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Health Plan Type Variations in Spells of Health-Care Treatment

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  • Randall P. Ellis

    (Boston University)

  • Wenjia Zhu

    (Boston University)

Abstract

This paper analyzes 30-day “treatment spells”—fixed-length periods that commence with a service after a gap in provider contact—to examine how health-care utilization and spending of insured employees at large firms are influenced by health plan types. We focus on differences between preferred provider organizations (PPOs) and two recent innovations: plans that feature a narrow panel of providers, and plans that allow free choice of providers but increase demand-side cost sharing: consumer-driven/high-deductible health plans. Health plan effect estimates change dramatically after controlling for endogenous plan type choice, and individual fixed effects. With these controls, narrow-panel plans reduce the probability of new treatment spells relative to PPOs by 34 percent with little effect on chronic, repeat visit spells. Visit reductions are more concentrated in less severe conditions in narrow-network plans, hence diagnostic coding on the remaining patients increases. We find no evidence that either narrow panel or higher-cost-sharing plans pay lower prices per procedure or have less intensive treatment given initiation of treatment. With controls, consumer-driven/high-deductible health plans are associated with higher total spending on procedures than PPO plans.

Suggested Citation

  • Randall P. Ellis & Wenjia Zhu, 2016. "Health Plan Type Variations in Spells of Health-Care Treatment," American Journal of Health Economics, MIT Press, vol. 2(4), pages 399-430, Fall.
  • Handle: RePEc:tpr:amjhec:v:2:y:2016:i:4:p:399-430
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    File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/AJHE_a_00056
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Thesis Thursday: Wenjia Zhu
      by Chris Sampson in The Academic Health Economists' Blog on 2018-06-21 06:00:42

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    Cited by:

    1. Chenyuan Liu & Justin R. Sydnor, 2018. "Dominated Options in Health-Insurance Plans," NBER Working Papers 24392, National Bureau of Economic Research, Inc.
    2. Denzil G. Fiebig, 2017. "Big Data: Will It Improve Patient-Centered Care?," The Patient: Patient-Centered Outcomes Research, Springer;International Academy of Health Preference Research, vol. 10(2), pages 133-139, April.

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    More about this item

    Keywords

    health-care spending; treatment spells; risk adjustment provider organizations; consumer-driven health plans;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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