Mediscare
A Decade Of Health Care Cost Growth Has Wiped Out Real Income Gains For An Average US Family
David Auerbach & Arthur Kellermann
Health Affairs, September 2011, Pages 1630-1636
Abstract:
Although a median-income US family of four with employer-based health insurance saw its gross annual income increase from $76,000 in 1999 to $99,000 in 2009 (in current dollars), this gain was largely offset by increased spending to pay for health care. Monthly spending increases occurred in the family's health insurance premiums (from $490 to $1,115), out-of-pocket health spending (from $135 to $235), and taxes devoted to health care (from $345 to $440). After accounting for price increases in other goods and services, the family had $95 more in monthly income to devote to nonhealth spending in 2009 than in 1999. By contrast, had the rate of health care cost growth not exceeded general inflation, the family would have had $545 more per month instead of $95 - a difference of nearly $5,400 per year. Even the $95 gain was artificial, because tax collections in 2009 were insufficient to cover actual increases in federal health spending. As a result, we argue, the burdens imposed on all payers by steadily rising health care spending can no longer be ignored.
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Bending and Stretching the Health Care Cost Curve
Gail Wilensky
Business Economics, September 2011, Pages 163-166
Abstract:
The Patient Protection and Affordable Care Act of 2010 (PPACA) has a number of provisions that aimed at slowing the rate of growth of health care spending. This paper examines the most prominent of these provisions and finds them to be seriously flawed and unlikely to deliver savings as intended. They are either too weak or liable to compromise quality. Moreover, some of the most important drivers of health care costs, such as fee for service payments to physicians under Medicare or limitations on physician liability are not addressed adequately. Thus, it is unlikely that the PPACA in its present form will do much to reduce the growth rate of health care expenditures.
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Glenn Melnick, Yu-Chu Shen & Vivian Yaling Wu
Health Affairs, September 2011, Pages 1728-1733
Abstract:
The long-term trend of consolidation among US health plans has raised providers' concerns that the concentration of health plan markets can depress their prices. Although our study confirmed that, it also revealed a more complex picture. First, we found that 64 percent of hospitals operate in markets where health plans are not very concentrated, and only 7 percent are in markets that are dominated by a few health plans. Second, we found that in most markets, hospital market concentration exceeds health plan concentration. Third, our study confirmed earlier studies showing that greater hospital market concentration leads to higher hospital prices. Fourth, we found that hospital prices in the most concentrated health plan markets are approximately 12 percent lower than in more competitive health plan markets. Overall, our results show that more concentrated health plan markets can counteract the price-increasing effects of concentrated hospital markets, and that-contrary to conventional wisdom-increased health plan concentration benefits consumers through lower hospital prices as long as health plan markets remain competitive. Our findings also suggest that consumers would benefit from policies that maintained competition in hospital markets or that would restore competition to hospital markets that are uncompetitive.
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Sujha Subramanian
Medical Care, September 2011, Pages 842-847
Background: The Medicaid program plays a critical role in providing insurance coverage for many low-income beneficiaries who are diagnosed with cancer. Several states have increased their copayment requirements in the past few years and this provides a natural experiment to study the impact of copayments.
Methods: We used Medicaid administrative data linked with cancer registry data for the years 1999 to 2004 from Georgia (intervention state with increases in copayments), Texas (control state A), and South Carolina (control state B) to study the impact of copayments on adult (aged from 18 to 64 y) Medicaid beneficiaries diagnosed with cancer (n=10,241). We report both pre/post and difference-in-difference assessments controlling for confounding factors including demographics, comorbidities, cancer site, and stage at diagnosis.
Results: After copayments were imposed, the number of days of supply of prescription drugs in the intervention state decreased by 127.4 and 150.1 days compared with control state A and B, respectively. Those with multiple comorbidities reduced their use of prescription drug the most. The proportion of beneficiaries with emergency room visits also increased in the intervention state compared with the control states. Overall, total 6-month cost was more than $2000 higher per patient in the intervention than the control states.
Conclusions: The results show that Medicaid patients with cancer when faced with even moderate copayments change their health-seeking behavior. State Medicaid programs should reconsider the use of copayments as they do not decrease overall cost, but instead could potentially result in negative consequences.
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Guy David et al.
NBER Working Paper, August 2011
Abstract:
Cross-subsidies are often considered the principal mechanism through which hospitals provide unprofitable care. Yet, hospitals' reliance on and extent of cross-subsidization are difficult to establish. We exploit entry by cardiac specialty hospitals as an exogenous shock to incumbent hospitals' profitability and in turn to their ability to cross-subsidize unprofitable services. Using patient-level data from general short-term hospitals in Arizona and Colorado before and after entry, we find that the hospitals most exposed to entry reduced their provision of services considered to be unprofitable (psychiatric, substance- abuse, and trauma care) and expanded their admissions for neurosurgery, a highly profitable service.
