Innovations and Inequities in Access to Medical Services

While ensuring equitable access to novel medical treatments is a major concern in improving their value, medical innovations may exacerbate inequitable access even to older services. I study this tradeoff in a model of physician decision-making with technological spillovers. I examine how improvements in the quality of a high-intensity treatment lead to both an expansion of its use as well as crowding-out of lower-intensity treatments. Crowd-out occurs not only because patients sort into the new treatment, but also because lower rates of utilization reduce the return to low-intensity treatments, inducing some patients to select out of treatment altogether. I further show that this crowding-out leads to inequities in access to low-intensity treatments, which may be further exacerbated when treatment appropriateness is not correctly observed. I study the model’s implications in the setting of aortic valve replacement surgeries in Medicare patients. The rise of minimally-invasive procedures to treat this condition led providers to adjust practice styles along two margins: medium-risk patients became more likely to receive surgery, and high-risk patients received fewer treatments overall. Medicare patients in low-income counties are most likely to be crowded-out of surgeries; 80\% of this crowd-out appears to be attributable to imperfect risk measurement.

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