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There is widespread agreement that the US healthcare system wastes as much as 5% of GDP, yet much less agreement on the source of the waste. This paper uses the effectively random assignment of patients to ambulance companies to generate comparisons across similar patients treated at different hospitals. We find that assignment to hospitals whose patients receive large amounts of care over the three months following a health emergency have only modestly better survival outcomes compared to hospitals whose patients receive less. Outcomes are related to different forms of spending. Patients assigned to hospitals with high levels of inpatient spending are more likely to survive to one year, while high levels of outpatient spending result in lower survival. In particular, we discovered that downstream spending at skilled nursing facilities (SNF) is a strong predictor of mortality. Our results highlight SNF admissions as a quality measure to complement the commonly used measure of hospital readmissions and suggest that in the search for waste in the US healthcare, post-acute SNF care is a prime candidate.

This paper describes the use of instrumental-variables (IV) to estimate causal effects of foster care on long- and short-term outcomes. This estimation strategy provides a tool to evaluate what are known as "natural experiments": settings that mimic randomization usually associated with a controlled trial. The proposed natural experiment involves the effective randomization of investigators to child-protection cases. The results suggest that foster care placement increases like likelihood of delinquency and emergency healthcare episodes. Care must be taken when interpreting IV estimates. The results apply to cases that are part of the natural experiment-"marginal cases" where the investigators may disagree about the placement recommendation. Keywords: Foster care; Instrumental variables; Causal effects, National Science Foundation (U.S.) (Grant SES-0518757)

Violence within families and child neglect are strikingly common: 700,000 children are found to be victims of abuse or neglect in the United States each year; over the course of childhood, 6% of children are placed in foster care, and 18% witness intimate partner violence. These children are at much higher risks of homelessness, criminal justice involvement, unemployment, and chronic health conditions compared to their neighbors. This article reviews the state of the economics literature on the causes and consequences of child maltreatment and intimate partner violence and calls for greater research into interventions aimed at improving child well-being. Keywords: child protection; foster care; intimate partner violence, National Science Foundation (U.S.) (Grant SES-0518757), National Science Foundation (U.S.) (Grant SES-0648700), National Institutes of Health (U.S.) (Grant RO3HD051808)

We consider whether hospitals that receive higher payments from Medicare improve patient outcomes, using exogenous variation in ambulance company assignment among patients who live near one another. Using Medicare data from 2002–10 on assignment across ambulance companies and New York State data from 2000–6 on assignment across area boundaries, we find that patients who are brought to higher-cost hospitals achieve better outcomes. Our estimates imply that a one standard deviation increase in Medicare reimbursement leads to a 4 percentage point (or 10 percent) reduction in mortality; the implied cost per at least 1 year of life saved is approximately $80,000., National Institutes of Health (U.S.) (R01 AG41794-01)

Over 130,000 juveniles are detained in the United States each year with 70,000 in detention on any given day, yet little is known about whether such a penalty deters future crime or interrupts social and human capital formation in a way that increases the likelihood of later criminal behavior. This article uses the incarceration tendency of randomly assigned judges as an instrumental variable to estimate causal effects of juvenile incarceration on high school completion and adult recidivism. Estimates based on over 35,000 juvenile offenders over a 10-year period from a large urban county in the United States suggest that juvenile incarceration results in substantially lower high school completion rates and higher adult incarceration rates, including for violent crimes. In an attempt to understand the large effects, we found that incarceration for this population could be very disruptive, greatly reducing the likelihood of ever returning to school and, for those who do return, significantly increasing the likelihood of being classified as having an emotional or behavioral disorder.

Estimates of moral hazard in health insurance markets can be confounded by adverse selection. This paper considers a plausibly exogenous source of variation in insurance coverage for childbirth in California. We find that additional health insurance coverage induces substantial extensions in length of hospital stay for mother and newborn. However, remaining in the hospital longer has no effect on readmissions or mortality, and the estimates are precise. Our results suggest that for uncomplicated births, minimum insurance mandates incur substantial costs without detectable health benefits.

In Almond et al. (2010), we describe how marginal returns to medical care can be estimated by comparing patients on either side of diagnostic thresholds. Our application examines at-risk newborns near the very low birth weight threshold at 1500 g. We estimate large discontinuities in medical care and mortality at this threshold, with effects concentrated at “low-quality” hospitals. Although our preferred estimates retain newborns near the threshold, when they are excluded the estimated marginal returns decline, although they remain large. In low-quality hospitals, our estimates are similar in magnitude regardless of whether these newborns are included or excluded.

Physicians play a major role in determining the cost and quality of healthcare, yet estimates of these effects can be confounded by patient sorting. This paper considers a natural experiment where nearly 30,000 patients were randomly assigned to clinical teams from one of two academic institutions. One institution is among the top medical schools in the U.S., while the other institution is ranked lower in the distribution. Patients treated by the two programs have similar observable characteristics and have access to a single set of facilities and ancillary staff. Those treated by physicians from the higher ranked institution have 10–25% less expensive stays than patients assigned to the lower ranked institution. Health outcomes are not related to the physician team assignment. Cost differences are most pronounced for serious conditions, and they largely stem from diagnostic-testing rates: the lower ranked program tends to order more tests and takes longer to order them.

