The Trade-Off between Costs and Outcomes: The Case of Acute Myocardial Infarction, by Jonas Schreyögg and Tom Stargardt
Objective. To investigate and to quantify the relationship between hospital costs and health outcomes for patients with acute myocardial infarction (AMI) in Veterans Health Administration (VHA) hospitals using individual-level data for costs and outcomes.
Data Sources. VHA administrative files for the fiscal years 2000–2006.
Study Design. Costs were defined as costs incurred during the index hospitalization for treatment of AMI. Mortality and readmission, assessed 1 year after the index hospitalization, were used as measures of clinical outcome. We examined health outcomes as a function of costs and other patient-level and hospital-level characteristics using a two-stage Cox proportional hazard model that accounted for competing risks within a multilevel framework. To control for patient comorbidities, we compiled a comprehensive list of comorbidities that have been found in other studies to affect mortality and readmissions.
Principal Findings. We found that costs were negatively associated with mortality and readmissions. Every U.S.$100 less spent is associated with a 0.63 percent increase in the hazard of dying and a 1.24 percent increase in the hazard to be readmitted conditional on not dying. This main finding remained unchanged after a number of sensitivity checks.
Conclusions. Our results suggest that there is a trade-off between costs and outcomes. The negative association between costs and mortality suggests that outcomes should be monitored closely when introducing cost-containment programs. Additional studies are needed to examine the cost–outcome relationship for conditions other than AMI to see whether our results are consistent.
Defining Medical Expenses — An Early Skirmish over Insurance Reforms, by John K. Iglehart
Lessons from the Mammography Wars, by Kerianne H. Quanstrum, and Rodney A. Hayward
Search costs and Medicare plan choice, by Ian M. McCarthy and Rusty Tchernis
There is increasing evidence suggesting that Medicare beneficiaries do not make fully informed decisions when choosing among alternative Medicare health plans. To the extent that deciphering the intricacies of alternative plans consumes time and money; the Medicare health plan market is one in which search costs may play an important role. To account for this, we split beneficiaries into two groups – those who are informed and those who are uninformed. If uninformed, beneficiaries only use a subset of covariates to compute their maximum utilities, and if informed, they use the full set of variables considered. In a Bayesian framework with Markov Chain Monte Carlo (MCMC) methods, we estimate search cost coefficients based on the minimum and maximum statistics of the search cost distribution, incorporating both horizontal differentiation and information heterogeneities across eligibles. Our results suggest that, conditional on being uninformed, older, higher income beneficiaries with lower self-reported health status are more likely to utilize easier access to information.
The history and principles of managed competition, by Alain Enthoven.
Managed competition in health care is an idea that has evolved over two decades of research and refinement. It is defined as a purchasing strategy to obtain maximum value for consumers and employers, using rules for competition derived from microeconomic principles. A sponsor (either an employer, a governmental entity, or a purchasing cooperative), acting on behalf of a large group of subscribers, structures and adjusts the market to overcome attempts by insurers to avoid price competition. The sponsor establishes rules of equity, selects participating plans, manages the enrollment process, creates price-elastic demand, and manages risk selection. Managed competition is based on comprehensive care organizations that integrate financing and delivery. Prospects for its success are based on the success and potential of a number of high-quality, cost-effective, organized systems of care already in existence, especially prepaid group practices. As it is outlined here, managed competition as a means to reform the U.S. health care system is compatible with Americans’ preferences for pluralism, individual choice and responsibility, and universal coverage.