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Hospitals in the United States maintain chargemasters that contain the official list prices for all billable services. The prices vary widely across hospitals and are more than three times what hospitals are paid for treating a patient, on average. From this it is tempting to conclude that list prices are a strange, yet ultimately inconsequential, quirk of US health care. However, using both state and national data sets covering the period 2002-14, we found considerable evidence suggesting that list prices reflect hospitals' strategic behavior and have meaningful effects on payments made by and on behalf of patients. Specifically, we found that list prices varied predominantly across hospitals and within markets, were well predicted by observable hospital characteristics, and were positively related to prices actually paid by patients and their insurers. Moreover, analyses of data before and after the implementation of california's Hospital Fair Pricing Act suggest that high list prices causally increased payments from the uninsured. However, list prices had at most a limited relationship with care quality.

We compared the generosity of Medicare plans in terms of out-of-pocket costs attributable to cost sharing and premiums, including both basic and supplemental services. From 2014 through 2019, projected out-of-pocket costs for a typical enrollee were 18-24 percent lower in Medicare Advantage than traditional fee-for-service Medicare.

The introduction of highly effective anti-obesity drugs, such as Wegovy, has prompted debate over Medicare's prohibition on coverage of such products. In this study, we estimated the costs of allowing Medicare coverage of anti-obesity medications. Our analysis incorporated data on drug costs, real-world adherence rates, and potential changes to other health care spending. Using Medicare claims, we also documented beneficiaries' eligibility for nearly identical products approved for different indications. Assuming that anti-obesity drugs were covered in 2025 and that 5 percent or 10 percent of newly eligible patients were prescribed one, annual Part D costs were estimated to increase by $3.1 billion or $6.1 billion, respectively. The marginal costs of this policy could fall by as much as 62.5 percent from baseline estimates if products were approved for additional indications in coming years because these additional conditions are common among people with obesity. This would increase Medicare spending but would occur regardless of a policy change. Longer-term estimates come with significant uncertainty about utilization and price changes, but these results are consistent with this policy change likely increasing Medicare costs by the low to middle tens of billions of dollars over ten years.

Health policy is often designed to help protect patients' financial security. However, there is limited understanding of the role medical debt plays in household finances. We used credit report data on more than four million Americans to study the age profile of people whose medical bills were sent to a US collections agency in 2016. We found that, unlike health care use and spending, medical collections decreased substantially with age. The average size of medical debt decreased nearly 40 percent from patients age twenty-seven to sixty-four, with increases in health insurance coverage and incomes likely playing important mediating roles. However, the frequency of medical collections-that is, the proportion of people with a collection by age-was less closely tied to insurance coverage rates. A potential explanation is that most medical collections were relatively modest in size, with more than half of them less than $600 annually. As a result, medical collections could still occur under typical insurance plans. We discuss how these results could inform policies targeting medical debt and insurance regulation, such as restrictions on age rating.

State laws that limit how much hospitals are paid by uninsured patients provide a unique opportunity to study how financial incentives of health care providers affect the care they deliver. We estimate the laws reduce payments from uninsured patients by 25–30 percent. Even though the uninsured represent a small portion of their business, hospitals respond by decreasing the amount of care delivered to these patients, without measurable effects on a broad set of quality metrics. The results show that hospitals can, and do, target care based on financial considerations, and suggest that altering provider financial incentives can generate more efficient care.

We analyze potential reforms to Medicaid financing through the lens of fiscal federalism. Because substantial dollars are at stake, both the economic and political sides of intergovernmental transfers have high relevance in this setting. We show that changes in Medicaid financing formulas can shift amounts exceeding several hundred dollars per capita from “winning” states to “losing” states. In some cases, these amounts exceed 10% of states’ own-source revenues. States’ balanced budget requirements imply that such changes would, if not phased in gradually, require significant budgetary adjustment over short time horizons. We next show that alternative Medicaid financing structures have significant implications for states’ exposure to budgetary stress during recessions. During the Great Recession, an acyclical block-grant structure would have increased states’ shortfalls by 2–3.5% of own-source revenues relative to either an explicitly countercyclical block grant or the current matching system. Finally, we assess the implications of several financing structures for the extent to which they subsidize states’ decisions on both the “extensive” and “intensive” margins of coverage generosity over the short and long term.