Premium Care
The Importance of the Meaning and Measurement of "Affordable" in the Affordable Care Act
Richard Burkhauser, Sean Lyons & Kosali Simon
NBER Working Paper, August 2011
Abstract:
This working paper highlights the practical importance of two critical but under-explored assumptions behind existing estimates of the Affordable Care Act (ACA)'s potential impact on the mix of employees and families who may have employer-sponsored health insurance (ESI) in the future or may receive subsidies in the new health insurance exchanges. The first assumption is whether ACA's affordable coverage rule will be interpreted to mean that employers must provide affordable single coverage or that they must provide affordable family coverage policies to workers with families to avoid paying a fine. The second assumption is how much employers and employees will cooperatively agree in the future to designing new compensation contracts to take advantage of the way "affordability" is determined. We show that depending on these assumptions, the ACA could lead to far more lower to moderate income families gaining access to affordable coverage through exchanges or, conversely, to far fewer of these families being covered by ESI, even if no employers drop their health insurance plans as a result of the new law. Using our stylized models, we find at one extreme that the share of private sector workers covered by ESI would fall by as much as 12.7 percentage points, relative to a case of full compliance with the law, if the ACA affordability coverage rule is interpreted to apply to family coverage and employees directly pay 100 percent of the cost of the ESI in premiums, with compensating higher wages making them no worse off. At the other extreme, we find no changes in the share of private sector workers covered by ESI along this margin if employee contribution shares do not change in the future and affordability is interpreted to refer to single coverage. What constitutes a realistic point between these two extremes depends on exactly how the affordability coverage rule will be interpreted and the degree that employers and employees will actually be able to make these adjustments because of labor market rigidities. This working paper's contribution is to point out the importance of these hitherto unexplored factors for future consideration in research that uses more sophisticated micro simulation models. In our stylized model, most of the effect of the movement onto the subsidized exchanges occurs when employees directly pay less than 50 percent of the ESI family premium. We conclude by discussing the limitations of stylized calculations relative to full simulation models, and directions for future research.
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Malpractice Risk According to Physician Specialty
Anupam Jena et al.
New England Journal of Medicine, 18 August 2011, Pages 629-636
Background: Data are lacking on the proportion of physicians who face malpractice claims in a year, the size of those claims, and the cumulative career malpractice risk according to specialty.
Methods: We analyzed malpractice data from 1991 through 2005 for all physicians who were covered by a large professional liability insurer with a nationwide client base (40,916 physicians and 233,738 physician-years of coverage). For 25 specialties, we reported the proportion of physicians who had malpractice claims in a year, the proportion of claims leading to an indemnity payment (compensation paid to a plaintiff), and the size of indemnity payments. We estimated the cumulative risk of ever being sued among physicians in high- and low-risk specialties.
Results: Each year during the study period, 7.4% of all physicians had a malpractice claim, with 1.6% having a claim leading to a payment (i.e., 78% of all claims did not result in payments to claimants). The proportion of physicians facing a claim each year ranged from 19.1% in neurosurgery, 18.9% in thoracic-cardiovascular surgery, and 15.3% in general surgery to 5.2% in family medicine, 3.1% in pediatrics, and 2.6% in psychiatry. The mean indemnity payment was $274,887, and the median was $111,749. Mean payments ranged from $117,832 for dermatology to $520,923 for pediatrics. It was estimated that by the age of 65 years, 75% of physicians in low-risk specialties had faced a malpractice claim, as compared with 99% of physicians in high-risk specialties.
Conclusions: There is substantial variation in the likelihood of malpractice suits and the size of indemnity payments across specialties. The cumulative risk of facing a malpractice claim is high in all specialties, although most claims do not lead to payments to plaintiffs.
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Dante Morra et al.
Health Affairs, August 2011, Pages 1443-1450
Abstract:
Physician practices, especially the small practices with just one or two physicians that are common in the United States, incur substantial costs in time and labor interacting with multiple insurance plans about claims, coverage, and billing for patient care and prescription drugs. We surveyed physicians and administrators in the province of Ontario, Canada, about time spent interacting with payers and compared the results with a national companion survey in the United States. We estimated physician practices in Ontario spent $22,205 per physician per year interacting with Canada's single-payer agency-just 27 percent of the $82,975 per physician per year spent in the United States. US nursing staff, including medical assistants, spent 20.6 hours per physician per week interacting with health plans-nearly ten times that of their Ontario counterparts. If US physicians had administrative costs similar to those of Ontario physicians, the total savings would be approximately $27.6 billion per year. The results support the opinion shared by many US health care leaders interviewed for this study that interactions between physician practices and health plans could be performed much more efficiently.
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Unhealthy Insurance Markets: Search Frictions and the Cost and Quality of Health Insurance
Randall Cebul et al.
American Economic Review, August 2011, Pages 1842-1871
Abstract:
We analyze the effect of search frictions in the market for commercial health insurance. Frictions increase insurance premiums (enough to transfer 13.2 percent of consumer surplus from fully insured employer groups to insurers-approximately $34.4 billion in 1997); and increase insurance turnover (by 64 percent for the average policy). This rent transfer harms consumers and-when combined with heightened turnover-reduces incentives to invest in future health. We also find that a publicly financed insurance option can improve the efficiency of private insurance markets by reducing search friction induced distortions in pricing and marketing efforts.
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Does Hospital Competition Save Lives? Evidence From The English NHS Patient Choice Reforms
Zack Cooper et al.
