Essays on the economics of health care in the United States [electronic resource]

In this dissertation, I study three related topics regarding the economics of health care in the United States. I begin with a broad look at the recent U.S. health care reform law in Chapter 1. In Chapters 2 and 3, I narrow my focus to study the impact of changing either demand-side incentives (Chapter 2) or supply-side incentives (Chapter 3) on the utilization of medical services. In Chapter 1, Wichsinee Wibulpolprasert and I study changes in firms' asset prices around the passage of the ACA by the House of Representatives to identify the long- run expected impact of the reform for a given firm, including general equilibrium effects (e.g., price changes). The ACA includes a wide-reaching set of reforms to ensure more universal and comprehensive health insurance benefits. The bill has the potential to impact U.S. firms through regulations on employer-sponsored insurance (ESI) and general equilibrium effects. Among 321 publicly traded firms from 19 sec- tors (defined by the 2-digit North American Industry Classification System code), we find that firms experienced heterogeneous effects on their asset prices that are consis- tent with predictions from a partial equilibrium analysis of labor market equilibria. Shareholders of firms with a relatively higher proportion of uninsured employees or employees with ESI prior to the reform experienced a negative impact on their asset prices, while shareholders of firms with a relatively higher proportion of employees who would qualify for the Medicaid expansion or who would qualify for premium subsidies on the health insurance exchanges experienced a positive impact on their asset prices. Our results suggest that the ACA's incidence lies partly on shareholders, but that coverage through public insurance or publicly-supported insurance markets is incident on taxpayers or possibly on the employees of the affected firms. In Chapter 2, Mark Cullen and I study the impact of changing demand-side in- centives on the use of generic drugs during an era of slowing prescription drug ex- penditures. We examine the interaction of two factors that have contributed to this trend change: cost-sharing and generic entry. Specifically, we examine a case in which a large, self-insured company introduced prescription drug plans that increased the difference in the marginal price of brand-name and generic drugs between 2004 and 2006. Using prescription drug claims data, we estimate an elasticity of substitution of -0.03. At the same time, we find that approximately 90% of individuals substitute to generics within two years of first-time generic entry, and that the switching decision is not affected by the change in cost-sharing. We discuss potential policy implications of these two divergent substitution patterns. Finally, in Chapter 3, Robin S. Lee, Kyna Fong and I study the effect of changing the price differential for cesarean versus vaginal deliveries paid by commercial insurers to hospitals and physicians on cesarean rates. Using eight years of claims data con- taining negotiated prices, we exploit within-hospital-physician-group price variation arising from contract renegotiations over time. We find that increasing the physician price differential by

Keywords: Economics.
Advisor: Einav Liran primary advisor. Thesis advisor
Bhattacharya Jay
Hoxby Caroline Minter advisor. Thesis advisor