Contrary To Popular Belief, Medicaid Hospital Admissions Are Often Profitable Because Of Additional Medicare Payments

December 5, 2016

It is generally believed that most hospitals lose money on Medicaid admissions. The data suggest otherwise. Medicaid admissions are often profitable for hospitals because of payments from both the Medicaid program and the Medicare program, including payments for uncompensated care and from the Medicare disproportionate-share hospital program. On average, adding a single Medicaid patient day in fiscal year 2017 will increase most hospitals’ Medicare payments by more than $300. When added to Medicaid payments, these payments often cause Medicaid patients to be profitable for hospitals. In contrast, adding a single charity care day in the same year will decrease overall Medicare payments by about $20 on average. The Centers for Medicare and Medicaid Services recently announced a proposal to shift some Medicare payments from supporting hospitals’ costs for Medicaid patients to directly supporting their costs for uncompensated care. If that proposal is adopted, hospitals’ profits on Medicaid patients would decrease, but their losses on care for the uninsured would be reduced.

Source: Contrary To Popular Belief, Medicaid Hospital Admissions Are Often Profitable Because Of Additional Medicare Payments


American Economic Association

December 2, 2016

This study evaluates how large changes in public health insurance coverage affect provider behavior and patient wait times by analyzing a common type of primary care: dental services. When states expand coverage of dental services to adult Medicaid beneficiaries, dentists’ participation in Medicaid increases and dentists see more publicly insured patients. Dentists supply more visits but only modestly increase the amount of time spent working. They achieve this in part by making greater use of dental hygienists. Wait times increase modestly, with the largest increases in wait times observed in states with restrictive scope of practice laws governing dental hygienists.

Source: American Economic Association


Give Recipients Fixed Payments for Premiums and the Right to Choose – NYTimes.com

December 1, 2016

Speaker Paul Ryan and other Republicans in the House have been pushing for several years for changes in Medicare that would improve the efficiency of the program. If done right, their reforms would reduce premiums for Medicare beneficiaries and lower costs for the federal government too, according to the Congressional Budget Office.

Source: Give Recipients Fixed Payments for Premiums and the Right to Choose – NYTimes.com


Vocational Considerations and Trends in Social Security Disability by Amanda M. Michaud, Jaeger Nelson, David G. Wiczer :: SSRN

November 13, 2016

Along with health, Social Security Disability Insurance (SSDI) evaluates work-limiting disability by considering vocational factors including age, education, and past work experience. As the number of SSDI applicants and awards has increased, these vocational criteria are increasingly important to acceptances and denials. A unique state-level dataset allows us to estimate how these factors relate to the SSDI award process. These estimates are used to asses how changes to the demographic and occupational composition have contributed to awards trends. In our results, the prevalence of workers in their 50s are especially important. Further, increasing educational attainment lowers applications and vocational awards.

Source: Vocational Considerations and Trends in Social Security Disability by Amanda M. Michaud, Jaeger Nelson, David G. Wiczer :: SSRN


Prospects for Care Coordination for Children with Medical Complexity – AAF

November 10, 2016

While most children covered by Medicaid require only routine and inexpensive medical services, some complex cases require considerable medical coordination and significant resources.

Coordinating care between medical facilities and employing capitated payments, shared savings models, or other incentive-based payments could improve medical outcomes and save both federal and state Medicaid dollars.

Proposed changes to the care coordination of medically complex children covered by Medicaid could save as much as $13 to $16 billion over the first 10 years of implementation, and has the potential to save more in future years.

Source: Prospects for Care Coordination for Children with Medical Complexity – AAF


Is Uncle Sam Inducing the Elderly to Retire? by Alan J. Auerbach, Laurence J. Kotlikoff, Darryl Koehler, Manni Yu :: SSRN

November 7, 2016

Many, if not most, Baby Boomers appear at risk of suffering a major decline in their living standard in retirement. With federal and state government finances far too encumbered to significantly raise Social Security, Medicare, and Medicaid benefits, Boomers must look to their own devices to rescue their retirements, namely working harder and longer. However, the incentive of Boomers to earn more is significantly limited by a plethora of explicit federal and state taxes and implicit taxes arising from the loss of federal and state benefits as one earns more. Of particular concern is Medicaid and Social Security’s complex Earnings Test and clawback of disability benefits. This study measures the work disincentives confronting those age 50 to 79 from the entire array of explicit and implicit fiscal work disincentives. Specifically, the paper runs older respondents in the Federal Reserve’s 2013 Survey of Consumer Finances through The Fiscal Analyzer — a software tool designed, in part, to calculate remaining lifetime marginal net tax rates.

We find that working longer, say an extra five years, can raise older workers’ sustainable living standards. But the impact is far smaller than suggested in the literature in large part because of high net taxation of labor earnings. We also find that many Baby Boomers now face or will face high and, in very many cases, extremely high work disincentives arising from the hodgepodge design of our fiscal system. A third finding is that the marginal net tax rate associated with a significant increase in earnings, say $20,000 per year, arising from taking a full-time or part-time job (which could a second job), can, for many elderly, be dramatically higher than that associated with earning a relatively small, say $1,000 per year, extra amount of money. This is due to the various income thresholds in our fiscal system.

We also examine the elimination of all transfer program asset and income testing. This dramatically lowers marginal net tax rates facing the poor. Another key finding is the enormous dispersion in effective marginal remaining lifetime net tax rates facing seeming identical households, i.e., households with the same age and resource level. Finally, we find that traditional, current-year (i.e., static) marginal tax calculations relating this year’s extra taxes to this year’s extra income are woefully off target when it comes to properly measuring the elderly’s disincentives to work. Our findings suggest that Uncle Sam is, indeed, inducing the elderly to retire.

Source: Is Uncle Sam Inducing the Elderly to Retire? by Alan J. Auerbach, Laurence J. Kotlikoff, Darryl Koehler, Manni Yu :: SSRN


Inattention and Switching Costs as Sources of Inertia in Medicare Part D by Florian Heiss, Daniel L. McFadden, Joachim K. Winter, Amelie C. Wuppermann, Bo Zhou :: SSRN

November 4, 2016

The trend towards giving consumers choice about their health plans has invited research on how good they actually are at making these decisions. The introduction of Medicare Part D is an important example. Initial plan choices in this market were generally far from optimal. In this paper, we focus on plan choice in the years after initial enrollment. Due to changes in plan supply, consumer health status, and prescription drug needs, consumers’ optimal plans change over time. However, in Medicare Part D only about 10% of consumers switch plans every year, and on average, plan choices worsen for those who do not switch. We develop a two-stage panel data model of plan choice whose stages correspond to two separate reasons for inertia: inattention and switching costs. The model allows for unobserved heterogeneity that is correlated across the two decision stages. We estimate the model using administrative data on Medicare Part D claims from 2007 to 2010. We find that consumers are more likely to pay attention to plan choice if overspending in the last year is more salient and if their old plan gets worse, for instance due to premium increases. Moreover, conditional on attention there are significant switching costs. Separating the two stages of the switching decision is thus important when designing interventions that improve consumers’ plan choice.

Source: Inattention and Switching Costs as Sources of Inertia in Medicare Part D by Florian Heiss, Daniel L. McFadden, Joachim K. Winter, Amelie C. Wuppermann, Bo Zhou :: SSRN