Amy Finkelstein's research while affiliated with Massachusetts Institute of Technology and other places

Publications (116)

Article
Importance Home dialysis rates for end-stage kidney disease (ESKD) treatment are substantially lower in the US than in other high-income countries, yet there is limited knowledge on how to increase these rates. Objective To report results from the first year of a nationwide randomized clinical trial that provides financial incentives to ESKD facil...
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We study the impact of expanded adult Medicaid eligibility on the enrollment of already-eligible children. We analyze the 2008 Oregon Medicaid lottery, in which some low-income uninsured adults were randomly selected to be allowed to apply for Medicaid. Children in these households were eligible for Medicaid irrespective of the lottery outcome. We...
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Government programs are often offered on an optional basis to market participants. We explore the economics of such voluntary regulation in the context of a Medicare payment reform, in which one medical provider receives a single, predetermined payment for a sequence of related healthcare services, instead of separate service-specific payments. Thi...
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There is substantial waste in US healthcare but little consensus on how to combat it. We identify one source of waste: long-term care hospitals (LTCHs). Using the entry of LTCHs into hospital markets in an event study design, we find that most LTCH patients would have counterfactually received care at Skilled Nursing Facilities – facilities that pr...
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We estimate the effect of current location on elderly mortality by analyzing outcomes of movers in the Medicare population. We control for movers’ origin locations as well as a rich vector of pre-move health measures. We also develop a novel strategy to adjust for remaining unobservables, using the correlation of residual mortality with movers’ ori...
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We study the sources of high end-of-life spending for cancer patients. Even among patients with similar initial prognoses, spending in the year post diagnosis is over twice as high for those who die within the year than those who survive. Elevated spending on decedents is predominantly driven by higher inpatient spending, particularly low-intensity...
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The impact of the coronavirus disease 2019 (COVID-19) pandemic has been starkly unequal across race and ethnicity. We examined the geographic variation in excess all-cause mortality by race and ethnicity to better understand the impact of the pandemic. We used individual-level administrative data on the US population between January 2011 and April...
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We focus on “selection markets,” which cover markets in which consumers vary not only in how much they are willing to pay for a product but also in how costly they are to the seller. The chapter tries to organize the recent wave of IO-related papers on selection markets, which has largely focused on insurance and credit markets. We provide a common...
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We analyze selection into screening in the context of recommendations that breast cancer screening start at age 40. Combining medical claims with a clinical oncology model, we document that compliers with the recommendation are less likely to have cancer than younger women who select into screening or women who never screen. We show this selection...
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Significance In the US healthcare system, most medical providers treat patients covered by multiple insurers. As a result, changes in the way one health insurer pays for medical services could, by changing provider behavior, spill over onto patients covered by other insurers. In this article, we present evidence of such spillovers in the context of...
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Significance A full picture of the COVID-19 pandemic requires information on how its impact on lives and on livelihoods relates across different groups. We therefore estimate excess all-cause mortality and employment displacement in April 2020 nationally and separately by state and by age group. Initial economic damages from the pandemic are more w...
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Background: There is widespread interest in programs aiming to reduce spending and improve health care quality among "superutilizers," patients with very high use of health care services. The "hotspotting" program created by the Camden Coalition of Healthcare Providers (hereafter, the Coalition) has received national attention as a promising super...
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In 2008, a group of uninsured low-income adults in Oregon was selected by lottery for the chance to apply for Medicaid. Using this randomized design and state administrative data on voter behavior, we analyze how a Medicaid expansion affected voter turnout and registration. We find that Medicaid increased voter turnout in the November 2008 Presiden...
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We compare healthcare spending in public and private Medicare using newly available claims data from Medicare Advantage (MA) insurers. MA insurer revenues are 30 percent higher than their healthcare spending. Adjusting for enrollee mix, healthcare spending per enrollee in MA is 9 to 30 percent lower than in traditional Medicare (TM), depending on t...
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There is widespread concern over the health risks and healthcare costs from potentially inappropriate high-cost imaging. As a result, the Centers for Medicare and Medicaid Services (CMS) will soon require high-cost imaging orders to be accompanied by Clinical Decision Support (CDS): software that provides appropriateness information at the time ord...
Data
Study protocol and Statistical analysis plan. (DOCX)
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A large literature in empirical public finance relies on “bunching” to identify a behavioral response to non-linear incentives and to translate this response into an economic object to be used counterfactually. We conduct this type of analysis in the context of prescription drug insurance for the elderly in Medicare Part D, where a kink in the indi...
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We study the design of provider incentives in the post-acute care setting—a high-stakes but under-studied segment of the healthcare system. We focus on long-term care hospitals (LTCHs) and the large (approximately $13,500) jump in Medicare payments they receive when a patient's stay reaches a threshold number of days. Discharges increase substantia...
