Unbiased Analysis of Today's Healthcare Issues

Friday Links

Written By: Jason Shafrin - Apr• 11•14

HWR goes to the Lighthouse

Written By: Jason Shafrin - Apr• 10•14

Billy Wynne has posted a great  Health Wonk Review – The April Fools’ Edition at Healthcare Lighthouse. Billy’s is a first-timer and gives a fresh perspective on the HWR. Check-it out!

Why rich woman don’t get fat

Written By: Jason Shafrin - Apr• 09•14

This is the title of an Atlantic article that finds the that although more woman than men are obese, this gap narrows for high-income women.

One reason for this difference could be that women are more penalized than men for being fat. In fact, the Atlantic finds that the annual cost of obesity is $4,879 for woman and $2,646 for men. The difference is almost entirely due to the fact that men’s wages do not decrease if they are obese, but woman’s wages do.

Without any wage penalty, it is unclear whether one would expect rich people to be fat. Healthy food is often more expensive than unhealthy food. For instance, creating a salad yourself is typically more expensive than buying a McDonalds hamburger. Thus, one would expect rich people to eat healthier.

It is unclear whether rich people would exercise more than poor people. Although rich people have more money to pay for trainers and gym membership, their time (measured in wages) is more valuable. Thus, the opportunity cost of exercise for rich individuals is higher than for poor people.

What the Atlantic article seems to find, however, is that being rich or poor is not independent of your body weight. For women, being thin is almost a precondition for being rich. For men, on the other hand, this is not the case.

The cost of obesity for women is even higher when one takes into account non-economic factors. “Obese women in the U.S. are less likely to get married than their normal-weight peers, and about half as likely to attend college. They’re also twice as likely to become ill or depressed as obese men.”

What’s the conclusion? I agree with the author who says: “Given these incentives, is it any wonder that women with more resources tend to use them to avoid the fate of being fat and female in America?”

Quotations on Big Data

Written By: Jason Shafrin - Apr• 07•14

“There are a lot of small data problems that occur in big data.  They don’t disappear because you’ve got lots of the stuff. They get worse.”

  • David Spiegelhalter, Winton Professor of the Public Understanding of Risk at Cambridge university

Via FT.

Wisconsin’s Unique Medicaid Non-Expansion

Written By: Jason Shafrin - Apr• 06•14

The Supreme Court ruled that the Affordable Care Act was legal with one exception: the federal government could not require states to increase Medicaid eligibility. Although States were not required to make Medicaid eligibility more generous, the did have an incentive to do so. The federal government will pay 90% of the cost of enrolling this additional individuals in Medicaid. Thus, most states still had an incentive to expand Medicaid roles to increase funds flowing from the federal government.

A number of states, however, did not expand their Medicaid coverage. One unique example is Wisconsin. WonkBlog reports:

Under Wisconsin’s new Medicaid design, about 82,000 childless adults living under the federal poverty level are newly eligible. About 75,000 adults earning between the federal poverty level and 200 percent FPL were removed from the Medicaid program, known as BadgerCare in Wisconsin. They’ll be eligible for federal subsidies to purchase exchange coverage…

Wisconsin’s Medicaid plan is pretty unique. Walker rejected Obamacare’s far more generous federal match for the Medicaid expansion while managing to cover more of the state’s poorest residents. And there’s no eligibility gap like there is in other states that rejected the ACA’s Medicaid expansion, since anyone above the poverty level can get coverage on the exchange. But will they find the exchange coverage affordable, even with the federal subsidies?

The Wisconsin plan is almost analogous to a voucher program. Governor Scott Walker is saying, ‘if you are poor, we will give you a subsidy to buy whatever insurance you want. You are not required to buy low-quality government insurance’. However, it is unclear whether the size of the exchange subsidies are the same as the expected benefit one would receive from Medicaid coverage. Thus, in their Walker’s proposal is pro-market and potentially welfare improve for the poor, in practice it may not be if the subsidies are not sufficient to offset the benefits poor individuals would have received from Medicaid.

Friday Links

Written By: Jason Shafrin - Apr• 03•14

Free Health Care in the UK ‘A Thing of the Past’?

Written By: Jason Shafrin - Apr• 02•14

The UK’s National Health Service (NHS) is well known for providing free care to all its citizens. However, will £0 out-of-pocket payments be a thing of the past? Maybe so according to a recent survey of UK Members of Parliament (MPs). Pharmafile reports:

In response to the question “if the challenges facing the NHS are not addressed, then it may not remain free at the point of need”, 48% of respondents either strongly agreed or agreed.

