September 2010

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Health Insurance for Part Time Workers

September 15, 2010 in Health Insurance, HSA | 6 comments

The goal of LyfeBank is basically to serve as a 401(k) for health insurance.  Employers can make contributions to the employees health insurance into a fund and workers can use this money to buy various health insurance products, reimburse themselves for co-payments or deductibles, or pay for medical costs directly.

LyfeBank has two key innovations.  The first is that part-time workers can still receive money for health insurance on a pre-tax basis.  Further, multiple employers can contribute the the worker’s health insurance premiums as these funds go directly into the employee’s LyfeBank account.  Second, workers can apply for a LyfeBank Visa which will automatically deduct covered medical expenses from their bill.  If this credit card works well, it could reduce paperwork needed to reimburse providers.  However, there will likely still be arguments from benefciaries about what is or is not covered by the insurance company they choose.

The main drawback of Lyfebank is that workers must purchase health insurance on the individual market.  There is no pooling mechanism.  Thus, although part-time workers can now receive funding from multiple employers, the cost of their health insurance premiums will still be much higher than it would be if they worked at a large firm.

LyfeBank thus helps reduce the health insurance complexities for individuals working multiple part-time jobs.  It does not, however, offer these individuals a mechanism to pool their risk with other part time workers.  It will be interesting to see how this innovation will evolve when Health Insurance Exchanges appear in a few years.

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Headlines: Vaccinating Adolescents

September 14, 2010 in Uncategorized | No comments

The U.S. medical system does a good job of vaccinating children.  The CDC has a list of recommended vaccinations which most children receive during routine physician visits.  As children grow into adolescents, however, they are less likely to visit their primary care provider regularly.  As a handful of new vaccines are targeted at teens (e.g., vaccines against meningococcal meningitis), the CDC is trying to target to teens using in-school vaccinations.

Reactions to this policy depends on whether you believe these vaccines provide more health benefits than risks (which I and most researchers do) or if you believe the risks of illness outweighs the health benefits.

Below are two headlines describing the same pilot in-school vaccination program in Denver.

  • “Pilot program provides shots to kids in Denver schools” – Denver Post
  • “Pharma Planning to Dump Experimental and Controversial Vaccines in Public Schools” – PreventDisease.com.

Links

September 13, 2010 in Current Events | No comments

Patents, Regulation, and Fake Drugs

September 13, 2010 in Pharmaceuticals, Regulation | No comments

The Economist notes that counterfeit drugs are a growing problem.

“Counterfeit drugs can kill. Many are shoddily made, containing the wrong dose of the active ingredient. Taking them instead of the real thing can turn a treatable disease into a fatal one. It can also foster drug resistance among germs.”

Do patents cause and increase or decrease in the provision of unsafe, fake drugs?  Most people will say that patents help protect drug safety.  Drugs sold under patent require FDA approval and are generally safe.  However, these drugs are expensive and many people–especially those without insurance–cannot afford them.  Thus, these individuals may turn to less reliable vendors who promise to provide the same drugs at a lower price.

With shorter patent lengths, reliable companies can begin to produce affordable generics.  Companies can build a reputation for high quality generics, while still selling customers through low prices.  Eventually, these “generic” companies could build a brand name as worthwhile as Pfizer.

Just decreasing patent lengths is not a cure all, however.  People have been selling, drugs, tonics and potions which falsely purport to cure all types of ailments since the beginning of mankind (e.g., snake oil salesmen).

Additional drug safety regulation could improve the safety of marketed drugs, but it would also likely drive up prices, thus forcing more individuals to buy medicines on the black market.  Additional regulation also stymies new treatment innovation due to the extra costs regulation imposes.

Fake drugs are a serious problem; a problem without a simple answer.

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Do Acid Blockers pose health risks

September 10, 2010 in Pharmaceuticals | 2 comments

In 2008, Americans spend over $14 billion on proton pump inhibitors.  These heartburn treatments such as Nexium, Prevacid, and Protonix may put millions of patients at risk.

According to Scientific American, long-term use of these medicines has been linked to “withdrawal symptoms, an increased risk of bacterial infection, hip fracture and even possible nutritional deficiencies.”  Additionally, Doctors sometimes give PPIs to prevent gastrointestinal bleeding or stress ulcers, even though such prescribing is of questionable medical value.  On study by a professor at the University of Michigan Hospital found that their facility spent over $100,000 per year on unnecessary PPI prescriptions.

Surprisingly, a 2009 study in Gastroenterology found that “long-term use of PPIs may cause the very symptoms the drugs are designed to treat.”  After 12 weeks of treatment, 22% of the treatment group receiving PPIs experienced heartburn compared to 2% of the group receiving a placebo.  In fact, St. Paul’s Hospital in Vancouver cut daily medication costs in half by redcing PPI prescribing patterns and did not worsen clinical outcomes whatsoever.

