Reading list

How Do Employers React to A Pay-or-Play Mandate? Early Evidence from San Francisco, by Carrie Hoverman Colla, William H. Dow, Arindrajit Dube

In 2006 San Francisco adopted major health reform, becoming the first city to implement a pay-or-play employer health spending mandate. It also created Healthy San Francisco, a “public option” to promote affordable universal access to care. Using the 2008 Bay Area Employer Health Benefits Survey, we find that most employers (75%) had to increase health spending to comply with the law, yet most (64%) are supportive of the law. There is substantial employer demand for the public option, with 21% of firms using Healthy San Francisco for at least some employees, yet there is little evidence of firms dropping existing insurance offerings in the first year after implementation.

A Review of War Costs in Iraq and Afghanistan, by Ryan D. Edwards

As of this writing, the wars in Iraq and Afghanistan are in their eighth and tenth years, having accrued nearly a trillion dollars in direct military costs. I review the history of cost forecasts for these ongoing engagements, highlighting the differences across them in scope and accuracy, assessing the methods and practice of cost forecasting, and exploring the implications of the war costs themselves. Besides the unanticipated length and breadth of the military conflicts themselves, a related and equally important component of costs is the life cycle of costs associated with caring for veterans. The forecasts we have of such costs imply high levels of public spending per veteran and very high levels of costs associated with pain and suffering per veteran, as high as 10 to 25 percent of lifetime wealth. I also discuss the methods and motivations associated with war cost forecasts by comparing them with other types of aggregate forecasts, which are prone to similar types of errors. The history of war cost forecasts suggests that increasing their frequency and transparency may improve their usefulness in guiding policy.

What if the Federal Government Negotiated Pharmaceutical Prices for Seniors? An Estimate of National Savings, by Walid F. Gellad, Sebastian Schneeweiss, Phyllis Brawarsky, Stuart Lipsitz and Jennifer S. Haas

The government is prohibited from directly negotiating drug prices for Medicare Part D, resulting in substantial policy debate. However, the government has an established mechanism for setting prices with pharmaceutical manufacturers for certain other federal programs – the Federal Supply Schedule (FSS). [H]ow much could be saved nationwide if prices equivalent to the 2006 FSS were achieved for the top 200 drug formulations dispensed to seniors[?] … The potential annual savings with FSS prices would be $21.9 billion [95% confidence interval (CI), $21.1 billion to $22.8 billion]. If FSS prices were substituted for only the top ten drugs, the annual savings would be $5.9 billion (95% CI, $5.7 billion, $6.1 billion). … Extension of existing price setting mechanisms to Medicare could save tens of billions of dollars if prices similar to those already achieved by other federal programs could be reached. Whether or not this is a political or economic possibility, the magnitude of these savings cannot be ignored.

Provider networks and primary-care signups: Do they restrict the use of medical services? by Partha Deb and Pravin Trivedi

This article analyzes the effect of gatekeeper and network restrictions on use of health-care services using simulation-based estimation methods. Data from the Community Tracking Survey (1996–1997) show significant evidence of selection into plans with gatekeeper and/or network restrictions. Enrollees in plans with networks of physicians have fewer office-based visits to non-physician medical professionals, but more emergency room visits and hospital stays. Individuals in plans that require signups with a primary-care provider have more visits to nonphysician providers of care, more surgeries and hospital stays but substantially fewer emergency room visits. Enrollees of plans that do not pay for out-of-network services have more office-based and emergency room visits, but less surgeries and hospitalizations.

Imperfect information in a quality-competitive hospital market, by Hugh Gravellea and Peter Sivey

We examine the implications of policies to improve information about the qualities of profit-seeking duopoly hospitals which face the same regulated price and compete on quality. We show that if hospital costs of quality are similar then better information increases the quality of both hospitals. However, if the costs are sufficiently different improved information will reduce the quality of both hospitals. Moreover, even when quality increases, better information may increase or decrease patient welfare depending on whether an ex post or ex ante view of welfare is taken.

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