• Reading list

      09/28/2013
      Adrianna McIntyre

    The Changing Role of Government in Financing Health Care: An International Perspective by Mark Stabile and Sarah Thomson (National Bureau of Economic Research)

    This paper explores the changing role of government involvement in health care financing policy outside the United States. It provides a review of the economics literature in this area to understand the implications of recent policy changes on efficiency, costs and quality. Our review reveals that there has been some convergence in policies adopted across countries to improve financing incentives and encourage efficient use of health services. In the case of risk pooling, all countries with competing pools experience similar difficulties with selection and are adopting more sophisticated forms of risk adjustment. In the case of hospital competition, the key drivers of success appear to be what is competed on and measurable rather than whether the system is public or private. In the case of both the success of performance-related pay for providers and issues resulting from wait times, evidence differs both within and across jurisdictions. However, the evidence does suggest that some governments have effectively reduced wait times when they have chosen explicitly to focus on achieving this goal. Many countries are exploring new ways of generating revenues for health care to enable them to cope with significant cost growth. However, there is little evidence to suggest that collection mechanisms alone are effective in managing the cost or quality of care.

    Impact of Mortality-Based Performance Measures on Hospital Pricing: the Case of Colon Cancer Surgeries by Avi Dor, Partha Deb, Michael Grossman, Gregory Cooper, Siran Koroukian and Fang Xu (National Bureau of Economic Research)

    We estimate price regressions for surgical procedures used to treat colon cancer, a leading cause of cancer mortality. Using a claims database for self-insured employers, we focus on transaction prices, rather than more commonly available billing data that do not reflect actual payments made. Although the responsiveness of prices to hospital performance depends on the impact of quality on the slope of the quantity-demand of the payers, which are not known a priory, it is often assumed that higher performing hospitals are able to command higher prices. To test this hypothesis we construct performance rankings, based on hospital excess-mortality and incorporate them into our price models. We are interested in the type information available to large payers who negotiate prices on behalf of their members. To get a cancer-specific index we emulate the widely-reported risk-adjustment methodology used in the federal Hospital Compare reporting system for ranking cardiac performance. The effects were consistently negative in all models (adverse quality reduces price), though not significant. However, we observe a rational pricing structure whereby higher treatment complexity is reflected in higher price differentials, controlling for patient characteristics and market structure.

    Worsening Trends in the Management and Treatment of Back Pain by John Mafi, Ellen McCarthy, Roger Davis, and Bruce Landon (JAMA)

    Back pain treatment is costly and frequently includes overuse of treatments that are unsupported by clinical guidelines. Few studies have evaluated recent national trends in guideline adherence of spine-related care […] We assessed imaging, narcotics, and referrals to physicians (guideline discordant indicators). In addition, we evaluated use of nonsteroidal anti-inflammatory drugs or acetaminophen and referrals to physical therapy (guideline concordant indicators). […] Nonsteroidal anti-inflammatory drug or acetaminophen use per visit decreased from 36.9% in 1999-2000 to 24.5% in 2009-2010 (unadjusted P < .001). In contrast, narcotic use increased from 19.3% to 29.1% (P < .001). Although physical therapy referrals remained unchanged at approximately 20%, physician referrals increased from 6.8% to 14.0% (P < .001). The number of radiographs remained stable at approximately 17%, whereas the number of computed tomograms or magnetic resonance images increased from 7.2% to 11.3% during the study period (P < .001). These trends were similar after stratifying by short-term vs long-term presentations, visits to PCPs vs non-PCPs, and adjustment for age, sex, race/ethnicity, PCP status, symptom duration, region, and metropolitan location. […] Despite numerous published clinical guidelines, management of back pain has relied increasingly on guideline discordant care. Improvements in the management of spine-related disease represent an area of potential cost savings for the health care system with the potential for improving the quality of care.

