Health Care Economics
The Potential Impact of Comparative Effectiveness Research on U.S. Health Care Expenditures
Daniella Perlroth, Dana Goldman & Alan Garber
Demography, Fall 2010, Pages S173-S190
Abstract:
Comparative effectiveness research (CER) has the potential to slow health care spending growth by focusing resources on health interventions that provide the most value. In this article, we discuss issues surrounding CER and its implementation and apply these methods to a salient clinical example: treatment of prostate cancer. Physicians have several options for treating patients recently diagnosed with localized disease, including removal of the prostate (radical prostatectomy), treatment with radioactive seeds (brachytherapy), radiation therapy (IMRT), or - if none of these are pursued - active surveillance. Using a commercial health insurance claims database and after adjustment for comorbid conditions, we estimate that the additional cost of treatment with radical prostatectomy is $7,300, while other alternatives are more expensive - $19,000 for brachytherapy and $46,900 for IMRT. However, a review of the clinical literature uncovers no evidence that justifies the use of these more expensive approaches. These results imply that if patient management strategies were shifted to those supported by CER-based criteria, an estimated $1.7 to $3.0 billion (2009 present value) could be saved each year.
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Comparative Effectiveness Research: Who Will Do The Studies?
Robert Giffin & Janet Woodcock
Health Affairs, November 2010, Pages 2075-2081
Abstract:
A key tenet of comparative effectiveness research is that it should be conducted in real-world health care settings. This article addresses a basic question: What is the capacity of the clinical research enterprise to conduct such studies? We argue that the clinical trial system is already at capacity and will not be able to absorb large amounts of comparative effectiveness research without diverting resources from other needs. We propose a federally funded national clinical research infrastructure that would increase comparative effectiveness research capacity by encouraging community-based clinicians and their patients to participate in trials.
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Can Food Stamps Help to Reduce Medicare Spending on Diabetes?
Lauren Hersch Nicholas
Economics & Human Biology, forthcoming
Abstract:
Diabetes is rapidly escalating amongst low-income, older adults at great cost to the Medicare program. We use longitudinal survey data from the Health and Retirement Study linked to administrative Medicare records and biomarker data to assess the relationship between Food Stamp receipt and diabetes health outcomes. We find no significant difference in Medicare spending, outpatient utilization, diabetes hospitalizations and blood sugar (HbA1c) levels between recipients and income-eligible non-recipients after controlling for a detailed set of covariates including individual fixed effects and measures of diabetes treatment compliance. As one-third of elderly Food Stamp recipients are currently diabetic, greater coordination between the Food Stamp, Medicare, and Medicaid programs may improve health outcomes for this group.
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Does substituting home care for institutional care lead to a reduction in Medicaid expenditures?
Michelle Amaral
Health Care Management Science, December 2010, Pages 319-333
Abstract:
In 1981 Congress introduced Home and Community Based Services (HCBS) waivers in an attempt to contain Medicaid long-term care expenditures. This paper analyzes the efficacy of the waiver program. To date, little is known about its impact on cost containment. Using state-level Medicaid data on expenditures and the number of individuals participating in HCBS waivers between 1992 and 2000, this study estimates the impact of HCBS waivers on total Medicaid expenditures as well as on Medicaid institutional, home health and pharmaceutical expenditures. A fixed effects model is used to analyze Medicaid expenditures using variation in the size of HCBS waiver programs across states and over time. The results, robust across multiple specifications, show increases rather than decreases in total Medicaid spending as well as increases in the other Medicaid spending categories analyzed. This implies that there is no evidence of substitution from institutional care to the HCBS waiver program or that cost-shifting is occurring. In fact, the large magnitude of the estimated spending increases suggests the waivers may induce more people to enter the Medicaid program.
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At Pitney Bowes, Value-Based Insurance Design Cut Copayments And Increased Drug Adherence
Niteesh Choudhry et al.
Health Affairs, November 2010, Pages 1995-2001
Abstract:
To date, there has been little empirical evidence to support the broader use of value-based insurance design, which lowers copayments for services with high value relative to their costs. To address this lack of data, we evaluated the impact of the value-based insurance program of a US corporation, Pitney Bowes. The program eliminated copayments for cholesterol-lowering statins and reduced them for clopidogrel, a blood clot inhibitor. We found that the policy was associated with an immediate 2.8 percent increase in adherence to statins relative to controls, which was maintained for the subsequent year. For clopidogrel, the policy was associated with an immediate stabilizing of the adherence rate and a four-percentage-point difference between intervention and control subjects a year later. Our study thus provides an empirical basis for the use of this approach to improve the quality of health care.
