• Don’t Assume That Private Insurance Is Better Than Medicaid

    The following originally appeared on The Upshot (copyright 2017, The New York Times Company). It was coauthored by Aaron Carroll and Austin Frakt. It also appeared on page A14 of the July 14, 2017 print edition

    As we recently wrote, it’s better for patients to have Medicaid than to be uninsured, contrary to critics of the program. But is having Medicaid, as those critics also say, much worse than having private insurance?

    This idea has become a talking point for conservatives who back big changes to Medicaid, as the Senate health bill proposes. The poor would benefit simply by being ushered off Medicaid and onto private insurance, they write.

    But it’s far from proven that Medicaid is worse than private insurance. A lot depends on what kind of insurance is compared with Medicaid, and how they are compared.

    Many studies that measure Medicaid against private insurance suffer from the same flaws that compare Medicaid with being uninsured. They’re terribly confounded, and can show only associations, not causation. People with private insurance are healthier and wealthier than those on Medicaid, and in ways not fully controlled for in statistical analyses. These factors almost certainly predispose someone on Medicaid to have worse outcomes than someone with private insurance.

    Perhaps the most convincing way to compare Medicaid and private insurance would be with a randomized controlled trial that pits them head to head. No such trials exist. Recall that the Oregon Medicaid study randomly offered, via a lottery, the opportunity for low-income adults to enroll in Medicaid. It did not have another study arm that offered private insurance.

    But we do have a decades-old trial that looked at varying levels of cost-sharing: the RAND Health Insurance Experiment. This is relevant because one substantial difference between Medicaid and most private coverage is the level of cost-sharing. Medicaid is nearly free. Most private coverage comes with deductibles and co-payments.

    The RAND study randomly assigned 2,750 families to one of four health plans. One had no cost-sharing whatsoever — kind of like Medicaid. The other three had cost-sharing (money people had to pay out-of-pocket for care) at levels of 25, 50 or 95 percent — capped at $1,000 at the time, which is about an inflation-adjusted $6,000 today. This level of personal liability acts like a deductible, making the plan with a 95 percent level of cost-sharing comparable to a “Bronze” plan on the Affordable Care Act’s exchanges today.

    The RAND study found that the more cost-sharing was imposed on people, the less health care they used — and therefore the less was spent on their care. The study also found that, over all, people’s health didn’t suffer from lower health care use and spending.

    Lower spending and no decline in health — these are the results that everyone cites to justify increased cost-sharing, and to justify shifting people from Medicaid to private plans with high deductibles.

    But the results of the RAND study, like so much in health care, are complicated. A deeper dive into the data shows that people decreased their consumption of necessary health care in equal measure to unnecessary health care. As a rule, people are terrible discriminators of what care is needed and what’s not. Since most people under the age of 65 are healthy, even in the RAND study, that doesn’t matter much.

    But even if most people are healthy, some are not (and particularly those on Medicaid). In the RAND study, poorer and sicker people — exactly the kind more likely to be on Medicaid — were slightly more likely to die with cost-sharing.

    Free care also resulted in improvements in vision and blood pressure for those with low income. As an influential 1983 New England Journal of Medicine paper put it: “Free care does make a difference.”

    One limitation of the RAND study is its age. It took place between 1971 and 1982. There have been no studies of cost-sharing to rival it since. Still, the best recent evidence we have is that giving free care to poorer and sicker people improves health and saves lives. It is reasonable to conclude that switching them to a plan with high cost-sharing (even a private plan) would do the opposite.

    Some of the more recent studies were nicely summarized in a paper by Katherine Swartz for the Robert Wood Johnson Foundation’s Synthesis project. She found that increased cost-sharing for low-income populations was associated with a shift toward more costly services, like increased emergency room visits because people skipped taking their drugs. She also found that increased cost-sharing affects poor people differently than everyone else, confirming RAND’s findings. A more recent study found that enrollment in plans with high deductibles led to reductions in necessary care, which would have consequences for the poor and sick.

    Austin wrote previously here how increased cost-sharing may lead people to take fewer drugs for their high cholesterol, hypertension and diabetes. In his first Upshot column, Aaron wrote that parents delay taking their children for asthma treatment when cost-sharing rises.

