To cover, or not to cover
Considering Whether Medicaid Is Worth the Cost: Revisiting the Oregon Health Study
Peter Muennig et al.
American Journal of Public Health, May 2015, Pages 866-871
Abstract:
The Oregon Health Study was a groundbreaking experiment in which uninsured participants were randomized to either apply for Medicaid or stay with their current care. The study showed that Medicaid produced numerous important socioeconomic and health benefits but had no statistically significant impact on hypertension, hypercholesterolemia, or diabetes. Medicaid opponents interpreted the findings to mean that Medicaid is not a worthwhile investment. Medicaid proponents viewed the experiment as statistically underpowered and, irrespective of the laboratory values, suggestive that Medicaid is a good investment. We tested these competing claims and, using a sensitive joint test and statistical power analysis, confirmed that the Oregon Health Study did not improve laboratory values. However, we also found that Medicaid is a good value, with a cost of just $62 000 per quality-adjusted life-years gained.
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Julie Hudson, Steven Hill & Thomas Selden
Health Affairs, May 2015, Pages 864-870
Abstract:
In spring 2015 Congress passed legislation to extend funding for the Children’s Health Insurance Program (CHIP) through the end of fiscal year 2017. This two-year extension pushes to 2017 the question of whether CHIP funding will end, allowing states to end their separate state CHIP programs. Also, when the Affordable Care Act’s maintenance-of-effort requirements expire after 2019, states will be allowed to roll back Medicaid- and CHIP-eligibility thresholds to minimum levels allowed by federal law. This study investigated the potential health insurance options available to low-income children if these events happen. If all states roll back coverage to federal statutory minimums, then, among children in families with incomes up to 400 percent of the federal poverty guidelines, the share ineligible for public coverage or subsidized Marketplace coverage would increase from 22 percent in 2014 (12.5 million children) to 46 percent after 2019 (26.5 million children). While not all states are likely to reduce eligibility to federal statutory minimums, these estimates highlight the fact that many children who do lose public eligibility will not become eligible for subsidized Marketplace coverage.
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Erin Trish & Bradley Herring
Journal of Health Economics, July 2015, Pages 104–114
Abstract:
The US health insurance industry is highly concentrated, and health insurance premiums are high and rising rapidly. Policymakers have focused on the possible link between the two, leading to ACA provisions to increase insurer competition. However, while market power may enable insurers to include higher profit margins in their premiums, it may also result in stronger bargaining leverage with hospitals to negotiate lower payment rates to partially offset these higher premiums. We empirically examine the relationship between employer-sponsored fully-insured health insurance premiums and the level of concentration in local insurer and hospital markets using the nationally-representative 2006-2011 KFF/HRET Employer Health Benefits Survey. We exploit a unique feature of employer-sponsored insurance, in which self-insured employers purchase only administrative services from managed care organizations, to disentangle these different effects on insurer concentration by constructing one concentration measure representing fully-insured plans’ transactions with employers and the other concentration measure representing insurers’ bargaining with hospitals. As expected, we find that premiums are indeed higher for plans sold in markets with higher levels of concentration relevant to insurer transactions with employers, lower for plans in markets with higher levels of insurer concentration relevant to insurer bargaining with hospitals, and higher for plans in markets with higher levels of hospital market concentration.
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Simon Haeder, David Weimer & Dana Mukamel
Health Affairs, May 2015, Pages 741-748
Abstract:
Do insurance plans offered through the Marketplace implemented by the State of California under the Affordable Care Act restrict consumers’ access to hospitals relative to plans offered on the commercial market? And are the hospitals included in Marketplace networks of lower quality compared to those included in the commercial plans? To answer these questions, we analyzed differences in hospital networks across similar plan types offered both in the Marketplace and commercially, by region and insurer. We found that the common belief that Marketplace plans have narrower networks than their commercial counterparts appears empirically valid. However, there does not appear to be a substantive difference in geographic access as measured by the percentage of people residing in at least one hospital market area. More surprisingly, depending on the measure of hospital quality employed, the Marketplace plans have networks with comparable or even higher average quality than the networks of their commercial counterparts.
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David Nyweide et al.
Journal of the American Medical Association, forthcoming
Importance: The Pioneer Accountable Care Organization (ACO) Model aims to drive health care organizations to reduce expenditures while improving quality for fee-for-service (FFS) Medicare beneficiaries.
Objective: To determine whether FFS beneficiaries aligned with Pioneer ACOs had smaller increases in spending and utilization than other FFS beneficiaries while retaining similar levels of care satisfaction in the first 2 years of the Pioneer ACO Model.
