Liberty or Death
How Intermountain Trimmed Health Care Costs Through Robust Quality Improvement Efforts
Brent James & Lucy Savitz
Health Affairs, June 2011, Pages 1185-1191
Abstract:
It has been estimated that full implementation of the Affordable Care Act will extend coverage to thirty-two million previously uninsured Americans. However, rapidly rising health care costs could thwart that effort. Since 1988 Intermountain Healthcare has applied to health care delivery the insights of W. Edwards Deming's process management theory, which says that the best way to reduce costs is to improve quality. Intermountain achieved such quality-based savings through measuring, understanding, and managing variation among clinicians in providing care. Intermountain created data systems and management structures that increased accountability, drove improvement, and produced savings. For example, a new delivery protocol helped reduce rates of elective induced labor, unplanned cesarean sections, and admissions to newborn intensive care units. That one protocol saves an estimated $50 million in Utah each year. If applied nationally, it would save about $3.5 billion. "Organized care" along these lines may be central to the long-term success of health reform.
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The Ghost that Slew the Mandate
Kevin Walsh
Stanford Law Review, forthcoming
Abstract:
Virginia v. Sebelius is a federal lawsuit in which Virginia seeks the invalidation of President Obama's signature legislative initiative of healthcare reform. Virginia seeks declaratory and injunctive relief to vindicate a state statute declaring that no Virginia resident shall be required to buy health insurance. To defend this state law from the preemptive effect of federal law, Virginia contends that the federal legislation's individual mandate to buy health insurance is unconstitutional. Virginia's lawsuit is one of the most closely followed and politically salient federal cases in recent times. Yet neither the federal government nor any other legal commentator has previously identified the way in which the very features of the case that contribute to its political salience also require that it be dismissed for lack of statutory subject-matter jurisdiction. The Supreme Court has placed limits on statutory subject-matter jurisdiction over declaratory judgment actions in which a state seeks a declaration that a state statute is not preempted by federal law - precisely the relief sought in Virginia v. Sebelius. These limits insulate federal courts from the strong political forces surrounding lawsuits that seek federal court validation of state nullification statutes. This Essay identifies these heretofore neglected limits, shows why they demand dismissal of Virginia v. Sebelius, and explains why it is appropriate for federal courts to be closed to this type of suit.
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The Impacts of the Affordable Care Act: How Reasonable Are the Projections?
Jonathan Gruber
NBER Working Paper, June 2011
Abstract:
The Patient Protection and Affordable Care Act (ACA) is the most comprehensive reform of the U.S. medical system in at least 45 years. The ACA transforms the non-group insurance market in the United States, mandates that most residents have health insurance, significantly expands public insurance and subsidizes private insurance coverage, raises revenues from a variety of new taxes, and reduces and reorganizes spending under the nation's largest health insurance plan, Medicare. Projecting the impacts of such fundamental reform to the health care system is fraught with difficulty. But such projections were required for the legislative process, and were delivered by the Congressional Budget Office (CBO). This paper discusses the projected impact of the ACA in more detail, and describes the evidence that sheds light upon the accuracy of the projections. It begins by reviewing in broad details the structure of the ACA and then reviews evidence from a key case study that informs our understanding of the ACA's impacts: a comparable health reform that was carried out in Massachusetts four years earlier. The paper discusses the key results from that earlier reform and what they might imply for the impacts of the ACA. The paper ends with a discussion of the projected impact of the ACA and offers some observations on those estimates.
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Returns to Local-Area Healthcare Spending: Evidence from Health Shocks to Patients Far From Home
Joseph Doyle
American Economic Journal: Applied Economics, forthcoming
Abstract:
Healthcare spending varies widely across markets, and previous research finds little evidence that higher spending translates into better health outcomes. The main innovation in this paper exploits this cross-sectional variation in hospital spending in a new way by considering emergency patients who are exposed to healthcare systems when they are far from home. Visitors to Florida who become ill in high-spending areas have significantly lower mortality rates compared to visitors in lower-spending areas. The results are robust within groups of similar visitors and within groups of destinations that appear to be close demand substitutes - areas that likely attract similar visitors.
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Paying a Premium on your Premium? Consolidation in the U.S. Health Insurance Industry
Leemore Dafny, Mark Duggan & Subramaniam Ramanarayanan
American Economic Review, forthcoming
Abstract:
We examine whether and to what extent consolidation in the U.S. health insurance industry is leading to higher employer-sponsored insurance premiums, using a panel dataset of employer-sponsored healthplans enrolling 10 million Americans annually between 1998 and 2006. Using "shocks" to local market concentration induced by a large national merger in 1999 to identify the causal effect of concentration on premiums, we estimate the increase in concentration between 1998 and 2006 raised real premiums by 7 percentage points. We also find evidence that concentration facilitates the exercise of monopsonistic power toward physicians, whose employment and earnings growth decline in its wake.
