Underconsumption in Health Care Markets
Friday, Jan. 5, 2024 8:00 AM - 10:00 AM (CST)
- Chair: Molly Kathleen Schnell, Northwestern University
Racial Concordance and the Quality of Medical Care: Evidence from the Military
AbstractOne explanation for insufficient use of primary care in the U.S. is a lack of trust between patients and providers – particularly along racial lines. We assess the role of racial concordance between patients and medical providers in driving use of preventive care and the implications for patient outcomes. We use unique data from the Military Health System, where we observe providers as patients so that we can identify their race, and where moves across bases change exposure to provider race. We consider patients with four chronic, deadly, but ultimately manageable illnesses, where the relationship with the provider may have the most direct and important impact on health. We find striking evidence that racial concordance leads to improved maintenance of preventive care – and ultimately lower patient mortality. Pooling across these diseases, we estimate that a one-standard deviation increase in the share of providers who are black leads to a 15% relative decline in Black mortality among those with these manageable illnesses. Our results further suggest that between 55 and 69% of this mortality impact arises through improved medication use and adherence, with other aspects of the provider-patient relationship accounting for the residual.
Social environment as a barrier to treatment and innovation adoption
AbstractLung cancer is associated with smoking and is characterized by low treatment rates and research funds. We estimate a model of treatment choice where patients internalize societally biased beliefs on the effectiveness of treatment and stigma, basing their treatment decision on the treatment decisions of their reference group. Identification rests on the exogenous variation in the treatment propensity of physicians. Placing all patients in a neighborhood characterized by low social discrimination increases treatment rates by 4% and the use of innovative therapies by 3%. Social effects account for around 2% of the gap in research funding for lung cancer.
Commitment, Competition and Preventive Care Provision
AbstractPreventive care, such as vaccines, cancer screenings, and chronic disease management, affects long-term population health. Insurer competition and limited consumer commitment could disincentivize insurers' preventive investment because insurers cannot internalize all investment cost savings as consumers leave the insurer in the future. Competition thereby creates a tradeoff between investment externalities and market power: lessening competition increases both preventive investment and premiums. Exploiting a shift-share instrument for consumer turnover, I find turnover reduces insurers' preventive investment. I develop and estimate a dynamic equilibrium model where insurers compete on premiums and preventive investment, and affect consumers' health status. Counterfactual analyses reveal that when transitioning to a single private insurer, insurers' preventive investment rises, and consumers' medical expenses fall. The distortion to consumer surplus from forgone investment savings is on par with that from pricing power. An investment mandate could relieve free-riding across insurers and achieve Pareto improvements. These results demonstrate efficiency losses of fragmented insurer markets due to investment externalities.
- I1 - Health