Unbiased Analysis of Today's Healthcare Issues

Efficacy vs. Effectiveness vs. Efficiency

Written By: Jason Shafrin - Jan• 25•16

Efficacy describes the technical relationship between the technology and its effects (whether it actually works), whereas effectiveness concerns the extent to which application of an efficacious technology brings about desired effects (changes in diagnoses, altered management plans, improvement in health)…Efficiency is an economic concept which relates efficacy and effectivness to resource use.  Assessment of efficiency is concerned with whether acceptable efficacy and effectiveness are achieved with the most prudent or optimal mix or resources.

MacKenzie and Dixon (1995).

Mental Health Stigma

Written By: Jason Shafrin - Jan• 24•16

In this day and age, does having a mental illness still carry a stigma?  According to research by Prashant Bharadwaj, Mallesh M. Pai, Agne Suziedelyte, the answer is yes.

Comparing self-reports to administrative data records on diagnosis and prescription drug use, we find that survey respondents under-report mental health conditions 36% of the time when asked about diagnosis and about 20% of the time when asked about prescription drug use. Survey respondents are significantly less likely to under-report other conditions such as diabetes or hypertension. This behavior is consistent with a model in which mental health illnesses are stigmatized and agents have incentives to hide such traits from others.

The authors also find that this stigma may prevent patients with a mentally ill from seeking needed care.

Physician shortage?

Written By: Jason Shafrin - Jan• 21•16

A physician shortage may be a bit much, but it appears that physicians overestimate their availability based on a study by Coffman et al. (2016).

The percentage of callers posing as Medicaid patients who could schedule new patient appointments was 18 percentage points lower than the percentage of physicians who self-reported on the survey that they accept new Medicaid patients. Callers were also less likely to obtain appointments when they posed as patients with private insurance.

This fact that physicians overestimate their availability should not be a surprise.  The cost of inaccurately estimating ones availability are asymmetric: physicians who overestimate their availability will only upset potential patients who won’t become there patient and could even build an air of exclusivity.  On the other hand, understimating the availability means that a physician may become idle.  What is surprising, however, is that this bias occurs for both Medicaid and private insurance; because Medicaid patients are less lucrative, one would expect the overestimation of availability to be much higher for Medicaid patients.


How to cure cancer

Written By: Jason Shafrin - Jan• 20•16

Clinical progress against a disease as wily and dimly understood as cancer, DeVita argues, happens when doctors have the freedom to try unorthodox things—and he worries that we have lost sight of that fact.

Excerpt from “Tough Medicine: A disturbing report from the front lines of the war on cancer” by Malcolm Gladwell in the New Yorker.

Healthcare Economist celebrates 10 year anniversary

Written By: Jason Shafrin - Jan• 19•16

On January 19, 2006, I started blogging with this post.  You could say that it was my “Hello World!” post. In ten years, a lot has changed.

On a personal note, I got a PhD at UC-San Diego, began work at Acumen, and have moved on to Precision Health Economics.  I moved all around California: from San Diego to San Francisco to Los Angeles. I got married to the most amazing woman in the world and was blessed to have an equally amazing daughter.

As a nation, we’ve seen 10 state of the union addresses (see my comments on each one). The Affordable Care Act passed and dramatically changed the health care landscape (see Obamacare Overview).  More people have health insurance, but health care cost per capita continues to rise.  Innovation is all around us including in new cancer treatments, digital medicine, robotic surgery, but society increasingly demands that these innovations demonstrate that the health benefits that they provide are worth the cost.

Throughout the past 10 years, I’ve kept you up to date on all these happenings.  Some of your favorite posts I have highlighted below. My most popular posts of the last 10 years included:

The top post of 2015 was “What is MIPS?” which describes Medicare’s planned Merit-Based Payment Incentive System which will change how physicians are reimbursed by Medicare.

Besides my blog, I’ve published a bunch of articles in peer-reviewed sources as well.  Although all these papers focus on health economics, there is a wide variety of topics within this genre.  Here is my full list of publications.  The most cited ones are:

In 2015 I published three new articles as well:

People in 228 countries have checked out Healthcare Economist, with the most users coming from the following countries:

  • U.S.: 1,097,443 (77.8%)
  • UK: 45,689 (3.4%)
  • Canada: 37,670 (2.7%)
  • India: 26,130 (1.8%)
  • Germany: 13,649 (1.0%)
  • Australia: 12,409 (0.9%)
  • Singapore:11,156 (0.8%)
  • Netherlands: 8,879 (0.6%)
  • Phillipines 8,102(0.6%)
  • France: 7,719 (0.5%)

I hope this blog has been as fun for you to read as it has for me to write.  I’m not sure what the next ten years will bring, but the last ten years have been a blast.  Thank you for sharing it with me.

