New Research

The Impact of Provider Payments on Health Care Utilization: Evidence from Medicare and Medicaid


with Colleen Carey and Marika Cabral, NBER Working Paper 29471

Provider payments are the key determinant of insurance generosity within many health insurance programs covering low-income populations. This paper analyzes the effects of a large, federally-mandated provider payment increase for primary care services provided to low-income elderly and disabled individuals. Drawing upon comprehensive administrative payment and utilization data, we leverage variation across beneficiaries and across providers in the policy-induced payment increase in difference-in-differences and triple differences research designs. The estimates indicate that the provider payment reform led to a 6.3% increase in the targeted services provided to eligible beneficiaries, indicating an implied payment elasticity of 1.3. Further, the provider payment reform decreased the fraction of low-income beneficiaries with no primary care visit in a year by 9%, completely closing the gap relative to higher-income beneficiaries with the same observable characteristics. Additionally, the results indicate that the payment reform caused an increase in established patient visits, with no increase in new patient visits. Heterogeneity analysis indicates that the payment increase led to an expansion of utilization for many subgroups, with somewhat larger effects among beneficiaries who are younger, are white, and live in areas with many primary care providers per capita.

Does Increasing Access to Formal Credit Reduce Payday Borrowing?


with Cindy K. Soo, NBER Working Paper 27783

The use of high cost "payday loans" among subprime borrowers has generated substantial concern among policymakers. This paper provides the first evidence of substitution between "alternative" and "traditional" credit by exploiting an unexpected positive shock to traditional credit access among payday loan borrowers: the removal of a Chapter 7 bankruptcy flag. We find that the removal of a bankruptcy flag on a credit report results in a sharp increase in access to traditional credit and raises credit scores, credit card limits, and approval rates. However, despite meaningful increases in access to traditional credit, we find no evidence that borrowers reduce their use of payday loans, and our confidence intervals allow us to rule out even very small reductions in payday borrowing. Furthermore, we find evidence that flag removals increase the use of other alternative credit products such as online subprime installment loans. These results indicate that marginally improving access to less expensive formal credit is insufficient to meaningfully shift borrowers away from high cost subprime products. We discuss likely explanations for this including increased marketing of subprime products associated with the flag removal, the imperfect substitutability between cash and credit for low income borrowers, and an insufficiency in the size of the increase in credit access associated with the flag removal.

What Difference Does a Diagnosis Make? Evidence from Marginal Patients


with Mattan Alalouf and Laura R. Wherry, NBER Working Paper 26363

Over the past 30 years, the criteria used to diagnose many illnesses have been relaxed, resulting in millions more relatively healthy individuals receiving treatment. This paper explores the impact of receiving a diagnosis of a common disease among such “marginally ill” patients. We apply a regression discontinuity design to the cutoff in blood sugar levels used to classify patients as having diabetes. We find that a marginally diagnosed patient with diabetes spends $1,097 more on drugs and diabetes-related care annually after diagnosis, but find no corresponding changes in self-reported health or healthy behaviors. These increases in spending persist over the 6-year period we observe the patients. These marginally diagnosed patients experience improved blood sugar after the first year of diagnosis, but this improvement does not persist in subsequent years. Other clinical measures of health, such as BMI, blood pressure, cholesterol, and mortality show no improvement. The diagnosis rates for preventable disease-related conditions such as diabetic retinopathy, neuropathy, and kidney disease increase following a diagnosis, likely due to more intensive screening. Our results imply that a small relaxation in the diagnosis cutoff would increase total spending on diabetes-related care by about $2.4 billion annually and minimally impact patient health.

Multi-generational Impacts of Childhood Access to the Safety Net: Early Life Exposure to Medicaid and the Next Generation's Health


revise and resubmit, American Economic Review, with Chloe East, Marianne Page, and Laura Wherry. NBER Working Paper 23810

We examine multi-generational impacts of positive in utero and early life health interventions. We focus on the 1980s Medicaid expansions, which targeted low-income pregnant women, and were adopted differently across states and over time. We use Vital Statistics Natality files to create unique data linking individuals’ in utero Medicaid exposure to the next generation’s health outcomes at birth. We find strong evidence that the health benefits associated with treated generations’ in utero access to Medicaid extend to later offspring in the form of higher average birth weight and decreased incidence of very low birth weight. Later childhood exposure to Medicaid does not lead to persistent health effects across generations. The return on investment is substantially larger than suggested by evaluations of the program that focus only on treated cohorts.

Press Coverage: Wall Street Journal, Bloomberg News, NBER Digest