Reform, Repeal, or Death
Assessing Health Reform's Impact On Four Key Groups Of Americans
Joseph Newhouse
Health Affairs, September 2010, Pages 1714-1724
Abstract:
Health reform can be assessed from the perspective of four groups that collectively include most Americans. For those who are now in Medicaid or who are uninsured, reform will be a major gain. For those who obtain health insurance in the individual and small-group markets, reform should bring improvements. For those who have health insurance from midsize- and large-group insurers, reform will bring little change. Finally, for Medicare beneficiaries, reform promises to bring positive change. However, financing future health spending overall, and Medicare spending in particular, poses a formidable challenge. Although not a panacea, all-payer rate setting, in which a federal or state agency establishes standard payment rates for each class of payer, may be the only feasible alternative, at least in the short run.
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Hospital prices and market structure in the hospital and insurance industries
Asako Moriya, William Vogt & Martin Gaynor
Health Economics, Policy and Law, October 2010, Pages 459-479
Abstract:
There has been substantial consolidation among health insurers and hospitals, recently, raising questions about the effects of this consolidation on the exercise of market power. We analyze the relationship between insurer and hospital market concentration and the prices of hospital services. We use a national US dataset containing transaction prices for health care services for over 11 million privately insured Americans. Using three years of panel data, we estimate how insurer and hospital market concentration are related to hospital prices, while controlling for unobserved market effects. We find that increases in insurance market concentration are significantly associated with decreases in hospital prices, whereas increases in hospital concentration are non-significantly associated with increases in prices. A hypothetical merger between two of five equally sized insurers is estimated to decrease hospital prices by 6.7%.
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Geographic Variation in Health Care: The Role of Private Markets
Tomas Philipson, Seth Seabury, Lee Lockwood, Dana Goldman & Darius Lakdawalla
Brookings Papers on Economic Activity, Spring 2010, Pages 325-355
Abstract:
The Dartmouth Atlas of Health Care has documented substantial regional variation in health care utilization and spending, beyond what would be expected from such observable factors as demographics and disease severity. However, since these data are specific to Medicare, it is unclear to what extent this finding generalizes to the private sector. Economic theory suggests that private insurers have stronger incentives to restrain utilization and costs, while public insurers have greater monopsony power to restrain prices. We argue that these two differences alone should lead to greater regional variation in utilization for the public sector, but either more or less variation in spending. We provide evidence that variation in utilization in the public sector is about 2.8 times as great for outpatient visits (p < 0.01) and 3.9 times as great for hospital days (p = 0.09) as in the private sector. Variation in spending appears to be greater in the private sector, consistent with the importance of public sector price restraints.
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Copayments Did Not Reduce Medicaid Enrollees' Nonemergency Use Of Emergency Departments
Karoline Mortensen
Health Affairs, September 2010, Pages 1643-1650
Abstract:
Eager to reduce unnecessary use of hospital emergency departments by Medicaid enrollees, states are increasingly implementing cost sharing for nonemergency visits. This paper uses monthly data from the 2001-2006 Medical Expenditure Panel Surveys (MEPS) to examine how changes in nine states' copayment policies influence enrollees' use of emergency departments. The results suggest that requiring copayments for nonemergency visits did not decrease emergency department use by Medicaid enrollees. Future research should examine more closely the effects at the state level and investigate whether these copayments affected the use of other services, such as hospitalizations or visits to physicians by Medicaid enrollees.
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Mulling over Massachusetts: Health Insurance Mandates and Entrepreneurs
Scott Jackson
Entrepreneurship Theory and Practice, September 2010, Pages 909-931
Abstract:
The author provides preliminary and provocative results regarding the impact of health insurance mandates on the propensity of entrepreneurs to start new organizations. In keeping with a well-observed propensity for individuals to adjust their economic calculations in anticipation of future costs/benefits, the evidence suggests that when confronted with such mandates, potential entrepreneurs may either abandon entrepreneurial ambitions or seek to minimize mandate costs through jurisdictional arbitrage with appreciable implications for state and national level approaches to health care, health insurance provision, and workers.
