In 1991 the Health Care Financing Agency (HCFA) changed the reimbursement system for hospital capital costs from a costs-paid basis to one with a prospective basis, as part of the ongoing battle to control health care costs. This followed the 1984 change for patient costs from a Fee-For-Service...

We study a 2008 policy reform in which Medicare revised its hospital payment system to better reflect patients' severity of illness. We construct a simulated instrument that predicts a hospital's policy-induced change in reimbursement using pre-reform patients and post-reform rules. The reform...

Hospitals face large and variable costs from treating indigent care patients. Two methods of "reinsuring" hospitals against these costs are providing these patients with insurance and directly providing hospitals with supplemental payments to cover the expected costs of treating the indigent....