Design, Setting, and Participants: Participants were FFS Medicare beneficiaries aligned with 32 ACOs (n = 675 712 in 2012; n = 806 258 in 2013) and a comparison group of alignment-eligible beneficiaries in the same markets (n = 13 203 694 in 2012; n = 12 134 154 in 2013). Analyses comprised difference-in-differences multivariable regression with Oaxaca-Blinder reweighting to model expenditure and utilization outcomes over a 2-year performance period (2012-2013) and 2-year baseline period (2010-2011) as well as adjusted analyses of Consumer Assessment of Healthcare Providers & Systems (CAHPS) survey responses among random samples of beneficiaries in Pioneer ACOs (n = 13 097), FFS (n = 116 255), or Medicare Advantage (n = 203 736) for 2012 care.
Results: Total spending for beneficiaries aligned with Pioneer ACOs in 2012 or 2013 increased from baseline to a lesser degree relative to comparison populations. Differential changes in spending were approximately −$35.62 (95% CI, −$40.12 to −$31.12) per-beneficiary-per-month (PBPM) in 2012 and -$11.18 (95% CI, −$15.84 to −$6.51) PBPM in 2013, which amounted to aggregate reductions in increases of approximately −$280 (95% CI, −$315 to −$244) million in 2012 and −$105 (95% CI, −$148 to −$61) million in 2013. Inpatient spending showed the largest differential change of any spending category (−$14.40 [95% CI, −$17.31 to −$11.49] PBPM in 2012; −$6.46 [95% CI, −$9.26 to −$3.66] PBPM in 2013). Changes in utilization of physician services, emergency department, and postacute care followed a similar pattern. Compared with other Medicare beneficiaries, ACO-aligned beneficiaries reported higher mean scores for timely care (77.2 [ACO] vs 71.2 [FFS] vs 72.7 [MA]) and for clinician communication (91.9 [ACO] vs 88.3 [FFS] vs 88.7 [MA]).
Conclusions and Relevance: In the first 2 years of the Pioneer ACO Model, beneficiaries aligned with Pioneer ACOs, as compared with general Medicare FFS beneficiaries, exhibited smaller increases in total Medicare expenditures and differential reductions in utilization of different health services, with little difference in patient experience.
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Brendan Saloner et al.
Health Affairs, May 2015, Pages 773-780
Abstract:
Provisions of the Affordable Care Act (ACA) allow millions more Americans to obtain health insurance. However, a sizable number of people remain uninsured because they live in states that have not expanded Medicaid coverage or because they feel that Marketplace coverage is not affordable. Using data from a ten-state telephone survey in which callers posed as patients, we examined prices for primary care visits offered by physician offices to new uninsured patients in 2012–13, prior to ACA insurance expansions. Patients were quoted a mean price of $160. Significantly lower prices for the uninsured were offered by family practice offices compared to general internists, in offices participating in Medicaid managed care plans, and in federally qualified health centers. Prices were also lower for offices in ZIP codes with higher poverty rates. Only 18 percent of uninsured callers were told that they could bring less than the full amount to the visit and arrange to pay the rest later. ACA insurance expansions could greatly decrease out-of-pocket spending for low-income adults seeking primary care. However, benefits of health reform are likely to be greater in states expanding Medicaid eligibility.
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Conflicts of Interest in Medical Technology Markets: Evidence from Orthopedic Surgery
Fabrice Smieliauskas
Health Economics, forthcoming
Abstract:
Financial relationships between physicians and industry are vital to biomedical innovation yet create the potential for conflicts of interest in medical practice. I consider an inducement model of the role of financial relationships in health care markets, where consulting payments induce physicians to use more devices of the firms that sponsor them. To test the model, I exploit a policy shock, whereby government monitoring of payments to joint replacement surgeons resulted in declines of over 60% in both total payments and in the number of physicians receiving payments from 2007 to 2008. Using hospital discharge data from three states, I find that the loss of payments leads physicians to switch 7 percentage points of their device utilization from their sponsoring firms' devices to other firms' devices, an effect which is concentrated among surgeons with low switching costs. These results offer support for the inducement model. I also find evidence of an increase in medical productivity following the policy intervention, which suggests conditions under which regulation of financial relationships would be socially beneficial.
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Darius Lakdawalla et al.
