Reading list

Social costs of robbery and the cost-effectiveness of substance abuse treatment, by Anirban Basu, A. David Paltiel, Harold A. Pollack

Reduced crime provides a key benefit associated with substance abuse treatment (SAT). Armed robbery is an especially costly and frequent crime committed by some drug-involved offenders. Many studies employ valuation methods that understate the true costs of robbery, and thus the true social benefits of SAT-related robbery reduction. At the same time, regression to the mean and self-report bias may lead pre–post comparisons to overstate crime reductions associated with SAT.

Using 1992–1997 data from the National Treatment Improvement Evaluation Study (NTIES), we examined pre–post differences in self-reported robbery among clients in five residential and outpatient SAT modalities. Fixed-effect negative binomial regression was used to examine incidence rate reductions (IRR) in armed robbery. Published data on willingness to pay to avoid robbery were used to determine the social valuation of these effects. Differences in IRR across SAT modalities were explored to bound potential biases.

All SAT modalities were associated with large and statistically significant reductions in robbery. The average number of self-reported robberies declined from 0.83/client/year pre-entry to 0.12/client/year following SAT (p<0.001). Under worst-case assumptions, monetized valuations of reductions in armed robbery associated with outpatient methadone and residential SAT exceeded economic costs of these interventions. Conventional wisdom posits the economic benefits of SAT. We find that SAT is even more beneficial than is commonly assumed.

How much can treatment reduce national drug problems? by Peter Reuter, Harold Pollack

Aims: Treatment of drug addiction has been the subject of substantial research and, in contrast to several other methods of reducing drug use, has been found to be both effective and cost-effective. This review considers what is known about how much a nation can reduce its drug problems through treatment alone and what is known at the aggregate level about the effectiveness of prevention and enforcement.

Methods: The literature on the effectiveness of treatment, prevention and enforcement are reviewed, and set in a policy analytical framework.

Findings: Many studies have found treatment to have large effects on individuals’ consumption and harms. However, there is an absence of evidence that even relatively well-funded treatment systems have much reduced the number of people in a nation who engage in problematic drug use. For prevention, the scientific literature shows useful and modest effects at the individual level but there is little support for substantial aggregate effects. For enforcement, research has failed almost uniformly to show that intensified policing or sanctions have reduced either drug prevalence or drug-related harm. Nor—outside the UK—is there more than a modest effort to improve the evidence base for making decisions about the appropriate level of enforcement of drug prohibitions.

Conclusions: Treatment can justify itself in terms of reductions in harms to individuals and communities. However, even treatment systems that offer generous access to good quality services will leave a nation with substantial drug problem. Finding effective complementary programs remains a major challenge.

Health Care Spending Growth and the Future of U.S. Tax Rates, by Katherine Baicker, Jonathan S. Skinner

The fraction of GDP devoted to health care in the United States is the highest in the world and rising rapidly. Recent economic studies have highlighted the growing value of health improvements, but less attention has been paid to the efficiency costs of tax-financed spending to pay for such improvements. This paper uses a life cycle model of labor supply, saving, and longevity improvement to measure the balanced-budget impact of continued growth in the Medicare and Medicaid programs. The model predicts that top marginal tax rates could rise to 70 percent by 2060, depending on the progressivity of future tax changes. The deadweight loss of the tax system is greater when the financing is more progressive. If the share of taxes paid by high-income taxpayers remains the same, the efficiency cost of raising the revenue needed to finance the additional health spending is $1.48 per dollar of revenue collected, and GDP declines (relative to trend) by 11 percent. A proportional payroll tax has a lower efficiency cost (41 cents per dollar of revenue averaged over all tax hikes, a 5 percent drop in GDP) but more than doubles the share of the tax burden borne by lower income taxpayers. Empirical support for the model comes from analysis of OECD country data showing that countries facing higher tax burdens in 1979 experienced slower health care spending growth in subsequent decades. The rising burden imposed by the public financing of health care expenditures may therefore serve as a brake on health care spending growth.

The Impact of Medicare Part D on Hospitalization Rates, by Christopher C. Afendulis, Yulei He, Alan M. Zaslavsky, Michael E. Chernew

Objective. To determine whether the change in prescription drug insurance coverage associated with Medicare Part D reduced hospitalization rates for conditions sensitive to drug adherence.

Data Sources/Study Setting. Hospital discharge data from 2005 to 2007 for 23 states, linked with state-level data on drug coverage.

Study Design. We use a difference-in-difference-in-differences approach, comparing changes in the probability of hospitalization before and after the introduction of the Part D benefit in 2006, for individuals aged 65 and older (versus individuals aged 60–64) in states with low drug coverage in 2005 (versus those in states with high pre-Part D drug coverage).

Data Collection/Extraction Methods. Hospitalization rates for selected ambulatory care sensitive conditions in 23 states were computed using data from the Census and Health Care Utilization Project. Drug coverage rates were computed using data from several sources.

Principal Findings. For the conditions studied, our point estimates suggest that Part D reduced the overall rate of hospitalization by 20.5 per 10,000 (4.1 percent), representing approximately 42,000 admissions, about half of the reduction in admissions over our study period.

Conclusions. The increase in drug coverage associated with Medicare Part D had positive effects on the health of elderly Americans, which reduced use of nondrug health care resources.

Outpatient Wait Time and Diabetes Care Quality Improvement, by Julia C. Prentice, B. Graeme Fincke, Donald R. Miller, and Steven D. Pizer

Objective: To examine the relationship between glycated hemoglobin (A1C) levels and the number of days spent waiting for primary care appointments.

Study Design: Retrospective observational study that relied on Department of Veterans Affairs (VA) utilization data and Medicare claims data from 2001 to 2003. The outcome was A1C levels. The main explanatory variable of interest was facility-level primary care wait times measured in days.

Methods: Heckman selection models simultaneously predicted the presence of an A1C value and its level. Models were risk adjusted for prior individual health status. Separate models were estimated on the entire sample and on subsamples stratified by baseline A1C levels.

Results: Veterans who visited VA facilities with wait times of longer than 32.5 days had small significant increases in A1C levels of 0.14 percentage point for the whole sample, 0.07 percentage point for patients with baseline A1C levels less than 7%, 0.11 percentage point for patients with baseline A1C levels between 7% and 8%, and 0.18 percentage point for patients with baseline A1C levels greater than 8%.

Conclusions: Decreasing wait times has the potential to reduce A1C levels by 0.18 percentage point for patients with baseline A1C levels exceeding 8%. This effect is roughly one-third of what is achieved with the most successful existing quality improvement strategies. Ensuring timely access to outpatient care could be an important addition to future diabetes care quality improvement programs.

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