Yale research guided policy to end surprise medical bills

A 2016 article in the New England Journal of Medicine by Yale economists Zack Cooper and Fiona Scott Morton exposed a pricey national problem: surprise medical bills.

In a study of 2.2 million emergency room visits across the United States, they found that 1 in 5 patients who went to hospitals within their health insurance networks were treated by an out-of-network doctor and potentially incurred unexpected, often exorbitant expenses as a result. The average “surprise bill,” they calculated, was $622.55, although the charges could soar into the thousands.

Their work made headlines nationwide. It caught the attention of prominent lawmakers in Washington D.C., who then consulted the researchers on the issue. Cooper and Scott Morton would publish two more papers expanding their analysis of surprise billing. And Cooper made at least a dozen trips to Washington to meet with lawmakers and their staffs, including presenting their work at the White House.

These efforts paid off in December 2020 when the combined COVID-relief and annual government funding package was enacted into law. The omnibus bill included a provision to protect people from surprise medical bills. It prohibits hospitals from charging for certain medical services, including emergency care performed by out-of-network physicians, over which patients usually have no say and cannot reasonably avoid.

The law was a rare bipartisan accomplishment in an era of political polarization. But it also showed that academic research can motivate policymakers to work together for the common good. And it demonstrates the potential of Yale’s Tobin Center for Economic Policy — which supported Cooper and Scott Morton’s work — to influence domestic policy debates and help solve problems of national scope.

“Zack and Fiona’s work on surprise medical billing was as rigorous as it gets — published in top peer-reviewed journals and then shared with the public through the media,” said Steven Berry, the Jeffrey Talpins Faculty Director at the Tobin Center and the David Swensen Professor of Economics. “Engaging with lawmakers was a heavy lift, but it resulted in a policy solution that should spare people the shock and hardship of a steep and unexpected medical bill.

“We hope to build on their experience to tackle other problems in need of well-considered policy solutions.”

Named for the late James Tobin, a renowned Yale economist and Nobel laureate whose work influenced U.S. monetary and fiscal policy, the center was established to support and advance rigorous, data-intensive scholarship that shapes public policy — one of Yale President Peter Salovey’s academic priorities. The Tobin Center joined Yale’s Institution for Social and Policy Studies in promoting social science research that addresses pressing domestic policy challenges.  

“Producing policy-relevant social science research requires supporting scholars who understand how to work with data, know how policy is made, and are willing to spend the time to engage with policymakers about their work,” said ISPS Director Alan Gerber, dean of the division of social sciences in the Faculty of Arts and Sciences. “All of those factors came together in the successful effort to address surprise medical billing.

“It’s a fantastic accomplishment — one that has made the healthcare system fairer and more equitable — that sets the stage for additional success in the future.”

The Tobin Center, where Cooper serves as associate faculty director, provides faculty with funding, research assistants, computing resources, and other support on projects that often involve the labor-intensive work of accessing and analyzing massive public and private datasets. Once the research is published, the center’s focus shifts to moving it beyond the walls of academia and into the public sphere.

David Wilkinson, the Tobin Center’s executive director, knows the ins and outs of the policymaking process. He previously directed the White House Office of Social Innovation and served in other White House senior policy roles from 2013 to 2017, leading successful national efforts to advance novel, data-driven approaches to solve social problems.

“The work involves building relationships in the media and with policymakers in government,” Wilkinson said. “It’s about discussing academic research in a way that non-academics can easily digest. When everything comes together, as it did on surprise billing, it can bring change that improves people’s lives.”

Given the partisan atmosphere in Congress, achieving passage of federal legislation just four years after that first article on surprise billing classifies as “warp speed,” said Cooper, an associate professor of public health and of economics. “It’s remarkable the amount of change that happened in a fairly short period of time,” he said.

Media coverage was pivotal, Cooper said. “The press provided a megaphone that supercharged our ability to reach legislators and the public on this issue,” he said.

That coverage caught the eye of U.S. Sen. Lamar Alexander, a Tennessee Republican who then chaired the Senate health committee, and other lawmakers from both parties. Alexander, who recently retired, cited Cooper’s work on the Senate floor while introducing legislation to prevent surprise billing.

In November, 2019, the Yale “investigators” were also cited by Joe Grogan, then director of the White House Domestic Policy Council, in a USA Today column.

The new law, which takes effect in 2022, requires health providers and insurers to negotiate a price with each other instead of charging patients for out-of-network services. If they cannot agree on a figure, an outside arbiter will decide on a fair price. The law is modeled on a New York policy that protects patients from surprise bills — an approach that Cooper, Scott Morton, and Nathan Shekita ’20 M.P.H./M.B.A., analyzed in a 2019 paper in the Journal of Political Economy.

“I think the new federal law provides an effective solution,” said Scott Morton, the Theodore Nierenberg Professor of Economics at SOM. “Importantly, it means patients will pay whatever they would pay for in-network care. It will reduce healthcare costs because the high out-of-network bills will disappear and because the out-of-network physicians use many more hospital services and tests, which generated revenue for the hospitals that allows them to charge surprise bills.”

The legislation overcame opposition from well-funded special interests, including insurance companies and physicians’ groups, in part because it was backed by solid academic research, said Cooper. “The breadth of evidence motivated lawmakers from across the aisle and got them working together on potential solutions,” he said.

He added: “It was a challenge to keep from getting caught up in the back and forth among the various stakeholders and their competing interests and ideologies. We tried to stick to the research. That’s our role as scholars: to inform the public and policymakers about our analysis and what the evidence we’ve uncovered suggests.”

While the team at the Tobin Center is savoring this legislative victory, nobody is resting on their laurels.

Cooper’s current research examines how consolidation in the health sector —hospitals buying up other hospitals and physician practices — affects the quality and cost of healthcare in the United States. He is also studying how rising costs affect economic opportunities, such as employment and wages, outside of the health sector. The Tobin Center is supporting a range of work that speaks to domestic policy concerns, including responses to the COVID-19 pandemic and its related economic fallout.

“Academic research is essential to solving the major issues facing our country and the world,” said Cooper. “Yale researchers have an obligation due to the opportunities the university affords us, to move our work from the pages of top peer-reviewed journals into the public sphere where it can make a difference.”