Care Free
Alan Krueger & Ilyana Kuziemko
NBER Working Paper, April 2011
Abstract:
Most existing work on the price elasticity of demand for health insurance focuses on employees' decisions to enroll in employer-provided plans. Yet any attempt to achieve universal coverage must focus on the uninsured, the vast majority of whom are not offered employer-sponsored insurance. In the summer of 2008, we conducted a survey experiment to assess the willingness to pay for a health plan among a large sample of uninsured Americans. The experiment yields price elasticities substantially greater than those found in most previous studies. We use these results to estimate coverage expansion under the Affordable Care Act, with and without an individual mandate. We estimate that 39 million uninsured individuals would gain coverage and find limited evidence of adverse selection.
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Why Behavioral And Environmental Interventions Are Needed To Improve Health At Lower Cost
Bobby Milstein et al.
Health Affairs, May 2011, Pages 823-832
Abstract:
We used a dynamic simulation model of the US health system to test three proposed strategies to reduce deaths and improve the cost-effectiveness of interventions: expanding health insurance coverage, delivering better preventive and chronic care, and protecting health by enabling healthier behavior and improving environmental conditions. We found that each alone could save lives and provide good economic value, but they are likely to be more effective in combination. Although coverage and care save lives quickly, they tend to increase costs. The impact of protection grows more gradually, but it is a critical ingredient over time for lowering both the number of deaths and reducing costs. Only protection slows the growth in the prevalence of disease and injury and thereby alleviates rather than exacerbates demand on limited primary care capacity. When added to a simulated scenario with coverage and care, protection could save 90 percent more lives and reduce costs by 30 percent in year 10; by year 25, that same investment in protection could save about 140 percent more lives and reduce costs by 62 percent.
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How does Risk Selection Respond to Risk Adjustment? Evidence from the Medicare Advantage Program
Jason Brown et al.
NBER Working Paper, April 2011
Abstract:
Governments often contract with private firms to provide public services such as health care and education. To decrease firms' incentives to selectively enroll low-cost individuals, governments frequently "risk-adjust" payments to firms based on enrollees' characteristics. We model how risk adjustment affects selection and differential payments -- the government's payments to a firm for covering an individual minus the counterfactual cost had the government directly covered her. We show that firms reduce selection along dimensions included in the risk-adjustment formula, while increasing selection along excluded dimensions. These responses can actually increase differential payments relative to pre-risk-adjustment levels and thus risk adjustment can raise the total cost to the government of providing the public service. We confirm both selection predictions using individual-level data from Medicare, which in 2004 began risk-adjusting payments to private Medicare Advantage plans. We find that differential payments actually rise after risk adjustment and estimate that they totaled $30 billion in 2006, or nearly eight percent of total Medicare spending.
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The Impact of Single-Payer Health Care on Physician Income in Canada, 1850-2005
Jacalyn Duffin
American Journal of Public Health, forthcoming
Abstract:
This study traces the average net income of Canadian physicians over 150 years to determine the impact of medicare. It also compares medical income in Canada to that in the United States. Sources include academic studies, government reports, Census data, taxation statistics, and surveys. The results show that Canadian doctors enjoyed a windfall in earnings during the early years of medicare and that, after a period of adjustment, medicare enhanced physician income. Except during the windfall boom, Canadian physicians have earned less than their American counterparts. Until at least 2005, however, the medical profession was the top-earning trade in Canada relative to all other professions.
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Amal Trivedi & Regina Grebla
Medical Care, June 2011, Pages 560-568
Background: After an organizational transformation in the mid-1990s, the quality of care in the Veterans Affairs health-care system (VA) compared favorably with the quality of care in some private-sector settings. Whether this performance advantage has persisted, and also its relation to geographic and socioeconomic variations in care, is unknown.
Objective: We compared the quality and equity of care for older adults in the VA with that delivered in Medicare Advantage (MA) health plans using the same performance measures.
Research Design: Cross-sectional comparison.
Subjects: A total of 293,554 observations from enrollees in 142 VA medical centers (VAMCs) and 5,768,573 observations from enrollees in 305 MA plans.
Measurements: Adherence to quality measures assessing diabetes, cardiovascular, and cancer screening care from 2000 to 2007.