Health care spending varies widely across markets, and previous research finds little evidence that higher spending translates into better health outcomes. The main innovation in this paper exploits this cross-sectional variation in hospital spending in a new way by considering emergency patients who are exposed to healthcare systems when they are far from home. Visitors to Florida who become ill in high-spending areas have significantly lower mortality rates compared to visitors in lower spending areas. The results are robust within groups of similar visitors and within groups of destinations that appear to be close demand substitutes -- areas that likely attract similar visitors., National Institute on Aging. Center for Aging and Health, National Bureau of Economic Research

Kavita V Nair1, Daniel A Belletti3, Joseph J Doyle3, Richard R Allen4, Robert B McQueen1, Joseph J Saseen1, Joseph Vande Griend1, Jay V Patel5, Angela McQueen2, Saira Jan21School of Pharmacy, University of Colorado, Aurora, CO, USA; 2Horizon Blue Cross Blue Shield of New Jersey, Newark, NJ, USA; 3Novartis Pharmaceuticals Corporation, East Hanover, NJ, USA, 4Peakstat Statistical Services, Evergreen, CO, USA; 5Care Management International, Marlborough, MA, USABackground: Although hypertension is a major risk factor for cardiovascular disease, adherence to hypertensive medications is low. Previous research identifying factors influencing adherence has focused primarily on broad, population-based approaches. Identifying specific barriers for an individual is more useful in designing meaningful targeted interventions. Using customized telephonic outreach, we examined specific patient-reported barriers influencing hypertensive patients' nonadherence to medication in order to identify targeted interventions.Methods: A telephone survey of 8692 nonadherent hypertensive patients was conducted. The patient sample comprised health plan members with at least two prescriptions for antihypertensive medications in 2008. The telephone script was based on the "target" drug associated with greatest nonadherence (medication possession ratio [MPR] <80%) during the four-month period preceding the survey.Results: The response rate was 28.2% of the total sample, representing 63.8% of commercial members and 37.2% of Medicare members. Mean age was 63.4 years. Mean MPR was 61.0% for the target drug. Only 58.2% of Medicare respondents and 60.4% of commercial respondents reported "missing a dose of medication". The primary reason given was "forgetfulness" (61.8% Medicare, 60.8% commercial), followed by "being too busy" (2.7% Medicare, 18.5% commercial) and "other reasons" (21.9% Medicare, 8

Some gasoline markets exhibit remarkable price cycles, where price spikes are followed by a series of small price declines: a pattern consistent with a model of Edgeworth cycles described by Maskin and Tirole. We extend the model and empirically test its predictions with a new dataset of daily station-level prices in 115 US cities. Consistent with the theory, and often in contrast with previous empirical work, we find the least and most concentrated markets are much less likely to exhibit cycling behavior both within and across cities; areas with more independent convenience-store gas stations are also more likely to cycle.

A key policy question is whether the benefits of additional medical expenditures exceed their costs. We propose a new approach for estimating marginal returns to medical spending based on variation in medical inputs generated by diagnostic thresholds. Specifically, we combine regression discontinuity estimates that compare health outcomes and medical treatment provision for newborns on either side of the very low birth weight threshold at 1,500 grams. First, using data on the census of U.S. births in available years from 1983 to 2002, we find that newborns with birth weights just below 1,500 grams have lower one-year mortality rates than do newborns with birth weights just above this cutoff, even though mortality risk tends to decrease with birth weight. One-year mortality falls by approximately one percentage point as birth weight crosses 1,500 grams from above, which is large relative to mean infant mortality of 5.5% just above 1,500 grams. Second, using hospital discharge records for births in five states in available years from 1991 to 2006, we find that newborns with birth weights just below 1,500 grams have discontinuously higher charges and frequencies of specific medical inputs. Hospital costs increase by approximately $4,000 as birth weight crosses 1,500 grams from above, relative to mean hospital costs of $40,000 just above 1,500 grams. Under an assumption that observed medical spending fully captures the impact of the "very low birth weight" designation on mortality, our estimates suggest that the cost of saving a statistical life of a newborn with birth weight near 1,500 grams is on the order of $550,000 in 2006 dollars.

Despite the considerable attention paid to the theory of tax incidence, there are surprisingly few estimates of the pass-through rate of sales taxes on retail prices. This paper estimates the effect of a suspension and subsequent reinstatement of the gasoline sales tax in Illinois and Indiana on retail prices. Earlier laws set the timing of the reinstatements, providing plausibly exogenous changes in the tax rates. Using a unique dataset of daily gasoline prices at the station level, retail gas prices are found to drop by 3% following the elimination of the 5% sales tax, and increase by 4% following the reinstatements, compared to neighboring states. Some evidence also suggests that the tax reinstatements are associated with higher prices up to an hour into neighboring states, which provides some evidence on the size of the geographic market for gasoline. Effects across different competitive environments are considered as well.