Working Paper: NBER ID: w29564
Authors: Marcus Dillender; Lu G. Jinks; Anthony T. Lo Sasso
Abstract: Policies to reduce health care payments can lead to health care access issues if providers reduce their supply in response to reimbursement rate reductions. We examine the impact of a policy that reduced reimbursement rates by 30% in a workers’ compensation insurance system that provided generous reimbursement rates relative to other payers even after the rate reduction. The results suggest that providers’ supply is inelastic at the part of the reimbursement distribution that we study. Our estimates indicate that the policy reduced annual workers’ compensation medical costs by over $400 million without affecting injured workers’ health care utilization or health.
Keywords: reimbursement rates; health care access; workers' compensation; provider supply; health care costs
JEL Codes: H75; I11; J22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| policy change (30% reduction in reimbursement rates) (I18) | reimbursement rates paid to providers (I18) |
| policy change (30% reduction in reimbursement rates) (I18) | annual workers' compensation medical costs (J30) |
| reimbursement rates paid to providers (I18) | health care utilization of injured workers (J28) |
| reimbursement rates paid to providers (I18) | supply response (J20) |
| policy change (30% reduction in reimbursement rates) (I18) | health care spending dynamics (H51) |