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"Exit, Voice or Loyalty? An Investigation into Mandated Portability of Front-Loaded Private Health Plans" (with Hanming Fang, Martin Karlsson and Nicolas R. Ziebarth)
We study theoretically and empirically how consumers in an individual private long-term health insurance market with front-loaded contracts respond to newly mandated portability requirements of their old-age provisions. To foster competition, effective 2009, German legislature made the portability of standardized old-age provisions mandatory. Our theoretical model predicts that the portability reform will increase internal plan switching. However, under plausible assumptions, it will not increase external insurer switching. Moreover, the portability reform will enable unhealthier enrollees to reoptimize their plans. We find confirmatory evidence for the theoretical predictions using claims panel data from a big private insurer.
"Lock-in in Dynamic Health Insurance Contracts: Evidence from Chile" Long-term health insurance contracts have the potential to efficiently insure against
reclassification risk, but at the expense of other limitations like provider lock-in. This
paper empirically investigates the workings of long-term guaranteed-renewable contracts, which are subject to this tradeoff. Individuals are shielded against premium
increases and coverage denial as long as they stay with their initial contract, but those
that become higher risk are subject to premium increases or coverage denials upon
switching, potentially leaving them locked-in with their original network of providers. I
provide the first empirical evidence on the importance of this phenomenon using administrative panel data from the universe of the private health insurance market in Chile,
where competing insurers offer guaranteed-renewable plans. I fit a structural model to
yearly plan choices, and am able to jointly estimate evolving preferences for different
insurance companies and supply-side underwriting in the form of premium risk-rating
and coverage denial. To quantify the welfare effects of lock-in, I compare simulated
choices under the current rules to those in a counterfactual scenario with no underwriting. The results show that consumers would be willing to pay around 13 percent more
in yearly premiums to avoid lock-in. Finally, I study a counterfactual scenario where
guaranteed-renewable contracts are replaced with community-rated spot contracts, and
I find only minor general-equilibrium effects on premiums and on the allocation of individuals across insurers. I argue that these small effects are the result of large levels
of preference heterogeneity uncorrelated to risk.
"Peer Effects in the Emergency Department" (with David Silver) We study worker interactions in a high-skill, high-stakes profession – medical staff in the emergency department. Using rich administrative case-level data
from two hospital-based emergency departments, we start by documenting peer
effects among physicians. We find that physicians are 1.5 percent faster when
working with peers who are 10 percent faster. We devise a test for random
patient-physician assignment and we provide a number of tests to discern the
mechanisms underlying these spillovers. The evidence points to spillovers that
are driven primarily by faster peers responding negatively to working with slower
peers. Utilization of shared resources accounts for little of the spillover, and event-study evidence points to spillovers that come into effect as soon as slower peers
begin their shifts. Going forward, we plan to further investigate causes and consequences of productivity differentials across physicians. We also plan to leverage
quasi-random and time-varying pairings of physicians and nurses to study hierarchical relationships in the workplace.
"Effects of Reference Pricing on Spending and Quality" (with Tim Brown) [submitted]
We estimate the effect of introducing reference pricing on total expenditures and surgical complications for different procedures, using claims data from January 2009 to December 2013 on patients covered by the California Public Employees Retirement System (CalPERS). We calculate treatment effects using several variants of a differences-in-differences strategy combined with matching, using patients enrolled in non-CalPERS Anthem Blue Cross plans as the control group. Each specification relies to a different degree on parametric assumptions to adjust for selection on observables and to handle the common undesirable properties of health claims data. For almost all procedures and specifications we find large and economically significant decreases in spending and statistically insignificant effects on complications. The point estimates are robust to the specification, which lowers concerns of miss-specification bias of previous published results based on strong parametric assumptions. We study market responses to the introduction of bioequivalence requirements that set minimum quality standards for generic drugs. We combine 4 years of monthly sales and prices data from Chile with the national registry of drugs to study the effect of these requirements on entry/exit, prices, and quantities sold, of generics and branded drugs. "Safe and Sound Social Policy: Reconciling Protection with Productivity", with Hugo Ñopo, in Pages, Carmen (ed) "The Age of Productivity, Transforming Economies From the Bottom Up", 2010. Software nopomatch (with Alejandro Hoyos and Hugo Ñopo): STATA module to decompose the outcome gap between two groups using exact matching, following the methodology developed by Ñopo 2008 (Matching as a Tool to Decompose Wage Gaps, ReStat). nopomatch performs the matching, computes the gap decomposition and provides the standard deviation of the unexplained component of the gap.
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