A fundamental question in health economics is how financial incentives affect medical treatment decisions. We study this question in the context of delivery procedure choice in Colombia where payment contracts vary across insurer-hospital pairs. Using a dynamic differences-in-differences design, we show that transitioning to a fee-for-service contract generates a 22 percentage point (p.p) increase in c-section rates. We use a structural model to evaluate two counterfactual payment contract regulations: full capitation and a c-section price ceiling. Both regulations reduce delivery costs, but there is a trade-off between the two with respect to reducing c-section rates and consumer surplus.

We quantify the impact of federal subsidies for graduate medical education on primary care physician (PCP) supply by examining the impact of Section 5503 of the Affordable Care Act, which increased the number of residents that teaching hospitals in rural and high-need areas could receive subsidies for training. Instrumenting for selection into the program using its eligibility and allocation criteria, we find that the provision increased both the recruitment of residents into primary care and time spent at teaching hospitals in high-need areas, resulting in an increase in PCP supply in treated counties of 5.2 percent.

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Presented at ASHEcon 2023 and AcademyHealth ARM 2023