Understanding the Distributional Impacts of Health Insurance Reforms: Evidence from a Consumer-Cost Sharing Program

Monday, June 11, 2018: 8:40 AM
Salon V - Garden Level (Emory Conference Center Hotel)

Presenter: Marion Aouad

Co-Authors: Timothy Brown; Christopher Whaley

Discussant: David M. Powell


In this paper, we examine the heterogeneous effects of a health insurance reform on the distribution of total medical spending for the California Public Employees' Retirement System (CalPERS). The reform, called reference pricing, changes the relative prices faced by CalPERS members when receiving care between higher-priced and lower-priced healthcare providers for several medical procedures. Specifically, the reference pricing program establishes a maximum reimbursable amount (i.e. the reference price) for procedures done in higher-priced settings while none is set for patients who have medical procedures performed in lower-priced settings.

Using medical claims data for CalPERS and an unaffected control group, we estimate the quantile treatment effects of the program to capture treatment effect heterogeneity. To do this, we employ the method detailed in Firpo (2007), which relies on the assumption that selection into treatment is based only on observable characteristics. Results vary by the medical procedure considered. However, we generally find large, negative effects at higher quantiles of the spending distributions, with smaller effects at lower quantiles. Our results suggest that the reform leads to a relative right-tail reduction in the distribution of total medical spending and that the reform does not lead to a simple, location shift in the distributions of spending. These effects are not captured by mean estimates but have important policy implications