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Jacob Hacker
Perspectives on Politics, September 2010, Pages 861-876
Abstract:
Why did comprehensive health care reform pass in 2010? Why did it take the form it did-a form that, while undeniably ambitious, was also more limited than many advocates wanted, than health policy precedents set abroad, and than the scale of the problems it tackled? And why was this legislation, despite its limits, the subject of such vigorous and sometimes vicious attacks? These are the questions I tackle in this essay, drawing not just on recent scholarship on American politics but also on the somewhat-improbable experience that I had as an active participant in this fierce and polarized debate. My conclusions have implications not only for how political scientists should understand what happened in 2009-10, but also for how they should understand American politics. In particular, the central puzzles raised by the health reform debate suggest why students of American politics should give public policy-what government does to shape people's lives-a more central place within their investigations. Political scientists often characterize politics as a game among undifferentiated competitors, played out largely through campaigns and elections, with policy treated mostly as an afterthought-at best, as a means of testing theories of electoral influence and legislative politics. The health care debate makes transparent the weaknesses of this approach. On a range of key matters at the core of the discipline-the role and influence of interest groups; the nature of partisan policy competition; the sources of elite polarization; the relationship between voters, activists, and elected officials; and more-the substance of public policy makes a big difference. Focusing on what government actually does has normative benefits, serving as a useful corrective to the tendency of political science to veer into discussions of matters deemed trivial by most of the world outside the academy. But more important, it has major analytical payoffs-and not merely for our understanding of the great health care debate of 2009-10.
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National Costs Of The Medical Liability System
Michelle Mello, Amitabh Chandra, Atul Gawande & David Studdert
Health Affairs, September 2010, Pages 1569-1577
Abstract:
Concerns about reducing the rate of growth of health expenditures have reignited interest in medical liability reforms and their potential to save money by reducing the practice of defensive medicine. It is not easy to estimate the costs of the medical liability system, however. This article identifies the various components of liability system costs, generates national estimates for each component, and discusses the level of evidence available to support the estimates. Overall annual medical liability system costs, including defensive medicine, are estimated to be $55.6 billion in 2008 dollars, or 2.4 percent of total health care spending.
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Physicians' Fears Of Malpractice Lawsuits Are Not Assuaged By Tort Reforms
Emily Carrier, James Reschovsky, Michelle Mello, Ralph Mayrell & David Katz
Health Affairs, September 2010, Pages 1585-1592
Abstract:
Physicians contend that the threat of malpractice lawsuits forces them to practice defensive medicine, which in turn raises the cost of health care. This argument underlies efforts to change malpractice laws through legislative tort reform. We evaluated physicians' perceptions about malpractice claims in states where more objective indicators of malpractice risk, such as malpractice premiums, varied considerably. We found high levels of malpractice concern among both generalists and specialists in states where objective measures of malpractice risk were low. We also found relatively modest differences in physicians' concerns across states with and without common tort reforms. These results suggest that many policies aimed at controlling malpractice costs may have a limited effect on physicians' malpractice concerns.
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Low Costs Of Defensive Medicine, Small Savings From Tort Reform
William Thomas, Erika Ziller & Deborah Thayer
Health Affairs, September 2010, Pages 1578-1584
Abstract:
In this paper we present the costs of defensive medicine in thirty-five clinical specialties to determine whether malpractice liability reforms would greatly reduce health care costs. Defensive medicine includes tests and procedures ordered by physicians principally to reduce perceived threats of medical malpractice liability. The practice is commonly assumed to increase health care costs. The results of studies of the costs of defensive medicine have been inconsistent. We found that estimated savings resulting from a 10 percent decline in medical malpractice premiums would be less than 1 percent of total medical care costs in every specialty. These savings are lower than most previous estimates, and they suggest that the presumed impact of tort reform on health care costs may be overstated.