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Health Service Use Among the Previously Uninsured: Is Subsidized Health Insurance Enough?
Sandra Decker et al.
Health Economics, forthcoming
Abstract:
Although it has been shown that gaining Medicare coverage at age 65 years increases health service use among the uninsured, difficulty in changing habits or differences in the characteristics of previously uninsured compared with insured individuals may mean that the previously uninsured continue to use the healthcare system differently from others. This study uses Medicare claims data linked to two different surveys-the National Health Interview Survey and the Health and Retirement Study-to describe the relationship between insurance status before age 65 years and the use of Medicare-covered services beginning at age 65 years. Although we do not find statistically significant differences in Medicare expenditures or in the number of hospitalizations by previous insurance status, we do find that individuals who were uninsured before age 65 years continue to use the healthcare system differently from those who were privately insured. Specifically, they have 16% fewer visits to office-based physicians but make 18% and 43% more visits to hospital emergency and outpatient departments, respectively. A key question for the future may be why the previously uninsured seem to continue to use the healthcare system differently from the previously insured. This question may be important to consider as health coverage expansions are implemented.
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Miriam Laugesen & Sherry Glied
Health Affairs, September 2011, Pages 1647-1656
Abstract:
Higher health care prices in the United States are a key reason that the nation's health spending is so much higher than that of other countries. Our study compared physicians' fees paid by public and private payers for primary care office visits and hip replacements in Australia, Canada, France, Germany, the United Kingdom, and the United States. We also compared physicians' incomes net of practice expenses, differences in financing the cost of medical education, and the relative contribution of payments per physician and of physician supply in the countries' national spending on physician services. Public and private payers paid somewhat higher fees to US primary care physicians for office visits (27 percent more for public, 70 percent more for private) and much higher fees to orthopedic physicians for hip replacements (70 percent more for public, 120 percent more for private) than public and private payers paid these physicians' counterparts in other countries. US primary care and orthopedic physicians also earned higher incomes ($186,582 and $442,450, respectively) than their foreign counterparts. We conclude that the higher fees, rather than factors such as higher practice costs, volume of services, or tuition expenses, were the main drivers of higher US spending, particularly in orthopedics.
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Physician Self-Referral for Imaging and the Cost of Chronic Care for Medicare Beneficiaries
Danny Hughes et al.
Medical Care, September 2011, Pages 857-864
Background: As the cost of both chronic care and diagnostic imaging continue to rise, it is important to consider methods of cost containment in these areas. Therefore, it seems important to study the relationship between self-referral for imaging and the cost of care of chronic illnesses. Previous studies, mostly of acute illnesses, have found self-referral increases utilization and, thus, probably imaging costs.
Objective: To evaluate the relationship between physician self-referral for imaging and the cost of episodes of chronic care.
Research Design: Using Medicare's 5% Research Identifiable Files for 2004 to 2007, episodes of care were constructed for 32 broad chronic conditions using the Symmetry Episode Treatment Grouper. Using multivariate regression, we evaluated the association between whether the treating physician self-referred for imaging and total episode cost, episode imaging cost, and episode nonimaging cost. Analyses were controlled for patient characteristics (eg, age and general health status), the condition's severity, and treating physician specialty.
Results: Self-referral in imaging was significantly (P < 0.01) associated with total episode costs in 41 of the 76 medical condition and imaging modality (computed tomography, magnetic resonance imaging, etc.) combinations studied. Total costs were higher in 38 combinations and lower in 3. Even nonimaging costs were much more often significantly higher (in 24 combinations) with self-referral than being lower (in 4 combinations).
Conclusions: We find broad evidence that physician self-referral for imaging is associated with significantly and substantially higher chronic care costs. Unless self-referral has empirically demonstrable benefits, curbing self-referral may be an appropriate route to containing chronic care costs.
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Comparative Effectiveness Research, COURAGE, and Technological Abandonment
David Howard & Yu-Chu Shen
NBER Working Paper, August 2011
Abstract:
When a major study finds that a widely used medical treatment is no better than a less expensive alternative, do physicians stop using it? Policymakers hope that comparative effectiveness research will identify less expensive substitutes for widely-used treatments, but physicians may be reluctant to abandon profitable therapies. We examine the impact of the COURAGE trial, which found that medical therapy is as effective as percutaneous coronary intervention (PCI) for patients with stable angina, on practice patterns. Using hospital discharge data from US community, Veterans Administration, and English hospitals, we detect a moderate decline in PCI volume post-COURAGE. However, many patients with stable angina continue to receive PCI. We do not find differences in PCI volume trends by reimbursement scheme or hospitals' teaching status, ownership, or degree of vertical integration.