    Going After the Money: Curbing the Rapid Growth in Medicare Expenditures for Medical Services More Than 30 Days After Hospital Admission by Ashish Jha (JAMA)

    Only the Beginning — What’s Next at the Health Insurance Exchanges? by Henry Aaron and Kevin Lucia (New England Journal of Medicine)

    Michigan’s Approach to Medicaid Expansion and Reform by John Ayanian (New England Journal of Medicine)

    Adrianna (@onceuponA)

     
      Health Policy
      reading list
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  • Stupid, incompetent, unhealthy people

      09/27/2013
      Bill Gardner

    Last week, Harold wrote some great posts about the work of Sendihl Mullainathan and Eldar Shafir on poverty, thinking, and behavior. I want to comment on how this pathbreaking work should affect how we think about health and justice.

    To set the stage, here is a model that explains why poor people have poor health.

    dysfunction_model_Page_1That is: many poor people have poor cognitive skills — that’s a reason why they are poor — and people with poor cognitive skills smoke, drink too much, eat bad food, and so on. These behaviors lead to poor health.

    Call it the stupid incompetent people model. It’s an uncharitable model, because it attributes poor health to the capabilities and characters of unhealthy people. It suggests that many of the unhealthy poor deserve that fate. This isn’t the whole story, you say. Many capable people screw up their health. And poor health often has nothing to do with our character or behavior. It’s just bad luck.

    But being uncharitable is not the same as being wrong. SES is strongly associated with health and with many health behaviors. David Cutler has data showing that intellectual abilities are associated with health behaviors. Linda Gottfredson reports data showing that intelligence predicts both health and longevity.

    Moreover, don’t we want the world to be structured so that functional behaviors — abstaining from cigarettes, or pursuing more education, or saving for retirement, or… — lead to higher income or better health? Doesn’t a world with incentives for functional behavior benefit everyone? These incentives lead to prosperity, stable families, low crime and so on. Conversely, in a world without incentives — a world that redistributed outcomes so that virtue had the same reward as vice — there would be less of the good things that virtuous behavior produces. Life would be that much more solitary, poor, nasty, brutish, and short.

    So why isn’t the stupid people model a description of a just world?

    One reason is that it holds people responsible for personal attributes that they do not control, such as the genes they received from their parents. Another reason is that the model does not acknowledge that many of the rich are highly capable because they had well-off parents. Those parents invested time and money in their children’s health and education. Conversely, many of the poor have limited capabilities because they were raised in relative deprivation. This graph (thanks to @BrendanSaloner) shows how much more the rich spend on their children compared to the poor, and how that inequality has increased over time.

    Saloner

    Because the children of well-off parents get a better start, we don’t have fair equality of opportunity in the competition for better outcomes.

    Mullainathan and Shafir’s data, however, lead to an important new criticism of the stupid incompetent people model.

    M and S present extensive experimental data showing that the experience of scarcity deeply affects our ability to think. When primary resources like food, money, or time are scarce we experience a kind of tunnel vision. In the tunnel, information related to the scarce resource dominates our thinking at the expense of the many other things we need to monitor. We have reduced attention, memory, and self-control and we make worse decisions. These changes are unconscious, automatic, and largely beyond our willful control. In short, scarcity makes us stupid, leading to bad choices about health behaviors. From their book,

    Poverty itself taxes the mind… poverty reduces fluid intelligence and executive control… this suggests a major twist in the debate over the cognitive capacity of the poor. We would argue that the poor have lower effective cognitive capacity than those who are well off. This is not because they are less capable, but rather because part of their mind is captured by scarcity.

    So now there is a new causal model for why the poor are unhealthy.

    dysfunction_model_MS

    Whereas in the stupid people model poverty and ill health were the outcomes of bad decision making, now bad decision making is an outcome of poverty. Even more important, this vulnerability to bad decision making is not a special vice of the poor. Instead, a propensity to bad decision making in the face of scarcity is wired into everyone‘s brain. The key problem isn’t that the poor are incompetent but rather that they are chronically exposed to scarcity. Our social policy must address that inequality of scarcity.

