Three Essays in Health Economics

This dissertation consists of three essays. The first essay examines the unintended consequence of Medicare pay-for-performance programs. I find evidence that the CMS case mix adjustment formula for patient experience measures in the Hospital Value-based Purchasing Program (HVBP) over-corrects (under-corrects) for the effect of patient health status on favorable survey responses for surgical (obstetric) patients, which creates scope for hospital to risk select patients on the basis of health status. Using inpatient discharge data from Pennsylvania and Maryland, I find that average patient severity increased among surgical patients and decreased among obstetric patients after the HVBP took effect. In addition, I find weak evidence of an increase in patient experience measures as a result of the HVBP, but no such effect is found for clinical process measures.;In the second essay, I estimate the short-term effect of depression on labor market outcomes using data from the 2004-2009 Medical Expenditure Panel Survey. After accounting for the endogeneity of depression through a correlated random effects panel data specification, I find that depression reduces the contemporaneous probability of employment by 2.6 percentage points. I do not find evidence of a causal relationship between depression and hourly wages or weekly hours worked. In addition, I examine the effect of depression on work impairment and found that depression increases annual work loss days by about 1.4 days (33 percent), which implies that the annual aggregate productivity loses due to depression range from ;In the third essay, I investigate the health impacts of unconventional natural gas development of Marcellus shale in Pennsylvania between 2001 and 2013. Through a multivariate regression analysis that compares changes in hospitalization rates over time for air pollution-sensitive disease in counties with unconventional gas wells to changes in hospitalization rates in non-well counties, I find significant associations between shale gas development and hospitalizations for acute myocardial infarction (AMI), chronic obstructive pulmonary disease (COPD), asthma, pneumonia, and upper respiratory infections (URI). These adverse effects on health are consistent with higher levels of air pollution resulting from unconventional natural gas development.