Daniel Philip Kessler

Although economic theory suggests that the federal government can influence spending by states through subsidies to programs that states operate, no recent work has quantified the magnitude of this...

Holding other factors constant, the authors find that older providers prescribe significantly more opioids, with the gap between older and younger providers increasing from 2010 to 2015.

Medicare currently allows beneficiaries to choose between traditional Medicare and privately run plans in the Medicare Advantage (MA) program. Because enrollment in MA is optional, conventional observational estimates of the program's impact are potentially subject to selection bias. To address this issue, we use a discontinuity in the rules governing MA payments to health plans that gives greater payments to plans operating in counties in metropolitan statistical areas with populations of 250,000 or more. The sharp difference in payment rates at this population cutoff creates a greater incentive for plans to increase the generosity of benefits and therefore enroll more beneficiaries in MA in counties just above versus just below the cutoff. We find that the expansion of MA on this margin reduces beneficiaries’ hospital use and mortality.

Although there has been significant interest from health services researchers and policy makers about recent trends in hospitals’ ownership of physician practices, few studies have investigated the strengths and weaknesses of available data sources. In this article, we compare results from two national surveys that have been used to assess ownership patterns, one of hospitals (the American Hospital Association survey) and one of physicians (the SK&A survey). We find some areas of agreement, but also some disagreement, between the two surveys. We conclude that full understanding of the causes and consequences of hospital ownership of physicians requires data collected at the both the hospital and the physician level. The appropriate measure of integration depends on the research question being investigated.

There is ongoing debate about how prices paid to providers by Medicare Advantage plans compare to prices paid by fee-for-service Medicare. We used data from Medicare and the Health Care Cost Institute to identify the prices paid for hospital services by fee-for-service (FFS) Medicare, Medicare Advantage plans, and commercial insurers in 2009 and 2012. We calculated the average price per admission, and its trend over time, in each of the three types of insurance for fixed baskets of hospital admissions across metropolitan areas. After accounting for differences in hospital networks, geographic areas, and case-mix between Medicare Advantage and FFS Medicare, we found that Medicare Advantage plans paid 5.6 percent less for hospital services than FFS Medicare did. Without taking into account the narrower networks of Medicare Advantage, the program paid 8.0 percent less than FFS Medicare. We also found that the rates paid by commercial plans were much higher than those of either Medicare Advantage or FFS Medicare, and growing. At least some of this difference comes from the much higher prices that commercial plans pay for profitable service lines.

We simulated how the decision of a hypothetical hospital to form an Accountable Care Organization through the purchase of physicians in a hypothetical county would translate into changes in prices and spending. Our simulation was based on regression estimates of the effects of hospital ownership of physicians on hospital and physician prices and spending on hospital, physician, and all health services (including prescription drugs and outpatient diagnostic tests). Although the simulation does not evaluate a transaction that actually occurred in the real world, it illustrates whether and under what circumstances a stylized merger would have important effects on markets for health care. We found that such mergers can lead to statistically significant and economically meaningful increases in prices and spending. We also show that these mergers can affect patients differently depending on their local hospital market conditions. We conclude that policymakers should consider modifying the current approach to antitrust policy toward Accountable Care Organizations.