Monitoring Demands for Hospital Care: An Analysis of State Discharge Data

The Affordable Care Act is estimated to increase the number of insured Americans by 7 million by the end of open enrollment period in 2014, according to recent projections by CMS.  It has been shown that insurance increases the utilization of health services (Finkelstein et al, 2011). However, there are many questions about how an increase in the demand for health services may manifest itself, and whether supply will be adequate to meet demand. One approach to assessing the impact of an insurance expansion on the demand for health care is to monitor trends in utilization.

Hospitals are interesting settings in which to examine the effect of an insurance expansion for a number of reasons. First, hospitals are required to provide certain kinds of care to all patients, regardless of their ability to pay. Second, hospitals provide a wide variety of services, from urgent critical care to elective surgical procedures. The sensitivity of demand for these procedures to insurance status vary considerably. Two categories of particular interest are hospitalizations for ambulatory care sensitive (ACS) conditions,  both  ED visits and inpatient admissions, as well as elective orthopedic surgery.  

There are several ways in which hospital utilization for ACS conditions may be affected by an expansion in coverage. One possibility is that improved use of primary care by the newly insured will reduce visits to the ED and hospitalizations for ACS conditions.  On the other hand, an increase in coverage may result in an increase in visits to the hospital for ACS conditions, if congestion problems in the ambulatory care setting make it difficult for patients to access care in physicians’ offices. With regard to elective orthopedic surgeries, since these are procedures for which price elasticity of demand is high, it would be expected that demand will be sensitive to insurance status, and will increase with a coverage expansion.

We will use a unique source of quarterly discharge data from approximately 500 hospitals in 30 states. These data are being submitted to the Robert Wood Johnson Foundation as part of project with state hospital associations that is designed to monitor the impact of the Affordable Care Act on hospital utilization. These data include information on overall discharges by payer, in addition to specific diagnoses, particularly ED visits and inpatient admissions for ACS conditions, as well as hospitalizations for knee replacement. We will construct a data set which combines hospital level discharge data with information on enrollment, features of exchange plans by rating area, and other relevant factors affecting supply and demand. Our analyses will focus on the relationship between coverage change and hospital utilization.  Quarterly data from 2012 through the first quarter of 2014 will be used to provide a very early glimpse of how hospital utilization data may be used to assess the impact of a coverage expansion on the demand for health services.