Vivian Ho

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  • Portion of Table 3: Multivariate Regression Models for Private Payer Price
  • Portion of Table 3: Multivariate Regression Models for Private Payer Price
  • Portion of Table 4: Multivariate Regression Models for Private Payer Price Accounting for Ownership Status
  • Portion of Table 4: Multivariate Regression Models for Private Payer Price Accounting for Ownership Status
  • Vivian Ho

    1. 1. DO HOSPITALS SHIFT THE COSTS OF THE UNINSURED TO PRIVATE PAYERS? By Vivian Ho, Jerome Dugan, and Meei-Hsiang Ku-Goto Rice University Baker Institute for Public Policy and Department of Economics HIGHLY PRELIMINARY - DO NOT CITE
    2. 2. Introduction  Cost shifting occurs when providers raise prices to one group of payers in response to another group’s paying lower prices (M. A. Morrisey 1994).  Public perception that rising number of uninsured patients is leading to higher premiums for those who are privately insured (Washington Post, St. Louis Post- Dispatch, Houston Chronicle)  Reductions in Medicaid and Medicare reimbursement rates may have led to higher private insurance premiums.
    3. 3. Previous Theoretical Literature  Cost shifting ruled out if hospitals maximize profits (Morrisey 1994; Frakt 2010)  Ppublic payer↓ → Qpublic ↓ , Pprivate ↓  Cost shifting occurs if hospitals maximize utility.  U = U ( π , patient volume or quality)  ability to cost shift depends on market hospital power wrt insurers and mix of private pay versus public pay patients.
    4. 4. Previous Empirical Literature  6 studies employ regression methods: Are reductions in Medicare/Medicaid payments, or increases in uninsured care associated with increases in prices charged to private pay patients?  4 of 6 studies find cuts in Medicare or Medicaid lead to higher private pay payments.  4 of 6 studies are based on data from California, which had data to estimate price per discharge.
    5. 5. Previous Empirical Literature  Past regression-based studies do not explicitly consider hospital revenues from the uninsured and self-pay patients.  Price estimates in previous studies may be subject to measurement error.  2 of the 6 studies use data from Medicare cost reports, which only distinguish Medicare revenue from non-Medicare revenue.  "Private pay revenue" includes payments from Medicaid, self-pay, and uninsured patients.
    6. 6. Previous Empirical Literature  Dranove & White (1998) estimate an overall private price by applying a fixed market basket to prices from 10 different cost centers for each hospital.  But hospitals may vary widely in revenues by cost center (e.g. surgical intensive care vs. diagnostic radiology).  Zwanziger et al (2000) account for both inpatient and outpatient care when estimating prices, but must aggregate over the 2.  Cutler (1998) and Wu (2010) instrument for reductions in Medicare price using (reduced) updates to DRG reimbursement rates.
    7. 7. Previous Empirical Literature  This paper replicates analyses from previous papers using Texas data.  25.2% of population uninsured in TX, compared w/ 18.5% in CA  Relating private pay price to prices of other payers.  Zwanziger et al (2000 & 2006), Wu (2010).  But we explicitly consider the uninsured.
    8. 8. Data  2000-2007 versions of the American Hospital Association annual survey  Contains net revenue by payer type, which is not reported in the national AHA survey.  Payer types: private pay, Medicare, Medicaid, uninsured/self-pay.  The state and local governments provide substantial subsidies to hospitals to care for uninsured and under-insured patients.  Upper Payment Limit (UPL) funds paid by federal gov’t to bring Medicaid prices up to level of Medicare payments.  Both these payment categories included in uninsured/self- pay.
    9. 9. Data  Medicaid DSH payments reported separately, but could be allocated to either Medicaid or uncompensated care.  Hospital expenses are not reported by payer type.  Texas hospital discharge data is used to sum charges by payer type and adjusted to reflect costs using the cost-to-charge ratio for each hospital and year.  The DRG weight for each hospital discharge is obtained from the state and averaged by hospital to create a case mix index.
