Patient Protection
The Other Ex-Ante Moral Hazard in Health
Jay Bhattacharya & Mikko Packalen
Journal of Health Economics, forthcoming
Abstract:
It is well-known that pooled insurance coverage can induce people to make inefficiently low investments in self-protective activities. We identify another ex-ante moral hazard that runs in the opposite direction. Lower levels of self-protection and the associated chronic conditions and behavioral patterns such as obesity, smoking, and malnutrition increase the incidence of many diseases and consumption of treatments to those diseases. This increases the reward for innovation and thus benefits the innovator. It also increases treatment innovation which benefits all consumers. As individuals do not take these positive externalities into account, their investments in self-protection are inefficiently high. We quantify the lower bound of this externality for obesity. The lower bound is independent of how much additional innovation is generated. The results show that the externality we identify offsets the negative Medicare-induced insurance externality of obesity. The Medicare-induced obesity subsidy is thus not a sufficient rationale for "soda taxes", "fat taxes" or other penalties on obesity. The quantitative finding also implies that the other ex-ante moral hazard that we identify can be as important as the ex-ante moral hazard that has been a central concept in health economics for decades.
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Ashish Jha, John Orav & Arnold Epstein
Health Affairs, October 2011, Pages 1904-1911
Abstract:
As policy makers design national programs aimed at managing the quality and costs of health care, it is important to understand the potential impact on minority and poor patients and the hospitals that provide most of their care. We analyzed a range of hospital data and assigned hospitals to various categories, including "best" - high-quality, low-cost institutions - and "worst" - where quality is low and costs high. We found that the "worst" hospitals - typically small public or for-profit institutions in the South - care for double the proportion (15 percent versus 7 percent) of elderly black patients as the "best" hospitals - typically nonprofit institutions in the Northeast. Similarly, elderly Hispanic and Medicaid patients accounted for 1 percent and 15 percent, respectively, of the patient population at the best hospitals, while at the worst hospitals, these groups represented 4 percent and 23 percent of the patients. Patients with acute myocardial infarction at the worst hospitals had 7-10 percent higher odds of death compared to patients with those conditions admitted to the best hospitals. Our findings have important implications for Medicare's forthcoming value-based purchasing program. The worst institutions in particular will have to improve on both costs and quality to avoid incurring financial penalties and exacerbating disparities in care.
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Adverse Selection and Switching Costs in Health Insurance Markets: When Nudging Hurts
Benjamin Handel
NBER Working Paper, September 2011
Abstract:
This paper investigates consumer switching costs in the context of health insurance markets, where adverse selection is a potential concern. Though previous work has studied these phenomena in isolation, they interact in a way that directly impacts market outcomes and consumer welfare. Our identification strategy leverages a unique natural experiment that occurred at a large firm where we also observe individual-level panel data on health insurance choices and medical claims. We present descriptive results to show that (i) switching costs are large and (ii) adverse selection is present. To formalize this analysis we develop and estimate a choice model that jointly quantifies switching costs, risk preferences, and ex ante health risk. We use these estimates to study the welfare impact of an information provision policy that nudges consumers toward better decisions by reducing switching costs. This policy increases welfare in a naive setting where insurance plan prices are held fixed. However, when insurance prices change endogenously to reflect updated enrollee risk pools, the same policy substantially exacerbates adverse selection and reduces consumer welfare, doubling the existing welfare loss from adverse selection.
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The efficiency of a group-specific mandated benefit revisited: The effect of infertility mandates
Joanna Lahey
Journal of Policy Analysis and Management, forthcoming
Abstract:
This paper examines the labor market effects of state health insurance mandates that increase the cost of employing a demographically identifiable group. State mandates requiring that health insurance plans cover infertility treatment raise the relative cost of insuring older women of child-bearing age. Empirically, wages in this group are unaffected, but their total labor input decreases. Workers do not value infertility mandates at cost, and so will not take wage cuts in exchange, leading employers to decrease their demand for this affected and identifiable group. Differences in the empirical effects of mandates found in the literature are explained by a model including variations in the elasticity of demand, moral hazard, ability to identify a group, and adverse selection.
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Stacy Fischer et al.
Journal of Hospital Medicine, forthcoming
Objective: To determine the effect of having advance directive (AD) discussions or having an AD in the medical record on patient survival.
