where PRE is an indicator of premature birth (i.e., PRE equals 1 if gestation is less
than or equal to 36 weeks). The coefficient on the interacted term can be interpreted as a
"difference in difference in differences" estimate. For example, the interaction of PRE
with one of the noCON indicators gives us the "difference" between these high-risk
births and other births in the "difference" between states with a certificate of need
program and those without a program. Given that noCON is a difference in difference
estimate, the coefficient on the interaction term is the difference in difference in
differences estimate.
First, the model was estimated with health as the dependent variable. As expected,
being born prematurely significantly reduces the probability of being healthy (-7.7%).
The coefficient on the interaction of the noCON indicators with the premature indicator is
positive for both the states that dropped their CON in the 1980s and in the 1990s. Again,
we see that only the interaction with noCON89 is statistically significant. The estimated
impact on premature babies is 1.98% (Column 1, Table 2-6) in those states that repealed
their CON programs in the 1980s. These positive coefficients indicate that removing
barriers to competition results in a higher likelihood of a healthy birth. As before, the
higher probability of a healthy birth in the states that removed their CON restrictions in
the 1980s versus those that removed the restrictions in the 1990s is reasonable given the
time needed for increased competition to have an effect on health care. Again, this may
appear to be a small effect. However, when compared to the average change in the
probability of being healthy over this time period, the effect of CON repeal leads to a
large increase.