Economic Journal, August 2011, Pages F228-F260
Abstract:
Recent substantive reforms to the English National Health Service expanded patient choice and encouraged hospitals to compete within a market with fixed prices. This study investigates whether these reforms led to improvements in hospital quality. We use a difference-in-difference-style estimator to test whether hospital quality (measured using mortality from acute myocardial infarction) improved more quickly in more competitive markets after these reforms came into force in 2006. We find that after the reforms were implemented, mortality fell (i.e. quality improved) for patients living in more competitive markets. Our results suggest that hospital competition can lead to improvements in hospital quality.
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Anticipatory ex ante moral hazard and the effect of Medicare on prevention
Laure de Preux
Health Economics, September 2011, Pages 1056-1072
Abstract:
This paper extends the ex ante moral hazard model to allow healthy lifestyles to reduce the probability of illness in future periods, so that current preventive behaviour may be affected by anticipated changes in future insurance coverage. In the United States, Medicare is offered to almost all the population at the age of 65. We use nine waves of the US Health and Retirement Study to compare lifestyles before and after 65 of those insured and not insured pre 65. The double-robust approach, which combines propensity score and regression, is used to compare trends in lifestyle (physical activity, smoking, drinking) of the two groups before and after receiving Medicare, using both difference-in-differences and difference-in-differences-in-differences. There is no clear effect of the receipt of Medicare or its anticipation on alcohol consumption nor smoking behaviour, but the previously uninsured do reduce physical activity just before receiving Medicare.
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Mark Duggan & Tamara Hayford
NBER Working Paper, July 2011
Abstract:
From 1991 to 2003, the fraction of Medicaid recipients enrolled in HMOs and other forms of Medicaid managed care (MMC) increased from 11 percent to 58 percent. This increase was largely driven by state and local mandates that required most Medicaid recipients to enroll in an MMC plan. Theoretically, it is ambiguous whether the shift from fee-for-service into managed care would lead to an increase or a reduction in Medicaid spending. This paper investigates this effect using a data set on state and local level MMC mandates and detailed data from CMS on state Medicaid expenditures. The findings suggest that shifting Medicaid recipients from fee-for-service into MMC did not reduce Medicaid spending in the typical state. However, the effects of the shift varied significantly across states as a function of the generosity of the state's baseline Medicaid provider reimbursement rates. These results are consistent with recent research on managed care among the privately insured, which finds that HMOs and other forms of managed care achieve their savings largely through reduced prices rather than lower quantities.
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Does Pay for Performance Improve Cardiovascular Care in a "Real-World" Setting?
Judy Ying Chen et al.
American Journal of Medical Quality, September/October 2011, Pages 340-348
Abstract:
The objective was to investigate the impact of a pay-for-performance program (P4P) on quality care and outcomes among cardiovascular disease (CVD) patients. Claims data were used to identify CVD patients in a commercial plan in 1999-2006. Multivariate analyses were employed to examine the impact of P4P on quality care (lipid monitoring and treatment) and quality care on outcomes (new coronary events, hospitalizations, and lipid control). Patients who were treated by physicians participating in P4P were more likely to receive quality care than patients who were not. Patients who received quality care were less likely to have new coronary events (odds ratio [OR] = 0.80; 95% confidence interval [CI] = 0.69-0.92), be hospitalized (OR = 0.76; 95% CI = 0.69-0.83), or have uncontrolled lipids (OR = 0.67; 95% CI = 0.61-0.73) than patients who did not. A P4P program was associated with increased lipid monitoring and treatment. Receipt of this quality care was associated with improved lipid control and reduced likelihood of new coronary events and hospitalizations.
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Massachusetts' Health Care Reform Increased Access To Care For Hispanics, But Disparities Remain
James Maxwell et al.
Health Affairs, August 2011, Pages 1451-1460
Abstract:
Hispanics are more likely than any other racial or ethnic group in the United States to lack health insurance. This paper draws on quantitative and qualitative research to evaluate the extent to which health reforms in Massachusetts, a model for the Affordable Care Act of 2010, have reduced disparities in insurance coverage and access to health care. We found that rates of coverage and the likelihood of having a usual provider increased dramatically for Massachusetts Hispanics after the state's reforms, but disparities remained. The increase in insurance coverage among Hispanics was more than double that experienced by non-Hispanic whites. Even so, in 2009, 78.9 percent of Hispanics had coverage, versus 96 percent of non-Hispanic whites. Language and other cultural factors remained significant barriers: Only 66.6 percent of Hispanics with limited proficiency in English were insured. One-third of Spanish-speaking Hispanics still did not have a personal provider in 2009, and 26.8 percent reported not seeing a doctor because of cost, up from 18.9 percent in 2005. We suggest ways to reduce such disparities through national health care reform, including simplified enrollment and reenrollment processes and assistance in finding a provider and navigating an unfamiliar care system.
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The Impact of Medicaid Insurance Coverage on Dental Service Use
Moonkyung Kate Choi
Journal of Health Economics, forthcoming
Abstract:
The new comprehensive health reform, beginning in 2014, will require Medicaid to expand all elements of coverage to individuals with incomes up to 133 percent of the federal poverty line. With millions more individuals gaining eligibility for adult Medicaid dental benefits, generating an unbiased estimate of the elasticity of demand for dental services is critical. The causal relationship between access to adult Medicaid dental benefits and usage of dental services for low-income adults is estimated, using difference-in-differences estimation procedures to exploit the state-level variation in adult Medicaid dental benefits. Results suggest that adult Medicaid dental benefits increase the probability of a dental visit within 12 months by 16.4 to 22 percent. A variety of robustness checks are invoked to confirm the finding.