Design: Prospective observational cohort study.
Setting: Three Colorado area hospitals: a large academic tertiary referral center, a Veteran's Affairs medical center, and an urban safety net hospital.
Participants: Four hundred fifty-eight adults admitted to the general internal medicine service interviewed about AD discussions. A concurrent chart review documented the presence of an AD in the medical record. Participants were stratified into low, medium, and high risk of death within 1 year based on validated prognostic criteria.
Measures: Kaplan-Meier survival plots were estimated for those at low and medium risk of death.
Results: No significant differences in survival for participants at low and medium risk of death who reported having had an AD discussion and those who had not (Wilcoxon low risk, P = 0.97; medium risk, P = 0.28; and log-rank low risk, P = 0.82; medium risk, P = 0.45), and for those who had an AD in the medical record vs those who did not (Wilcoxon low risk, P = 0.84; medium risk, P = 0.78; and log-rank low risk, P = 0.86; medium risk, P = 0.69).
Conclusions: There is no evidence that AD discussions or documentation result in increased mortality. In regards to the current national debate about the merits of advance care planning, this study suggests that honoring patients' wishes to engage in AD discussions and documentation does not lead to harm.
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Sinking, Swimming, or Learning to Swim in Medicare Part D?
Jonathan Ketcham et al.
American Economic Review, forthcoming
Abstract:
Under Medicare Part D, senior citizens choose prescription drug insurance offered by numerous private insurers. We examine non-poor enrollees' actions in 2006 and 2007 using panel data. Our sample reduced overspending by $298 on average, with gains by 81% of them. The greatest improvements were by those who overspent most in 2006 and by those who switched plans. Decisions to switch depended on individuals' overspending in 2006 and on individual-specific effects of changes in their current plans. The oldest consumers and those initiating medications for Alzheimer's disease improved by more than average, suggesting that real-world institutions help overcome cognitive limitations.
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Human Capital and Organizational Performance: Evidence from the Healthcare Sector
Ann Bartel et al.
NBER Working Paper, September 2011
Abstract:
This paper contributes to the literature on the relationship between human capital and organizational performance. We use detailed longitudinal monthly data on nursing units in the Veterans Administration hospital system to identify how the human capital (general, hospital-specific and unit or team-specific) of the nursing team on the unit affects patients' outcomes. Since we use monthly, not annual, data, we are able to avoid the omitted variable bias and endogeneity bias that could result when annual data are used. Nurse staffing levels, general human capital, and unit-specific human capital have positive and significant effects on patient outcomes while the use of contract nurses, who have less specific capital than regular staff nurses, negatively impacts patient outcomes. Policies that would increase the specific human capital of the nursing staff are found to be cost-effective.
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Kristin Huntoon et al.
PLoS ONE, September 2011, e23557
Context: Over one year after passage of the Patient Protection and Affordable Care Act (PPACA), legislators, healthcare experts, physicians, and the general public continue to debate the implications of the law and its repeal. The PPACA will have a significant impact on future physicians, yet medical student perspectives on the legislation have not been well documented.
Objective: To evaluate medical students' understanding of and attitudes toward healthcare reform and the PPACA including issues of quality, access and cost.
Design, Setting, and Participants: An anonymous electronic survey was sent to medical students at 10 medical schools (total of 6982 students) between October-December 2010, with 1232 students responding and a response rate of 18%.
Main Outcome Measures: Medical students' views and attitudes regarding the PPACA and related topics, measured with Likert scale and open response items.
Results: Of medical students surveyed, 94.8% agreed that the existing United States healthcare system needs to be reformed, 31.4% believed the PPACA will improve healthcare quality, while 20.9% disagreed and almost half (47.7%) were unsure if quality will be improved. Two thirds (67.6%) believed that the PPACA will increase access, 6.5% disagreed and the remaining 25.9% were unsure. With regard to containing healthcare costs, 45.4% of participants indicated that they are unsure if the provisions of the PPACA will do so. Overall, 80.1% of respondents indicated that they support the PPACA, and 78.3% also indicated that they did not feel that reform efforts had gone far enough. A majority of respondents (58.8%) opposed repeal of the PPACA, while 15.0% supported repeal, and 26.1% were undecided.