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Health Insurance Status, Medical Debt, and Their Impact on Access to Care in Arizona
Patricia Herman, Jill Rissi & Michele Walsh
American Journal of Public Health, forthcoming
Objectives: We examined the impact of health insurance status on medical debt among Arizona residents and the impact of both of these factors on access to care.
Methods: We estimated logistic regression models for medical debt (problems paying and currently paying medical bills) and access to care (medical care and medications delayed or missed because of cost or lack of insurance).
Results: Insured status did not predict medical debt after control for health status, income, age, and household characteristics. Insured status (adjusted odds ratio [AOR]=0.32), problems paying medical bills (AOR=4.96), and currently paying off medical bills (AOR=3.04) were all independent predictors of delayed medical care, but only problems paying (AOR=6.16) and currently paying (AOR=3.68) medical bills predicted delayed medications.
Inconsistent coverage, however, was a strong predictor of problems paying bills, and both of these factors led to delays in medical care and medications.
Conclusions: At least in Arizona, health insurance does not protect individuals from medical debt, and medical debt and lack of insurance coverage both predict reduced access to care. These results may represent a troubling message for US health care in general.
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The choice of detecting Down Syndrome: Does money matter?
Clémentine Garrouste, Jérôme Le & Eric Maurin
Health Economics, forthcoming
Abstract:
The prenatal diagnosis of Down syndrome (amniocentesis) presents parents with a complex dilemma which requires comparing the risk of giving birth to an affected child and the risk of losing an unaffected child through amniocentesis-related miscarriage. Building on the specific features of the French Health insurance system, this paper shows that variation in the monetary costs of the diagnosis procedure may have a very significant impact on how parents solve this ethical dilemma. The French institutions make it possible to compare otherwise similar women facing very different reimbursement schemes and we find that eligibility to full reimbursement has a largely positive effect on the probability of taking an amniocentesis test. By contrast, the sole fact of being labelled ‘high-risk' by the Health system seems to have, as such, only a modest effect on subsequent choices. Finally, building on available information on post-amniocentesis outcomes, we report new evidence suggesting that amniocentesis increases the risk of premature birth and low weight at birth.
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Encryption and the loss of patient data
Amalia Miller & Catherine Tucker
Journal of Policy Analysis and Management, Summer 2011, Pages 534-556
Abstract:
Fast-paced IT advances have made it increasingly possible and useful for firms to collect data on their customers on an unprecedented scale. One downside of this is that firms can experience negative publicity and financial damage if their data are breached. This is particularly the case in the medical sector, where we find empirical evidence that increased digitization of patient data is associated with more data breaches. The encryption of customer data is often presented as a potential solution, because encryption acts as a disincentive for potential malicious hackers, and can minimize the risk of breached data being put to malicious use. However, encryption both requires careful data management policies to be successful and does not ward off the insider threat. Indeed, we find no empirical evidence of a decrease in publicized instances of data loss associated with the use of encryption. Instead, there are actually increases in the cases of publicized data loss due to internal fraud or loss of computer equipment.
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Michael Kozminski et al.
Medical Decision Making, May/June 2011, Pages 380-385
Objective: To determine how oncologists value quality-enhancing v. life-prolonging outcomes attributable to chemotherapy.
Methods: The authors surveyed a random sample of 1379 US medical oncologists (members of the American Society of Clinical Oncology), presenting them with 2 scenarios involving a hypothetical new chemotherapy drug. Given their responses, the authors derived the implicit cost-effectiveness ratios each physician attributed to quality-enhancing and life-prolonging chemotherapies.
Results: The authors received responses from 58% of the oncologists surveyed. On average, the responses implied that oncologists were willing to prescribe treatments that cost $245,972 per quality-adjusted life-year (QALY; SD $243,663 per QALY) in life-prolonging situations v. only $119,082 per QALY (SD $197,048 per QALY) for treatments that improve quality of life but do not prolong survival (P < 0.001). This difference did not depend on age, gender, percentage of time in clinical work, or self-reported preparedness to use and interpret cost-effectiveness information (P > 0.05 for all specifications). Differences across these situations persisted even among those who considered themselves to be "well-prepared" to make cost-effectiveness decisions.
Conclusion: Cost-effectiveness thresholds for oncologists vary widely for life-prolonging chemotherapy compared to treatments that only enhance quality of life. This difference suggests that oncologists value length of survival more highly than quality of life when making chemotherapy decisions.