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Mark Hall, Wenke Hwang & Alison Snow Jones
Health Affairs, September 2011, Pages 1698-1707
Abstract:
Because the reforms under the Affordable Care Act of 2010 will leave an estimated twenty million or more people still uninsured, some Americans will continue to seek care at low or no cost through existing safety-net systems. To identify appropriate care models, this comparative case study assessed the costs of care provided by four large, well-structured, comprehensive safety-net programs for the uninsured in Colorado, Michigan, North Carolina, and Texas. The average monthly resource cost-including the value of referred, donated, and in-kind services-in these model programs was $141-$209 per adult in 2008. This was 25-50 percent less than the estimated cost of care for comparison groups covered by local Medicaid programs or by private insurance that provided similar services. Although these programs' services are somewhat less comprehensive than those of generous insurance plans, the findings suggest that these model safety-net programs could be adapted to provide an alternative type of coverage for the uninsured, including both low-income and middle-class people.
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Comparison Friction: Experimental Evidence from Medicare Drug Plans
Jeffrey Kling et al.
NBER Working Paper, September 2011
Abstract:
Consumers need information to compare alternatives for markets to function efficiently. Recognizing this, public policies often pair competition with easy access to comparative information. The implicit assumption is that comparison friction - the wedge between the availability of comparative information and consumers' use of it - is inconsequential because information is readily available and consumers will access this information and make effective choices. We examine the extent of comparison friction in the market for Medicare Part D prescription drug plans in the United States. In a randomized field experiment, an intervention group received a letter with personalized cost information. That information was readily available for free and widely advertised. However, this additional step-providing the information rather than having consumers actively access it - had an impact. Plan switching was 28 percent in the intervention group, versus 17 percent in the comparison group, and the intervention caused an average decline in predicted consumer cost of about $100 per year among letter recipients - roughly 5 percent of the cost in the comparison group. Our results suggest that comparison friction can be large even when the cost of acquiring information is small, and may be relevant for a wide range of public policies that incorporate consumer choice.
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How do health insurance loading fees vary by group size?: Implications for Healthcare reform
Pinar Karaca-Mandic, Jean Abraham & Charles Phelps
International Journal of Health Care Finance and Economics, September 2011, Pages 181-207
Abstract:
The health insurance loading fee represents the portion of the premium above the expected amount of medical care expenditures paid by the insurance company. The size of the loading fees and how they vary by employer group size have important implications for health policy given the recent passage of the Patient Protection and Affordable Care Act. Despite their policy relevance, there is surprisingly little empirical evidence on the magnitude and the determinants of health insurance loading fees. This paper provides estimates of the loading fees by firm size using data from the confidential Medical Expenditure Panel Survey Household Component-Insurance Component Linked File. Overall, we find an inverse relationship between employer group size and loading fees. Firms of up to 100 employees face similar loading fees of approximately 34%. Loads decline with firm size and are estimated to be on average 15% for firms with more than 100 employees, but less than 10,000 employees, and 4% for firms with more than 10,000 workers.
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Charles Roehrig & David Rousseau
Health Affairs, September 2011, Pages 1657-1663
Abstract:
Some prior research has suggested that health spending for many diseases has been driven more by increases in so-called treated prevalence-the number of people receiving treatment for a given condition-than by increases in cost per case. Our study reached a different conclusion. We examined treated prevalence, clinical prevalence-the number of people with a given disease, treated or not-and cost per case across all medical conditions between 1996 and 2006. Over this period, three-fourths of the increase in real per capita health spending was attributable to growth in cost per case, while treated prevalence accounted for about one-fourth of spending growth. Our evidence suggests that most of the treated-prevalence effect is due to an increase in the share of eligible people being treated rather than an increase in clinical prevalence of diseases. We conclude that efforts to curb health spending should focus more on reining in cost per case.
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Does Price Reveal Poor-Quality Drugs? Evidence from 17 countries
Roger Bate, Ginger Zhe Jin & Aparna Mathur
Journal of Health Economics, forthcoming
Abstract:
Focusing on 8 drug types on the WHO-approved medicine list, we constructed an original dataset of 899 drug samples from 17 low- and median-income countries and tested them for visual appearance, disintegration, and analyzed their ingredients by chromatography and spectrometry. Fifteen percent of the samples fail at least one test and can be considered substandard. After controlling for local factors, we find that failing drugs are priced 13.6-18.7% lower than non-failing drugs but the signaling effect of price is far from complete, especially for non-innovator brands. The look of the pharmacy, as assessed by our covert shoppers, is weakly correlated with the results of quality tests. These findings suggest that consumers are likely to suspect low quality from market price, non-innovator brand and the look of the pharmacy, but none of these signals can perfectly identify substandard and counterfeit drugs.