    Even small premiums can lead to problems. A $10 increase in monthly Medicaid premiums was followed by a 6.7 percent reduction in Medicaid and coverage of CHIP (Children’s Health Insurance Program) for people just above the poverty line.

    Unquestionably, private coverage can work very well for many people. Take us, for instance. The insurance that we each have from our employers is probably better for us than Medicaid would be. Though these plans come with cost-sharing, we have incomes that can handle it. Our plans cover things that Medicaid often does not, like dental checkups.

    Our plans have great networks, and they reimburse well for the care we receive. Just like Medicaid enrollees, we also receive support from the federal government, which waives tax collections on dollars contributed to premiums. That tax break is higher than the cost of Medicaid in many cases.

    We’re also relatively healthy and would probably be fine on any plan (unless and until our health deteriorates).

    But because our plans require considerable cost-sharing, even Medicaid enrollees would struggle on them. More important, neither House nor Senate repeal and replace bills offer poor Medicaid enrollees plans as generous as ours.

    The Senate’s health care plan, for example, would offer much less generous plans. A 64-year-old woman with an income of $11,400 would face a deductible of at least $6,000. For her, such a plan is not better than Medicaid; it is most likely much worse if she is also sick. Because of the deductible, the care she’d need would be financially out of reach.

    recent paper in Health Affairs documented that outcomes in Arkansas, which allowed poor people to buy private plans on the exchanges, were similar to those in Kentucky, which expanded access to poor people through Medicaid. But those private plans came with significant cost-sharing subsidies, which would be stripped away by the Senate’s bill. Even so, the evidence did not suggest that the private coverage of Arkansas was better than the public coverage of Kentucky.

    There are certainly private plans for poor and sick Americans that are better than Medicaid. But plans with very high cost-sharing — which are the ones being offered in Congress as A.C.A. replacements — are not among them.

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  • The most influential health care studies, according to Twitter

    In an interview, a journalist asked me for the health care studies with greatest policy influence. I said the RAND Health Insurance Experiment and the Oregon Medicaid Study. I added there are certainly more worthy to be named, but this is not a thing my brain does so readily.

    And so I put it to Twitter:

    The replies overwhelmed me, so I asked if anyone would compile them for a post. Nisarg Patel, a DMD Candidate at Harvard University and delivery system innovation researcher at Boston Children’s Hospital, obliged. (He’s on Twitter @nxpatel).

    Below is the list, in no particular order. Just so you can debate these and add more, comments open for one week. (I won’t be going back to Twitter to pull in more replies there, so if you want yours in the TIE record you’ll have to add them here.)

    UPDATE: Brian Rahmer (@brianrahmer) put the PDFs of these studies in Dropbox. Go get them!


    National Research Council. America’s uninsured crisis: consequences for health and health care. Washington, DC: The National Academic. 2009.

    Baicker K, Staiger D. Fiscal shenanigans, targeted federal health care funds, and patient mortality. The quarterly journal of economics. 2005;120(1):345-86.

    Kane TJ, Orzsag P, Gunter DL. State fiscal constraints and higher education spending: The role of Medicaid and the business cycle. 2003.

    Blumberg LJ, Buettgens M, Holahan J, Garrett B, Wang R. State-by-State Coverage and Government Spending Implications of the Better Care Reconciliation Act. 2017.

    McGlynn EA, Asch SM, Adams J, Keesey J, Hicks J, DeCristofaro A, Kerr EA. The quality of health care delivered to adults in the United States. New England journal of medicine. 2003;348(26):2635-45.

    Baicker K, Taubman SL, Allen HL, Bernstein M, Gruber JH, Newhouse JP, Schneider EC, Wright BJ, Zaslavsky AM, Finkelstein AN. The Oregon experiment—effects of Medicaid on clinical outcomes. New England Journal of Medicine. 2013;368(18):1713-22.

    Wagnerman K, Alker J, Hoadley J, Holmes M. Medicaid in Small Towns and Rural America: A Lifeline for Children, Families, and Communities. 2017.

    Arrow KJ. Uncertainty and the Welfare Economics of Medical Care. The American Economic Review. 1963;53(5): 941-973

    Summers LH. Some simple economics of mandated benefits. The American Economic Review. 1989;79(2):177-83.