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The Flaws In State ‘Apology' And ‘Disclosure' Laws Dilute Their Intended Impact On Malpractice Suits
Anna Mastroianni, Michelle Mello, Shannon Sommer, Mary Hardy & Thomas Gallagher
Health Affairs, September 2010, Pages 1611-1619
Abstract:
Apologies are rare in the medical world, where health care providers fear that admissions of guilt or expressions of regret could be used by plaintiffs in malpractice lawsuits. Nevertheless, some states are moving toward giving health care providers legal protection so that they feel free to apologize to patients for a medical mistake. Advocates believe that these laws are beneficial for patients and providers. However, our analysis of "apology" and "disclosure" laws in thirty-four states and the District of Columbia finds that most of the laws have major shortcomings. These may actually discourage comprehensive disclosures and apologies and weaken the laws' impact on malpractice suits. Many could be resolved by improved statutory design and communication of new legal requirements and protections.
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The Unexpected Effects of Caps on Non-Economic Damages
Ronen Avraham & Álvaro Bustos
International Review of Law and Economics, forthcoming
Abstract:
This paper focuses on the economic and legal implications of the enactment of caps on noneconomic damages on conflicting parties who know that state supreme courts may strike down the caps as unconstitutional within a few years of enactment. We develop a simple screening model where parties have symmetric expectations regarding the probability of a strike down and asymmetric information regarding plaintiff‘s non-economic harm. Our model makes the following predictions: First, caps may increase the length required to resolve disputes if the caps are low enough or the probability of a strike down is large enough. Second, although caps always increase the percentage of disputes that are settled out of courts, they do not necessarily save litigation expenses. Third, when caps increase the length of dispute resolution, they also increase litigation expenses if and only if the settlement negotiation costs are small enough. Fourth, while caps always reduce the recoveries of plaintiffs with large claims, caps may increase recoveries of plaintiffs with low claims compared to their recoveries in states with no caps. We end by discussing the robustness of the results.
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Retiree Health Insurance and Disengagement from a Career Job
Christina Robinson & Robert Clark
Journal of Labor Research, September 2010, Pages 247-262
Abstract:
Over the past two decades the prevalence of partial/phased retirements has increased dramatically, redefining retirement and the way in which retirement benefits are evaluated. Specifically the effect of retirement benefits on the transition away from a state of career employment has become the primary issue of interest. This study uses data obtained from the Health and Retirement Study (HRS) and the Rand HRS files, to examine the relationship between access to retiree health insurance (RHI) and the decision to leave one's career job. We employ a Cox Proportional Hazard Model to estimate how RHI affects the probability that an individual disengages from their career job, given they have not yet done so. Results indicate that those with access to RHI are 21% more likely to leave their career employer in all time periods than similar individuals without RHI. Several robustness tests including stratified estimation and propensity score matching are performed and no evidence of bias is detected.
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Thomas Rice, Yaniv Hanoch & Janet Cummings
Health Economics, Policy and Law, October 2010, Pages 437-457
Abstract:
Questions about the design of the new US Medicare prescription drug benefit were raised even before its passage, where one of the most heated issues has been the number of plans offered to beneficiaries. Whether beneficiaries believe that there should be extensive or limited choice is still an open question. To study this issue, we analyzed data from the Kaiser Family Foundation/Harvard School of Public Health Survey, which included 718 individuals aged 65 years and above. The survey asked these older adults (i) whether they prefer having dozens of plans or for Medicare to offer a restricted number of plans and (ii) whether they think there are too many, too few or the right amount of plans. Our findings show that the majority of beneficiaries (69%) preferred that Medicare offer a limited number of options while only 29% wanted to see dozens of plans on the market. We also examine the effect of education level, income, political affiliation, race and health status on the desire for more or fewer plans. One surprising finding is that seniors with higher education appear to prefer fewer, not more, plan choices. Overall, our results question the merit of offering so many prescription drugs plan choices to Medicare beneficiaries.
