Three Essays in Health Economics

Matthew C. Baker

Advisor: Thomas Stratmann, PhD, Department of Economics

Committee Members: Alex T. Tabarrok, Len M. Nichols

Online Location, Online
October 12, 2020, 10:00 AM to 12:00 PM


This dissertation examines determinants of decisions by providers and consumers of health care, and how differences across local areas affect the characteristics of health care markets. 

The first chapter focuses on state regulation of imaging services through Certificate-of-Need (CON) programs that require prospective providers to demonstrate community need. Using panel data methods, I find that states with CON laws have fewer providers and higher patient travel costs. In addition, there is a notable shift in the market composition: CON laws are associated with fewer nonhospital providers and fewer new hospital providers but have negligible or even positive effects on incumbent hospitals. Thus, CON laws tend to centralize imaging services in incumbent hospitals and reduce the number of new hospitals and independent providers. 

The second chapter extends the analysis of state policy impacts to insurance coverage by studying health consumers’ response to Medicaid expansion, which was implemented in some states following the Patient Protection and Affordable Care Act of 2010 (ACA). Using microdata, I provide evidence that Medicaid’s rapid expansion led to in-migration to states highly increasing Medicaid benefits, especially amongst individuals previously living close to the state’s border. The migration effect was not immediate, as it appeared to continue increasing several years after ACA implementation. 

The third chapter analyzes determinants of a health care provider’s decision enter a market as well as the decision to invest in quality improvement, and how those decisions affect the allocation of patients among hospitals. Using national hospital-level patient mortality measures for patients with common medical conditions, I find that patient mortality at entrant hospitals tends to be lower than mortality at nearby incumbent hospital. I present evidence that hospital investment in quality improvement by incumbent hospitals increases for some conditions at the time of nearby hospital entry. Thus, the emergence of new hospitals tends to reallocate patients to higher quality hospitals and thereby reduces average mortality.