PhD Candidate, Department of Economics

Contact Information

Department of Economics
Northwestern University
2211 Campus Drive
Evanston, IL 60208

Phone: 224-817-2226

benjaminvatterj@u.northwestern.edu

https://benjaminvatter.com

 

 


Education

Ph.D., Economics, Northwestern University, 2022 (expected)
MA, Economics, Northwestern University, 2018
MA, Economics, University of Chile, 2016
B.Sc.Eng Industrial Engineering, University of Chile, 2014

Primary Fields of Specialization

Industrial Organization

Secondary Fields of Specialization

Health Economics, Econometrics

Curriculum Vitae

Download Vita (PDF)

Job Market Paper

Quality Disclosure and Regulation: Scoring Design in Medicare Advantage” (pdf)

Regulators often generate quality scores to help consumers with limited information about product quality, as in schooling, healthcare, and financial markets. When designing scores, regulators must not only anticipate how they will influence consumer choices but also the resulting impact on firms’ incentives to invest in quality. In this work, I draw on theoretical insights, econometric strategies, and computational methods to develop an empirical scoring design methodology. I apply it to a large health insurance market and find an alternative policy that vastly improves the market’s performance. The new design coarsens consumers’ information about lower-quality insurance options but refines it for higher-quality ones. Changes to available product information generate a shift in demand towards higher-quality plans, triggering additional firm investments and making consumers better informed about a menu of superior options. The new design also optimally aggregates different quality dimensions, tackling a multitasking moral hazard problem. The friction is due to firms’ (agent) private incentives to attain scores using cost-efficient investments instead of consumer-valued ones, preferred by the regulator (principal). Overall, the alternative policy increases welfare by $669 per enrollee per year. The analysis reveals that simple scores can be remarkably effective if well-designed and provides a method to construct them.

Other Papers

Vertical Integration between Hospitals and Insurers” with José Ignacio Cuesta and Carlon Noton (pdf)

We study vertical integration between insurers and hospitals. The welfare effects of vertical integration are ambiguous and depend on a trade-off between a variety of economic forces, including solving double marginalization and improving the use of resources within the firm, but also increasing market power and providing incentives to affect rivals’ costs. To study the effects of vertical integration, we develop a model of health markets and show that vertically integrated firms have incentives to increase negotiated hospital prices to rivals in order to steer demand to their integrated partners. We estimate the model using administrative data on plan choices and hospital admissions from the Chilean private health market, where vertically integrated systems account for almost half of the market. Using our structural estimates, we find that banning vertical integration increases total welfare.

Spooky Action at a Distance: Why Do Cross-Market Mergers Affect Prices?” with David Dranove (pdf coming soon)

The standard theory for merger price effects requires the merging parties to share some common demand. However, recent evidence has shown that hospital prices increase after acquisitions by remote systems. This work documents three things about these mergers: (i) traditional market power explanations can not explain price increases; (ii) employer overlap does account for a significant part of the price effect, validating a previous theory by Vistnes and Sarafidis (2013) and Dafny et al. (2019); (iii) hospitals acquired by out-of-market systems have nearly flat pre-merger prices, which disagrees with both the previous theory and the standard Nash-in-Nash model for insurer-hospital prices. We show that an extension of the workhorse model that incorporates preliminary offers can rationalize the pre-merger prices and account for a fraction of the remaining price variation. We show that the cross-market merger price effect stems from a combination of increased market power due to employer overlap and a change in the pricing protocol created by a reduction in bargaining cost and adverse selection on preliminary offers.

Work in Progress

Winners and Losers Under Counterfactual Health Risk Pooling” with Victoria Marone

We study public policy proposals that would decouple health risk pools from employment pools in the US. These policies, such as ‘Medicare for All,’ would pool health risk at the state or national level, overturning the status quo of pooling risks at the firm level. Generally speaking, firms with on average healthy employees would be worse off, and firms with on average sick employees would be better off, but little is known about the extent of existing variation along this dimension. We analyze a large, national data set of individuals with employer-sponsored health insurance and present novel evidence on the variation in average health spending across firms.

CMS Hospital Compare: Do Methods Matter?” with David Dranove and Ting Wang

The Hospital Quality Star Rating Program is one of CMS’s most recent, prominent, and widely criticized efforts to disclose hospital quality information. This article reviews the methodology behind the ratings, identifies the sources of the criticisms, and proposes partial remedies. Using inpatient data from Florida, we show that CMS ratings affect demand for hospitals, and we estimate the impact of different rating assignments. We use these estimates to evaluate the effect of addressing the array of flaws in CMS methodology on demand and hospital revenue. Our findings showcase the importance of proper scoring design and the challenges introduced by incomplete data collection.

References

Prof. Igal Hendel (Committee co-chair)
Prof. David Dranove (Committee co-chair)
Prof. Gaston Illanes
Prof. Amanda Starc