    Berwick DM, Nolan TW, Whittington J. The triple aim: care, health, and cost. Health affairs. 2008;27(3):759-69.

    Barnett ML, Sommers BD. A National Survey of Medicaid Beneficiaries’ Expenses and Satisfaction With Health Care. JAMA Intern Med. Published online July 10, 2017. doi:10.1001/jamainternmed.2017.3174

    Sommers BD, Gawande AA, Baicker K. Health Insurance Coverage and Health—What the Recent Evidence Tells Us. New England Journal of Medicine (2017).

    Frean M, Gruber J, Sommers BD. Disentangling the ACA’s coverage effects—lessons for policymakers. New England Journal of Medicine. 2016;375(17):1605-8.

    Luntz F. The Language of Healthcare 2009. Politico.

    Wasserman J, Manning WG, Newhouse JP, Winkler JD. The effects of excise taxes and regulations on cigarette smoking. Journal of health economics. 1991;10(1):43-64.

    Ridley DB, Grabowski HG, Moe JL. Developing drugs for developing countries. Health Affairs. 2006;25(2):313-24.

    Marmot M. Social determinants of health inequalities. The Lancet. 2005;365(9464):1099-104.

    Nelson A. Unequal treatment: confronting racial and ethnic disparities in health care. Journal of the National Medical Association. 2002;94(8):666.


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  • Health Plans That Nudge Patients to Do the Right Thing

    The following originally appeared on The Upshot (copyright 2017, The New York Times Company).

    As health care costs rise, Americans are increasingly on the hook to pay more for their care. This trend is more than just annoying — asking consumers to pay more for everything deters many from getting the care they need. What would happen if, instead, health plans offered more generous coverage of high-value care, but less generous coverage of those services that provide little or no health benefit?

    This idea is known as value-based insurance design. Though not widespread, V-BID is not new. It was pioneered nearly 20 years ago by Dr. Mark Fendrick, a physician and professor at the University of Michigan, and Michael Chernew, a Harvard economist. (“Value” in V-BID plans is usually set according to longstanding measurements of quality established by decades of study of medical records.)

    In his own practice, Dr. Fendrick feels as if standard insurance is working against him and his patients. “They are deeply concerned about the amount they have to pay out of their own pockets for the things I beg them to do,” he said. “It makes no sense that they pay the same co-payment for a lifesaving drug to treat diabetes or cancer, as for a drug that makes toenail fungus go away.”

    This may be changing. The Affordable Care Act includes a V-BID provision, eliminating cost-sharing for more than 100 preventive services, such as vaccinations and cancer screenings. It’s endorsed by four committees of medical experts.

    Many large employers and state governments are going further, reducing cost-sharing for high-value care and medications to treat chronic illnesses, like depression and heart disease. This year, the Centers for Medicare and Medicaid Services began a five-year test of value-based design that permits Medicare Advantage plans in seven states to reduce cost-sharing and enhance benefits for enrollees with designated chronic conditions. Bipartisan legislation has been introduced in the House and Senate to expand the program nationwide.

    In 2018, the Department of Defense will pilot a V-BID program that reduces cost-sharing for high-value medications and services, trying to improve the care and outcomes for American military personnel.

    Does value-based insurance work? The Medicare Advantage and Department of Defense programs will tell us more, but experience with commercial V-BID programs suggests it’s a promising approach.

    Several studies show that value-based “carrot” programs — those that help patients with chronic illnesses stay out of the hospital by reducing cost-sharing for high-value medications — increases medication use, at least modestly. Of course, if patients are paying less for medications, someone else — employers and health plans — pick up that part of the tab.

    But making high-value drugs less expensive can offset other health care spending. One study of 6,000 heart attack patients compared one group that received their drugs free with those whose regular insurance had co-payments of $10 to $25. Patients receiving free drugs increased their use of them — and the additional insurer drug costs were offset by a decrease in hospital procedures.

    Another study, of reduced cost-sharing for diabetic medications, showed that patients took their medication more regularly and used other, costly services less. Emergency department visits dropped 36 percent, and hospitalizations fell 13 percent.

    Value-based programs need not focus exclusively on drugs. In 2010, I.B.M. encouraged greater use of primary care by eliminating cost-sharing for primary care visits. A study of the effect on children found increases in primary care visits and vaccinations, and decreases in expensive emergency department and specialist visits.