Results: The VA outperformed MA plans on 10 of 11 quality measures in the initial study year, and on all 12 measures in the final year. In 2006 and 2007, adjusted differences between the VA and MA ranged from 4.3 percentage points (95% CI, 3.2-5.4) for cholesterol testing in coronary heart disease to 30.8 percentage points (95% CI, 28.1-33.5) for colorectal cancer screening. For 9 of 12 measures, socioeconomic disparities (defined as the difference in performance rates between persons in the highest and lowest quartiles of area-level income and education) were lower in the VA than in MA. Across all measures, the mean interquartile range of performance was 6.7 percentage points for VAMCs and 14.5 percentage points for MA plans.
Conclusions: Among persons aged 65 years or older, the VA health-care system significantly outperformed private-sector MA plans and delivered care that was less variable by site, geographic region, and socioeconomic status.
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Estimates of Crowd-Out from a Public Health Insurance Expansion Using Administrative Data
Laura Dague et al.
NBER Working Paper, May 2011
Abstract:
We use a combination of administrative and survey data to estimate the fraction of individuals newly enrolled in public health coverage (Wisconsin's combined Medicaid and CHIP program) that had access to private, employer-sponsored health insurance at the time of their enrollment and the fraction that dropped this coverage. We estimate that after expansion of eligibility for public coverage, approximately 20% of new enrollees had access to private health insurance at the time of enrollment and that only 8% dropped this coverage (with the remaining 12% having both private and public coverage). We also identify an "upper bound" estimate, which suggests that the percentage of new enrollees with private insurance coverage at the time of enrollment is, at most, 27%. These estimates of crowd-out are relatively low compared with estimates from the literature based on Medicaid and CHIP expansions, although based both on different data and on a different method.
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Stacey Wood et al.
Psychology and Aging, forthcoming
Abstract:
Studies on decision making have come to challenge the idea that having more choice is necessarily better. The Medicare prescription drug program (Part D) has been designed to maximize choice for the consumer but has simultaneously created a highly complex decision task with dozens of options. In this study, in a sample of 121 adults, we examined the impact that increasing choice options has on decision-making abilities in older versus younger adults. Consistent with our hypotheses, we found that participants performed better with less choice versus more choice, and that older adults performed worse than younger adults across conditions. We further examined the role that numeracy may play in making these decisions and the role of more traditional cognitive variables such as working memory, executive functioning, intelligence, and education. Finally, we examined how personality style may interact with cognitive variables and age in decision making. Regression analysis revealed that numeracy is related to performance across the lifespan. When controlling for additional measures of cognitive ability, we found that although age was no longer associated with performance, numeracy remained significant. In terms of decision style, personality characteristics were not related to performance. Our results add to the mounting evidence for the critical role of numeracy in decision making across decision domains and across the lifespan.
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Selection on Moral Hazard in Health Insurance
Liran Einav et al.
NBER Working Paper, April 2011
Abstract:
In this paper we explore the possibility that individuals may select insurance coverage in part based on their anticipated behavioral response to the insurance contract. Such "selection on moral hazard" can have important implications for attempts to combat either selection or moral hazard. We explore these issues using individual-level panel data from a single firm, which contain information about health insurance options, choices, and subsequent claims. To identify the behavioral response to health insurance coverage and the heterogeneity in it, we take advantage of a change in the health insurance options offered to some, but not all of the firm's employees. We begin with descriptive evidence that is suggestive of both heterogeneous moral hazard as well as selection on it, with individuals who select more coverage also appearing to exhibit greater behavioral response to that coverage. To formalize this analysis and explore its implications, we develop and estimate a model of plan choice and medical utilization. The results from the modeling exercise echo the descriptive evidence, and allow for further explorations of the interaction between selection and moral hazard. For example, one implication of our estimates is that abstracting from selection on moral hazard could lead one to substantially over-estimate the spending reduction associated with introducing a high deductible health insurance option.
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Does State Regulation of Quality Impose Costs on Nursing Homes?
Dana Mukamel et al.
Medical Care, June 2011, Pages 529-534
Background: Government regulation is intended to enhance quality, safety, fairness, or competition in the regulated industry. Such regulation entails both direct and indirect costs.
Objectives: To estimate the costs associated with the regulation of quality of the nursing home industry.
Sample: This study includes 11,168 free-standing nursing homes nationally, between 2004 and 2006.
