Reading list

The Looming Expansion And Transformation Of Public Substance Abuse Treatment Under The Affordable Care Act, by Jeffrey A. Buck (Health Affairs)

Public substance abuse treatment services have largely operated as an independent part of the overall health care system, with unique methods of administration, funding, and service delivery. The Affordable Care Act of 2010 and other recent health care reforms, coupled with declines in state general revenue spending, will change this. Overall funding for these substance abuse services should increase, and they should be better integrated into the mainstream of general health care. Reform provisions are also likely to expand the variety of substance abuse treatment providers and shift services away from residential and stand-alone programs toward outpatient programs and more integrated programs or care systems. As a result, patients should have better access to care that is more medically based and person-centered.

Massachusetts’ Health Care Reform Increased Access To Care For Hispanics, But Disparities Remain, by James Maxwell, Dharma E. Cortés, Karen L. Schneider, Anna Graves, and Brian Rosman (Health Affairs)

Hispanics are more likely than any other racial or ethnic group in the United States to lack health insurance. This paper draws on quantitative and qualitative research to evaluate the extent to which health reforms in Massachusetts, a model for the Affordable Care Act of 2010, have reduced disparities in insurance coverage and access to health care. We found that rates of coverage and the likelihood of having a usual provider increased dramatically for Massachusetts Hispanics after the state’s reforms, but disparities remained. The increase in insurance coverage among Hispanics was more than double that experienced by non-Hispanic whites. Even so, in 2009, 78.9 percent of Hispanics had coverage, versus 96 percent of non-Hispanic whites. Language and other cultural factors remained significant barriers: Only 66.6 percent of Hispanics with limited proficiency in English were insured. One-third of Spanish-speaking Hispanics still did not have a personal provider in 2009, and 26.8 percent reported not seeing a doctor because of cost, up from 18.9 percent in 2005. We suggest ways to reduce such disparities through national health care reform, including simplified enrollment and reenrollment processes and assistance in finding a provider and navigating an unfamiliar care system.

Setting Cost-Effectiveness Thresholds As A Means To Achieve Appropriate Drug Prices In Rich And Poor Countries, by Patricia M. Danzon, Adrian Towse, and Andrew W. Mulcahy (Health Affairs)

Finding better mechanisms to enable differential pricing that reflects different degrees of willingness to pay across countries with different income levels is an important challenge for drug manufacturers and policy makers. Drug prices must be high enough to meet manufacturers’ needs—covering costs and ensuring adequate investment in research and development, as well as producing a profit—but low enough to allow consumers access to medicines that they need. Examining drug pricing, we found that in rich countries, insurance coverage can make consumers insensitive to price, which means that manufacturers’ prices are largely unrestrained unless payers intervene. In middle- and low-income countries, where most consumers pay for drugs out of pocket, we found that the poorest countries face the highest prices, relative to their mean per capita income. We recommend that countries and payers set their own cost-effectiveness thresholds to reflect how much they are willing to pay for “health gain”—in other words, for a measured improvement in the health of a person or a population. Adopting this approach broadly should lead to appropriate price differences across and within countries, benefiting consumers and manufacturers alike.

How payment systems affect physicians’ provision behaviour—An experimental investigation, by Heike Hennig-Schmidt, Reinhard Selten, and Daniel Wiesen (JHE)

Understanding how physicians respond to incentives from payment schemes is a central concern in health economics research. We introduce a controlled laboratory experiment to analyse the influence of incentives from fee-for-service and capitation payments on physicians’ supply of medical services. In our experiment, physicians choose quantities of medical services for patients with different states of health. We find that physicians provide significantly more services under fee-for-service than under capitation. Patients are overserved under fee-for-service and underserved under capitation. However, payment incentives are not the only motivation for physicians’ quantity choices, as patients’ health benefits are of considerable importance as well. We find that patients in need of a high (low) level of medical services receive larger health benefits under fee-for-service (capitation).

