Unbiased Analysis of Today's Healthcare Issues

What is they key driver of cancer care spending?

Written By: Jason Shafrin - Jul• 13•15

High-cost cancer drugs often get bad press. Cancer treatment certainly is expensive. However, drug costs are not the primary driver of high cost of cancer treatment; hospitalizations are. Using data from SEER-Medicare, Brooks et al. (2014) examine regional variation in the cost of cancer care and find:

Acute hospital care was the largest component of spending and the chief driver of regional spending variation, accounting for 48 percent of spending and 67 percent of variation. In contrast, chemotherapy accounted for 16 percent of spending and 10 percent of variation. Hospice care constituted 5 percent of spending.

Thus, providing high-value cancer care may not involve reduced spending on high-value drugs, but rather higher quality treatment that can (hopefully) keep patients with cancer out of the hospital.

“Affordable” Care Act

Written By: Jason Shafrin - Jul• 13•15

Is the Affordable Care Act making health insurance more affordable?  Generally, the answer is yes.  More individuals are insured due to Medicaid coverage expansions in some but not all states and the implementation of health insurance exchanges.  However, there is one worrying trend in affordability: increasing patient cost sharing. A paper by Hempstead et al. (2015), find the following:

Primary payments—those made by insurance carriers—to office-based physicians rose moderately between 2013 and 2014. Payments declined for orthopedics and surgery while increasing for primary care and obstetrics-gynecology. Patients’ payment obligations rose for all specialties, and deductibles were the largest category of increased patient spending

The trend towards higher deductibles may be a good thing in the presence of moral hazard where a large share of health care services are of little or negative value. However, higher deductibles also means that low-income patients may not be receiving the care they need. Thus, the net effect of higher deductibles on social welfare is not entirely clear. Additional research is needed on this topic.

End of week links

Written By: Jason Shafrin - Jul• 09•15

The case for and against prescription painkillers

Written By: Jason Shafrin - Jul• 07•15

Oftentimes, prescription pain killers are demonized. Opponents of painkiller are likely to cite statistics like this:

The annual number of opioid painkiller prescriptions is now at more than 200 million. In hand with that, overdose deaths have shot up from over 4,000 in 1999 to more than 16,000 in 2013, according to data provided by the Centers for Disease Control and Prevention.

However, painkillers do have a key benefit; they decrease patient pain. About 100 million US patients suffer from chronic pain. And patients are asking for these painkillers. According to Vox:

“[My patients] are not saying, ‘Hey, can you take away all my pain? I can’t handle any pain,'” [Sean] Mackey said. “For the most part, what they want is control of their lives back. They want to be able to get back to doing the things they were doing that they can no longer do because pain has robbed them of that.”

How much do you value individual freedom of choice compared to paternalistic policies to help avoid addiction? Your answer to that question likely will determine where you fall in the painkiller debate.

Rate hikes in 2016

Written By: Jason Shafrin - Jul• 06•15

The Affordable Care Act may turn out to be not so affordable.  From the New York Times:

Health insurance companies around the country are seeking rate increases of 20 percent to 40 percent or more, saying their new customers under the Affordable Care Act turned out to be sicker than expected. Federal officials say they are determined to see that the requests are scaled back.

Blue Cross and Blue Shield plans — market leaders in many states — are seeking rate increases that average 23 percent in Illinois, 25 percent in North Carolina, 31 percent in Oklahoma, 36 percent in Tennessee and 54 percent in Minnesota, according to documents posted online by the federal government and state insurance commissioners and interviews with insurance executives.

As the insurance market continues to consolidate, the likelihood of future rate decreases is shrinking.

Confirmation Bias

Written By: Jason Shafrin - Jul• 05•15


HT: Incidental Economist.

Measles death in the US

Written By: Jason Shafrin - Jul• 02•15

Vox reports:

We started 2015 with one of the worst measles outbreaks in recent history, which originated at Disneyland in California. And today, the US just recorded its first measles death in a dozen years.

According to a news release from the Washington State health department, the (still unidentified) woman was probably exposed to the extremely contagious virus while at a medical facility during an outbreak in Clallam County.

If you or your children haven’t gotten your MMR shot, get vaccinated. See this CDC chart for details.

Is Ebola back?

Written By: Jason Shafrin - Jul• 01•15

Troubling news from Liberia. The BBC reports:

A second case of Ebola has been confirmed in Liberia, following the death of a teenager from the virus on Sunday, officials say.

The country had been declared Ebola-free more than seven weeks ago.

The new case was in Nedowein, the same village where the boy died, the ministry of information said.
Liberia’s authorities quarantined the area after the teenager’s death and said his funeral was carried out safely.

Liberia has recorded close to 5,000 lives lost to the virus.

Vermont Creating an All-Payer Claims Database?

Written By: Jason Shafrin - Jul• 01•15

A claims database from all health insurers would but a great resource for researchers. States also want to use these data, however, to negotiate better prices. The question is, can a state legally compel health insurers to disclose prices?

That is what a court case from Vermont involves. The Incidental Economist writes:

the Supreme Court this morning agreed to hear Gobeille v. Liberty Mutual, a case with significant implications for the states’ authority over the health-care sector.

At issue in the case is whether Vermont can force health insurers—including employers that self-insure—to tell state officials the prices they pay for medical care. Vermont wants to put that information in an “all-payer claims database” to enable regulators and consumers to get a picture of how the health-care market operates in the state

On the one hand, pricing transparancy is generally a good thing. On the other hand, insurers are private businesses and it is unclear whether the government could or should force them to disclose these prices. Further, health insurers and their prices–to public payers at least–are highly regulated.

Another question is whether self-insured employers also have to disclose their prices.

What are your thoughts on this issue? Please add to the comments.

ACA and narrow networks

Written By: Jason Shafrin - Jun• 29•15

One way for insurers to reduce health care costs is to restrict patient access to only lower cost providers.  This phenomenon is known as narrow networks.  On the one hand, narrow networks can promote efficiency by driving down provider price and directing patients to the highest value physicians.  Alternatively, if insurers use narrow networks to direct patients to providers based solely on cost, the quality of care patients receive in narrow networks may decline.

What share of silver plans in health insurance exchanges use narrow networks?  This is the question Polksy and Weiner (2015) address in their issue brief.  They use data from 1,065 unique silver plans sold in all states (plus DC) as provided by HIX Compare to identify the size of different provider networks for each insurer. They found that:

By our measures, 41% of networks are small or x-small: 11% of networks are x-small, meaning they include less than 10% of office-based practicing physicians in the area and another 30% are small, including between 10% and 25% of physicians. At the other end of the spectrum, 11% are x-large, which we define as networks including more than 60% of physicians.

As the figure below shows, although only 36% of networks are narrow with respect to primary care physicians, for oncologists 59% of networks are narrow. Thus, access to high cost oncology services is more limited. It is not clear whether narrow networks are moving patients towards oncology specialist or simply reducing patient access to care. Additional research is needed to determine how narrow networks affect patient outcomes, particularly for patients with cancer.