Impacts of Health Insurance on Infant Health and Utilization: An Instrumental Variables Approach

Empirical estimates of the effects of private insurance on health can be confounded by selection problems and moral hazard. And the cost of giving birth in New Jersey is among the highest in the nation. Yet outcomes in New Jersey are often worse than other states. Understanding the effects of greater spending on newborn care and whether outcomes are affected by increased utilization is pivotal for keeping costs low for expectant parents and understanding minimum insurance mandates for maternal health. This study investigates the causal effects that health insurers have on medical and financial outcomes for children by leveraging a Coordination of Benefits rule which assigns the primary insurer of a dependent child to the parent whose birthday is first in the calendar year. Using exogenous variation from this “birthday rule”, we aim to measure whether health care spending differs across insurers, whether outcomes differ, and whether approaches to treatment vary. Typically, selection by patients into plans and by plans about which employers they contract with complicates the ability of researchers to answer these questions; our quasi-experimental approach allows us to circumvent this selection problem and provide novel, credible causal estimates of these effects. We propose accomplishing this study by leveraging the unique ability to link the New Jersey Birth Data with Uniform Billing (UB) Data through the New Jersey iPHD.