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Importance Bundled payments are an increasingly common alternative payment model for Medicare, yet there is limited evidence regarding their effectiveness. Objective To report interim outcomes from the first year of implementation of a bundled payment model for lower extremity joint replacement (LEJR). Design, Setting, and Participants As part of...
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Health insurance confers benefits to the previously uninsured, including improvements in health, reductions in out-of-pocket spending, and reduced medical debt. However, because the nominally uninsured pay only a small share of their medical expenses, health insurance also provides substantial transfers to nonrecipient parties who would otherwise b...
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We explore how private drug plans set cost sharing in the context of Medicare Part D. While publicly provided drug coverage typically involves uniform cost sharing across drugs, we document substantial heterogeneity in the cost sharing for different drugs within privately provided plans. We also document that private plans systematically set higher...
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End-of-life health care spending In the United States, one-quarter of Medicare spending occurs in the last 12 months of life, which is commonly seen as evidence of waste. Einav et al. used predictive modeling to reassess this interpretation. From detailed Medicare claims data, the extent to which spending is concentrated not just on those who die,...
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We describe research on the impact of health insurance on healthcare spending (“moral hazard”), and use this context to illustrate the value of and important complementarities between different empirical approaches. One common approach is to emphasize a credible research design; we review results from two randomized experiments, as well as some qua...
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This paper develops a framework for evaluating the welfare impact of various interventions designed to increase take-up of social safety net programs in the presence of potential behavioral biases. We calibrate the key parameters using a randomized field experiment in which 30,000 elderly individuals not enrolled in – but likely eligible for – the...
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Though there is compelling evidence that medical expenses do cause bankruptcies in the United States, they may cause far fewer than has been claimed. Overemphasizing such events may distract from an understanding of the true nature of health-related economic hardship.
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Context: Expanding Medicaid to previously uninsured adults has been shown to increase detection and reduce the prevalence of depression, but the ways that Medicaid affects mental health care, how effectively it addresses unmet needs, and how those effects differ for those with and without a history of depression remain unclear. Methods: We take...
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We use an event study approach to examine the economic consequences of hospital admissions for adults in two datasets: survey data from the Health and Retirement Study, and hospitalization data linked to credit reports. For non-elderly adults with health insurance, hospital admissions increase out-of-pocket medical spending, unpaid medical bills, a...
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We use an event study approach to examine the economic consequences of hospital admissions for adults in two datasets: survey data from the Health and Retirement Study, and hospitalization data linked to credit reports. For non-elderly adults with health insurance, hospital admissions increase out-of-pocket medical spending, unpaid medical bills, a...
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Oregon's 2008 Medicaid expansion significantly increased the use of prescription medications in 2009-10.
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There is a popular perception that insurance coverage will reduce overuse of the emergency department (ED). Both opponents and advocates of expanding insurance coverage under the Affordable Care Act (ACA) have made statements to the effect that EDs have been jammed with the uninsured and that paying for the uninsured population's emergency care has...
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Objective: To evaluate the effect of Medicaid coverage on dental care outcomes, a major health concern for low-income populations. Data sources: Primary and secondary data on health care use and outcomes for participants in Oregon's 2008 Medicaid lottery. Study design: We used the lottery's random selection to gauge the causal effects of Medic...
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The time patients spend in a doctor's waiting room prior to a scheduled appointment is an important component of the quality of the overall health care experience. We analyzed data on twenty-one million outpatient visits obtained from electronic health record systems, which allowed us to measure time spent in the waiting room beyond the scheduled a...
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We document four similarities between American human healthcare and American pet care: (i) rapid growth in spending as a share of GDP over the last two decades; (ii) strong income-spending gradient; (iii) rapid growth in the employment of healthcare providers; and (iv) similar propensity for high spending at the end of life. We speculate about poss...
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In the U.S. health care system, payments and performance measures are often adjusted to account for differences in patients’ baseline health and demographic characteristics. The idea behind such risk adjustments is to create a level playing field, so that providers aren’t penalized for serving sicker or harder-to-treat patients and insurers aren’t...
Article
A large literature in empirical public finance relies on “bunching” to identify a behavioral response to non-linear incentives and to translate this response into an economic object to be used counterfactually. We conduct this type of analysis in the context of prescription drug insurance for the elderly in Medicare Part D, where a kink in the indi...
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The effect of Medicaid coverage on health and the use of health care services is of first-order policy importance, particularly as policymakers consider expansions of public health insurance. Estimating the effects of expanding Medicaid is challenging, however, because Medicaid enrollees and the uninsured differ in many ways that may also affect ou...
