Patient Protection and Affordable Care Act and Health Outcomes Samuel A. Kleiner Cornell University and NBER Human Capital Research Collaborative Fall Conference Federal Reserve Bank of Minneapolis October 15, 2010

22 Provisions Addressed in PPACA Eligibility expansions –Medicaid Expansions to 133% of Federal Poverty Level (FPL) –State Children’s Health Insurance Program (SCHIP) Extensions Funding extended through 2015 –Lewin Group projects 13 million person increase in Medicaid and SCHIP enrollment Premium subsidies up to 400% of FPL for insurance purchase

33 Effects of Expansions Individual effects of insurance expansions (Demand) –Effects on health outcomes Does health insurance improve health? Supply Side Factors and Responses to Expansions –Access Effects Provider availability and behavior response –Quality of care

44 Insurance Expansions – Utilization Utilization among general population “Consistent evidence that extending coverage would result in significant increases in all types of utilization” [ Buchmueller et al. (2005)] Insurance coverage: –Increases outpatient utilization by roughly one visit per year for children and 1-2 visits per year –Increases inpatient utilization by 4% –Reduces chance that a child goes without a physician visit

55 Does more utilization mean better care? More treatment not necessarily productive on the margin –Medical literature finds no association between increased treatment intensity across hospitals and patient outcomes [Fisher et. al. (2003), Fisher et. al. (2004)] Expansions could have two effects: –Efficiency effect: Greater access to care enables avoidance of severe health conditions Assumption behind preventative mandates in PPACA –Price effect: Lower out-of-pocket costs may lead to more consumption of health care (not necessarily productive)

66 Insurance Expansions – Health Outcomes Public Insurance Expansions –Medicare Increased utilization due to legislation lowered mortality (ε=- 0.5 for doc visits) [Lichtenberg, 2002] Reduction of 20% in death for severely ill [Card et al., (2009)] –Medicaid Expansions improve health outcomes for children Private Insurance Expansions –Massachusetts mandate decreased uninsurance by 28% –Reduction in hospitalization for preventable conditions [Kolstad & Kowalski, 2010]

77 Effects on Birth-related Outcomes Infant mortality –Universal coverage in Canada reduced infant mortality by 4% [Hanratty (1996)] –30 percentage point increase in eligibility was associated with a 8.5% reduction in mortality [Currie and Gruber (1996)] Adverse birth outcomes (low birth weight/prematurity) –Universal coverage in Canada reduced incidence of low birth weight babies of 1.3% [Hanratty (1996)] –Massachusettes healthy start expansion of insurance in 1985 has no effect on outcomes [Haas et al. (1993)]

88 Effects on Children Hospitalizations for preventable conditions decrease –Reduction in avoidable hospitalizations of 22% [Dafny and Gruber (2000)] –Increase in enrollment of 15% associated with a 2.7% reduction in avoidable hospitalizations [Aizer (2007)] Decrease in child mortality –15% increase in eligibility between ‘84 and ‘92 decreased childhood mortality by 5% [Currie and Gruber (1996)]

99 How Will Supply Side Respond? Insurance alone does not affect health –Impact depends on intermediate factors Capacity constraints –Not possible with existing data from the United States to estimate utilization effects that incorporate capacity constraints [Buchmueller et al., 2005] Outcome effects depend on provider response –Canadian experience documents changes in physician work effort and practice patterns after universal coverage [Enterline, 1973, 1975]

10 Will Provider Access Be Sufficient? Increase of 7.5% in primary care visits will necessitate nearly 6,000 additional providers [Hofer, Abraham, and Moscovice (2010)] Will reimbursement be sufficient? –Physicians are responsive to income effects [Nicholson (2002), Decker (2007)] Will there be enough non-physician providers? –Shortage of 260,000 nurses expected by 2025 [Buerhaus et al. (2009)] –Nurses significantly affect hospital quality [Bartel et al. (2010), Gruber & Kleiner (2010)]

11 Quality May Matter Beyond Just Access Insurance type affects quality of care –Crowd-out induced loss of superior quality private insurance may adversely affect health [Koch (2009)] Importance of proximity high quality provider –Infant mortality reductions most pronounced the closer a mother lives to a “high-tech” hospital with a NICU [Gruber and Currie, 1997] Market Structure –More competition leads to higher quality [Gaynor (2006)]

12 Will there be Long-term Effects? Referenced studies measure short-term outcomes –Hospitalization, infant mortality, birth outcomes Health insurance shown to affect educational outcomes “Test scores in reading, but not math, increased for those children affected at birth by increased health insurance eligibility [Levine and Schanzenbach (2009)] Early intervention important –Contemporaneous health insurance coverage has little effect on health status but eligibility from birth is protective [Currie (2008)]

13 Concluding Remarks Research suggests health insurance expansions increase utilization, improve health –Decrease preventable hospitalization –Lower infant mortality and adverse birth outcomes Will there be a supply response to increase in demand, and how long will this take? –Access and quality of providers important for health outcomes Long-term effects are uncertain

14 Thank you!