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The Effects of Insurance Mandates on Choices and Outcomes in Infertility Treatment Markets
Barton Hamilton & Brian McManus
Health Economics, forthcoming
Abstract:
For the 10% to 15% of American married couples who experience reproductive problems, in vitro fertilization (IVF) is the leading technologically advanced treatment procedure. However, IVF's expense may prevent many couples from receiving treatment, and those who are treated may take an overly aggressive approach to reduce the probability of failure. Aggressive treatment, which occurs through an increase in the number of embryos transferred during IVF, can lead to medically dangerous multiple births. We evaluated the principle policy proposal - insurance mandates - for improving IVF access and outcomes. We used data from US markets during 1995-2003 to show that broad insurance mandates for IVF result in not only large increases in treatment access but also significantly less aggressive treatment. More limited insurance mandates, which may apply to a subset of insurers or provide weaker guidelines for insurer behavior, generally have little effect on IVF markets.
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Kenneth Thorpe & Zhou Yang
Health Affairs, September 2011, Pages 1673-1679
Abstract:
Rising chronic disease prevalence among Medicare beneficiaries, including new enrollees, is a key driver of health care spending. Randomized trials have shown that lifestyle modification interventions such as those in the National Diabetes Prevention Program clinical trial reduce the incidence of chronic disease and that community-based programs applying the same principles can produce net health care savings. We propose expanding a proven, community-based weight loss program nationwide and enrolling overweight and obese prediabetic adults ages 60-64. We estimate that making the program available to a single cohort of eligible people could save Medicare $1.8-$2.3 billion over the following ten years. Estimated savings would be even higher ($3.0-$3.7 billion) if equally overweight people at risk for cardiovascular disease were also enrolled. We estimate that lifetime Medicare savings could range from approximately $7 billion to $15 billion, depending on how broadly program eligibility was defined and actual levels of program participation, for a single "wave" of eligible people. In this context we propose that Medicare expand its new wellness benefit to include reimbursement for this and other qualifying behavior change programs.
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Premium subsidies and social health insurance: Substitutes or complements?
Mathias Kifmann & Kerstin Roeder
Journal of Health Economics, forthcoming
Abstract:
Premium subsidies have been advocated as an alternative to social health insurance. These subsidies are paid if expenditure on health insurance exceeds a given share of income. In this paper, we examine whether this approach is superior to social health insurance from a welfare perspective. We show that the results crucially depend on the correlation of health and productivity. For a positive correlation, we find that combining premium subsidies with social health insurance is the optimal policy.
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Jack Zwanziger & Shuli Brammli-Greenberg
Health Affairs, September 2011, Pages 1779-1785
Abstract:
Israel reformed its health care system in 1995. In contrast to many other developed nations, it has since experienced relatively low rates of growth in health spending, even as health outcomes have continued to improve. This paper describes characteristics of the Israeli system that have helped control rising costs. We describe how the national government exerts direct operational control over a large proportion of total health care expenditures (39.1 percent in 2007) through a range of mechanisms, including caps on hospital revenue and national contracts with salaried physicians. The Ministry of Finance has been able to persuade the national government to agree to relatively small increases in the health care budget because the system has performed well, with a very high level of public satisfaction. It is unclear whether this success in health expenditure control can be sustained because of growing signs of strain within the system, the rapid increase in nongovernment financing for health care services, and the growing prosperity of Israeli society.
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Carole Gresenz & José Escarce
Medical Care, September 2011, Pages e14-e21
Background: Previous research suggests, but does not definitively establish, that a high level of uninsurance in a community may negatively affect access to and quality of health care for insured persons.
Objective: To assess the effect of the level of uninsurance in a community on access to and satisfaction with care-an important dimension of quality-among insured persons.
Research Design: The 1996 to 2006 Medical Expenditure Panel Survey Household Component data linked to data from the Current Population Survey, Area Resource File, and the InterStudy Competitive Edge. Analyses include 86,928 insured adult respondents living in approximately 200 large metropolitan areas.
Main Outcome Measures: Measures of whether an individual had a usual source of care, had any delay/difficulty obtaining needed care, used office-based services, used prescription drug services, and used any medical services, and measures of satisfaction with care.
