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    A Decade Of Health Care Cost Growth Has Wiped Out Real Income Gains For An Average US Family, by David I. Auerbach and Arthur L. Kellermann (Health Affairs)

    Although a median-income US family of four with employer-based health insurance saw its gross annual income increase from $76,000 in 1999 to $99,000 in 2009 (in current dollars), this gain was largely offset by increased spending to pay for health care. Monthly spending increases occurred in the family’s health insurance premiums (from $490 to $1,115), out-of-pocket health spending (from $135 to $235), and taxes devoted to health care (from $345 to $440). After accounting for price increases in other goods and services, the family had $95 more in monthly income to devote to nonhealth spending in 2009 than in 1999. By contrast, had the rate of health care cost growth not exceeded general inflation, the family would have had $545 more per month instead of $95—a difference of nearly $5,400 per year. Even the $95 gain was artificial, because tax collections in 2009 were insufficient to cover actual increases in federal health spending. As a result, we argue, the burdens imposed on all payers by steadily rising health care spending can no longer be ignored.

    The Growth In Cost Per Case Explains Far More Of US Health Spending Increases Than Rising Disease Prevalence, by Charles S. Roehrig and David M. Rousseau (Health Affairs)

    Some prior research has suggested that health spending for many diseases has been driven more by increases in so-called treated prevalence—the number of people receiving treatment for a given condition—than by increases in cost per case. Our study reached a different conclusion. We examined treated prevalence, clinical prevalence—the number of people with a given disease, treated or not—and cost per case across all medical conditions between 1996 and 2006. Over this period, three-fourths of the increase in real per capita health spending was attributable to growth in cost per case, while treated prevalence accounted for about one-fourth of spending growth. Our evidence suggests that most of the treated-prevalence effect is due to an increase in the share of eligible people being treated rather than an increase in clinical prevalence of diseases. We conclude that efforts to curb health spending should focus more on reining in cost per case.

    Model Safety-Net Programs Could Care For The Uninsured At One-Half The Cost Of Medicaid Or Private Insurance, by Mark A. Hall, Wenke Hwang, and Alison Snow Jones (Health Affairs)

    Because the reforms under the Affordable Care Act of 2010 will leave an estimated twenty million or more people still uninsured, some Americans will continue to seek care at low or no cost through existing safety-net systems. To identify appropriate care models, this comparative case study assessed the costs of care provided by four large, well-structured, comprehensive safety-net programs for the uninsured in Colorado, Michigan, North Carolina, and Texas. The average monthly resource cost—including the value of referred, donated, and in-kind services—in these model programs was $141–$209 per adult in 2008. This was 25–50 percent less than the estimated cost of care for comparison groups covered by local Medicaid programs or by private insurance that provided similar services. Although these programs’ services are somewhat less comprehensive than those of generous insurance plans, the findings suggest that these model safety-net programs could be adapted to provide an alternative type of coverage for the uninsured, including both low-income and middle-class people.

    Medicare’s Bundled Payment Pilot For Acute And Postacute Care: Analysis And Recommendations On Where To Begin, by Neeraj Sood, Peter J. Huckfeldt, José J. Escarce, David C. Grabowski, and Joseph P. Newhouse (Health Affairs)

    In the National Pilot Program on Payment Bundling, a subset of Medicare providers will receive a single payment for an episode of acute care in a hospital, followed by postacute care in a skilled nursing or rehabilitation facility, the patient’s home, or other appropriate setting. This article examines the promises and pitfalls of bundled payments and addresses two important design decisions for the pilot: which conditions to include, and how long an episode should be. Our analysis of Medicare data found that hip fracture and joint replacement are good conditions to include in the pilot because they exhibit strong potential for cost savings. In addition, these conditions pose less financial risk for providers than other common ones do, so including them would make participation in the program more appealing to providers. We also found that longer episode lengths captured a higher percentage of costs and hospital readmissions while adding little financial risk. We recommend that the Medicare pilot program test alternative design features to help foster payment innovation throughout the health system.

    The Increased Concentration Of Health Plan Markets Can Benefit Consumers Through Lower Hospital Prices, by Glenn A. Melnick, Yu-Chu Shen, and Vivian Yaling Wu (Health Affairs)

    The long-term trend of consolidation among US health plans has raised providers’ concerns that the concentration of health plan markets can depress their prices. Although our study confirmed that, it also revealed a more complex picture. First, we found that 64 percent of hospitals operate in markets where health plans are not very concentrated, and only 7 percent are in markets that are dominated by a few health plans. Second, we found that in most markets, hospital market concentration exceeds health plan concentration. Third, our study confirmed earlier studies showing that greater hospital market concentration leads to higher hospital prices. Fourth, we found that hospital prices in the most concentrated health plan markets are approximately 12 percent lower than in more competitive health plan markets. Overall, our results show that more concentrated health plan markets can counteract the price-increasing effects of concentrated hospital markets, and that—contrary to conventional wisdom—increased health plan concentration benefits consumers through lower hospital prices as long as health plan markets remain competitive. Our findings also suggest that consumers would benefit from policies that maintained competition in hospital markets or that would restore competition to hospital markets that are uncompetitive.

    Medical Group Responses To Global Payment: Early Lessons From The ‘Alternative Quality Contract’ In Massachusetts, by Robert E. Mechanic, Palmira Santos, Bruce E. Landon, and Michael E. Chernew (Health Affairs)

    The largest insurer in Massachusetts, Blue Cross Blue Shield, began a new program in 2009 that combines global payments—fixed payments for the care of patient populations during a specified time period—with large potential quality bonuses for medical groups. In interviews with representatives of the participating medical groups, many of which could be considered prototype accountable care organizations, we found that most groups initially focused on two goals: building the infrastructure to help primary care providers earn quality bonuses; and managing referrals to direct patients to lower-cost settings. Groups are working to overcome numerous challenges, which include improving their data management capabilities; managing conflicting incentives in their fee-for-service contracts; and establishing cultures that emphasize teamwork, patient-centered care, and effective stewardship of medical resources. The participating medical groups are diverse in terms of size, organizational structure, and prior experience with managed care contracting. If the groups can succeed in reducing annual growth in health spending by half over the five-year contract, it could signal that even newly formed accountable care organizations can navigate a shift from fee-for-service to population-based payment models.

    The Impact of Economics Blogs, by David McKenzie and Berk Özler (The World Bank)

    There is a proliferation of economics blogs, with increasing numbers of economists attracting large numbers of readers, yet little is known about the impact of this new medium. Using a variety of experimental and non-experimental techniques, this study quantifies some of their effects. First, links from blogs cause a striking increase in the number of abstract views and downloads of economics papers. Second, blogging raises the profile of the blogger (and his or her institution) and boosts their reputation above economists with similar publication records. Finally, a blog can transform attitudes about some of the topics it covers.

    Health Care Spending and Quality in Year 1 of the Alternative Quality Contract, by Zirui Song, Dana Gelb Safran, Bruce E. Landon, Yulei He, Randall P. Ellis, Robert E. Mechanic, Matthew P. Day, and Michael E. Chernew (NEJM)

    Massachusetts’ Health Care Reform and Emergency Department Utilization, Christopher Chen, Gabriel Scheffler, and Amitabh Chandra (NEJM)

    Health Care Reform and the Health Care Workforce — The Massachusetts Experience, by Douglas O. Staiger, David I. Auerbach, and Peter I. Buerhaus (NEJM)

     

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