Hospitals as insurers of last resort

Craig Garthwaite; Tal Gross; Matthew J. Notowidigdo

doi:10.1257/app.20150581

Hospitals as insurers of last resort

Craig Garthwaite, Tal Gross, Matthew J. Notowidigdo

Research output: Contribution to journal › Article › peer-review

56 Scopus citations

Abstract

American hospitals are required to provide emergency medical care to the uninsured. We use previously confidential hospital financial data to study the resulting uncompensated care, medical care for which no payment is received. Using both panel-data methods and case studies, we find that each additional uninsured person costs hospitals approximately $800 each year. Increases in the uninsured population also lower hospital profit margins, suggesting that hospitals do not pass along all uncompensated-care costs to other parties such as hospital employees or privately insured patients. A hospital's uncompensated-care costs also increase when a neighboring hospital closes.

Original language	English (US)
Pages (from-to)	1-39
Number of pages	39
Journal	American Economic Journal: Applied Economics
Volume	10
Issue number	1
DOIs	https://doi.org/10.1257/app.20150581
State	Published - Jan 1 2018

Funding

* Garthwaite: Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208 (email: [email protected]); Gross: Questrom School of Business, Boston University, 595 Commonwealth Ave., Boston, MA 02215 (email: [email protected]); Notowidigdo: Department of Economics, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208 (email: [email protected]). This research was made possible by a data-use agreement between the authors and the American Hospital Association that allows the confidential hospital financial data to be used for academic research. The agreement placed no constraints on the conclusions of the analysis except that they be factually accurate, and the results do not represent the conclusions or opinions of the data provider. We thank Leemore Dafny, Guy David, David Dranove, Joe Doyle, Amy Finkelstein, Emily Oster, Jesse Shapiro, and Heidi Williams for helpful discussions, and seminar participants at BU/Harvard/ MIT Health Policy, the University of California-Irvine, Carnegie Mellon University, the University of Chicago, Cornell University, the University of Illinois, the Robert Wood Johnson Foundation at the University of Michigan, the New York Federal Reserve, Northwestern-IPR, the RAND Corporation, Rice University, Stanford University, Syracuse University, the University of Texas-Austin, Vanderbilt University, and Yale University for useful comments. We thank Scott Bates for assistance with the American Hospital Association data, and we thank Mark He, Angela Li, Alen Makmudov, and Mariel Schwartz for excellent research assistance. Notowidigdo thanks the Initiative on Global Markets at the Booth School of Business for financial support. All authors are deeply grateful to the Robert Wood Johnson Foundation (Grant #72183) for financial support.

ASJC Scopus subject areas

General Economics, Econometrics and Finance

Access to Document

10.1257/app.20150581

Cite this

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abstract = "American hospitals are required to provide emergency medical care to the uninsured. We use previously confidential hospital financial data to study the resulting uncompensated care, medical care for which no payment is received. Using both panel-data methods and case studies, we find that each additional uninsured person costs hospitals approximately $800 each year. Increases in the uninsured population also lower hospital profit margins, suggesting that hospitals do not pass along all uncompensated-care costs to other parties such as hospital employees or privately insured patients. A hospital's uncompensated-care costs also increase when a neighboring hospital closes.",

author = "Craig Garthwaite and Tal Gross and Notowidigdo, {Matthew J.}",

note = "Funding Information: * Garthwaite: Kellogg School of Management, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208 (email: [email protected]); Gross: Questrom School of Business, Boston University, 595 Commonwealth Ave., Boston, MA 02215 (email: [email protected]); Notowidigdo: Department of Economics, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208 (email: [email protected]). This research was made possible by a data-use agreement between the authors and the American Hospital Association that allows the confidential hospital financial data to be used for academic research. The agreement placed no constraints on the conclusions of the analysis except that they be factually accurate, and the results do not represent the conclusions or opinions of the data provider. We thank Leemore Dafny, Guy David, David Dranove, Joe Doyle, Amy Finkelstein, Emily Oster, Jesse Shapiro, and Heidi Williams for helpful discussions, and seminar participants at BU/Harvard/ MIT Health Policy, the University of California-Irvine, Carnegie Mellon University, the University of Chicago, Cornell University, the University of Illinois, the Robert Wood Johnson Foundation at the University of Michigan, the New York Federal Reserve, Northwestern-IPR, the RAND Corporation, Rice University, Stanford University, Syracuse University, the University of Texas-Austin, Vanderbilt University, and Yale University for useful comments. We thank Scott Bates for assistance with the American Hospital Association data, and we thank Mark He, Angela Li, Alen Makmudov, and Mariel Schwartz for excellent research assistance. Notowidigdo thanks the Initiative on Global Markets at the Booth School of Business for financial support. All authors are deeply grateful to the Robert Wood Johnson Foundation (Grant #72183) for financial support.",

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Hospitals as insurers of last resort

Abstract

Funding

ASJC Scopus subject areas

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Replication data for: Hospitals as Insurers of Last Resort

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Hospitals as insurers of last resort

Abstract

Funding

ASJC Scopus subject areas

Access to Document

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Fingerprint

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Replication data for: Hospitals as Insurers of Last Resort

Cite this