Reading list

[book] The Theory of Demand for Health Insurance, by John Nyman.

The Paradoxical Problem with Multiple-IRB Review, by Jerry Menikoff. (A justified rant.)

The impact of medical insurance for the poor in Georgia: a regression discontinuity approach, by Sebastian Bauhoff, David R. Hotchkiss

Improving access to health care and financial protection of the poor is a key concern for policymakers in low- and middle-income countries, but there have been few rigorous program evaluations. The Medical Insurance Program for the Poor in the republic of Georgia provides a free and extensive benefit package and operates through a publicly funded voucher program, enabling beneficiaries to choose their own private insurance company. Eligibility is determined by a proxy means test administered to applicant households. The objective of this study is to evaluate the program’s impact on key outcomes including utilization, financial risk protection, and health behavior and management. A dedicated survey of approximately 3500 households around the thresholds was designed to minimize unobserved heterogeneity by sampling clusters with both beneficiary and non-beneficiary households. The research design exploits the sharp discontinuities at two regional eligibility thresholds to estimate local average treatment effects. Results suggest that the program did not affect utilization of health services but decreased mean out-of-pocket expenditures for some groups and reduced the risk of high inpatient expenditures. There are no systematic impacts on health behavior, management of chronic illnesses, and patient satisfaction.

Medicare Doesn’t Work As Well For Younger, Disabled Beneficiaries As It Does For Older Enrollees, by Juliette Cubanski and Patricia Neuman.

Medicare is not working as well for its eight million disabled beneficiaries under age sixty-five as it is for its older beneficiaries. We report on a 2008 survey that found significant differences between the two Medicare populations, with the younger group experiencing more problems of cost and access. Even with the Medicare Part D prescription drug program, the nonelderly disabled reported greater difficulty in affording medications, and more adverse health consequences as a result. One potential remedy is the Patient Protection and Affordable Care Act. The law includes reforms that could improve access to care and limit out-of-pocket expenses for the nonelderly disabled in Medicare—as well as those who are waiting to become eligible for the program.

The Medical Care Costs of Obesity: An Instrumental Variables Approach, by John Cawley, Chad Meyerhoefer

This paper is the first to use the method of instrumental variables (IV) to estimate the impact of obesity on medical costs in order to address the endogeneity of weight and to reduce the bias from reporting error in weight. Models are estimated using data from the Medical Expenditure Panel Survey for 2000-2005. The IV model, which exploits genetic variation in weight as a natural experiment, yields estimates of the impact of obesity on medical costs that are considerably higher than the correlations reported in the previous literature. For example, obesity is associated with $676 higher annual medical care costs, but the IV results indicate that obesity raises annual medical costs by $2,826 (in 2005 dollars). The estimated annual cost of treating obesity in the U.S. adult non-institutionalized population is $168.4 billion or 16.5% of national spending on medical care. These results imply that the previous literature has underestimated the medical costs of obesity, resulting in underestimates of the cost effectiveness of anti-obesity interventions and the economic rationale for government intervention to reduce obesity-related externalities.

Preventing a National Debt Explosion, by Martin S. Feldstein

The projected path of the U.S. national debt is the major challenge facing American economic policy. Without changes in tax and spending rules, the national debt will rise from 62 percent of GDP now to more than 100 percent of GDP by the end of the decade and nearly twice that level within 25 years. This paper discusses three strategies that, taken together, could reverse this trend and reduce the ratio of debt to GDP to less than 50 percent. The first strategy, which focuses on the current decade, would reduce the Administration’s proposed spending increases and tax reductions that would otherwise add $3.8 trillion to the national debt in 2020. The second strategy would augment the tax-financed benefits for Social Security, Medicare and Medicaid with investment based accounts would permit the higher future spending on health care and pensions with a relatively small increase in saving for such accounts. The third strategy focuses on “tax expenditures,” the special features of the tax law that reduce revenue in order to achieve effects that might otherwise be done by explicit outlays. Tax expenditures now result in an annual total revenue loss of about $1 trillion; reducing them could permanently reduce future deficits without increasing marginal tax rates or reducing the rewards for saving, investment, and risk taking. The paper concludes with a discussion of how the high debt to GDP ratio after World War II was reversed and how the last four presidents ended their terms with small primary deficits or primary budget surpluses.

Variation in Prescription Use and Spending for Lipid-Lowering and Diabetes Medications in the Veterans Affairs Healthcare System, by Walid F. Gellad, Chester B. Good, John C. Lowe, and Julie M. Donohue

Objectives: To examine variation in outpatient prescription use and spending for hyperlipidemia and diabetes mellitus in the Veterans Affairs Healthcare System (VA) and its association with quality measures for these conditions.

Study Design: Cross-sectional.

Methods: We compared outpatient prescription use, spending, and quality of care across 135 VA medical centers (VAMCs) in fiscal year 2008, including 2.3 million patients dispensed lipid-lowering medications and 981,031 patients dispensed diabetes medications. At each facility, we calculated VAMC-level cost per patient for these medications, the proportion of patients taking brand-name drugs, and Healthcare Effectiveness Data and Information Set (HEDIS) scores for hyperlipidemia (low-density lipoprotein cholesterol level <100 mg/dL) and for diabetes (glycosylated hemoglobin level >9% or not measured).

Results: The median cost per patient for lipidlowering agents in fiscal year 2008 was $49.60 and varied from $39.68 in the least expensive quartile of VAMCs to $69.57 in the most expensive quartile (P < .001). For diabetes agents, the median cost per patient was $158.34 and varied from $123.34 in the least expensive quartile to $198.31 in the most expensive quartile (P < .001). The proportion of patients dispensed brand-name oral drugs among these classes in the most expensive quartile of VAMCs was twice that in the least expensive quartile (P < .001). There was no correlation between VAMC-level prescription spending and performance on HEDIS measures for lipid-lowering drugs (r = 0.12 and r = 0.07) or for diabetes agents (r = -0.10).

Conclusions: Despite the existence of a closely managed formulary, significant variation in prescription spending and use of brand-name drugs exists in the VA. Although we could not explicitly risk-adjust, there appears to be no relationship between prescription spending and quality of care.

Accountable Care Organizations: Accountable for What, to Whom, and How, by Elliott S. Fisher, Stephen M. Shortell

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