The Secondary Spending Effects of More Primary Health Care
Does Seeing the Doctor Keep You Out of the Hospital?
About This Event
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The new health law passed last March invests heavily in greater access to primary care, mostly through subsidized and mandated health insurance. The underlying theory is that this will ensure earlier and more frequent delivery of preventive care that should reduce hospitalization rates, use of emergency care, and overall health spending.

AEI visiting scholar Robert Kaestner and his coauthor Anthony Lo Sasso, both professors at the University of Illinois at Chicago, challenge those assumptions in a new study. They find that although health insurance strongly increases use of primary care services, both health insurance and primary care services are positively associated with more hospitalization and greater use of the emergency room. Accordingly, policies that expand health insurance coverage and/or increase the use of primary care services will tend to increase, not decrease, the overall costs of health care.

Discussants include Jonathan T. Kolstad of the Wharton School, University of Pennsylvania, who recently examined the impact of health reform and expanded insurance coverage in Massachusetts on hospitalizations for preventable conditions and hospital cost growth. Leighton Ku of George Washington University will discuss the study from the perspective of health care financing and access to affordable health care. Thomas P. Miller of AEI will moderate.
9:15 a.m.

ROBERT KAESTNER, University of Illinois at Chicago and AEI

JONATHAN T. KOLSTAD, University of Pennsylvania
LEIGHTON KU, George Washington University


Question and Answer

Event Summary

WASHINGTON, FEBRUARY 17, 2011--Although health reformers justified them as ways to "bend the cost curve," more health insurance coverage and increased use of primary care are associated with higher--not lower--levels of overall health spending, concludes a forthcoming paper by AEI visiting scholar Robert Kaestner and coauthor Anthony Lo Sasso. In his presentation, Kaestner explained how the use of primary (outpatient) services is associated with greater emergency room care and more hospitalizations. This conclusion is based on a variety of national cross-sectional survey data and claims for small employers. Panelist Jonathan T. Kolstad considered the findings important and a key issue for addressing cost growth, but countered with his research on the Massachusetts coverage expansions, which found that coverage for preventive care resulted in a significant reduction in avoidable hospitalizations. Leighton Ku argued that Kaestner's conclusions are not necessarily incompatible with the overall goals of the Patient Protection and Affordable Care Act, and that Kaestner and Lo Sasso's analysis presents an oversimplified view of the effects of primary care spending.


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Speaker biographies

Robert Kaestner
is a professor at the Institute of Government and Public Affairs of the University of Illinois and a professor in the University of Illinois at Chicago’s department of economics. He is also a research associate at the National Bureau of Economic Research. Mr. Kaestner is an expert in health and labor economics and has conducted research on the effects of Medicaid and private health insurance on infant and child health; whether or not expansions in Medicaid crowded out private health insurance; the impact of state policies on the timing, place of occurrence, and incidence of abortion; the effects of welfare reform on employment, fertility, health insurance, and health; and the effect of Title IX on adolescent physical activity and weight.

Jonathan Kolstad is an assistant professor of health care management at the Wharton School of the University of Pennsylvania. He is an economist whose research interests lie at the intersection of health economics, industrial organization, and applied microeconomics. The unifying theme of Mr. Kolstad’s work is an effort to understand how information, market structure, and regulation alter firm organization, individual incentives, and, ultimately, welfare. In recent work, he has studied entry and competition in hospital markets, the impact of specialty hospital entry on general hospital service provision, and the impact of quality information on demand as well as intrinsic surgeon incentives. In ongoing work, Mr. Kolstad seeks to estimate the welfare gains from risk protection provided by health insurance. He is also studying the impact of the Massachusetts health insurance expansion on a variety of outcomes of interest to researchers and policymakers, including preventive care, cost, labor-market outcomes, and financial risk protection.

Leighton Ku is a professor of health policy and director of the Center for Health Policy Research at the George Washington University. He is a nationally respected health policy expert, who has conducted research on topics including health care financing, state and national health care reform, health access for vulnerable populations such as immigrants, and Medicaid. In addition to his research, Mr. Ku has worked with federal, state, and local governments, organizations, and advocacy groups to strengthen access to affordable health care. He recently authored a paper on health reform and primary care that appears in the New England Journal of Medicine. Mr. Ku has authored or coauthored more than two hundred reports and papers about health policy issues, testified before Congress and state legislatures, and been a regular panelist on a radio talk show about health policy. Previously, he was a senior fellow at the Center on Budget and Policy Priorities and a principal researcher at the Urban Institute. Earlier in his career, Mr. Ku was a federal regulator and budget and policy analyst for federal nutrition-assistance programs.

Thomas P. Miller is a resident fellow at AEI, where he focuses on health policy with a particular emphasis on information transparency, health insurance regulation, and consumer-driven health care. He was a member of the National Advisory Council for the Agency for Healthcare Research and Quality from 2007 to 2009. Before joining AEI, Mr. Miller served for three years as a senior health economist for the Joint Economic Committee, where he organized a series of hearings focusing on promising reforms in private health care markets. He also has been director of health policy studies at the Cato Institute and director of economic policy studies at the Competitive Enterprise Institute. Mr. Miller’s writing has appeared in publications such as Health Affairs, the Wall Street Journal, the New York Times, the Washington Post, the Los Angeles Times, Reader’s Digest, National Review,, the Journal of Law and Contemporary Problems, Regulation, and Cato Journal. Before moving to Washington to work on public policy, he was a trial attorney, journalist, and radio broadcaster.


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