Has the Affordable Care Act Affected Health Care Efficiency? by Russell Kashian, Nicholas Lovett, Yuhan Xue :: SSRN

We utilize health care input and output data to evaluate how state-level efficiency in health care has changed in the wake of the Affordable Care Act (ACA). We use a Stochastic Frontier model to estimate annual measures of technical and cost efficiency before, and after, the implementation of the ACA. Results show that following the ACA, states’ technical efficiency improved and converged across states. However, cost efficiency declines suggest health outputs rose by a proportionally smaller margin than health care costs. Plausible explanations are a lack of substitutability between emergency care and preventive care, the presence of moral hazard in health care markets, and declining marginal returns to increased health care expenditures. The above pattern of results is repeated with greater magnitude for states that expanded Medicaid coverage. The results suggest the ACA represents a package of reforms that present a trade-off between technical and cost efficiency.

via Has the Affordable Care Act Affected Health Care Efficiency? by Russell Kashian, Nicholas Lovett, Yuhan Xue :: SSRN

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s