    10. 10. Empirical Models  Private pay price (revenue/discharges) regressed on:  Medicare price  Medicaid price  Uninsured/Self-pay price  Cost per patient  casemix (quadratic)  county HHI index (based on bedsize, quadratic)  county managed care penetration (quadratic)  year fixed effects
    11. 11. Empirical Models
    12. 12. Empirical Models  Estimates w/ and w/o hospital fixed effects.  Regressions include either hospital fixed effects, or first-differencing w/in hospitals.  Additional specification interacts prices & ownership status
    13. 13. Mean Hospital Revenue by Payer Type $0 $50 $100 $150 2000 2001 2002 2003 2004 2005 2006 2007 Millions Private Pay Medicare Medicaid Self-Pay Uncomp. Care
    14. 14. Price Per Admission Year Private pay Medicare Medicaid Uninsured/Self pay 2000 6638 5997 4118 7608 2004 8699 6332 3959 8997 2007 9685 6400 4015 8618 % Growth 45.9 6.7 -2.5 13.3 CV (2007) 0.45 0.38 0.58 0.77 Cost Per Admission Year Private pay Medicare Medicaid Uninsured/Self pay 2000 5063 8568 5008 5382 2004 6174 9691 5269 6325 2007 6645 9779 5341 6742 % Growth 31.2 14.1 6.6 25.3
    15. 15. (1) (2) Coef. t Coef. t Medicare price 0.253 (1.35) 0.101 (1.44) Medicaid price -0.085 (-2.29) -0.078 (-2.25) Unins/self pay price -0.010 (-0.57) -0.032 (-2.72) Average cost 0.671 (5.26) 0.599 (3.88) Casemix 1.096 (4.58) 6096.757 (2.47) Casemix² -0.240 (-3.17) -1214.832 (-1.24) N 1660 1268 Price & Cost in logs X Hospital Fixed Effects X First Differences X Regression Models for Private Payer Price
    16. 16. (1) (2) Coef. t Coef. t HHI 0.076 (0.17) 1002.022 (0.25) HHI² 0.093 (0.29) 540.651 (0.19) Man. Care Pen. -0.001 (-0.68) 8.563 (0.78) Man. Care Pen.² 1.01E-06 (0.07) -0.066 (-0.76) 2001 0.074 (3.75) 2002 0.078 (3.29) -117.876 (-1.02) 2003 0.153 (6.00) -18.939 (-0.11) 2004 0.134 (4.03) -426.643 (-2.48) 2005 0.178 (5.60) -59.925 (-0.35) 2006 0.221 (6.49) -122.984 (-0.86) 2007 0.180 (5.20) -228.197 (-1.75) Constant 0.723 (0.86) 331.724 (5.63) Regression Models for Private Payer Price (cont.)
    17. 17. (1) (2) Coef. t Coef. t Medicare price 0.166 (1.21) 0.015 (0.24) Medicare price * for-profit 0.149 (1.67) 753.231 (1.67) Medicare price * public 0.071 (1.03) 338.980 (0.54) Medicaid price -0.009 (-0.33) -0.003 (-0.05) Medicaid price * for-profit -0.149 (-1.39) -658.092 (-1.46) Medicaid price * public -0.050 (-0.8) -289.248 (-0.50) Unins/Self pay price 0.000 (-0.02) -0.027 (-2.09) Unins/Self pay price * for-profit -0.005 (-0.15) -111.854 (-0.58) Unins/Self pay price * public -0.021 (-1.07) -40.658 (-0.34) Average cost 0.684 (6.05) 0.763 (7.95) N 1660 1267 Price & Cost in logs X Hospital Fixed Effects X First Differences X
    18. 18. (1) (2) Coef. t Coef. t Casemix 1.062 (4.38) 4869.042 (2.08) Casemix² -0.221 (-2.81) -733.384 (-0.78) HHI 0.040 (0.09) 1453.027 (0.36) HHI² 0.111 (0.33) 165.659 (0.06) Man. Care Pen. -0.002 (-0.97) 11.220 (1.07) Man. Care Pen.² 4.45E-06 (0.31) -0.086 (-1.04) 2001 0.070 (3.67) 2002 0.074 (3.02) -118.615 (-1.04) 2003 0.150 (5.84) 18.107 (0.10) 2004 0.132 (3.77) -364.874 (-2.32) 2005 0.176 (5.53) -70.895 (-0.44) 2006 0.218 (6.43) -125.644 (-0.86) 2007 0.181 (5.24) -210.485 (-1.61) Constant 0.675 (0.78) 302.002 (5.40)
    19. 19. Bargaining Power  Wu: Hospitals w/ large private payer volumes may be better able to cost shift onto private payers.  Wu’s measure of bargaining power  More appropriate measure may be
    20. 20. Table 5: Private Payer Price Regressions with Bargaining Power (1) Coef. t Medicare price 0.102 (1.45) Medicaid price -0.058 (-1.25) Medicaid*bargain -0.055 (-0.76) Unins/self pay price -0.022 (-1.37) Unins/self*bargain -0.032 (-1.21) Bargain -182.067 (-1.68) Average cost 0.586 (3.73) N 1255 Price & Cost in logs Hospital Fixed Effects First Differences X Regression also includes Casemix, HHI, and Managed care penetration in quadratic form, year dummies, and a constant.
    21. 21. Conclusions & Future Work  Very little evidence of cost shifting to private payers from either government sources or the uninsured in Texas.  Further research on the DSH payments and payments for uninsured/self-pay care.  Identify better measures of hospital and insurance market competition.
    22. 22. Conclusions & Future Work  Cutler (1998) tests for effects of Medicare price cuts on:  Hospital closures*  Change in beds  FTE RNs and LPNs*  Cardiac services (PCI, cardiac cath, CABG)  Diagnostic radiology (CT, MRI, PET, SPECT)  ERs

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