Nighohossian, Jeremy (2013-05). Ownership and Health Care. Doctoral Dissertation.
The United States Health Care sector is a large and growing segment of the US economy. Herein, I present three distinct research projects regarding aspects of that industry, especially how it responds to public policy and government pro- grams. I focus primarily on the hospital sector, and the Medicare Advantage market. Additionally, I explore how ownership type-publicly owned versus for-profits, for example-behave differently. I investigate the relative efficiency of different ownership types in the US hospital industry. Earlier studies neglect the differential ability of the hospital types to choose their own market. We use a Dubin-McFadden approach to solve the endogeneity problem and estimate hospital efficiencies for each ownership type. Efficiencies are estimated using stochastic frontier analysis. Results indicate that accounting for location choice does affect estimates of efficiency and that for-profit hospitals have a relative advantage in smaller markets while public hospitals have a slight edge in larger markets. Next, I study entry decisions of insurance plans participating in the Medicare Advantage program. I use the prevailing models of entry to compare how for profit and non-profit insurance firms differentially emphasize the characteristics of potential markets. I also determine how the preferential treatment of non-profits affects the composition of markets and whether governments should adjust their treatment to encourage or discourage non-profit entry. Results indicate that non-profit insurance companies are more responsive to higher payment rates which suggest that they act more like for-profit firms than altruistic organizations. Finally, I estimate the how much net welfare, Medicare Advantage contributes to the US economy. I use the Medicare Current Beneciary Survey to estimate a discrete choice model of beneciaries' choice of traditional Medicare, Medigap, and Medicare Advantage. I use the results to calculate the net welfare; I find that Medicare Advantages, on net, increased social welfare by 7.76 billion dollars in 2005.