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Disease Prevalence, Disease Incidence, and Mortality in the United States and in England
James Banks, Alastair Muriel & James Smith
Demography, Fall 2010, Pages S211-S231
Abstract:
We find that both disease incidence and disease prevalence are higher among Americans in age groups 55-64 and 70-80, indicating that Americans suffer from higher past cumulative disease risk and experience higher immediate risk of new disease onset compared with the English. In contrast, age-specific mortality rates are similar in the two countries, with an even higher risk among the English after age 65. We also examine reasons for the large financial gradients in mortality in the two countries. Among 55- to 64-year-olds, we estimate similar health gradients in income and wealth in both countries, but for 70- to 80-year-olds, we find no income gradient in the United Kingdom. Standard behavioral risk factors (work, marriage, obesity, exercise, and smoking) almost fully explain income gradients among those aged 55-64 in both countries and a significant part among Americans 70-80 years old. The most likely explanation of the absence of an English income gradient relates to the English income benefit system: below the median, retirement benefits are largely flat and independent of past income, and hence past health, during the working years. Finally, we report evidence using a long panel of American respondents that their subsequent mortality is not related to large changes in wealth experienced during the prior 10-year period.
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Embry Howell, Sandy Decker, Sara Hogan, Alshadye Yemane & Jonay Foster
American Journal of Public Health, December 2010, Pages 2500-2506
Objectives: We investigated trends in national childhood mortality, racial disparities in child mortality, and the effect of Medicaid and State Children's Health Insurance Program (SCHIP) eligibility expansions on child mortality.
Methods: We analyzed child mortality by state, race, and age using the National Center for Health Statistics' multiple cause of death files over 20 years, from 1985 to 2004.
Results: Child mortality continued to decline in the United States, but racial disparities in mortality remained. Declines in child mortality (ages 1-17 years) were substantial for both natural (disease-related) and external (injuries, homicide, and suicide) causes for children of all races/ethnicities, although Black-White mortality ratios remained unchanged during the study period. Expanded Medicaid and SCHIP eligibility was significantly related to the decline in external-cause mortality; the relationship between natural-cause mortality and Medicaid or SCHIP eligibility remains unclear. Eligibility expansions did not affect relative racial disparities in child mortality.
Conclusions: Although the study provides some evidence that public insurance expansions reduce child mortality, future research is needed on the effect of new health insurance on child health and on factors causing relative racial disparities.
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Timothy Brown, Erin Cruz & Stephen Brown
Health Economics, forthcoming
Abstract:
Studies show a relationship between oral inflammatory processes and cardiovascular risk factors, suggesting that dental care may reduce the risk of cardiovascular disease (CVD) events. However, due to the differences between men and women in the development and presentation of CVD, such effects may vary by sex. We use a valid set of instrumental variables to evaluate these issues and include a test of essential heterogeneity. CVD events include new occurrences of heart attack (including death from heart attack), stroke (including death from stroke), angina, and congestive heart failure. Controls include age, race, education, marital status, foreign birthplace, and cardiovascular risk factors (health status, body mass index, alcohol use, smoking status, diabetes status, high-blood-pressure status, physical activity, and depression). Our analysis finds no evidence of essential heterogeneity. We find the minimum average treatment effect for women to be -0.01, but find no treatment effect for men. This suggests that women who receive dental care may reduce their risk of future CVD events by at least one-third. The findings may only apply to married middle-aged and older individuals as the data set is only representative for this group.
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Douglas Peddicord, Ann Waldo, Marc Boutin, Tina Grande & Luis Gutierrez
Health Affairs, November 2010, Pages 2082-2090
Abstract:
Current laws, practices, and concerns about privacy inhibit access to health data for research. Barriers include inconsistent Institutional Review Board policies and complicated and costly procedures to obtain the consent of patients for release of their information. To realize the promise of comparative effectiveness research, it is essential to develop a new policy framework that will allow and encourage the use of health information in all forms-fully identifiable, partially anonymized, and deidentified. We propose that health data be made available for information-based research under a so-called research safe harbor. The arrangement would include strict data security controls, standards, and practices to be promulgated by the secretary of health and human services, and an annual third-party audit to ensure compliance.
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Soft Budget Constraints and Ownership: Empirical Evidence from US Hospitals
Karen Eggleston & Yu-Chu Shen
Economics Letters, January 2011, Pages 7-11
Abstract:
Consistent with the property rights theory of ownership incorporating soft budget constraints (SBCs), we find that controlling for SBCs, for-profit hospitals drop safety-net services more often and exhibit higher mortality rates, suggesting aggressive cost control that damages non-contractible quality.
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Elizabeth Wager, Rahul Mhaskar, Stephanie Warburton & Benjamin Djulbegovic
PLoS ONE, October 2010, e13591
Background: JAMA introduced a requirement for independent statistical analysis for industry-funded trials in July 2005. We wanted to see whether this policy affected the number of industry-funded trials published by JAMA.
