Title: Three Essays on Access and Welfare in Health Care and Health Insurance Markets
Description: This dissertation consists of three essays on access to primary care and the design of health insurance markets. These essays share a methodological framework. In each, I estimate a model of the market using detailed administrative data sets. Then, I employ the estimated model to answer policy-relevant research questions. The first chapter, entitled Access to Care in Equilibrium, studies consumer access to medical care as an equilibrium outcome of a market without prices. I use data from the Northern Ontario primary care market to estimate an empirical matching model where patients match with physicians. The market is cleared by a non-price mechanism: the effort it takes to find a physician. I use the model to study the distribution and determinants of access to care. By employing a model of the market, I am able to define a measure of access to care that accounts for patient preferences and market conditions: the probability that a patient who would attain care in a full access environment currently attains care.

I find that access to care is low and unevenly distributed. On average, a patient who would attain care in a full access environment will receive care 73% of the time. The issue is particularly acute in rural areas. Further, physicians discriminate in favor of patients with higher expected utilization, thereby increasing access for older and sicker patients while decreasing access for younger and healthier patients. The estimated model is used to decompose access into its contributing factors. In rural areas, the geographic distribution of physicians is the primary determinant of low access. In contrast, low access in urban areas is primarily driven by capacity constraints of physicians. Interestingly, equating physician to population ratios across Northern Ontario would not improve rural access. In the second chapter, entitled Increasing Access to Care Through Policy: A Case Study of Northern Ontario, Canada, I employ the estimated model from Chapter One to assess the impact of policy on access to medical care.

I study two policies: (1) grants to incentivize physicians to practice in low-access areas and (2) a payment reform that provided incentives for physicians to increase the numbers of patients on their books. Using the estimated model, I simulate market outcomes in counterfactuals where each policy is removed. By comparing these simulations to outcomes in the current market, I estimate policy impacts while accounting for equilibrium effects. I find that both policies are effective at increasing access to care. However, the policies target different subsets of the population. The grant program increases access most for rural patients, whereas the payment reform increases urban access most. Lastly, Chapter Three is a paper co-authored with Kate Ho and Michael Dickstein entitled Market Segmentation and Competition in Health Insurance. We study the welfare consequences of market segmentation in private health insurance in the US, where households obtain coverage either through an employer or via an individual marketplace.

We use comprehensive and detailed data from Oregon’s small group and individual markets to demonstrate several facts. First, enrollees in the small group market have lower health care spending than those in the individual market conditional on plan coverage level. Second, small group enrollees benefit from tax exemptions and employer premium subsidies that create a wedge between premiums charged by insurers and the prices they face. However, these benefits are offset by relatively high plan markups over costs, which generate premiums (prior to employer contributions) that are at least as high as those in the individual market. These findings suggest that recent policies to merge the two markets, allowing small group enrollees to shop on the individual exchanges while maintaining their tax exemptions and employer contributions, may stabilize the individual market without much loss to small group enrollees. However, the new equilibrium outcome depends crucially on the preferences and characteristics of the two populations.

We use a model of health plan choice and subsequent utilization to estimate household preferences in both markets and predict premiums and costs under a counterfactual pooled market. We find that integration mitigates adverse selection issues in the individual market, while decreasing government and employer expenditures on premium subsidies. Small group households benefit from lower premiums for low coverage plans in the merged market. However, they face higher premiums for high coverage plans and are constrained to a smaller set of insurance options. Thus, the effects of integration on small group households are heterogeneous.