This paper analyzes individual decisions to participate in an activity and the aggregation of those decisions when individuals gather information about the outcomes and choices of (a few) others in their social network. In this environment, aggregate participation rates are generally inefficient. Increasing the size of social networks does not necessarily increase efficiency and can lead to less efficient long-run outcomes. Both subsidies for participation and penalties for non-participation can increase participation rates, though not necessarily by the same amount. Punishing non-participation has much greater effects on participation rates than rewarding participation when current rates are very low. A program that provides youth with mentors who have participated themselves can increase participation rates, especially when those rates are low. Finally, communities plagued by the flight of successful participants will experience lower short-and long-run participation rates.
Vertical integration can reduce integrating firms' trading opportunities and, contrary to predictions of two-firm models, this loss of trade can make integration unprofitable. If downstream units must commit to suppliers before contracting on the final terms of trade, then suppliers will have ex-post monopoly power. This monopoly power reduces the quality that an integrated supplier will provide to its competitors. Expectations of this quality reduction can prevent firms from purchasing from an integrated supplier even though the supplier would be better off if it could commit to provide its downstream competitors with sufficient quality to retain their business.
Background Insured patients who receive out-of-network care may receive a “balance bill” for the difference between the practitioner’s charge and their insurer’s contracted rate. In 2017, California banned balance billing for anesthesia care. We examined the association between California’s law and subsequent payments for anesthesia care. We hypothesized that following the law’s implementation, there would be no change in-network payment amounts, and that out-of-network payment amounts and the portion of claims occurring out-of-network would decline. Methods We used average, quarterly, California county-level payment data (2013-2020) derived from a claims database of commercially-insured patients. Using a difference-in-differences approach, we estimated the change in payment amounts for intraoperative/intrapartum anesthesia care, along with the portion of claims occurring out-of-network, following the law’s implementation. The comparison group was office visit payments, expected to be unaffected by the law. We prespecified that we would refer to differences of ≥10% as policy significant. Results Our sample consisted of 43,728 procedure code-county-quarter-network combinations aggregated from 4,599,936 claims. The law’s implementation was associated with a significant 13.6% decline in payments for out-of-network anesthesia care (95%CI -16.5 to -10.6%; p<0.001), translating to an average $108 decrease across all procedures (95%CI -$149 to -$64). There was a statistically significant 3.0% increase in payments for in-network anesthesia care (95%CI 0.9 to 5.1%; p=0.007), translating to an average $87 increase (95%CI $64 to $110), which may be notable in some circumstances but did not meet our threshold for identifying a change as policy significant. There was a non-statistically significant increase in the portion of claims occurring out-of-network (10.0%, 95%CI -4.1 to 24.2%, p=0.155). Conclusions California’s balance billing law was associated with significant declines in out-of-network anesthesia payments in the first three years following implementation. There were mixed statistical and policy significant results for in-network payments and the proportion of out-of-network claims.
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