Methods and Findings: We undertook a retrospective, before-and-after study of published papers. Two investigators independently extracted data from all issues of JAMA published between 1 July 2002 and 30 June 2008 (i.e., three years before and after the policy). They were not blinded to publication date. The randomized controlled trials (RCTs) were classified as industry funded (IF), joint industry/non-commercial funding (J), industry supported (IS) (when manufacturers provided materials only), non-commercial (N) or funding not stated (NS). Findings were compared and discrepancies resolved by discussion or further analysis of the reports. RCTs published in The Lancet and NEJM over the same period were used as a control group. Between July 2002 and July 2008, JAMA published 1,314 papers, of which 311 were RCTs. The number of industry studies (IF, J or IS) fell significantly after the policy (p = 0.02) especially for categories J and IS. However, over the same period, the number of industry studies rose in both The Lancet and NEJM.
Conclusions: After the requirement for independent statistical analysis for industry-funded studies, JAMA published significantly fewer RCTs and significantly fewer industry-funded RCTs. This pattern was not seen in the control journals. This suggests the JAMA policy affected the number of submissions, the acceptance rate, or both. Without analysing the submissions, we cannot check these hypotheses but, assuming the number of published papers is related to the number submitted, our findings suggest that JAMA's policy may have resulted in a significant reduction in the number of industry-sponsored trials it received and published.
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HMO Coverage Reduces Variations In The Use Of Health Care Among Patients Under Age Sixty-Five
Laurence Baker, Kate Bundorf & Daniel Kessler
Health Affairs, November 2010, Pages 2068-2074
Abstract:
Variation in the use of hospital and physician services among Medicare beneficiaries is well documented. However, less is known about the younger, commercially insured population. Using data from the Community Tracking Study to investigate this issue, we found significant variation in the use of both inpatient and outpatient services across twelve metropolitan areas. HMO insurance reduces, but does not eliminate, the extent of this variation. Our results suggest that health plan spending to better organize delivery systems and manage care may be efficient, and regulations that arbitrarily cap plans' spending on administration, such as minimum medical loss ratios, could undermine efforts to achieve better value in health care.
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Explaining the efficiency of local health departments in the U.S.: An exploratory analysis
Kankana Mukherjee, Rexford Santerre & Ning Jackie Zhang
Health Care Management Science, December 2010, Pages 378-387
Abstract:
No study to date has analyzed the efficiency at which local health departments (LHDs) produce public health services. As a result, this study employs data envelopment analysis (DEA) to explore the relative technical efficiency of LHDs operating in the United States using 2005 data. The DEA indicates that the typical LHD operates with about 28% inefficiency although inefficiency runs as high as 69% for some LHDs. Multiple regression analysis reveals that more centralized and urban LHDs are less efficient at producing local public health services. The findings also suggest that efficiency is higher for LHDs that produce a greater variety of services internally and rely more on internal funding. However, because this is the first study of LHD efficiency and some shortcomings exist with the available data, we are reluctant to draw strong policy conclusions from the analysis.
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Early Entrant Protection in Approval Regulation: Theory and Evidence from FDA Drug Review
Daniel Carpenter et al.
Journal of Law, Economics, & Organization, December 2010, Pages 515-545
Abstract:
Early entrant protection in approval regulation exists when the first incumbents in an exclusive market niche receive more favorable regulatory treatment than later entrants. We show that this pattern can prevail for two reasons: regulatory capture and consumer co-optation. We consider a decision-theoretic model of dynamic product approval by an uncertain regulator. The model predicts early entrant protection even when later entrants offer quality improvements over market incumbents. We then test the model using duration analyses of New Drug Application approval times for 1080 new molecular entities submitted to the US Food and Drug Administration (FDA) from 1950 to 2006 and later approved. FDA approval times are shown to be increasing in order of market entry for the entire period studied and across numerous subsamples. A standard deviation rise in the log of order of entry is associated with a 3.6-month increase in expected FDA approval time. The entry-order gradient appears to be heavily influenced by disease-level variables but not by firm-level effects, supporting a consumer co-optation explanation and disfavoring capture and producer rent-seeking accounts. The gradient appears heightened by the 1962 Kefauver-Harris Amendments but unaffected by the 1992 Prescription Drug User Fee Act; the influence of some disease-level factors upon the gradient may have been reduced by the 1992 statute.
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Copayment Reductions Generate Greater Medication Adherence In Targeted Patients
Matthew Maciejewski, Joel Farley, John Parker & Daryl Wansink
Health Affairs, November 2010, Pages 2002-2008
Abstract:
A large value-based insurance design program offered by Blue Cross Blue Shield of North Carolina eliminated generic medication copayments and reduced copayments for brand-name medications. Our study showed that the program improved adherence to medications for diabetes, hypertension, hyperlipidemia, and congestive heart failure. We found that adherence improved for enrollees, ranging from a gain of 3.8 percentage points for patients with diabetes to 1.5 percentage points for those taking calcium-channel blockers, when compared to others whose employers did not offer a similar program. An examination of longer-term adherence and trends in health care spending is still needed to provide a compelling evidence base for value-based insurance design.