    In 2011, Connecticut started the Health Enhancement Program for state employees, which required participants to obtain high-value primary and chronic disease preventive services — like screenings, physical examinations and other guideline-based services — and lowered cost-sharing for them. The use of those services and medications for chronic conditions increased, while emergency department use decreased during the program’s first two years.

    Though programs like these improve patients’ health and quality of life, they don’t necessarily save money. That’s the finding of a large programby Blue Cross Blue Shield of North Carolina. In 2008, the insurer reduced cost-sharing for hypertensionhyperlipidemia, diabetes and congestive heart failure medications for more than 700,000 policy holders. Their overall health care spending remained comparable to that of similar patients insured by other plans that did not use a value-based design.

    “For the most part, V-BID isn’t a way to save money,” Mr. Chernew said. “What it can do is shift health care use from lower- to higher-value care.” In doing so, it can also provide more financial protection for people who have regular need for maintenance medications and care.

    If reducing cost-sharing for high-value care is the “carrot” approach, increasing it for low-value care is the “stick.” Though less common, stick approaches have been tested, too. A program by a large public employer in Oregon raised cost-sharing for sleep studies, upper gastrointestinal endoscopies, advanced imaging services and certain types of overused procedures, like surgery for back pain. Although clinically appropriate circumstances exist for each service, copayments were raised $100 to $500 only for those specific situations where their use was deemed not medically necessary.

    An evaluation demonstrated that consumers responded to these higher out-of-pocket costs. Targeted services fell by about 12 percent over all, though some fell more than others. For example, sleep studies and low-value surgery use fell by about 20 percent. But advanced imaging use fell by only 7.7 percent.

    It may be inevitable that health insurance comes with cost-sharing. But there’s no reason it can’t be applied in ways that also help patients do the right thing, nudging them toward high-value care and decreasing incentives to pursue low-value care.


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  • Where are the Democrats’ ACA fixes?

    That’s what the Republican National Committee wants to know, putting the question in a new ad. This is one of the oldest rhetorical tricks in the book, and to be fair has been used by both sides on many issues. It’s the “Have you stopped beating your wife?” tactic. It works when one only hears the question but never the answer.

    These days, many hearing the question won’t even look for the answer. They’ll just assume there are no Democratic or progressive ideas to fix the ACA.

    But there are. I asked for them on Twitter this morning and here’s a taste of what I got, just as of noon today:

    Yeah, you have to click through and read a bit. But if you want the answer, it’s there. There are lots of ideas to fix the ACA that are not what the GOP is proposing. Nevertheless, one good tactic for diverting attention from a troubled plan pushed through in a closed process is to ask where your opponent’s is. I don’t fault the RNC for trying it out.


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  • What studies should I write about?

    From time to time I solicit suggestions on what to write about. Usually I solicit topics, but that often doesn’t generate very many ideas I can work with. The reason is that my writing isn’t driven by topics so much as studies.

    Of course, each piece is on a topic. But my entry is through the research. I start with a study that sparks an idea I think will resonate with people. That leads to other studies, and a post is born.

    With that, what studies do you think I should write about? Please send links or full enough citations so I can find them. You can reach me on Twitter, by email, or in the comments below, which are open for one week.


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  • Will we ever see Medicare Advantage encounter data?

    Charles Ornstein reports on the latest chapter in research access to Medicare Advantage encounter data:

    The government has collected [Medicare Advantage] data on patients’ diagnoses and the services they receive since 2012 and began using it last year to help calculate payments to private insurers, which run the Medicare Advantage plans. But it has never made that data public.

    Officials at the Centers for Medicare and Medicaid Services have been validating the accuracy of the data and, in recent months, were preparing to release it to researchers. Medicare already shares data on the 38 million patients in the traditional Medicare program, which the government runs. […]

    The grand unveiling of the new data was scheduled to take place at the annual research meeting of AcademyHealth, a festival of health wonkery, which just concluded in New Orleans.

    But at the last minute, the session was canceled.

    Go read the whole thing. I am quoted.


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  • Medicaid, a “broken program that harms its beneficiaries”

    I asked on Twitter for policymakers’ expressions of harm caused by Medicaid.