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The Impact of Comparative Effectiveness Research on Health and Health Care Spending
Anirban Basu, Anupam Jena & Tomas Philipson
Journal of Health Economics, forthcoming
Abstract:
Comparative effectiveness research (CER) is thought to identify what works and does not work in health care. We interpret CER as infusing evidence on product quality into markets, shifting the relative demand for products in CER studies. We analyze how shifts in demand affect health and health care spending and demonstrate that CER may raise or lower overall health when treatments have heterogeneous effects, but payers respond with product-specific coverage policies. Among patients with schizophrenia, we calibrate that subsidy policies based on the clinical trial CATIE may have reduced overall health by inducing some patients to switch away from schizophrenia treatments that were effective for them towards winners of the CER.
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Auditing Access to Specialty Care for Children with Public Insurance
Joanna Bisgaier & Karin Rhodes
New England Journal of Medicine, 16 June 2011, Pages 2324-2333
Background: Health care reform has expanded eligibility to public insurance without fully addressing concerns about access. We measured children's access to outpatient specialty care to identify disparities in providers' acceptance of Medicaid and the Children's Health Insurance Program (CHIP) versus private insurance.
Methods: Between January and May 2010, research assistants called a stratified, random sample of clinics representing eight specialties in Cook County, Illinois, which has a high proportion of specialists. Callers posed as mothers of pediatric patients with common health conditions requiring outpatient specialty care. Two calls, separated by 1 month, were placed to each clinic by the same person with the use of a standardized clinical script that differed by insurance status.
Results: We completed 546 paired calls to 273 specialty clinics and found significant disparities in provider acceptance of Medicaid-CHIP versus private insurance across all tested specialties. Overall, 66% of Medicaid-CHIP callers (179 of 273) were denied an appointment as compared with 11% of privately insured callers (29 of 273) (relative risk, 6.2; 95% confidence interval [CI], 4.3 to 8.8; P<0.001). Among 89 clinics that accepted both insurance types, the average wait time for Medicaid-CHIP enrollees was 22 days longer than that for privately insured children (95% CI, 6.8 to 37.5; P=0.005).
Conclusions: We found a disparity in access to outpatient specialty care between children with public insurance and those with private insurance. Policy interventions that encourage providers to accept patients with public insurance are needed to improve access to care.
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Dimensions of Health in the Elderly Population
David Cutler & Mary Beth Landrum
NBER Working Paper, June 2011
Abstract:
In this paper, we characterize the multi-faceted health of the elderly and understand how health along multiple dimensions has changed over time. Our data are from the Medicare Current Beneficiary Survey, 1991-2007. We show that 19 measures of health can be combined into three broad categories: a first dimension representing severe physical and social incapacity such as difficulty dressing or bathing; a second dimension representing less severe difficulty such as walking long distances or lifting heavy objects; and a third dimension representing vision and hearing impairment. These dimensions have changed at different rates over time. The first and third have declined rapidly over time, while the second has not. The improvement in health is not due to differential mortality of the sick or a new generation of more healthy people entering old age. Rather, the aging process itself is associated with less rapid deterioration in health. We speculate about the factors that may lead to this.
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Medicare Prospective Payment and the Volume and Intensity of Skilled Nursing Facility Services
David Grabowski, Christopher Afendulis & Thomas McGuire
Journal of Health Economics, forthcoming
Abstract:
In 1998, Medicare adopted a per diem Prospective Payment System (PPS) for skilled nursing facility care, which was intended to deter the use of high-cost rehabilitative services. The average per diem decreased under the PPS, but because per diems increased for greater therapy minutes, the ability of the PPS to deter the use of high-intensity services was questionable. In this study, we assess how the PPS affected the volume and intensity of Medicare services. By volume we mean the product of the number of Medicare residents in a facility and the average length-of-stay, by intensity we mean the time per week devoted to rehabilitation therapy. Our results indicate that the number of Medicare residents decreased under PPS, but rehabilitative services and therapy minutes increased while length-of-stay remained relatively constant. Not surprisingly, when subsequent Medicare policy changes increased payment rates, Medicare volume far surpassed the levels seen in the pre-PPS period.
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After Midnight: A Regression Discontinuity Design in Length of Postpartum Hospital Stays
Douglas Almond & Joseph Doyle
American Economic Journal: Economic Policy, forthcoming
Abstract:
Estimates of moral hazard in health insurance markets can be confounded by adverse selection. This paper considers a plausibly exogenous source of variation in insurance coverage for childbirth in California. We find that additional health insurance coverage induces substantial extensions in length of hospital stay for mother and newborn. However, remaining in the hospital longer has no effect on readmissions or mortality, and the estimates are precise. Our results suggest that for uncomplicated births, minimum insurance mandates incur substantial costs without detectable health benefits.
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Will Tax-Based Health Insurance Reforms Help the Self-Employed Stay in Business?