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We study the drivers of geographic variation in US health care utilization, using an empirical strategy that exploits migration of Medicare patients to separate the role of demand and supply factors. Our approach allows us to account for demand differences driven by both observable and unobservable patient characteristics. Within our sample of over...
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"Big data" and statistical techniques to score potential transactions have transformed insurance and credit markets. In this paper, we observe that these widely-used statistical scores summarize a much richer heterogeneity, and may be endogenous to the context in which they get applied. We demonstrate this point empirically using data from Medicare...
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We present a simple graphical framework to illustrate the potential welfare gains from a "top-up" health insurance policy requiring patients to pay the incremental price for more expensive treatment options. We apply this framework to breast cancer treatments, where lumpectomy with radiation therapy is more expensive than mastectomy but generates s...
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We study the demand response to non-linear price schedules using data on insurance contracts and prescription drug purchases in Medicare Part D. We exploit the kink in individuals' budget set created by the famous “donut hole,” where insurance becomes discontinuously much less generous on the margin, to provide descriptive evidence of the drug purc...
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Using data from employer-provided health insurance and Medicare Part D, we investigate whether health care utilization responds to the dynamic incentives created by the nonlinear nature of health insurance contracts. We exploit the fact that because annual coverage usually resets every January, individuals who join a plan later in the year face the...
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The medical profession has long recognized the importance of randomized evaluations; such designs are commonly used to evaluate the safety and efficacy of medical innovations such as drugs and devices. Unfortunately, innovations in how health care is delivered (e.g., health insurance structures, interventions to encourage the use of appropriate car...
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In 2008, a group of uninsured low-income adults in Oregon was selected by lottery for the chance to apply for Medicaid. Using this randomized design and 2009 administrative data, we find no significant effect of Medicaid on employment or earnings. Our 95 percent confidence intervals allow us to reject that Medicaid causes a decline in employment of...
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This article tests for asymmetric information in the U.K. annuity market of the 1990s by trying to identify “unused observables,” attributes of individual insurance buyers that are correlated both with subsequent claims experience and with insurance demand but that insurance companies did not use to set insurance prices. Unlike the widely used posi...
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In 2008, Oregon initiated a limited expansion of a Medicaid program for uninsured, low-income adults, drawing names from a waiting list by lottery. This lottery created a rare opportunity to study the effects of Medicaid coverage by using a randomized controlled design. By using the randomization provided by the lottery and emergency-department rec...
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In 2008 Oregon allocated access to its Medicaid expansion program, Oregon Health Plan Standard, by drawing names from a waiting list by lottery. The lottery was chosen by policy makers and stakeholders as the preferred way to allocate limited resources. At the same time, it also gave rise to the Oregon Health Insurance Experiment: an unprecedented...
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Despite the imminent expansion of Medicaid coverage for low-income adults, the effects of expanding coverage are unclear. The 2008 Medicaid expansion in Oregon based on lottery drawings from a waiting list provided an opportunity to evaluate these effects. Approximately 2 years after the lottery, we obtained data from 6387 adults who were randomly...
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We re-present and re-examine the analysis from the famous RAND Health Insurance Experiment from the 1970s on the impact of consumer cost sharing in health insurance on medical spending. We begin by summarizing the experiment and its core findings in a manner that would be standard in the current age. We then examine potential threats to the validit...
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We use employee-level panel data from a single rm to explore the possibility that individuals may select insurance coverage in part based on their anticipated behavioral ( moral hazard ) response to insurance, a phenomenon we label selection on moral hazard. Using a model of plan choice and medical utilization, we present evidence of heterogeneous...
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We estimate how the marginal utility of consumption varies with health. To do so, we develop a simple model in which the impact of health on the marginal utility of consumption can be estimated from data on permanent income, health, and utility proxies. We estimate the model using the Health and Retirement Study's panel data on the elderly and near...
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We analyze the extent to which individuals' choices over five employer-provided insurance coverage decisions and one 401(k) investment decision exhibit systematic patterns, as would be implied by a general utility component of risk preferences. We provide evidence consistent with an important domain-general component that operates across all insura...
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We survey the literature on social insurance, focusing on recent work that has connected theory to evidence to make quantitative statements about welfare and optimal policy. Our review contains two parts. We first discuss motives for government intervention in private insurance markets, focusing primarily on selection. We review the original theore...
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In 2008, a group of uninsured low-income adults in Oregon was selected by lottery to be given the chance to apply for Medicaid. This lottery provides an opportunity to gauge the effects of expanding access to public health insurance on the health care use, financial strain, and health of low-income adults using a randomized controlled design. In th...