Medicare in the data analysis business?

Written By: Jason Shafrin - Jan• 17•16

From a recent N.Y. Times article on Vice President Joe Biden’s cancer “moonshoot”:

The researchers pointed out that although genome sequencing seems to be rapidly transforming cancer research, a tiny fraction of cancer patients are having their tumors sequenced because most insurers, including Medicare, will not pay for the procedure.

For a start, the group told Mr. Biden’s staff, Medicare could start paying for sequencing and, as a condition for paying, collect data on patient outcomes to see if they were noticeably better.

One question is who would have access to these data. Data on the genetics, treatment and outcomes of millions of Medicare cancer patient would be highly valuable to researchers. If patient identity could be made anonymous and the data secured, this proposal would not only help patients get access to genetic testing, but it would also create a treasure trove of data for researchers.

Friday Links

Written By: Jason Shafrin - Jan• 14•16

HWR at InsureBlog

Written By: Jason Shafrin - Jan• 14•16

One of my favorite health insurance blogger, Hank Stern, has a freshly posted Health Wonk Review: Happy New Year! Edition at InsureBlog.

Check it out.

ASSA 2016: Regional variation in hospital spending among U.S. privately insured patients

Written By: Jason Shafrin - Jan• 13•16

How do health care costs vary across the country. Although the team at the Dartmouth Atlas has done this exercise with patients in Medicare, there has been less study of region variation in health care spending among the privately insured with the notable exception of a 2013 Institute of Medicine report. In a study by Cooper et al. presented at the 2016 ASSA meetings, The authors use data from the Health Care Cost Institute (HCCI) to measure regional variation in prices. The data cover about 27.5% of individuals with employer sponsor insurance or 14.2% of the US population.

The study finds that a low correlation between Medicare and private spending per person (0.140). While La Crosse, WI and Rochester, MN are high cost for Medicare, they are actually low cost for patients who are privately insured. Other cities, like San Francisco, in high cost for both. McAllen, TX—one of the most expensive for treating Medicare—is about average cost

Whereas price explains a large portion of national variation in inpatient private spending; for Medicare, utilization is the key drive of differences in healthcare spending.  This finding is similar to what was found in the IOM report.

The authors also find substantial variation in prices, both within and across markets. Variation in hospital prices is not only due to high cost procedures—such as knee replacement—but also relatively low-cost procedures such as lower limb MRIs.

Like most of previous research—such as Leemore Dafny’s finding that hospital mergers increase price—the authors also find that higher hospital market concentration (e.g., if the hospital is a monopoly or in some cases a duopoly) is associated with higher hospital prices.  Specifically, hospital prices are 15.3% higher when they are a monopolist. There is some suggestion that higher hospital quality is associated with higher price.

Although this analysis is not causal, the authors scope of data and statistics can help motivate future studies to better understand regional variation in hospital prices.

State of the Union 2016: A Health Care Review

Written By: Jason Shafrin - Jan• 13•16

As I have done every year, below are excerpts from the State of the Union address that focus on health care (full transcript here). President Obama did not offer any specific policies except potentially additional funding for cancer research. The President did mention the success of the ACA in maintaining insurance for people transitioning to jobs and how international collaboration help end the spread of Ebola. Unlike in recent years, health care issues took a back seat in this year’s State of the Union address.
Support for the ACA…

And for American short of retirement, basic benefits should be just as mobile as everything else is today. That, by the way, is what the Affordable Care Act is all about. It’s about filling the gaps in employer based care so that when you lose a job, or you go back to school, or you strike out and launch that new business you’ll still have coverage. Nearly 18 million people have gained coverage so far, and in the process…


In the process health care inflation has slowed, our businesses have created jobs every single month since it became law.

On a new ‘War on Cancer’…

You know, last year, Vice President Biden said that, with a new moon-shot, America can cure cancer. Last month, he worked with this Congress to give scientists at the National Institutes of Health the strongest resources that they’ve had in over a decade.


Well, so — so tonight, I’m announcing a new national effort to get it done. And because he’s gone to the mat for all of us on so many issues over the past 40 years, I’m putting Joe in charge of mission control.


For the loved ones we’ve all lost, for the families that we can still save, let’s make America the country that cures cancer once and for all. What do you think? Let’s make it happen.

On global partnership leading to an end to the spread of Ebola…

That’s why we built a global coalition, with sanctions and principled diplomacy, to prevent a nuclear-armed Iran. And as we speak, Iran has rolled back its nuclear program, shipped out its uranium stockpile, and the world has avoided another war.


That’s how — that’s how we stopped the spread of Ebola in West Africa.


Our military, our doctors, our development workers — they were heroic. They set up the platform that then allowed other countries to join in behind us and stamp out that epidemic. Hundreds of thousands — maybe a couple million lives were saved.