Research Design: Data included information from the Medicare cost reports, Minimum Data Set, Medicare Denominator file, OSCAR, and a survey of States' Certification and Licensing Offices conducted by the authors. These data were used to create variables measuring nursing homes costs, outputs, wages, competition, adjusted deficiency citations, ownership, state-fixed effects, and an index of each state's regulatory stringency. We estimated hybrid cost functions which included the regulatory stringency index.
Results: The estimated cost functions demonstrated the typical behavior expected of nursing home cost functions. The stringency index was positively and significantly associated with costs, indicating that nursing homes located in states with more stringent regulatory requirements face higher costs, ceteris paribus. The average incremental costs of a 1 standard deviation increase in the stringency index resulted in a 1.1% increase in costs.
Conclusions: This study for the first time places a price tag on the regulation of quality in nursing homes. It offers an order of magnitude on the costs to the industry of complying with the current set of standards and given the current level of enforcement. Complementary studies of the benefits that these regulations entail are needed to gain a comprehensive assessment of the effect of the regulation.
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Should Medicare Adopt the Veterans Health Administration Formulary?
Austin Frakt, Steven Pizer & Roger Feldman
Health Economics, forthcoming
Abstract:
Since January 2006 all Medicare beneficiaries have been eligible to obtain outpatient prescription drug coverage through private stand-alone drug plans (PDPs). We estimate a model of beneficiary demand for PDPs and use it to compute the loss of consumer surplus due to tightening PDP formularies to the level found in the Veterans Health Administration (VA). Under a generous assumption of cost savings attributed to increased bargaining leverage associated with exclusion of more drugs from formularies, we find the loss in consumer surplus to be smaller than the financial savings that could be shared between Medicare and beneficiaries. According to our estimates, Medicare beneficiaries could be compensated for the loss in consumer surplus associated with tighter PDP formularies with the savings generated by such formularies.
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Pharmaceutical Use Following Generic Entry: Paying Less and Buying Less
Peter Huckfeldt & Christopher Knittel
NBER Working Paper, May 2011
Abstract:
We study the effects of generic entry on prices and utilization using both event study models that exploit the differential timing of generic entry across drug molecules and cast studies. Our analysis examines drugs treating hypertension, high blood pressure, type 2 diabetes, and depression using price and utilization data from the Medical Expenditure Panel Survey. We find that utilization of drug molecules starts decreasing in the two years prior to generic entry and continues to decrease in the years following generic entry, despite decreases in prices offered by generic versions of a drug. This decrease coincides with the market entry and increased utilization of branded reformulations of a drug going off patent. We show case study evidence that utilization patterns coincide with changes in marketing by branded drug manufacturers. While the reformulations -- often extended-release versions of the patent-expiring drug -- offer potential health benefits, the FDA does not require evidence that the reformulations are improvements over the previous drug in order to grant a patent. Indeed, in a number of experiments comparing the efficacies of the patent-expiring and reformulated drugs do not find statistical differences in health outcomes calling into question the patent-extension policy.
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Increasing the Number of Trainees in General Surgery Residencies: Is There Capacity?
Anthony Charles et al.
Academic Medicine, May 2011, Pages 599-604
Purpose: General surgeons have decreased as a proportion of the total U.S. surgical workforce. Given the likelihood of increasing shortages of general surgeons, the authors evaluated available expansion capacity of existing general surgery residency programs.
Method: In November 2009, the authors e-mailed a Web-based questionnaire to the program directors and coordinators of the 246 U.S. general surgery residency programs that were then certified by the Accreditation Council for Graduate Medical Education.
Results: Of the 246 programs the authors contacted, 123 (50%) completed the survey. Community hospital programs and academic programs had similar response rates (52% and 50%, respectively). Of the 115 program directors who responded to the relevant question, 92 (80%) reported sufficient existing case volume capacity to accommodate additional surgery residents. Both community and academic program directors reported modest expansion capacity: an average of 1.7 and 2.0 additional residents per year, respectively. Across all programs, the average additional capacity reported was 1.9 additional residents per year. An expansion of this size would increase the number of general surgery residency positions from 1,137 to 1,515 annually. After accounting for subspecialization, this increase of 378 residents would result in approximately 249 additional general surgeons entering the workforce per year after five years.
Conclusions: Expansion capacity within existing approved general surgery residency programs is insufficient to meet the expected demand for general surgeons in the United States. Strategies to alleviate shortages include developing new training programs, cultivating new medical education funding streams, and changing the surgical training paradigm.