Why are PPIs so popular if they are ineffective?  One doctor claims that they may be addictive.

Should PPIs be prohibited?  I would say not.  However, given the evidence of the ineffectiveness of PPIs, private insurance companies, Medicare and Medicaid should not cover these types of medicines.  Under this logic, patients could still take the medicines if they wished, but this would come at their own cost.  This is one case where President’s Obama’s push for the use of more cost-effectiveness analysis within government health insurance programs could bear cost savings without harming patient health.

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Risk Adjustment Models

September 9, 2010 in Econometrics | 1 comment

Risk adjustment is important for many aspects of health care.  Medicare uses risk adjustment to modify payments to Medicare Advantage (Part C) plans based on the health of the beneficiaries they cover.  Private insurance companies can use risk adjustment to fine-tune capitation payments to physicians or determine a potential enrollee’s premium.  Providers can use risk adjustment to identify likely high cost patients and how to adjust their likely treatment pattern accordingly.

There is little doubt that risk adjustment is important, but determining which risk adjustment model is ideal is difficult.  A paper by the Society of Actuaries (2007) examines this topic.  The ideal risk adjustment method will depend on a number of factors.   These include:

  • Ease of use of the software;
  • Specificity of the model to the population to which it is being applied;
  • Cost of the software;
  • Transparency of the mechanics and results of the model;
  • Access to data of sufficient quality;
  • Underlying logic or perspective of a model that makes it best for a specific application;
  • Whether the model provides both useful clinical as well as financial information;
  • Whether the model will be used mostly for payment to providers and plans or for underwriting, rating and/or case management;
  • Reliability of the model across settings, over time or with imperfect data (models that are calibrated and tested on a single data set and population may or may not perform well on different data sets/populations);
  • Whether the model is currently in use in the market or organization; and
  • Susceptibility of the model to gaming or upcoding.

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Cavalacade of Risk

September 8, 2010 in Carnivals | No comments

The 113rd edition of the Cavalcade of Risk is up at David Williams’ Health Business Blog.

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Wednesday Links

September 8, 2010 in Current Events | No comments

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International Healthcare Models: Australia

September 7, 2010 in Uncategorized | No comments

Today I’ll be talking about healthcare in Australia.  Australia a rich country with 21.2 million residents, has the sixth highest life expectancy of any country in the world.  The review of the Australian healthcare system is based on the Australia’s Health 2008 report.  Unless otherwise noted, all dollar figures reference are in Australian dollars ($1 USD=1.10 AUD)

Health Spending

“Almost 70% of total health expenditure in Australia is funded by government, with the Australian Government contributing two-thirds of this and state, territory and local
governments the other third. The Australian Government’s major contributions include the two national subsidy schemes, Medicare and the Pharmaceutical Benefits Scheme (PBS). Medicare subsidises payments for services provided by doctors and optometrists and other allied health professionals such as clinical psychologists, and the PBS subsidises payments
for a high proportion of prescription medications bought from pharmacies (individuals contribute out-of-pocket payments for these services as well). The Australian Government and state and territory governments also jointly fund public hospital services.”

  • Australia spent 1 in every 11 dollars on health in 2005–06, equaling $86.9 billion, 9.0% of gross domestic product (GDP).
  • The Australian government pays for 68% of national health expenditures (NHE).
  • The federal government paid $37.2 billion (43% of NHE) and the state, territory and local governments paid $21.6 billion (25%)
  • As a share of its GDP, Australia spent more in 2005 than the United Kingdom (8.3%), a similar amount to Italy (8.9%) and much less than the United States (15.3%).
  • NHE per capita amounted to $4,226
  • Health spending per person was 45% more in 2005–06 than a decade before, even after adjusting for inflation.
  • For Indigenous Australians in 2004–05, health spending per person was 17% higher than for other Australians.
  • The spending on medications increased by 1.6% between 2004–05 and 2005–06—much less than the average increase of 8.6% per year in the decade before

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Labor Day Post II: Health Insurance Cost Shifting

September 6, 2010 in Health Insurance | 2 comments

Sticky wages is the concept that few employees will agree to a nominal decrease in wages even if there is a decrease in productivity.  However, the Kaiser Family Foundation found that although nominal wages may not be decreasing, the amount of money workers are paying for health insurance is rising quickly (full report).

“Workers on average are paying nearly $4,000 this year toward the cost of family health coverage – an increase of 14 percent, or $482, above what they paid last year… The jump occurred even though the total premiums for family coverage, including what employers themselves contribute, rose a modest 3 percent to $13,770 on average in 2010, the survey found.  In contrast, the amount employers contribute for family coverage did not increase.”

With employees bearing a larger and larger share of health insurance costs, pressure to increase decrease benefit generosity will build as workers begin to switch to less generous health insurance plans.

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