Health Affairs, April 2015, Pages 555-561
Abstract:
Technology drives both health care spending and health improvement. Yet policy makers rarely see measures of cost growth that account for both effects. To fill this gap, we present the quality-adjusted cost of care, which illustrates cost growth net of growth in the value of health improvements, measured as survival gains multiplied by the value of survival. We applied the quality-adjusted cost of care to two cases. For colorectal cancer, drug cost per patient increased by $34,493 between 1998 and 2005 as a result of new drug launches, but value from offsetting health improvements netted a modest $1,377 increase in quality-adjusted cost of care. For multiple myeloma, new therapies increased treatment cost by $72,937 between 2004 and 2009, but offsetting health benefits lowered overall quality-adjusted cost of care by $67,863. However, patients with multiple myeloma on established first-line therapies saw costs rise without corresponding benefits. All three examples document rapid cost growth, but they provide starkly different answers to the question of whether society got what it paid for.
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Performance Differences in Year 1 of Pioneer Accountable Care Organizations
Michael McWilliams et al.
New England Journal of Medicine, forthcoming
Background: In 2012, a total of 32 organizations entered the Pioneer accountable care organization (ACO) program, in which providers can share savings with Medicare if spending falls below a financial benchmark. Performance differences associated with characteristics of Pioneer ACOs have not been well described.
Methods: In a difference-in-differences analysis of Medicare fee-for-service claims, we compared Medicare spending for beneficiaries attributed to Pioneer ACOs (ACO group) with other beneficiaries (control group) before (2009 through 2011) and after (2012) the start of Pioneer ACO contracts, with adjustment for geographic area and beneficiaries' sociodemographic and clinical characteristics. We estimated differential changes in spending for several subgroups of ACOs: those with and those without clear financial integration between hospitals and physician groups, those with higher and those with lower baseline spending, and the 13 ACOs that withdrew from the Pioneer program after 2012 and the 19 that did not.
Results: Adjusted Medicare spending and spending trends were similar in the ACO group and the control group during the precontract period. In 2012, the total adjusted per-beneficiary spending differentially changed in the ACO group as compared with the control group (−$29.2 per quarter, P=0.007), consistent with a 1.2% savings. Savings were significantly greater for ACOs with baseline spending above the local average, as compared with those with baseline spending below the local average (P=0.05 for interaction), and for those serving high-spending areas, as compared with those serving low-spending areas (P=0.04). Savings were similar in ACOs with financial integration between hospitals and physician groups and those without, as well as in ACOs that withdrew from the program and those that did not.
Conclusions: Year 1 of the Pioneer ACO program was associated with modest reductions in Medicare spending. Savings were greater for ACOs with higher baseline spending than for those with lower baseline spending and were unrelated to withdrawal from the program.
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Job Lock: Evidence from a Regression Discontinuity Design
Robert Fairlie, Kanika Kapur & Susan Gates
University of California Working Paper, April 2015
Abstract:
Employer-provided health insurance may restrict job mobility, resulting in “job lock.” Previous research on job lock finds mixed results using several methodologies. We take a new approach to examine job-lock by exploiting the discontinuity created at age 65 through the qualification for Medicare. Using a novel procedure for identifying age in months from matched monthly CPS data and a relatively unexplored administration measure of job mobility, we compare job mobility among male workers in the months just prior to turning age 65 to job mobility in the months just after turning age 65. We find no evidence that job mobility increases at the age 65 threshold when Medicare eligibility starts. We also do not find evidence that other factors such as retirement, reduction in hours worked, social security eligibility, pension eligibility, and sample changes confound the results on job mobility in the month individuals turn 65.
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Benjamin Chute & Phani Wunnava
Middlebury College Working Paper, April 2015
Abstract:
This study investigates the prevalence and severity of job immobility induced by the provision of employer-sponsored health insurance – a phenomenon known as 'job-lock'. Using data from the National Longitudinal Survey of Youth from 1994 to 2010, job-lock is identified by measuring the impact of employer-sponsored health insurance on voluntary job turnover frequency. Estimates from a logistic regression with random effects indicate that job-lock reduces voluntary job turnover by 20% per year. These results that are consistent with past research and are also supported by two alternative identification strategies employed in this paper. Our results indicate a persistence of the job-lock effect, despite two major policy interventions designed to mitigate it (COBRA and HIPAA) and signal a fundamental misunderstanding of its causes. Both policies made health insurance more portable between employers, but this paper presents evidence from a quasi-natural experiment to suggest that the problem is a lack of viable alternative private sources of health insurance. In this model, we find evidence that access to health insurance through one's spouse or partner dramatically increases voluntary job turnover. This finding has significant bearing on predicted impacts of the Patient Protection and Affordable Care Act (2010) and the individual health insurance exchanges catalyzed by it; these new markets will create risk pools that may 'unlock' a job-locked individual by providing them a viable alternative to employer-sponsored health insurance.