    The M and S model, if their data hold up, complements rather than replaces the stupid people model. In the real world, causality runs every which way. As I see it, everyone should have access to insurance to protect us from bad luck and, to some degree, our own stupidity. Nevertheless, it’s right that people should experience much of the pain generated by their own incompetent decisions. But we should also have a society with a priority on ending chronic inequality in exposure to scarcity — more briefly, poverty — and ensuring substantive equality of opportunity. It’s only fair.

    @Bill_Gardner

     
      Health Policy
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  • Physicians care about patients and money, ctd.

      09/27/2013
      Austin Frakt

    Forthcoming in the Journal of Health Economics, Geir Godager reanalyzes data from a study by Heike Hennig-Schmidt, Reinhard Selten, and Daniel Wiesen, about which I blogged in 2011 (ungated, working paper version of Godager’s manuscript is here). To refresh your memory, here’s a bit from that 2011 post:

    In a controlled setting, the researchers asked medical students to choose the quantity of medical care to provide to hypothetical patients enrolled in either fee-for-service (FFS) or capitated insurance plans [CAP]. Under the former, physicians are paid for each additional unit of care. Under the latter, they receive a lump-sum payment independent of units of care provided. In the experiment, quantity of care is an amount indexed by the integers 0 (no services) to 10 (the most services). In advance of making the quantity selection, the physician has full information about how the quantity selected will affect payment, costs, and profit (or income) and how it will benefit the patient. […]

    A-E are the (abstract) illness types and 1-3 index how much medical care would be optimal. The solid, black dots show the optimal level of care. Patients of type 1 (1A, 1B, etc.) would do best with 5 units of care, etc. Notice that under both payment systems, actual quantity provided is correlated with what would be optimal, highest for type 3 patients, lowest for type 2. So, patient needs matter. Still, patients needs don’t tell the whole story. Provision of care under both payment types differs from optimality, most strongly for types 1 and 2 under FFS and type 3 under CAP. Finally, CAP levels of care are systematically lower than under FFS.

    After reanalysis, Godager reports,

    In this paper, we investigate physician altruism toward patients’ health benefit using behavioral data from Hennig-Schmidt et al.’s (2011) laboratory experiment conducted with medical students deciding in the role of physicians. In particular, we measure individuals’ valuations of patient health benefits when choosing quantity of medical services.

    We find that most subjects attach a positive weight to patients’ health and, further, we observe substantial heterogeneity in the degrees of physician altruism. Our results indicate that some subjects attach a higher value to their own profit than to the patient benefit (26%), while others either attach equal weights to profit and health benefit (29%) or put an even higher weight on the patient (44%).

    Translation: More than half the study subjects (medical students) value their own profit as much or more than their (hypothetical) patients’ health. I neither find this surprising nor alarming. First of all, these are students facing paper patients, not patients in the flesh. Though that’s probably relevant to the findings, I still think that practitioners facing actual patients place some value on their own profit. Some of them probably do value that profit as much or more than their patients’ health.

    Even if we don’t like to think about that (likely) fact, it behooves us to accept it. The model that the doctor always and only cares about what’s best for the patient is old fashioned and, frankly, dangerous. Even if and when it’s true, patients would be better served if they played a more active role in their own care. Don’t presume your doctor’s values and incentives are aligned with your own. Ask questions. Do research. Behave like the consumer you should be. It’s your body, health, and life. And, if your doctor isn’t responding the way you’d like, fire him.

    Full disclosure: I just fired one of mine.

    @afrakt

     
      Medicine
      capitation, fee for service, physicians
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  • CNN: There are tradeoffs to Obamacare

      09/26/2013
      Aaron Carroll

    I tweeted this morning:

    In related news, insurance companies have always had limited networks. It’s one way they hold costs, and premiums, down. It’s an “expected” effect of Obamacare. If we don’t like that, we should change it. But then, we should expect to pay more.

    This was the topic of my latest column over at CNN.com. Go read.

