Most Popular Books by Jonathan Gruber

Recent years have seen enormous growth in limited network plans that restrict patient choice of provider, particularly through state exchanges under the ACA. Opposition to such plans is based on concerns that restrictions on provider choice will harm patient care. We explore this issue in the context of the Massachusetts GIC, the insurance plan for state employees, which recently introduced a major financial incentive to choose limited network plans for one group of enrollees and not another. We use a quasi-experimental analysis based on the universe of claims data over a three-year period for GIC enrollees. We find that enrollees are very price sensitive in their decision to enroll in limited network plans, with the state''s three month "premium holiday" for limited network plans leading 10% of eligible employees to switch to such plans. We find that those who switched spent considerably less on medical care; spending fell by almost 40% for the marginal complier. This reflects both reductions in quantity of services used and prices paid per service. But spending on primary care actually rose for switchers; the reduction in spending came entirely from spending on specialists and on hospital care, including emergency rooms. We find that distance traveled falls for primary care and rises for tertiary care, although there is no evidence of a decrease in the quality of hospitals used by patients. The basic results hold even for the sickest patients, suggesting that limited network plans are saving money by directing care towards primary care and away from downstream spending. We find such savings only for those whose primary care physicians are included in limited network plans, however, suggesting that networks that are particularly restrictive on primary care access may fare less well than those that impose only stronger downstream restrictions.

Stemming from the belief that the key barrier to achieving high-quality and low-cost health care is the deficiency of information and medical knowledge among patients, an enormous number of health policies are focused on patient education. In this paper, we attempt to place an upper bound on the improvements to health care quality that may emanate from such information campaigns. To do so, we compare the care received by a group of patients that should have the best possible information on health care service efficacy--i.e., physicians as patients--with a comparable group of non-physician patients, taking various steps to account for unobservable differences between the two groups. Our results suggest that physicians do only slightly better in adhering to both low- and high-value care guidelines than non-physicians - but not by much and not always.

The magnitude of provider uncompensated care has become an important public policy issue. Yet existing measures of uncompensated care are flawed because they compare uninsured payments to list prices, not to the prices actually paid by the insured. We address this issue using a novel source of data from a vendor that processes financial data for almost 4000 physicians. We measure uncompensated care as the net amount that physicians lose by lower payments from the uninsured than from the insured. Our best estimate is that physicians provide negative uncompensated care to the uninsured, earning more on uninsured patients than on insured patients with comparable treatments. Even our most conservative estimates suggest that uncompensated care amounts to only 0.8% of revenues, or at most $3.2 billion nationally. These results highlight the important distinction between charges and payments, and point to the need for a re-definition of uncompensated care in the health sector going forward.

Greater patient cost-sharing could help reduce the fiscal pressures associated with insurance expansion by reducing the scope for moral hazard. But it is possible that low-income recipients are unable to cut back on utilization wisely and that, as a result, higher cost-sharing will lead to worse health and higher downstream costs through hospitalizations. We use exogenous variation in the copayments faced by low-income enrollees in the Massachusetts'' Commonwealth Care program to study these effects. We estimate separate price elasticities of demand by type of service (hospital care, drugs, outpatient care). Overall, we find price elasticities of about -0.15 for this low-income population - fairly similar to elasticities calculated for higher-income populations in other settings. These elasticities are somewhat larger for the chronically sick and older enrollees. A substantial portion of the decline in utilization comes from some patients cutting back on use completely, but we find no (detectable) evidence of offsetting increases in hospitalizations or emergency department visits in response to the higher copayments, either overall or for the chronically ill in particular -- National Bureau of Economic Research web site.

The effect of vouchers on sorting between private and public schools depends upon the price elasticity of demand for private schooling. Estimating this elasticity is empirically challenging because prices and quantities are jointly determined in the market for private schooling. We exploit a unique and previously undocumented source of variation in private school tuition to estimate this key parameter. A majority of Catholic elementary schools offer discounts to families that enroll more than one child in the school in a given year. Catholic school tuition costs therefore depend upon the interaction of the number and spacing of a family''s children with the pricing policies of the local school. This within-neighborhood variation in tuition prices allows us to control for unobserved determinants of demand with a fine set of geographic fixed effects, while still identifying the price parameter. We use data from 3700 Catholic schools, matched to restricted Census data that identifies geography at the block level. We find that a standard deviation decrease in tuition prices increases the probability that a family will send its children to private school by one-half percentage point, which translates into an elasticity of Catholic school attendance with respect to tuition costs of -0.19. Our subgroup results suggest that a voucher program would disproportionately induce into private schools those who, along observable dimensions, are unlike those who currently attend private school.