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Warren Stevens et al.
Health Affairs, April 2015, Pages 562-570
Abstract:
Health care spending and health outcomes vary markedly across countries, but the association between spending and outcomes remains unclear. This inevitably raises questions as to whether continuing growth in spending is justified, especially relative to the rising cost of cancer care. We compared cancer care across sixteen countries over time, examining changes in cancer spending and two measures of cancer mortality (amenable and excess mortality). We found that compared to low-spending health systems, high-spending systems had consistently lower cancer mortality in the period 1995–2007. Similarly, we found that the countries that increased spending the most had a 17 percent decrease in amenable mortality, compared to 8 percent in the countries with the lowest growth in cancer spending. For excess mortality, the corresponding decreases were 13 percent and 9 percent. Additionally, the rate of decrease for the countries with the highest spending growth was faster than the all-country trend. These findings are consistent with the existence of a link between higher cancer spending and lower cancer mortality. However, further work is needed to investigate the mechanisms that underlie this correlation.
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An Early Look At SHOP Marketplaces: Low Premiums, Adequate Plan Choice In Many, But Not All, States
Jon Gabel et al.
Health Affairs, May 2015, Pages 732-740
Abstract:
The Affordable Care Act created the Small Business Health Options Program (SHOP) Marketplaces to help small businesses provide health insurance to their employees. To attract the participation of substantial numbers of small employers, SHOP Marketplaces must demonstrate value-added features unavailable in the traditional small-group market. Such features could include lower premiums than those for plans offered outside the Marketplace and more extensive choices of carriers and plans. More choices are necessary for SHOP Marketplaces to offer the “employee choice model,” in which employees may choose from many carriers and plans. This study compared the numbers of carriers and plans and premium levels in 2014 for plans offered through SHOP Marketplaces with those of plans offered only outside of the Marketplaces. An average of 4.3 carriers participated in each state’s Marketplace, offering a total of forty-seven plans. Premiums for plans offered through SHOP Marketplaces were, on average, 7 percent less than those in the same metal tier offered only outside of the Marketplaces. Lower premiums and the participation of multiple carriers in most states are a source of optimism for future enrollment growth in SHOP Marketplaces. Lack of broker buy-in in many states and burdensome enrollment processes are major impediments to success.
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John Scott et al.
Journal of the American College of Surgeons, forthcoming
Background: Disparities in trauma outcomes based on insurance and race are especially pronounced among young adults who have relatively high uninsured rates and incur a disproportionate share of trauma in the population. The 2010 dependent coverage provision (DCP) of the Affordable Care Act (ACA) allowed young adults to remain on their parent’s health insurance plans until age 26, leading to over 3 million young adults gaining insurance. We investigated the impact of the DCP on racial disparities in coverage expansion among trauma patients.
Study Design: Using the 2007-2012 National Trauma Databank, we compared changes in coverage among 529,844 19-25 year-olds to 484,974 controls aged 27-34 not affected by the DCP. Subgroup analyses were conducted by race and ethnicity and by census region.
Results: The pre-DCP uninsured rates among young adults were highest among black patients (48.1%) and Hispanic patients (44.3%), and significantly lower among Non-Hispanic white patients (28.9%). However, Non-Hispanic white young adults experienced a significantly greater absolute reduction in the uninsured rate (-4.9 percentage points) than black (-2.9, p=0.01) and Hispanic (-1.7, p<0.001) young adults. These absolute reductions correspond to a 17.0% relative reduction in the uninsured rate for white patients, 6.1% for black patients, and 3.7% for Hispanic patients. Racial disparities in the provision’s impact on coverage among trauma patients were largest in the South and West census regions (p<0.01).
Conclusions: While the DCP increased insurance coverage for young adult trauma patients of all races, both absolute and relative racial disparities in insurance coverage widened. The extent of these racial disparities also differed by geographic region. Though this policy produced overall progress towards greater coverage among young adults, its heterogeneous impact by race has important implications for future disparities research in trauma.
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Care Coordination Program For Washington State Medicaid Enrollees Reduced Inpatient Hospital Costs
Jingping Xing, Candace Goehring & David Mancuso
Health Affairs, April 2015, Pages 653-661
Abstract:
Managing clinically complex populations poses a major challenge for state agencies trying to control health care costs and improve quality of care for Medicaid beneficiaries. In Washington State a care coordination intervention, the Chronic Care Management program, was implemented for clinically complex Medicaid beneficiaries who met risk criteria defined by a predictive modeling algorithm. We used propensity score matching to evaluate the program’s impact on health care spending and utilization and mortality. We found large and significant reductions in inpatient hospital costs ($318 per member per month) among patients who used the program. The estimated reduction in overall medical costs of $248 per member per month exceeded the cost of the intervention but did not reach statistical significance. These results suggest that well-designed targeted care coordination services could reduce health care spending for Medicaid beneficiaries with complex health care needs.
