Research on surprise medical billing shows potential of Yale’s Tobin Center

Research by Yale economists Zack Cooper and Fiona Scott Morton is driving a burst of bipartisan legislation aimed at mitigating surprise medical bills.


Speaking at a press event last spring in the Roosevelt Room of the White House, President Donald Trump vowed to tackle a problem that plagues emergency-room patients across the United States: surprise medical bills.

In emergency care situations, patients should never have to bear the burden of out-of-network costs they didn't agree to pay,” Trump said, standing beside individuals who, despite being insured, were slammed with steep medical bills after receiving emergency care.

The president urged Congress to pass legislation to protect patients from unexpected costs. Bipartisan groups in both the House and Senate were already working on multiple proposals to address the issue. At least four bills are under consideration. In late June, a Senate committee overwhelmingly approved a measure cosponsored by Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) that would seek to address surprise billing.

Research by Yale economists Zack Cooper and Fiona Scott Morton is driving this burst of bipartisan legislating. The economists’ work exposed the scale of out-of-network billing in emergency departments, explained why it happens, and tested a potential policy solution. Their findings drew detailed coverage from The New York Times and other major media outlets and attracted the attention of state and federal lawmakers. Every congressional committee working on the issue has cited them. They have consulted with senators and members of Congress on policy remedies.

Producing data-driven, social-science research that shapes public policy is one of Yale President Peter Salovey’s top research priorities. In June 2018, the university established the James Tobin Center for Economic Policy at Yale, to advance rigorous, evidence-based scholarship that defines and informs domestic policy debates. 

Named for the late James Tobin, a renowned Yale economist and Nobel laureate whose work influenced U.S. monetary and fiscal policy, the center will provide grants and other support to scholars while helping them communicate their research to the public and engage with policymakers.

Steven Berry, the center’s inaugural Jeffrey Talpins Faculty Director, said that Cooper and Scott Morton’s success demonstrates that impactful, policy-relevant research is already happening on campus.

We’re not starting from scratch,” said Berry, the David Swensen Professor of Economics. “Faculty are already engaged in work on policy-related topics that lines up well with the Tobin Center’s mission, and Zack and Fiona’s work on surprise medical billing is a great example of that. The center aims to generate this kind of rigorous, policy-oriented research and help faculty share it with legislators so that it has a real-world impact.”

Berry said he envisions reaching a stage where policymakers know to approach the Tobin Center for guidance on a range of domestic issues, including healthcare costs.

Cooper is associate professor of public health at the Yale School of Public Health and in the Department of Economics, and Scott Morton is the Theodore Nierenberg Professor of Economics at the Yale University School of Management. They first published their findings on emergency medical bills in a Nov. 17, 2016 article in the New England Journal of Medicine.

They analyzed billing data from a large commercial insurer covering 2.2 million emergency room visits across the United States, finding that more than one in five patients who went to emergency departments within their health-insurance networks were treated by an out-of-network doctor and potentially incurred substantial, unexpected expenses. It was the first national estimate of the frequency of “surprise” out-of-network medical billing.

The researchers calculated that patients were exposed to an average bill of $622.55 if their insurer only covered in-network rates. (The steepest bill in their dataset was $19,603.) To address the problem, they proposed requiring hospitals to sell an emergency-care package that bundles physician services and facility fees, as well as staff their own emergency rooms and pay physicians directly — measures they argue would preserve competition among physicians, hospitals, and insurance carriers and ensure that patients are not surprised by expensive medical bills.

Their article was covered in The New York Times under the headline, “Surprise! Insurance paid the E.R., but Not the Doctor.” The researchers expanded on their first article in a working paper, which was co-authored by Nathan Shakita, who was a research associate and data analyst. The paper inspired a front-page story in The New York Times that focused on how the study exposed the role of EmCare, a private company that hospitals hire to staff their emergency rooms, which has contributed to the pattern of surprise medical bills. The paper also tested the effect of a 2015 law passed in New York that was designed to stop out-of-network billing and found that it was successful.

Federal lawmakers soon began contacting the researchers to discuss the issue, said Cooper, the Tobin Center’s associate director. Cooper has presented the research at the Brookings Institution, a nonpartisan research organization, in Washington, D.C.; made frequent trips to D.C. to consult with lawmakers; and worked with policy-makers in Texas, Connecticut, and New Jersey, who were interested in passing surprise-billing legislation.  

The research also resonated with the public. Half of people surveyed in an April Kaiser Family Foundation poll believed that Congress ought to make protecting patients from surprise medical bills a top priority.

Fiona and Zack are unusual in that there aren’t that many people who are excellent researchers, excellent communicators, and policy entrepreneurs all wrapped in one package,” Berry said. “What we’re hoping to do is create a more direct channel for researchers at Yale to take the important work being done and share it more broadly so that it directly affects the policymaking process.” 

The center is also building infrastructure, including funding and computing resources, to facilitate policy-relevant economic research, which often involves accessing and analyzing massive public and private datasets.

We want to reduce the cost of doing this kind of research,” Berry said.

Along with the Department of Economics, the Tobin Center launched a pre-doctoral research assistant program that provides recent college graduates the opportunity to work with faculty on research projects.

The research assistants really are the backbone of this research,” Cooper said. “They do the computer programming essential to the work. The program also allows us to train the next generation of scholars and offer a new pipeline to get more people into the economics and diversify the profession.”

Additionally, the center will bring policymakers and policy experts to campus to inform researchers’ work and consult with them on how it can best impact the real world.

We will have roundtable discussions and convenings with policymakers to get an understanding of the issue-areas that will have the most impact,” he said. “We want our researchers to have a lot more direct contact with people setting domestic policy.”

The center’s first year involved setting the groundwork for these initiatives, Berry said — establishing an advisory faculty committee, pursuing additional fundraising, and planning the construction of a building that will house both the center and the Department of Economics, Berry said.

The fact that Yale-generated research on medical billing has sparked cooperation across political aisle underscores why supporting rigorous academic research on policy issues is so important, Berry noted.

If you have enough research consensus on something, and it is an important enough issue that really affects people’s lives, maybe it is possible to build bipartisan support for some things in the present atmosphere,” he said.


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