    @aaronecarroll

     
      Health Policy
      ACA, CNN, networks, premiums
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  • Chart of the day: What happened to CABG and angioplasty?

      09/26/2013
      Austin Frakt

    One of these things is not like the others:

    That’s a figure from Amitabh Chandra, Jonathan Holmes, and Jonathan Skinner (PDF). The authors explain:

    In the case of cardiac stenting and bypass surgery, there was a dramatic run-up in their use during the 1990s for heart attacks and other heart disease, and with a particularly rapid rise in the use of stents (wire cylindrical devices used to maintain blood flow in the heart’s arteries). During the mid-2000s, however, several randomized trials suggested very modest benefits arising from the use of stents for the most common types of heart disease, leading to a downturn in the use of these procedures.

    According to this story, it’s all an angioplasty effect. Hold the CABG. However, no doubt the rise of statins also played a large role, probably affecting both CABG and angioplasty.

    UPDATE: NodakEM on Twitter points out that smoking cessation also likely played a role in reducing incidence of heart disease.

    UPDATE 2: By email, Amitabh Chandra points to this paper.

    @afrakt

     
      Medicine
      angioplasty, CABG
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  • A tale of two charts on exchange premiums

      09/25/2013
      Kevin Outterson

    The NYT and WSJ both feature charts today on state-by-state comparisons of premiums for health insurance policies in the exchanges. The WSJ chart is a health policy fail because it compares apples to zombies (bronze exchange policies with today’s cheapest available bare-bones coverage) and fails to include the tax subsidies. Both deficiencies are noted, but that just means they knew the chart was misleading:

    WSJ

    The NYT chart shows the premiums (with and without subsidies) for a family of four and a 27 year old, using the second-cheapest Silver plan. Much better, but it would still be interesting to also see the current cost of an actuarially-equivalent plan. An excerpt:

    NYT

    @koutterson

     
      Health Policy
      insurance exchange, premiums
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  • AcademyHealth: Too many choices

      09/25/2013
      Austin Frakt

    My latest AcademyHealth post summarizes literature on consumers’ responses to high numbers of plan choices. You really can have too much of a good thing. This, being only one post, is not too much for you to click through and read, is it?

    @afrakt

     

     
      Health Policy
      Medicare, Medicare Advantage, Part D
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  • Housekeeping note: TIE has a Facebook page now

      09/25/2013
      Adrianna McIntyre

    You might already be following TIE on Facebook through the “Networked Blogs” app, but we’ve found that this suffers from occasional fits of bugginess. Also, some people (me) really hate subscribing to Facebook apps.

    So! We made a traditional Facebook page, and we’re going to discontinue the use of Networked Blogs in two weeks (this way folks have a chance to transition over). The page will function like a RSS feed; new posts will automatically push to Facebook and show up for subscribers as stories in your Timeline for folks to click, like, and share.

    Sound like something that would make following TIE more convenient? Go “like” us!  

    Adrianna (@onceuponA)

     
      Uncategorized
      announcement
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  • The end of comments

      09/25/2013
      Austin Frakt

    Popular Science is shutting off comments.

    Comments can be bad for science. That’s why, here at PopularScience.com, we’re shutting them off.

    It wasn’t a decision we made lightly. As the news arm of a 141-year-old science and technology magazine, we are as committed to fostering lively, intellectual debate as we are to spreading the word of science far and wide. The problem is when trolls and spambots overwhelm the former, diminishing our ability to do the latter.

    You should read the rest, and especially if you make or read comments here. Yes, in our moments of frustration, we have considered shutting off comments at TIE. Rest assured, we have no plans at the moment to do so.

    Also, I might as well tell you, we’ve implemented a comment moderation rotation so that those of us who find reading comments especially taxing* only have to do so a couple of days a week. The upshot is that you should not expect that the author of the post you may be addressing will read your comment. It’s for this reason that we’re responding less, which you may have noticed.**

    Sorry about that. It’s not itself a commentary on your comments; many are very good. It’s a commentary on the growing volume of both signal and noise. It’s tragedy of the commons. Most of all, it’s the price of sanity and productivity.