It is a politically touchy subject: last May in response to an online campaign, the government felt the need to reaffirm that NHS treatment “will remain free at the point of delivery and available according to clinical need”.

The NHS Confederation says a ‘cross-section’ of 100 MPs was interviewed by Dods, and 81% of them believe the NHS in their constituency needs to change to meet the needs of patients in the future.

Of course, health care in the UK is not free; taxpayers finance these expenses. However, will increasing user fees help reduce moral hazard and decrease unnecessary use of medical services? Or will increasing user fees decrease access for poor patients who need care? Where you stand on the political spectrum likely will determine your answer.

Benefits of mammogram oversold?

Written By: Jason Shafrin - Apr• 01•14

That is what one new study finds. The Boston Globe reports that:

Doctors may have oversold the benefits of mammography and underplayed its risks, which has left many women unable to make an informed decision about whether or not to have regular breast cancer screenings beginning at age 40. That troubling finding is based on the latest review of research conducted by Harvard Medical School and Brigham and Women’s Hospital researchers, which concluded that mammograms decrease a woman’s risk of dying from breast cancer by a modest 19 percent.

Women in their 40s had just a 15 percent reduction in their breast cancer death risk compared to a 32 percent reduction for older women in their 60s who are far more likely to get breast cancer than younger women, according to the study published Tuesday in the Journal of the American Medical Association. None of the trials could determine whether mammograms reduced a woman’s risk of dying from any cause:

Thus, it appears that mammograms are beneficial on net, particularly for older or high risk women. However, they may not be the silver bullet some may have once thought them to be.

CoR at Insurance Writer

Written By: Jason Shafrin - Apr• 01•14

The 205th edition of the Cavalcade of Risk is up at the Insurance Writer blog. Are you willing to take the chance to check it out!

Do you live in an area with hospital competition?

Written By: Jason Shafrin - Mar• 31•14

Likely not.  At least according to some research by William Vogt.  In an NIHCM Issue Brief, Dr. Vogt states:

The inpatient hospital market in the United States was transformed by a wave of hospital consolidation during the 1990s, which witnessed more than 900 mergers and acquisitions. Many cities came to be dominated by two or three large hospital systems, and by 2003 almost 90 percent of Americans in metropolitan areas faced a “highly concentrated” hospital market, according to U.S. antitrust standards.

Does hospital competition matter? Likely yes. Less competition means higher prices for consumers. Vogt presents some time series data to support the claim:

…hospital prices to private payers in California fell from $10,800 per discharge in
1992 to $8,500 in 1999 – a more than 20 percent decline during this period of tightly managed care. After that, as hospitals consolidated and the impact of managed care waned, prices to private payers increased rapidly, nearly doubling to $15,600 per discharge by 2006. These price increases were highest in markets
with a small number of dominant hospitals.

There is some evidence that hospitals have modest economies of scale from merging; however these cost savings are not passed on to consumers. Further, “In the Medicare market, hospital consolidation
seems to lead to lower quality, at least for easily measured quality indicators.”

On the one hand, agencies such as the FTC and DOJ may push for more competitions. On the other hand, CMS and HHS are pushing for more consolidation, as they promote the use of accountable care organizations.

Not only can a lack of hospital competition affect prices, but so can a lack of insurer competition.  Dr. Austin Frakt reports in another NIHCM brief that:

Most prior work has focused on hospital consolidation and concluded that greater hospital market concentration raises hospital prices, sometimes by very significant amounts. Insurer consolidation can also lead to higher premiums, but available evidence points to a very modest impact. One recent study showed, for example, that the significant increase in insurer concentration that took place between 1998 and 2006 explained only 2 percent of the total increase in premiums over that period.

Are more mergers on the horizon? Maybe, maybe not. Dr. David Dranove writes that in recent years attorney generals have started to worry about market concentration.

Currently, Attorneys General in Massachusetts and California, respectively, are investigating concerns that Partners Healthcare and Sutter Health dominate their local markets and insurers feel unable to resist their demands for greater reimbursements.

Further, in Idaho, the FTC blocked a merger between St. Luke’s Healthcare and Saltzer Medical Group.

The future market concentration of the healthcare industry is thus yet to be determined.