The causal relationship between education, health and health related behaviour: Evidence from a natural experiment in England, by Nils Braakmann (JHE)

I exploit exogenous variation in the likelihood to obtain any sort of educational qualification between January- and February-born individuals for 13 academic cohorts in England. For these cohorts compulsory schooling laws interacted with the timing of the CSE and O-level exams to change the probability of obtaining a qualification by around 2–3 percentage points. I then use data on individuals born in these two months from the British Labour Force Survey and the Health Survey for England to investigate the effects of education on health using being February-born as an instrument for education. The results indicate neither an effect of education on various health related measures nor an effect on health related behaviour, e.g., smoking, drinking or eating various types of food.

Where would you go for your next hospitalization? by Kyoungrae Jung, Roger Feldman, and Dennis Scanlon (JHE)

We examine the effects of diverse dimensions of hospital quality – including consumers’ perceptions of unobserved attributes – on future hospital choice. We utilize consumers’ stated preference weights to obtain hospital-specific estimates of perceptions about unmeasured attributes such as reputation. We report three findings. First, consumers’ perceptions of reputation and medical services contribute substantially to utility for a hospital choice. Second, consumers tend to select hospitals with high clinical quality scores even before the scores are publicized. However, the effect of clinical quality on hospital choice is relatively small. Third, satisfaction with a prior hospital admission has a large impact on future hospital choice. Our findings suggest that including measures of consumers’ experience in report cards may increase their responsiveness to publicized information, but other strategies are needed to overcome the large effects of consumers’ beliefs about other quality attributes.

Economic Impact of Opioid Abuse, Dependence, and Misuse, by Alan White, et al. (American Journal of Pharmacy Benefits)

Objectives: To examine the demographics, comorbidity rates, healthcare resource use, and costs for patients with opioid abuse, dependence, and misuse (opioid abuse) and their spouses, dependents, and other family members (caregivers) and to report the prevalence of opioid abuse.

Methods: We compared opioid abuse patients and demographically matched controls using privately insured and Florida Medicaid administrative claims data from 2003 to 2007. We calculated comorbidity rates, healthcare resource use, and costs per patient (from the payer’s perspective) for 3 samples: privately insured patients (n = 4474), privately insured caregivers (n = 5987), and Florida Medicaid patients (n = 4667).

Results: Opioid abuse patients and caregivers had higher rates of comorbidities and greater resource use in both privately insured and Florida Medicaid populations compared with controls. Mean excess annual cost per privately insured patient was $20,546 ($24,193 − $3647 control), and mean excess cost per caregiver was $1010 ($4171 − $3161 control). Mean excess cost per Florida Medicaid patient was $15,183 ($26,724 − $11,541 control). Over the past decade, the annual prevalence of diagnosed opioid abuse more than doubled in both populations, increasing from 0.05% to 0.16% among the privately insured and from 0.18% to 0.50% in Florida Medicaid patients.

Conclusion: Opioid abuse has a serious negative impact on patient health and places a substantial economic burden on healthcare payers.

Has the Shift to Managed Care Reduced Medicaid Expenditures? Evidence from State and Local-Level Mandates, by Mark Duggan and Tamara Hayford (NBER)

From 1991 to 2003, the fraction of Medicaid recipients enrolled in HMOs and other forms of Medicaid managed care (MMC) increased from 11 percent to 58 percent. This increase was largely driven by state and local mandates that required most Medicaid recipients to enroll in an MMC plan. Theoretically, it is ambiguous whether the shift from fee-for-service into managed care would lead to an increase or a reduction in Medicaid spending. This paper investigates this effect using a data set on state and local level MMC mandates and detailed data from CMS on state Medicaid expenditures. The findings suggest that shifting Medicaid recipients from fee-for-service into MMC did not reduce Medicaid spending in the typical state. However, the effects of the shift varied significantly across states as a function of the generosity of the state’s baseline Medicaid provider reimbursement rates. These results are consistent with recent research on managed care among the privately insured, which finds that HMOs and other forms of managed care achieve their savings largely through reduced prices rather than lower quantities.

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