth the cost? My “Health Care Tax Policy” paper examines the pros and cons of this policy. On one hand, the tax may encourage over-insurance; on the other the tax subsidy may eliminate some problems of adverse select. The conclusion of the paper is that the tax subsidy is efficient only if adverse selection is a significant problem, and if the cost savings from group policies outweigh any fixed costs firms incur from administering health care plans.

Please, feel free to take the time to read the paper and give me some feedback.