Results: Among privately insured adults, a higher community uninsurance rate resulted in a lower probability of having a usual source of care, having an office-based visit, having any medical expenditures, and reporting being satisfied with the quality of care provided by the usual source of care. A higher community uninsurance rate also led to a higher probability of reporting difficulty obtaining needed care. Among Medicare enrollees, a higher community uninsurance rate resulted in lower reported satisfaction with care and higher probability of experiencing difficulty or delay in getting needed care.
Conclusions: Our results suggest substantial spillover effects of the community uninsurance rate on access to and satisfaction with health care among insured working-age adults and seniors. Consequently, new efforts to address the problem of the uninsured may bring significant benefits to persons who already have insurance.
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Michael McWilliams et al.
Health Affairs, September 2011, Pages 1786-1794
Abstract:
The proliferation of Medicare Advantage plans has given Medicare enrollees more choices, but these could be overwhelming for some, especially for those with impaired decision-making capabilities. We analyzed national survey data and linked Medicare enrollment data for the period 2004-07 to examine the effects on enrollment of expanded choices and benefits in the Medicare Advantage program. The availability of more plan options was associated with increased enrollment in Medicare Advantage when elderly Medicare beneficiaries chose from a limited number of plans-for example, fewer than fifteen plans. Enrollment was unchanged or decreased in Medicare Advantage when beneficiaries chose from larger numbers of plans - for example, fifteen to thirty, or more than thirty. Elderly adults with low cognitive function were less responsive to the generosity of available benefits than those with high cognitive function when choosing between traditional Medicare and Medicare Advantage. Simplifying choices in Medicare Advantage could improve beneficiaries' enrollment decisions, strengthen value-based competition among plans, and extend the benefits of choice to seniors with impaired cognition. It could also lower their out-of-pocket costs.
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Ronnie Horner et al.
Medical Care, forthcoming
Background: Similarities and differences in physician work intensity among specialties are poorly understood but have implications for quality of care, patient safety, practice organization and management, and payment.
Objective: To determine the magnitude and important dimensions of physician work intensity for 4 specialties.
Research Design: Cross-sectional assessment of work intensity associated with actual patient care in the examination room or operating room.
Subjects: A convenience sample of 45 family physicians, 20 general internists, 22 neurologists, and 21 surgeons, located in Kansas, Kentucky, Maryland, Ohio, and Virginia.
Measures: Work intensity measures included the National Aeronautics and Space Administration-Task Load Index (NASA-TLX), Subjective Work Assessment Technique (SWAT), and Multiple Resource Questionnaire. Stress was measured by the Dundee Stress State Questionnaire.
Results: Physicians reported similar magnitude of work intensity on the NASA-TLX and Multiple Resource Questionnaire. On the SWAT, general internists reported work intensity similar to surgeons but significantly lower than family physicians and neurologists (P=0.035). Surgeons reported significantly higher levels of task engagement on the stress measure than the other specialties (P=0.019), significantly higher intensity on physical demand (P < 0.001), and significantly lower intensity on the performance dimensions of the NASA-TLX than the other specialties (P=0.003). Surgeons reported the lowest intensity for temporal demand of all specialties, being significantly lower than either family physicians or neurologists (P=0.014). Family physicians reported the highest intensity on the time dimension of the SWAT, being significantly higher than either general internists or surgeons (P=0.008).
Conclusions: Level of physician work intensity seems to be similar among specialties.
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Bradford Harris et al.
Health Affairs, September 2011, Pages 1751-1761
Abstract:
Efforts to reduce infections acquired during a hospital stay through improvements in the quality of care have had measurable results in many hospital settings. In pediatric intensive care units, the right quality interventions can save lives and money. We found that improving practices of hand hygiene, oral care, and central-line catheter care reduced hospital-acquired infections and improved mortality rates among children admitted to a large pediatric intensive care unit in 2007-09. In addition, on average patients admitted after the quality interventions were fully implemented spent 2.3 fewer days in the hospital, their hospitalization cost $12,136 less, and mortality was 2.3 percentage points lower, compared to patients admitted before the interventions. The projected annual cost savings for the single pediatric intensive care unit studied was approximately $12 million. Given the modest expenses incurred for these improvements-which mainly consisted of posters for an educational campaign, a training "fair," roughly $21 per day for oral care kits, about $0.60 per day for chlorhexidine antiseptic patches, and hand sanitizers attached to the walls outside patients' rooms-this represents a significant return on investment. Used on a larger scale, these quality improvements could save lives and reduce costs for patients, hospitals, and payers around the country, provided that sustained efforts ensure compliance with new protocols and achieve long-lasting changes.