Mortality Effects of Health Insurance Networks and Providers

Why are some health insurance plans better than others at keeping beneficiaries healthy? It is possible that differences in plan networks results in beneficiaries having access to differential quality physicians and hospitals. This research project will study why some private health insurance plans are better than others at keeping their beneficiaries healthy. It will measure which physicians and hospitals promote health for different types of patients and link these to plan-level effects using new data on plan networks. The research will also develop new methods to separate plans that promote health from plans that enroll beneficiaries who will be healthier regardless of the plans they enroll in. The findings from this project will provide guidance on how to regulate private and government subsidized health insurance markets in ways that will promote beneficiary health. By helping to improve efficiency in the health insurance market, the results of this research project will not only improve health outcomes in the USA but also promote economic growth and lower health care expenditure. This research will therefore help to establish the USA as the global leader in health insurance reforms.

This project will develop a unified framework for studying quality differences and choice in healthcare markets by synthesizing the heterogeneous mortality effects and selection of different physicians, hospitals, and health insurance plans. This analysis proceeds in three steps. It validates observational estimates of provider mortality effects, allowing for heterogeneity by patient observables, with quasi-experimental "mover" variation. Second, it uses discrete choice methods to recover the effective networks of insurance plans from detailed provider network information. This is combined with validated provider mortality estimates to yield estimates of plan network quality. Third, it estimates a model of plan choice, as a function of provider networks and other attributes, and use this model to study (i) how health insurance markets impact health via the matching of consumers and providers and (ii) whether counterfactual market structures can yield better matches and health outcomes. The findings from this project will influence policy debates over the optimal structure of private and government subsidized healthcare markets, such as Medicare Advantage (MA). This research will also yield new estimates of provider and plan network quality which will complement existing public performance rankings. The estimates will allow for a range of policy counterfactuals that evaluate the health consequences and broader welfare impact of policies. The results will therefore improve the functioning of the insurance markets as well as improve its effectiveness on health outcomes.