Social Security faces a major financing shortfall. One policy option for addressing this shortfall would be to raise the earliest age at which individuals can claim their retirement benefits. A welfare analysis of such a policy change depends critically on how it affects living standards. This paper estimates the impact of the Social Security early entitlement age on later-life elderly living standards by tracing birth cohorts of men who had access to different potential claiming ages. The focus is on the Social Security Amendments of 1961, which introduced age 62 as the early entitlement age (EEA) for retired-worker benefits for men. Based on data from the Social Security Administration and March 1968-2001 Current Population Surveys, reductions in the EEA in the long-run lowered the average claiming age by 1.4 years, which lowered Social Security income for male-headed families in retirement by 1.5% at the mean, 3% at the median, and 4% at the 25th percentile of the Social Security income distribution. The increase in early claiming was associated with a decrease in total income, but only at the bottom of the income distribution. There was a large associated rise in elderly poverty and income inequality; the introduction of early claiming raised the elderly poverty rate by about one percentage point. Finally, for the 1885-1916 cohorts, the implied elasticity of poverty with respect to Social Security income for male-headed families is 1.6−. Overall, we find that the introduction of early claiming was associated with a reduction in income and an increase in the poverty rate in old age for male-headed households.

The continued rise in the number of non-elderly Americans without health insurance has led to considerable interest in tax-based policies to raise the level of insurance coverage. This paper describes a detailed microsimulation model that has been developed to evaluate such tax-based policies, and its findings for the impact of policies on government costs and insurance coverage. I find that while tax subsidies could significantly increase insurance coverage, even very generous tax policies could not cover more than a sizeable minority of the uninsured population. But there are several design features that can clearly make tax policy more effective: using tax credits rather than deductions; making credits refundable; and addressing the timing mismatch between when insurance purchases are made and tax refunds are received. I also document a clear tradeoff between the scope of tax subsidies and their efficiency.

We explore choice inconsistency over time within the Medicare Part D Prescription Drug Program. Using the full universe of Part D claims data, we revisit our earlier work on partial data to replicate our results showing large "foregone savings" among Part D enrollees. We also document that this foregone savings increases over time during the first four years of the Part D program. We then develop a rich dynamic structural framework that allows us to mathematically decompose the "foregone welfare" from inconsistent plan choices into components due to demand side factors, supply side factors, and changes in preferences over time. We find that the welfare cost of choice inconsistencies increases over time. Most importantly, we find that there is little improvement in the ability of consumers to choose plans over time; we identify and estimate little learning at either the individual or cohort level over the years of our analysis. Inertia does reduce welfare, but even in a world with no inertia we estimate that substantial welfare losses would remain. We conclude that the increased choice inconsistencies over time are driven by changes on the supply side that are not offset both because of inertia and because non-inertial consumers still make inconsistent choices.

Parallel reimbursement regimes, under which providers have some discretion over which payer gets billed for patient treatment, are a common feature of health care markets. In the U.S., the largest such system is under Workers’ Compensation (WC), where the treatment workers with injuries that are not definitively tied to a work accident may be billed either under group health insurance plans or under WC. We document that there is significant reclassification of injuries from group health plans into WC, or “claims shifting”, when the financial incentives to do so are strongest. In particular, we find that injuries to workers enrolled in capitated group health plans (such as HMOs) see a higher incidence of their claims for soft-tissue injuries under WC than under group health, relative to those in non-capitated plans. Such a pattern is not evident for workers with traumatic injuries, which are easier to classify specifically as work related. Moreover, we find that such reclassification is more common in states with higher WC fees, once again for soft tissue but not traumatic injuries. Our results imply that a significant shift towards capitated reimbursement, or reimbursement reductions, under GH could lead to a large rise in the cost of WC plans.

Uses "a microsimulation model to estimate the impact of various tax interventions to cover the uninsured, relative to an expansion of public insurance designed to accomplish the same goals." - abstract.

As we approach the tenth anniversary of the passage of the Affordable Care Act, it is important to reflect on what has been learned about the impacts of this major reform. In this paper we review the literature on the impacts of the ACA on patients, providers and the economy. We find strong evidence that the ACA''s provisions have increased insurance coverage. There is also a clearly positive effect on access to and consumption of health care, with suggestive but more limited evidence on improved health outcomes. There is no evidence of significant reductions in provider access, changes in labor supply, or increased budgetary pressures on state governments, and the law''s total federal cost through 2018 has been less than predicted. We conclude by describing key policy implications and future areas for research.