Tami Gurley-Calvez
Contemporary Economic Policy, July 2011, Pages 441-460
Abstract:
The self-employed face a tax-induced disadvantage relative to wage and salary workers when it comes to the payment of health insurance premiums. This paper uses a panel of individual tax return data to test whether lower health insurance premium costs because of an expanded tax incentive result in longer periods of self-employment. The results suggest that households claiming the deduction are indeed less likely to exit self-employment. Equalizing the treatment of health insurance premiums for the self-employed and wage workers by allowing full deductibility from Self-Employment Contributions Act (SECA) taxes would result in a 7% decrease in the probability of exit.
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The Individual and Program Impacts of Eliminating Medicaid Dental Benefits in the Oregon Health Plan
Neal Wallace et al.
American Journal of Public Health, forthcoming
Objectives: We determined how elimination of dental benefits among adult Medicaid beneficiaries in Oregon affected their access to dental care, Medicaid expenditures, and use of medical settings for dental services.
Methods: We used a natural experimental design using Medicaid claims data (n=22833) before and after Medicaid dental benefits were eliminated in Oregon in 2003 and survey data for continuously enrolled Oregon Health Plan enrollees (n=718) covering 3 years after benefit cuts.
Results: Claims analysis showed that, compared with enrollees who retained dental benefits, those who lost benefits had large increases in dental-related emergency department use (101.7%; P<.001) and expenditures (98.8%; P<.001) and in all ambulatory medical care use (77.0%; P<.01) and expenditures (114.5%; P<.01). Survey results indicated that enrollees who lost dental benefits had nearly 3 times the odds (odds ratio=2.863; P=.001) of unmet dental need, and only one third the odds (odds ratio=0.340; P=.001) of getting annual dental checkups relative to those retaining benefits.
Conclusions: Combined evidence from both analyses suggested that the elimination of dental benefits resulted in significant unmet dental health care needs, which led to increased use of medical settings for dental problems.
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Martha Bailey & Andrew Goodman-Bacon
University of Michigan Working Paper, June 2011
Abstract:
In 1965, the U.S. began a bold new experiment in the public provision of health care. Unlike Medicare and Medicaid, which subsidize the purchase of medical services from private and non-profit providers, community health centers (CHCs) deliver free or reduced-cost primary care. Using newly entered archival data on the roll-out of CHCs from 1965 to 1974, this paper evaluates their impact on older-adult mortality. We find that CHCs substantially reduced age-adjusted mortality rates among those 50 and older, driven largely by reductions in deaths from cardiovascular and cerebrovascular causes. The effects are large enough to imply a 19 percent decline in age-adjusted mortality for households below the poverty line and explain half of the 1965 mortality difference between the poor and non-poor. Large effects for the elderly, who were eligible for Medicare, underscore the potential health effects of interventions to improve the delivery of primary care and reduce non-financial costs.
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Information-oriented patients and physician career satisfaction: Is there a link?
Hai Fang & John Rizzo
Health Economics, Policy and Law, July 2011, Pages 295-311
Abstract:
Patients' increasing use of alternative sources of information besides their physician and more active involvement in medical decision making may be changing relationships between physicians and their patients. We term patients who provide medical information to their physicians from sources other than their physician as information-oriented patients and investigate the relationship between having such patients and physician career satisfaction. We find that having more information-oriented patients is significantly associated with lower physician career satisfaction. Though healthcare information from alternative sources other than their physicians is thought to promote better-informed patient choices, the adverse relationship with physician career satisfaction found in this study may have important implications for patient access and quality of care.
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Jan Blustein et al.
Health Affairs, June 2011, Pages 1165-1175
Abstract:
In 2006 Massachusetts took the novel approach of using pay-for-performance - a payment mechanism typically used to improve the quality of care - to specifically target racial and ethnic disparities in hospital care for Medicaid patients. We describe the challenges of implementing such an ambitious effort in a short time frame, with limited resources. The early years of the program have yielded little evidence of racial or ethnic disparity in hospital care in Massachusetts, and raise questions about whether pay-for-performance as it is now practiced is a suitable tool for addressing disparities in hospital care.
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Gopi Shah Goda, Ezra Golberstein & David Grabowski
Journal of Health Economics, forthcoming
Abstract:
This paper estimates the impact of income on the long-term care utilization of elderly Americans using a natural experiment that led otherwise similar retirees to receive significantly different Social Security payments based on their year of birth. Using data from the 1993 and 1995 waves of the AHEAD, we estimate instrumental variables models and find that a positive permanent income shock lowers nursing home use but increases the utilization of paid home care services. We find some suggestive evidence that the effects are due to substitution of home care for nursing home utilization. The magnitude of these estimates suggests that moderate reductions in post-retirement income would significantly alter long-term utilization patterns among elderly individuals.