    By email, Andrew Goodman-Bacon came through in a huge way. The bullets below are a lightly edited version of what he sent me, shared with his permission. (For the record, Medicaid does not cause harm. More about that soon.)

    • The Sommers/Epstein paper surveyed governors and found that five of those who opposed expansion felt that Medicaid was a “broken program that harms its beneficiaries.”
    • Senator Ted Cruz has said that Medicaid hurts health care access
    • In one of Tom Price’s recent testimonies he said ,“Medicaid is a program that has, by and large, decreased people’s ability to access care.”
    • Speaker Paul Ryan comes close on pg 24 of “A Better Way
    • A Healthy Indiana report (notably produced by the Pence administration) cites Roy and LaPar, but doesn’t go all in on the “harms” claim
    • Here is the American Action Forum saying “harm”
    • See also, this brief from a policy shop in MI, this brief from a policy shop in NC, and this brief from a policy shop in PA
    • Here is ALEC citing that study, although not going so far as to say patients will be “harmed”

    To these, I will add this quote of Representative Bill Cassidy (via Aaron) and this op-ed by Seema Verma (via Adrianna). Note: I have not looked through everything in the above list. If you find errors or have more contributions, let me know.


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  • New collaboration for VA drug pricing

    Great news:

    The Institute for Clinical and Economic Review (ICER) has agreed to work closely with the Department of Veterans Affairs (VA) Pharmacy Benefits Management Services office (PBM) to support its use of ICER drug assessment reports in drug coverage and price negotiations with the pharmaceutical industry.

    More here. I am employed by the VA and serve on one of ICER’s evidence review panels.


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  • All the plan-provider vertical integration literature to date

    There aren’t a lot of studies and reports on the integration of health insurance plans with health care providers (meaning they’re owned by the same organization). Still, I want to keep track, so here’s what I’m aware of (I’m a coauthor on the first two):

    Peer-Reviewed Publications

    • Frakt, A.B., Pizer, S.D. and Feldman, R., 2013. Plan–Provider Integration, Premiums, and Quality in the Medicare Advantage Market. Health Services Research, 48(6pt1), pp.1996-2013. I wrote about this paper here and here.
    • Johnson, G., Lyon, Z.M. and Frakt, A., 2017. Provider-Offered Medicare Advantage Plans: Recent Growth And Care Quality. Health Affairs, 36(3), pp.539-547. I wrote about this paper here.
    • La Forgia, A., Maeda, J.L.K. and Banthin, J.S., 2017. Are Integrated Plan Providers Associated With Lower Premiums on the Health Insurance Marketplaces? Medical Care Research and Review.
    • Burns, L.R., McCullough, J.S., Wholey, D.R., Kruse, G., Kralovec, P. and Muller, R., 2015. Is the system really the solution? Operating costs in hospital systems. Medical Care Research and Review, 72(3), pp.247-272.


    • Khanna, G., Smith, E. and Sutaria, S., 2015. Provider-Led Health Plans: The Next Frontier—or the 1990s All Over Again. McKinsey & Company Healthcare Systems and Services Practice.
    • Khanna, G., Narula, D. and Rao, N., 2016. The market evolution of provider-led health plans. McKinsey & Company Healthcare Systems and Services Practice.
    • Carpenter, E., 2016. Nearly 60 Percent of New Medicare Advantage Plans Are Sponsored by Healthcare Providers. Avalere.
    • Blumberg, L.J., Holahan, J. and Wengle, E., 2015. Marketplace Price Competition in 2014 and 2015. Urban Institute.
    • Pascaris, M. and Smith, K., 2015. Entrance of US not-for-profit hospitals into health insurance will continue to rise. Moody’s.
    • Goldsmith, J., Burns, L.R., Sen, A. and Goldsmith, T., 2015. Integrated delivery networks: In search of benefits and market effects. National Academy of Social Insurance.
    • McKinsey Center for U.S. Health System Reform. (2016). Hospital networks: Perspective from three years of exchanges.
    • Baumgarten, A., 2017. Analysis of Integrated Delivery Systems and New Provider- Sponsored Health Plans. Robert Woods Johnson Foundation.


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  • Get Well Sooner? A Healthier Roommate Could Help

    The following originally appeared on The Upshot (copyright 2017, The New York Times Company).