Although the vast majority of working individuals aged 55-64 receive health insurance coverage through their employment, many of these individuals face the prospect of losing such coverage should they retire before becoming eligible for guaranteed public coverage through Medicare at age 65. Because the expected medical expenses of this group are large and uncertain, the availability of health insurance coverage after retirement could be a key factor in the retirement decision of older workers. We examine the effect of health insurance on retirement by looking at variation in state and federal ''continuation of coverage'' mandates, laws which allow individuals to continue purchasing health insurance through a previous employer for a specified number of months after leaving the firm. By allowing individuals to maintain their employer-provided health insurance after retirement, these laws decrease the cost of early retirement for those who do not have other retiree health insurance available. Using data on 55-64 year old men from the Current Population Survey, we find that one year of continuation benefits increases the probability of being retired by 1 percentage point; this represents a 5.4 percent increase in the baseline probability of being retired for this group. We also find that continuation mandates increase the likelihood of being insured after retirement.

Recently economists have begun to consider the causes and consequences of religious participation. An unanswered question in this literature is the effect upon individuals of changes in the opportunity cost of religious participation. In this paper we identify a policy-driven change in the opportunity cost of religious participation based on state laws that prohibit retail activity on Sunday, known as "blue laws." Many states have repealed these laws in recent years, raising the opportunity cost of religious participation. We construct a model which predicts, under fairly general conditions, that allowing retail activity on Sundays will lower attendance levels but may increase or decrease religious donations. We then use a variety of datasets to show that when a state repeals its blue laws religious attendance falls, and that church donations and spending fall as well. These results do not seem to be driven by declines in religiosity prior to the law change, nor do we see comparable declines in membership or giving to nonreligious organizations after a state repeals its laws. We then assess the effects of changes in these laws on drinking and drug use behavior in the NLSY. We find that repealing blue laws leads to an increase in drinking and drug use, and that this increase is found only among the initially religious individuals who were affected by the blue laws. The effect is economically significant; for example, the gap in heavy drinking between religious and non religious individuals falls by about half after the laws are repealed.

We explore the causes of the dramatic rise in employee contributions to health insurance over the past two decades. In 1982, 44% of those who were covered by their employer-provided health insurance had their costs fully financed by their employer, but by 1998 this had fallen to 28%. We discuss the theory of why employers might shift premiums to their employees, and empirically model the role of six factors suggested by the theory. We find that there was a large impact of falling tax rates, rising eligibility for insurance through the Medicaid system and through spouses, and deteriorating economic conditions (in the late 1980s and early 1990s). We also find much more modest impacts of increased managed care penetration and rising health care costs. Overall, this set of factors can explain about one-quarter of the rise in employee premiums over the 1982-1996 period

Medicaid’s federal-state matching system of financing is the nation’s largest example of fiscal federalism. Using generous federal subsidies, the Affordable Care Act incentivized states to expand Medicaid, which became a state option in the aftermath of a 2012 Supreme Court ruling. As of early 2020, 14 states had not yet expanded, with concerns over state budgetary effects described as a key barrier. We use an event-study approach to analyze state budget data from 2010-2018 and assess the effects of state Medicaid expansion decisions. We find that Medicaid expansion increased total spending in expansion states by 6% to 9%, compared to non-expansion states. By source of funds, federal spending via the states increased by 10% in the first year of Medicaid expansion, rising to 27% in 2018. Changes in spending from state funding were modest and non-significant, with less than a 1% change from baseline annually in the most recent years, 2017 and 2018. Meanwhile, we find no evidence that increased Medicaid spending from expansion produced any reductions in spending on education, corrections, transportation, or public assistance. Changes in Medicaid spending tracked closely with the baseline pre-ACA (2013) uninsured rate in each states, with expansion leading to roughly $2680 in added annual spending per uninsured adult. As a result, we estimate states that didn’t expand Medicaid passed up $43 billion in federally-subsidized program funds in 2018. Finally, state projections in the aggregate were reasonably accurate, with expansion states projecting average Medicaid spending from 2014-2018 within 2 percent of the actual amounts, and in fact overestimating Medicaid spending in most years.

We explore the in- and out- of sample robustness of tests for consumer choice inconsistencies based on parameter restrictions in parametric models, with a focus on tests proposed by Ketcham, Kuminoff and Powers (2015). We start by arguing that non-parametric alternatives are inherently conservative with respect to detecting mistakes (and one specific test proposed by KKP is incorrect). We then consider several proposed robustness checks of parametric models and argue that they do not separately identify misspecification and choice inconsistencies. We also show that, when implemented using a comprehensive goodness of fit measure, the Keane and Wolpin (2007) test of out of sample forecasting demonstrates that a model allowing for choice inconsistencies forecasts substantially better than one that does not. Finally, we explore the robustness of our 2011 results to alternative normative assumptions.