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Public Reporting Drove Quality Gains At Nursing Homes
Rachel Werner, Elizabeth Stuart & Daniel Polsky
Health Affairs, September 2010, Pages 1706-1713
Abstract:
Public reporting of the quality of care delivered in hospitals and nursing homes is thought to foster improvements in care. When information is available, consumers may choose high-quality providers. That choice, in turn, may stimulate providers to improve quality as a way to attract a larger share of the market. However, these assumptions have gone largely untested. We examined short-stay care provided at 8,137 nursing homes after the Nursing Home Compare public reporting requirements went into effect in 2002. We found that quality improved both because consumers chose higher-quality nursing homes and because providers improved the care they delivered. These findings support the continued use of public reporting to improve quality.
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Do Randomized Controlled Trials Discuss Healthcare Costs?
Michael Allan, Christina Korownyk, Kate LaSalle, Ben Vandermeer, Victoria Ma, Douglas Klein & Donna Manca
PLoS ONE, August 2010, e12318
Background: Healthcare costs, particularly pharmaceutical costs, are a dominant issue for most healthcare organizations, but it is unclear if randomized controlled trials (RCTs) routinely discuss costs. Our objective was to assess the frequency and factors associated with the inclusion of costs in RCTs.
Methods and Findings: We randomly sampled 188 RCTs spanning three years (2003-2005) from six high impact journals. The sample size for RCTs was based on a calculation to estimate the inclusion of actual drug costs with a precision of +/-3%. Two reviewers independently extracted cost data and study characteristics. Frequencies were calculated and potential characteristics associated with the inclusion of costs were explored. Actual drug costs were included in 4.7% (9/188) of RCTs; any actual costs were included in 7.4% (14/188) of RCTs; and any mention of costs was included in 27.7% (52/188) of RCTs. As the amount of industry funding increased across RCTs, from non-profit to mixed to fully industry funded RCTs, there was a statistically significant reduction in the number of RCTs with any actual costs (Cochran-Armitage test, p = 0.005) and any mention of costs (Cochran-Armitage test, p = 0.02). Logistic regression analysis also indicated funding was associated with the inclusion of any actual cost (OR = 0.34, p = 0.009) or any mention of costs (OR = 0.63, p = 0.02). Journal, study conclusions, study location, primary author's country and product age were not associated with inclusion of cost information.
Conclusion: While physicians are encouraged to consider costs when prescribing drugs for their patients, actual drug costs were provided in only 5% of RCTs and were not mentioned at all in 72% of RCTs. Industry funded trials were less likely to include cost information. No other factors were associated with the inclusion of cost information.
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Annisa Lai Lee
Journal of Health Communication, September 2010, Pages 629-655
Abstract:
A popular perception holds that physicians prescribe requested drugs to patients influenced by mass mediated direct-to-consumer prescription drug advertising. The phenomenon poses a serious challenge to the two-step flow model, which emphasizes the influence of opinion leaders on their followers and their legitimating power over the informing power of the mass media. This study investigates a 2002 Food and Drug Administration (FDA) survey and finds that patients searching for drug information through mass and hybrid media in newspapers and magazines' small print, the Internet, and toll-free numbers are more likely to seek information through interpersonal communication channels like health care providers. Patients using small print, toll-free numbers, one's own physician, and other physicians are associated with influencing their physicians with various drug-requesting behaviors. But physicians only prescribe requested drugs to patients who are influenced by other health care providers, such as pharmacists and other physicians, not the mass media. The influence of expert opinion leaders of drugs is so strong that the patients even would switch from their own unyielding physicians who do not prescribe drugs as advised by the pharmacists. Physicians and patients all are influenced more by other expert opinion leaders of drugs than by the mass media and therefore still uphold the basic tenet of the two-step model.