    * Ahem, that’d be me.

    ** Best way to engage us, frankly, is on Twitter.

    @afrakt

     
      Uncategorized
      blogging
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  • Health care spending variation in Medicare and private coverage ain’t the same thing

      09/25/2013
      Aaron Carroll

    There are lots and lots of people who believe that increased health care spending must involve higher quality. Otherwise, we’d be forced to admit that we could spend a lot less and suffer no real consequences. A new viewpoint in JAMA summarizes a recent report from the IOM that begs to differ (emphasis mine):

    Recognizing that unexplained geographic variation in medical expenditures is both persistent and possibly a sign of inefficiency, members of Congress asked the Institute of Medicine (IOM) to explore geographic variation and address its policy implications. We chaired the resulting IOM committee, which recently issued its final report. The committee scrutinized the magnitude and implications of geographic variation in Medicare expenditures and examined the variation in health expenditures for patients whose care was financed from other sources. In its analyses of geographic variation in overall area-specific medical expenditures, the committee estimated spending by private insurers, Medicaid, the uninsured, and other out-of-pocket spending in an effort to measure the per-capita dollars spent on health care from all payment sources. In short, the committee sought to compare the total dollars spent on health care in different areas.

    The committee found that geographic variation in both Medicare and private expenditures was a real phenomenon and that high-cost areas in 1 year had high costs in other years. Areas with high costs in the treatment of 1 condition were somewhat more likely to have high costs in treating other conditions, but higher expenditures were not associated with better outcomes or higher quality care, either overall or when viewed from the perspectives of individual health conditions. Importantly, Medicare spending in an area and input-price-adjusted spending by private insurers were poorly correlated (with correlation coefficients of less than 0.1).

    It seems that most of the variation in per beneficiary spending is in “post-acute care”. This includes home health services, nursing homes, rehab facilities, long-term care hospitals, and hospice care. In fact, about three quarters of variation is accounted for by these services, which account for about 13% of all Medicare spending. The rest of the variation comes from inpatient services. Variation in outpatient services was negligible.

    Here’s something else that’s interesting (emphasis mine):

    These findings from Medicare do not generalize to private health insurance, for 2 principal reasons. First, post–acute care services (the main source of variation in Medicare spending) are seldom used by the younger privately insured population. Second, whereas Medicare sets a take-it-or-leave-it price after adjusting for wage levels, private insurers individually negotiate prices with physicians, hospitals, and other health care institutions and practitioners. The variation in negotiated prices presumably reflects variation in the local market power of both the insurer and the health care entity or clinician, as well as any variation across markets in efficiency among clinicians, hospitals, and other health care institutions. These 2 differences may help explain the poor correlation between Medicare and private insurer costs.

    Whereas price variation explains almost none of the overall variation in Medicare expenditures (after adjusting for wage variation), price variation is responsible for an estimated 70% of the total geographic variation in spending among privately insured persons. Variation in wage levels and variation in the quantity of services delivered are almost equally responsible for the remaining estimated 30% of spending variation. Thus, although most of the variation in per-beneficiary Medicare spending across HRRs is in the quantity of services, especially post–acute care services, the prices insurers pay in different areas—not the quantity of services—are responsible for most of the variation in private spending. These results are consistent with an important finding concerning Medicare: there is relatively little variation in either Medicare or among the privately insured in the quantity of services predominantly used by those younger than 65 years, such as outpatient visits and procedures. This helps explain why there is almost no correlation between Medicare spending and commercial spending in an area.

    Bottom line: Medicare spending in an area tells you almost nothing about private spending in an area, and vice versa. Moreover, what we might do to reduce one may have little effect on the other. Medicare has a volume problem, while private insurance has more of a price problem. We’ve got our work cut out for us.

    @aaronecarroll

     
      Health Policy
      JAMA, prices, variation, volume
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