I review the key issues that arise in financing health care delivery. I begin by documenting the key features of health care markets that make financing so central in this sector, such as the skewed and unpredictable nature of health care spending and market failures in health care delivery. I then review the key issues that public and private payers face in designing health care markets, from the proper mix of public and private provision to the role of risk bearing for consumers and providers. Finally, I illustrate how these issues manifest in practice by comparing the design of insurance systems in the United States and Canada.

We present a detailed analysis of the incentives that Social Security provides for continued work at older ages. We do so using information on older males from the Health and Retirement Study over the 1980-1997 period to calculate the changes in the present discounted value of Social Security entitlements from additional work at each age. We find that the median male worker faces a small tax on work at ages 55-61, a near zero tax at ages 62-64, and a large tax at ages 65-69. However, there is significant heterogeneity in tax rates. We also document significant non-monotonicities in the accrual of Social Security entitlements with additional work, and suggest a more appropriate measure of incentive effects that considers accruals over not just the next year but future years as well

First-year insurer participation in the Health Insurance Marketplaces (HIMs) established by the Affordable Care Act is limited in many areas of the country. There are 3.9 participants, on (population-weighted) average, in the 395 ratings areas spanning the 34 states with federally facilitated marketplaces (FFMs). Using data on the plans offered in the FFMs, together with predicted market shares for exchange participants (estimated using 2011 insurer-state market shares in the individual insurance market), we study the impact of competition on premiums. We exploit variation in ratings-area-level competition induced by United Healthcare''s decision not to participate in any of the FFMs. We estimate that the second-lowest-price silver premium (which is directly linked to federal subsidies) would have decreased by 5.4 percent, on average, had United participated. If all insurers active in each state''s individual insurance market in 2011 had participated in all ratings areas in that state''s HIM, we estimate this key premium would be 11.1 percent lower and 2014 federal subsidies would be reduced by $1.7 billion.

We estimate the extent of defensive medicine by physicians, embracing the no-liability counterfactual made possible by the structure of liability rules in the Military Heath System. Active-duty patients seeking treatment from military facilities cannot sue for harms resulting from negligent care, while protections are provided to dependents treated at military facilities and to all patients--active-duty or not--that receive care from civilian facilities. Drawing on this variation and exploiting exogenous shocks to care location choices stemming from base-hospital closures, we find suggestive evidence that liability immunity reduces inpatient spending by 5% with no measurable negative effect on patient outcomes.

This is the introduction to and summary of Phase III of an international research project to study the relationship between social security provisions and retirement. The project relies on the work of a large group of economists in 12 countries who conduct the analysis for each of their countries. The first phase described the retirement incentives inherent in plan provisions and documented the strong relationship across countries between social security incentives to retire and the proportion of older persons out of the labor force. The second phase illustrated the large effects that changing plan provisions would have on the labor force participation of older workers. This third phase shows the consequent fiscal implications that extending labor force participation would have on net program costs -- reduced government social security benefit payments less increased government tax revenues. The findings are conveyed by simulating the implications of illustrative reforms. One reform increases benefit eligibility ages by three years. Another illustrative reform reduces actuarially benefits received before the normal retirement age. A common reform prescribes the same provisions in each country. The financial implications of the illustrative reforms are very large in many instances, often as much as 20 to 40 percent of current program costs. The savings amount to as much a 1 percent or more of country GDP. The results make clear that reforms like those considered in this volume can have very large fiscal implications for the cost of social security benefits as well as for government revenues engendered by changes in the labor force participation of older workers.

There is widespread agreement that the US healthcare system wastes as much as 5% of GDP, yet little consensus on what care is actually unproductive. This partly arises because of the endogeneity of patient choice of treatment location. This paper uses the effective 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 do not have meaningfully better survival outcomes compared to hospitals whose patients receive less. Outcomes are related to different types of treatment intensity, however: patients assigned to hospitals with high levels of inpatient spending are more likely to survive to one year, while those assigned to hospitals with high levels of outpatient spending are less likely to do so. This adverse effect of outpatient spending is predominately driven by spending at skilled nursing facilities (SNF) following hospitalization. These results offer a new type of quality measure for hospitals based on utilization of SNFs. We find that patients quasi-randomized to hospitals with high rates of SNF discharge have poorer outcomes, as well as higher downstream spending once conditioning on initial hospital spending.