Unbiased Analysis of Today's Healthcare Issues

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.

Health Insurance Exchange Enrollment: March 2014 Update

Written By: Jason Shafrin - Mar• 30•14

Healthcare.gov was seen as a disaster. Some states, however, opted to create their own exchange. California, for instance, created the “Covered California” website and exchange. How many states decided to create their own exchange? A Robert Wood Johnson issue brief notes that:

[Sixteen] States (and DC) established their own marketplaces; 27 states chose, or defaulted to, a federally-run marketplace. Because of time constraints, two of the state-based marketplaces (New Mexico and Idaho) are using the federal IT platform while they develop their own.

In which States did the exchanges lead to the largest update in insurance?

The enrollment rate varies from state to state, with a high of 54% in Vermont to a low of 5% in Massachusetts. We should note that Massachusetts had the lowest rate of uninsurance in the nation since its health reform in 2006; its previous success might mean that the remaining uninsured population could be especially difficult to reach…

On average, state-based marketplaces have had higher enrollment rates (20.3% of eligibles) than the federally facilitated ones (12.4%) or the partnership states (13.9%).

Note, however, that these figures represent the share of individuals who were uninsured or who had previously had an individual plan (i.e., not Medicare, Medicaid, or an employer-provided group plan), and thus these estimates somewhat overstate the impact of ACA on uninsurance rates.

Friday Links

Written By: Jason Shafrin - Mar• 28•14

Madness at the HWR

Written By: Jason Shafrin - Mar• 27•14

Christopher Fleming has posted an excellent edition of the Health Wonk Review (HWR) at Health Affairs BlogA March Madness Health Wonk Review.

And the news from Syria gets worse…

Written By: Jason Shafrin - Mar• 27•14

Individual health in Syria is not only at risk due to violence, but also due to contagious diseases.  In fact, one disease that had previously been eradicated from the country is now back.  The BBC reports:

Syria was declared free of polio in 1999. But the disease re-emerged last year, after two years of conflict. The World Health Organization (WHO) says there are now 25 laboratory-confirmed cases in the country, with another 13 confirmations pending. But Syrian doctors put the number of children with clinical symptoms of polio much higher, at at least 110. And for every victim, there are at least 200 people – some doctors say up to 1,000 – carrying and spreading the virus.

The human toll of the war in Syria keeps growing.

Comparing Cost-Benefit Analysis and Social Welfare Functions

Written By: Jason Shafrin - Mar• 25•14

When evaluating whether a policy or medical treatment approved, policymakers often rely on cost-benefit analysis (CBA).  However, how does one measure costs and benefits?  Costs are often measured in monetary terms and benefits are often measured as decreases in mortality or morbidity.

One way to ensure to tradeoff cost and benefits is to monetize health benefits using the value of a statistical life (VSL) framework.  VSL measures the marginal rate of substitution between fatality risk in a specified time period, and wealth. In other words, it is the change in an individual’s wealth required to compensate him for a small change in his risk of dying during the period, divided by the risk change.  Policymakers use VSL as an input to value health benefits in cost-benefit analysis.

Another approach to evaluate policies or medical treatmetns is to use a social welfare function.  In the social welfare function (SWF), treatment costs and health benefits are arguments in a utility function.  For instance, a utilitarian SWF simply sums individual utilities.  The goal of policymakers is to maximize utility of the entire population.  Another approach is to use a concave SWF where the utility of the worst-off members of society receives more weight than the best-off.

How does the use of VSL and SWF compare?  And article by Adler, Hammitt and Treich (2014) provides a comparison.