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We investigate whether individuals exhibit forward looking behavior in their response to the non-linear pricing common in health insurance contracts. Our empirical strategy exploits the fact that employees who join an employer-provided health insurance plan later in the calendar year face the same initial ("spot") price of medical care but a higher...
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Long-term care expenditures constitute one of the largest uninsured financial risks facing the elderly in the United States and thus play a central role in determining the retirement security of elderly Americans. In this essay, we begin by providing some background on the nature and extent of long-term care expenditures and insurance against those...
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Long-term care expenditures constitute one of the largest uninsured financial risks facing the elderly in the United States. This paper provides an overview of the economic and policy issues surrounding insuring long-term care expenditure risk. Through this lens we also discuss the likely impact of recent long-term care public policy initiatives at...
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There has been much debate, especially in light of the health insurance expansions in the Affordable Care Act and the current fiscal crisis, about the costs and benefits of Medicaid. Some have argued that Medicaid doesn't deliver much in the way of real benefits, either because it pays providers so little that beneficiaries have trouble gaining acc...
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Insurance induces a well-known tradeoff between the welfare gains from risk protection and the welfare losses from moral hazard. Empirical work traditionally estimates each side of this tradeoff separately, potentially yielding mutually inconsistent results. I develop a nonlinear budget set model of health insurance that allows me to estimate both...
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Government intervention in insurance markets is ubiquitous and the theoretical basis for such intervention, based on classic work from the 1970s, has been the problem of adverse selection. Over the last decade, empirical work on selection in insurance markets has gained considerable momentum. This research finds that adverse selection exists in som...
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Many households spend their wealth slowly during retirement, holding much of their wealth into old age. Determining why they do so is made difficult by a fundamental identification problem: retirees' saving decisions reflect the combined strength of precautionary and bequest motives. Given the substantial medical spending and mortality risks that r...
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We describe recent advances in the empirical analysis of insurance markets. This new research proposes ways to estimate individual demand for insurance and the relationship between prices and insurer costs in the presence of adverse and advantageous selection. We discuss how these models permit the measurement of welfare distortions arising from as...
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The recently enacted Patient Protection and Affordable Care Act includes a major expansion of Medicaid to low-income adults in 2014. This paper describes the Oregon Health Study, a randomized controlled trial that will be able to shed some light on the likely effects of such expansions. In 2008, Oregon randomly drew names from a waiting list for it...
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We provide a graphical illustration of how standard consumer and producer theory can be used to quantify the welfare loss associated with inefficient pricing in insurance markets with selection. We then show how this welfare loss can be estimated empirically using identifying variation in the price of insurance. Such variation, together with quanti...
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Much of the extensive empirical literature on insurance markets has focused on whether adverse selection can be detected. Once detected, however, there has been little attempt to quantify its welfare cost, or to assess whether and what potential government interventions may reduce these costs. To do so, we develop a model of annuity contract choice...
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T his article presents an experiment in which 49 Indonesian villages were randomly assigned to choose development projects through either representative-based meetings or direct election-based plebiscites. Plebiscites resulted in dramatically higher satisfaction among villagers, increased knowledge about the project, greater perceived benefits, and...
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I document a strong negative relationship between stock market returns and annuitization. Using a novel dataset with more than 103,000 actual payout decisions, I find that positive stock market returns decrease the likelihood of employees choosing an annuity over a lump sum, and vice versa. More precisely, only recent market performance drives annu...
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This paper examines whether the salience of a tax system affects equilibrium tax rates. I analyze how tolls change after toll facilities adopt electronic toll collection (ETC); drivers are substantially less aware of tolls paid electronically. I estimate that, in steady state, tolls are 20 to 40 percent higher than they would have been without ETC....
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Health expenditures as a share of GDP have more than tripled over the last half century. A common conjecture is that this is primarily a consequence of rising real per capita income, which more than doubled over the same period. We investigate this hypothesis empirically by instrumenting for local area income with time-series variation in global oi...
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This paper reviews the growing literature on the market for private long-term care insurance, a market notable for its small size despite the fact that long-term care expenses are potentially large and highly uncertain. After summarizing long-term care utilization and insurance coverage in the United States, the paper reviews research on the supply...
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If the marginal utility of consumption depends on health status, this will affect the economic analysis of a number of central problems in public finance, including the optimal structure of health insurance and optimal life cycle savings. In this paper, we describe the promises and challenges of various approaches to estimating the effect of health...
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We illustrate how equilibrium screening models can be used to evaluate the economic consequences of insurance market regulation. We calibrate and solve a model of the United Kingdom's compulsory annuity market and examine the impact of gender-based pricing restrictions. We find that the endogenous adjustment of annuity contract menus in response to...