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Jessica Greene, Judith Hibbard & Valerie Overton
Health Affairs, April 2015, Pages 673-680
Abstract:
This study examined the impact of Fairview Health Services’ primary care provider compensation model, in which 40 percent of compensation was based on clinic-level quality outcomes. Fairview Health Services is a Pioneer accountable care organization in Minnesota. Using publicly reported performance data from 2010 and 2012, we found that Fairview’s improvement in quality metrics was not greater than the improvement in other comparable Minnesota medical groups. An analysis of Fairview’s administrative data found that the largest predictor of improvement over the first two years of the compensation model was primary care providers’ baseline quality performance. Providers whose baseline performance was in the lowest tertile improved three times more, on average, across the three quality metrics studied than those in the middle tertile, and almost six times more than those in the top tertile. As a result, there was a narrowing of variation in performance across all primary care providers at Fairview and a narrowing of the gap in quality between providers who treated the highest-income patient panels and those who treated the lowest-income panels. The large quality incentive fell short of its overall quality improvement aim. However, the results suggest that payment reform may help narrow variation in primary care provider performance, which can translate into narrowing socioeconomic disparities.
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Implementation of Patient-Centered Medical Homes in Adult Primary Care Practices
Jeffrey Alexander et al.
Medical Care Research and Review, forthcoming
Abstract:
There has been relatively little empirical evidence about the effects of patient-centered medical home (PCMH) implementation on patient-related outcomes and costs. Using a longitudinal design and a large study group of 2,218 Michigan adult primary care practices, our study examined the following research questions: Is the level of, and change in, implementation of PCMH associated with medical surgical cost, preventive services utilization, and quality of care in the following year? Results indicated that both level and amount of change in practice implementation of PCMH are independently and positively associated with measures of quality of care and use of preventive services, after controlling for a variety of practice, patient cohort, and practice environmental characteristics. Results also indicate that lower overall medical and surgical costs are associated with higher levels of PCMH implementation, although change in PCMH implementation did not achieve statistical significance.
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Ninez Ponce et al.
Health Affairs, April 2015, Pages 609-615
Abstract:
With the Affordable Care Act reducing coverage disparities, social factors could prominently determine where and for whom innovations first diffuse in health care markets. Gene expression profiling is a potentially cost-effective innovation that guides chemotherapy decisions in early-stage breast cancer, but adoption has been uneven across the United States. Using a sample of commercially insured women, we evaluated whether income inequality in metropolitan areas was associated with receipt of gene expression profiling during its initial diffusion in 2006–07. In areas with high income inequality, gene expression profiling receipt was higher than elsewhere, but it was associated with a 10.6-percentage-point gap between high- and low-income women. In areas with low rates of income inequality, gene expression profiling receipt was lower, with no significant differences by income. Even among insured women, income inequality may indirectly shape diffusion of gene expression profiling, with benefits accruing to the highest-income patients in the most unequal places. Policies reducing gene expression profiling disparities should address low-inequality areas and, in unequal places, practice settings serving low-income patients.
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Determinants of US Prescription Drug Utilization using County Level Data
Thierry Nianogo et al.
Health Economics, forthcoming
Abstract:
Prescription drugs are the third largest component of US healthcare expenditures. The 2006 Medicare Part D and the 2010 Affordable Care Act are catalysts for further growths in utilization becuase of insurance expansion effects. This research investigating the determinants of prescription drug utilization is timely, methodologically novel, and policy relevant. Differences in population health status, access to care, socioeconomics, demographics, and variations in per capita number of scripts filled at retail pharmacies across the USA justify fitting separate econometric models to county data of the states partitioned into low, medium, and high prescription drug users. Given the skewed distribution of per capita number of filled prescriptions (response variable), we fit the variance stabilizing Box–Cox power transformation regression models to 2011 county level data for investigating the correlates of prescription drug utilization separately for low, medium, and high utilization states. Maximum likelihood regression parameter estimates, including the optimal Box–Cox λ power transformations, differ across high (λ = 0.214), medium (λ = 0.942), and low (λ = 0.302) prescription drug utilization models. The estimated income elasticities of −0.634, 0.031, and −0.532 in high, medium, and low utilization models suggest that the economic behavior of prescriptions is not invariant across different utilization levels.