Graduation Year

2021

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

June Fu O'Leary

Reader 2

Nayana Bose

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Terms of Use for work posted in Scholarship@Claremont.

Abstract

The Hospital Value-Based Purchasing Program (HVBP) is a Centers for Medicare and Medicaid Services (CMS) program implemented in 2012 to reward acute-care hospitals with incentive payments for the quality of care provided to Medicare patients in inpatient settings. Under this policy, payment adjustments are made based on a variety of factors including clinical quality, patient experience, and cost reductions. This paper uses state-level variation in the implementation of HVBP to ascertain whether the policy led to improvements in Healthy Days (a CDC-designed composite measure of individuals’ self-reported number of physically and mentally “healthy” days per month), health disparities, and community benefit spending patterns using a difference-in-differences model. Notably, this paper adds to economic literature on health equity by utilizing and comparing three measures of health disparity, including a novel measure of health inequity that includes a social justice component in the U.S. context. Results show that the HVBP led to meaningful improvements in Healthy Days, with differential effects based on income and race. It also significantly reduced health disparities and significantly increased certain types of community benefit spending, showing that hospitals can and should be invested in addressing community health. Policymakers should continue to use value-based policies to implement incentives to achieve health equity, but must be more thoughtful and intentional with these efforts by grappling with racial, political, sociological, and economic structures that contribute to inequity.

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