Employee Choice of a High-Deductible Health Plan across Multiple Employers, by Judith R. Lave1, Aiju Men, Brian T. Day, Wei Wang, and Yuting Zhang
Objective. To determine factors associated with selecting a high-deductible health plan (HDHP) rather than a preferred provider plan (PPO) and to examine switching and market segmentation after initial selection.
Data Sources/Study Setting. Claims and benefit information for 2005–2007 from nine employers in western Pennsylvania first offering HDHP in 2006.
Study Design. We examined plan growth over time, used logistic regression to determine factors associated with choosing an HDHP, and examined the distribution of healthy and sick members across plan types.
Data Extraction. We linked employees with their dependents to determine family-level variables. We extracted risk scores, covered charges, employee age, and employee gender from claims data. We determined census-level race, education, and income information.
Principal Findings. Health status, gender, race, and education influenced the type of individual and family policies chosen. In the second year the HDHP was offered, few employees changed plans. Risk segmentation between HDHPs and PPOs existed, but it did not increase.
Conclusions. When given a choice, those who are healthier are more likely to select an HDHP leading to risk segmentation. Risk segmentation did not increase in the second year that HDHPs were offered.
[book] How to Fix Medicare: Let’s Pay Patients, Not Physicians, by Roger Feldman. Excerpt of summary from the publisher:
Should Medicare pay for patient expenses the way automobile insurers pay for car-repair bills?
Medicare’s current method of paying physicians sets fees for more than 8,000 separate procedures and services, totaling over $60 billion annually. With Medicare’s formulas underpaying for some services and overpaying for others, this complex system is an inefficient use of resources that discourages the use of primary care in favor of more expensive specialty services. Provided with virtually unlimited medical services at low or no cost, patients today have little incentive to choose their care wisely.
In How to Fix Medicare: Let’s Pay Patients, Not Physicians, health economist Roger Feldman argues that a radical shift in Medicare policy is not only possible but imperative. Under Feldman’s “medical indemnity” proposal, Medicare would pay each patient a fixed amount of money, reserving larger subsidies for sicker people. Patients, in turn, would select their own medical services from providers who would set their own competitive rates. A medical indemnity system would do away with the distortion in patients’ incentives wrought by conventional Medicare coverage. Given a fixed amount of money to spend on medical care, patients would have strong incentives to shop for the combination of services, providers, and prices that most closely meet their needs.
Medical indemnities have already been tested successfully in the Medicaid program for some patients needing long-term care services. Feldman’s indemnity system protects patients whose conditions are much costlier than average while avoiding the proliferation of costly individual indemnities.
Implemented wisely, medical indemnities would expand consumer choice, improve program efficiency, and simplify the Medicare program.
The Role of Consumer Copayments for Health Care:Lessons from the RAND Health Insurance Experiment and Beyond, by Jon Gruber
[book] The Politics of Medicare, by Theodore Marmor.
[book] Pricing the Priceless: A Health Care Conundrum, by Joseph Newhouse.
Medicare, by Joseph Newhouse. A history of the program.
Medicare Advantage payment policy, by Mark Merlis.
Medicare Advantage (MA) plans are an important source of supplemental benefits for many Medicare beneficiaries. Often, MA plans are able to finance these extra benefits only because Medicare is paying them more than it would have spent to cover the same beneficiaries on a fee-for-service basis. As Congress considers curbing MA plan payments, this background paper explains how MA plans are paid and reviews recent trends in plan participation and enrollment. It then considers key issues raised by proposals to change the payment system.