    Your speed of recovery in a hospital is related to many things. Among them is one you might not consider: the condition of your roommate.

    A recent study published in the American Journal of Health Economics found that hospital patients who are assigned healthier roommates require less care and are discharged more rapidly, with no negative effects on their health. For example, a patient who rooms with the healthiest roommate has a hospital stay that is about eight hours shorter, requiring 27 percent less medical attention, and costing about $840 less, compared with a patient with the sickest roommate. Female patients with healthier roommates are discharged in better condition and have a smaller chance of requiring re-hospitalization.

    The study examined a broad range of hospital patients, including those who had surgical procedures — like heart bypasses or joint replacement operations — as well as those admitted for medical conditions like pneumonia or cancer.

    At first glance, there is an apparently obvious explanation for these findings: Patients are typically assigned to room with other patients of similar condition. In particular, healthier people are assigned to rooms farther from the nursing station. Therefore, healthier patients — those who require less care and are discharged more rapidly — also tend to room with relatively healthier patients. So there seems to be a noncausal connection between the recovery speed of patients and the health of their roommates.

    But the author of the study, Olga Yakusheva, a University of Michigan economist, controlled for the factors that nurses at the Connecticut hospital she studied use to assign patients to rooms, including diagnosis and specific room assignment. She found that even in a particular room at the hospital and even among patients with a specific diagnosis, those who ended up with healthier roommates fared better. (The study did not include patients who had single rooms.)

    What’s more, “placing a sick and a healthy patient in one room benefited the sicker patient without ill effects for the healthier roommate,” Ms. Yakusheva said.

    Had that particular hospital taken fuller advantage of this phenomenon in patient room assignments, it could have reduced total inpatient days by 900 per year, saving about $1 million, for the sample of patients the study examined.

    In recent years, most American hospitals have gone another way, though. They’ve added private rooms and renovated shared ones to accommodate only one person. The amount of hospital room space per patient has doubled since the late 1980s. Naturally, that increases costs.

    Many patients prefer the privacy of a single room. And some studies indicate that single rooms reduce the spread of flu and other infections, though the evidence is not conclusive. Despite the potential risks and preferences, having a hospital roommate, and a healthier one in particular, may be better than having no roommate.

    There are several hypotheses for how roommate assignments affect patients’ health. A healthier roommate — particularly one with a similar condition — may be better able to transfer important self-care knowledge or even lend a helping hand, as a few studies have documented. Or, patients with healthier roommates may feel better when they observe other patients doing well, relative to those who observe patients doing poorly. Some studies have found that patient interactions can reduce anxiety.

    Other possibilities are indirect. If your roommate is healthier, she may draw on fewer nursing resources (time and attention), leaving more for you. Or, you may be better able to rest because nurses and doctors are entering the room less frequently when your roommate needs less care. Additional analysis by Ms. Yakusheva doesn’t support these indirect explanations, however.

    The phenomenon is just one of many “peer effects” — the tendency for certain behaviors to spread through social interaction — that have been identified and studied by researchers. It’s probably no surprise that the nature of your social engagement with friends, family and colleagues influences your degree of cooperation and happiness, as studies have found. Research also suggests that it affects behaviors more closely tied to health. For example, obesity tends to spread in social networks. So does smoking behavior. Alcohol consumption follows similar patterns.

    Even if it’s plausible that healthier roommates improve hospital patients’ outcomes, we should acknowledge some limitations of the research in this area. There are very few studies of the subject beyond Ms. Yakusheva’s. Hers is a study of one hospital, with a sample that may not be representative of all hospital patients. Also, as with all observational studies (as opposed to randomized trials), there may be other important influences that could not be accounted for that affect the results.

    If there is a positive efect, of what use are the findings? If you’re hospitalized, could you increase your chances of being assigned to a room with a healthier roommate? The answer, according to Bradley Flansbaum, a hospitalist with the Geisinger Health System, is yes.

    “You could always ask the nurse in charge for a room change,” he said. “If asked why, and you say it’s for personal reasons, the nurse will probably accommodate.”

    But this might put too much onus on the patient, and there is no guarantee the new roommate will be any healthier. A better approach might be for hospital staff to systematically take the phenomenon into account when assigning patients to rooms.



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