Conclusion: The overwhelming majority of medical students recognized healthcare reform is needed and expressed support for the PPACA but echoed concerns about whether it will address issues of quality or cost containment.
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The intensity and variation of surgical care at the end of life: A retrospective cohort study
Alvin Kwok et al.
Lancet, forthcoming
Background: Although the extent of hospital and intensive-care use at the end of life is well known, patterns of surgical care during this period are poorly understood. We examined national patterns of surgical care in the USA among elderly fee-for-service Medicare beneficiaries in their last year of life.
Methods: We did a retrospective cohort study of elderly beneficiaries of fee-for-service Medicare in the USA, aged 65 years or older, who died in 2008. We identified claims for inpatient surgical procedures in the year before death and examined the relation between receipt of an inpatient procedure and both age and geographical region. We calculated an end-of-life surgical intensity (EOLSI) score for each hospital referral region defined as proportion of decedents who underwent a surgical procedure during the year before their death, adjusted for age, sex, race, and income. We compared patient characteristics with Rao-Scott χ2 tests, resource use with generalised estimating equations, regional differences with generalised estimating equations Wald tests, and end-of-life surgical intensity scores with Spearman's partial-rank-order correlation coefficients.
Findings: Of 1 802 029 elderly beneficiaries of fee-for-service Medicare who died in 2008, 31.9% (95% CI 31.9-32.0; 575 596 of 1 802 029) underwent an inpatient surgical procedure during the year before death, 18.3% (18.2-18.4; 329 771 of 1 802 029) underwent a procedure in their last month of life, and 8.0% (8.0-8.1; 144 162 of 1 802 029) underwent a procedure during their last week of life. Between the ages of 80 and 90 years, the percentage of decedents undergoing a surgical procedure in the last year of life decreased by 33% (35.3% [95% CI 34.7-35.9; 8858 of 25 094] to 23.6% [22.9-24.3; 3340 of 14 152]). EOLSI score in the highest intensity region (Munster, IN) was 34.4 (95% CI 33.7-35.1) and in the lowest intensity region (Honolulu, HI) was 11.5 (11.3-11.7). Regions with a high number of hospital beds per head had high end-of-life surgical intensity (r=0.37, 95% CI 0.27-0.46; p<0.0001), as did regions with high total Medicare spending (r=0.50, 0.41-0.58; p<0.0001).
Interpretation: Many elderly people in the USA undergo surgery in the year before their death. The rate at which they undergo surgery varies substantially with age and region and might suggest discretion in health-care providers' decisions to intervene surgically at the end of life.
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Jennifer Keelan & Kumanan Wilson
American Journal of Public Health, forthcoming
Abstract:
The US Court of Federal Claims, which adjudicates cases for the National Vaccine Injury Compensation Program, has been confronted withmore than 5000 cases submitted on behalf of children with autism spectrum disorders, seeking to link the condition to vaccination. Through a test case process, the Omnibus Autism Proceedings have in every instance found no association between autism spectrum disorders and vaccines. However, vaccine advocates have criticized the courts for having an overly permissive evidentiary test for causation and for granting credence to insupportable accusations of vaccine harm. In fact, the courts have functioned as intended and have allowed for a fair hearing of vaccine concerns while maintaining confidence in vaccines and providing protection to vaccine manufacturers.
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Rising Closures Of Hospital Trauma Centers Disproportionately Burden Vulnerable Populations
Renee Yuen-Jan Hsia & Yu-Chu Shen
Health Affairs, October 2011, Pages 1912-1920
Abstract:
Closures of hospital trauma centers have accelerated since 2001. These closures may disproportionately affect disadvantaged communities. We evaluate how driving time between ZIP code areas and the nearest trauma centers-a proxy for access, given the time-sensitive nature of trauma care-changed nationwide during 2001-07. By 2007, sixty-nine million Americans (24 percent of the population) had to travel farther to the nearest trauma center than they did in 2001, and almost sixteen million people had to travel an additional thirty minutes or more. Communities with disproportionately high numbers of African American residents, uninsured people, and people living in poverty, as well as people living in rural areas, were more likely than others to be thus affected. Because mortality from traumatic injuries has also worsened for these vulnerable populations, policy makers should learn more about the possible connections-and consider such measures as paying trauma centers serving these communities higher amounts for treatment of injuries.