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Efficiency of American states after implementation of the patient protection and affordable care act (PPACA) from 2014 to 2017

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  • Richard Gearhart
  • Nyakundi Michieka

Abstract

We assess the impact of healthcare efficiency among U.S. states after implementation of the PPACA. A Malmquist Index decomposes productivity changes of state healthcare systems since 2014. Results indicate productivity regression of 0.14-percentage points from 2014 to 2017. In 2017 the average state is 4.9-percentage points inefficient. Using the conditional order-m estimator and nonparametrically regressing the ratio of conditional to unconditional order-m efficiency scores on secondary environmental variables, we find that behavioural, socioeconomic, and healthcare utilization factors play a role in explaining state inefficiency. The average state becomes nearly fully efficient after controlling for behaviour (efficiency improves by 3.7-percentage points), socioeconomic (4.1-percentage points), and healthcare utilization (3.2-percentage points) variables. Using a second-stage regression framework, we find that higher levels of obesity, adult smoking, and diabetes lead to lower healthcare efficiency. Likewise, we see that low and high levels of unemployment are associated with improved healthcare efficiency, which is in line with contradictory studies. We also find further support for the link between income and health outcomes, through the vehicle of improved health efficiency. Lastly, we find that ensuring that low-cost populations engaging in health treatments have improved health outcomes, as they prevent high-cost morbidities in the future.

Suggested Citation

  • Richard Gearhart & Nyakundi Michieka, 2020. "Efficiency of American states after implementation of the patient protection and affordable care act (PPACA) from 2014 to 2017," Applied Economics, Taylor & Francis Journals, vol. 52(18), pages 1959-1972, April.
    • Handle: RePEc:taf:applec:v:52:y:2020:i:18:p:1959-1972
    DOI: 10.1080/00036846.2020.1730758
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    Cited by:

    1. Richard Gearhart & Nyakundi Michieka, 2020. "A non-parametric investigation of supply side factors and healthcare efficiency in the U.S," Journal of Productivity Analysis, Springer, vol. 54(1), pages 59-74, August.
    2. Toshiyuki Sueyoshi & Youngbok Ryu, 2021. "Environmental Assessment and Sustainable Development in the United States," Energies, MDPI, vol. 14(4), pages 1-23, February.

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