Craig Garthwaite

The impact of early discharge laws on the health of newborns.

Using an interrupted time series design and a census of births in California over a 6-year period, we show that state and federal laws passed in the late 1990s designed to increase the length of postpartum hospital stays reduced considerably the fraction of newborns that were discharged early. The law had little impact on re-admission rates for privately insured, vaginally delivered newborns, but reduced re-admission rates for privately insured c-section-delivered and Medicaid-insured vaginally delivered newborns by statistically significant amounts. Our calculations suggest the program was not cost saving.

The White/Black Educational Gap, Stalled Progress, and the Long Term Consequences of the Emergence of Crack Cocaine Markets

We propose the rise of crack cocaine markets as a key explanation for the end to the convergence in black-white educational outcomes in the United States that began in the mid-1980s. After constructing a measure to date the arrival of crack markets in cities and states, we show that the decline in educational outcomes for black males begins with the start of the crack epidemic. We also show that there are higher murder and incarceration rates after the arrival of crack cocaine and that these are predictive of lower black high school completion rates, a result consistent with human capital theory. We estimate that effects related to crack markets can account for approximately 40% to 70% of the fall in black male high school completion rates.

Success and Failure in the Insurance Exchanges

The available data on the health insurers participating in the Affordable Care Act exchanges reveal patterns of market entry and exit that are consistent with natural competitive processes separating out firms that are best suited to adapt to a new market.

Estimating Heterogeneity in the Benefits of Medical Treatment Intensity

We exploit increases in postpartum length of stay generated by legislative changes in the late 1990s to identify the impact of greater hospital care on the health of newborns. Using all births in California over the 1995–2000 period, two-stage least-square estimates show that increased treatment intensity had a modest impact on readmission probabilities for the average newborn. Allowing the treatment effect to vary by two objective measures of medical need demonstrates that the law had large impacts for those with the greatest likelihood of a readmission. The results suggest that the returns to average and marginal patients vary considerably in this context.

The economics of indication-based drug pricing

Contrary to the hopes of its supporters, indication-based drug pricing will result in higher prices for patients who benefit the most from a given drug, higher utilization by patients who benefit least, higher overall spending, and higher manufacturer profits.

How do nonprofits respond to negative wealth shocks? The impact of the 2008 stock market collapse on hospitals

The theory of cost shifting posits that nonprofit firms “share the pain” of negative financial shocks with their stakeholders, for example, by raising prices. We examine how nonprofit hospitals responded to the sharp reductions in their assets caused by the 2008 stock market collapse. The average hospital did not raise prices, but hospitals with substantial market power did cost shift in this way. We find no evidence that hospitals reduced treatment costs. Hospitals eliminated but left unchanged their offerings of profitable services. Taken together, our results provide mixed evidence on whether nonprofits behave differently from for-profits.