Venue: The Fuqua School of Business, Duke University, 1 Towerview Drive, Durham, NC 27708-0120
Presentation
Is Fragmented Financing Bad for your Health?
Americans finance health care through a wide variety of private insurance plans and public programs. Over a lifetime, individuals are likely to change financing arrangements when they change jobs, retire, move, or experience severe changes in health or economic status, sometimes combining coverage from multiple sources at the same time. This variety presents opportunities to an individual to choose a configuration of coverage that optimally fits his or her needs. It also presents a threat to the quality of care because communication and coordination could be compromised by organizational boundaries among insurance plans and public programs.
We isolate the adverse effects of communication and coordination failures by measuring the effects of fragmented financing on health outcomes, controlling for differences in utilization attributable to financing configuration. Using a large sample of veterans who were eligible for mixtures of VA-, Medicaid-, and Medicare-financed care, we estimate a system of equations in three stages to account for simultaneity in the determination of financing configuration, health services utilization, and health outcomes.
Our first-stage equations predict the probability of enrollment in Medicaid (or the maximum degree of reliance on one program). Our second stage equations predict utilization of medical services as a function of first stage results and other variables. Our third stage equations predict the probability of mortality or hospitalization for ambulatory care sensitive conditions as a function of results from the first two stages, adjusted for baseline health status using diagnosis-based groups and other variables. Two-stage residual inclusion and bootstrapping methods are applied to the system.