Unbiased Analysis of Today's Healthcare Issues

Quality of your (Social) Life

Written By: Jason Shafrin - Jul• 05•17

Many metrics purport to measure individuals quality of life.  Tools such as the EQ-5D and SF-36 do so largely based on functional status.  Using other surveys on individual preferences, one can estimate patient utility for any given functional status level (i.e,. EQ-5D or SF-36 score).  What these scores ignore, however, is the social component of health.  People who are sick not only feel bad physically but they are often socially isolated, which can have a more severe impact on their quality of life.  This is the topic of a study by Lamu and Olsen (2017).  From their abstract:

Three alternative measures of health are used: For generic instruments (EQ-5D-5L; SF-6D), the total indirect effect was stronger (0.226; 0.249) than its direct effect (0.157; 0.205). For the visual analogue scale, the direct effect was stronger (0.322) than its total indirect effect (0.179). Most of the indirect effect of improved health on SWB transmitted through social relationships. The effect via income was small…An important lesson for researchers is to include meaningful items on social relationships when measuring the benefits from improved health. An important lesson for policy makers is that social isolation appears to be more detrimental to overall well-being than ill health.


Quotation of the Day

Written By: Jason Shafrin - Jul• 03•17

On this Fourth of July, I will actually quote a British man to describe the state of a country.

“Healthy citizens are the greatest asset any country can have.”
― Winston S. Churchill

CBO Scores Better Care

Written By: Jason Shafrin - Jul• 02•17

The Congressional Budget Office (CBO) recently scored the Better Care Reconciliation Act of 2017.  What did they conclude?

The good news: The Better Care Reconciliation Act of 2017 is a fiscally responsible bill.  According to the Congressional Budget Office (CBO), Better Care cuts taxes by $701 billion between 2017-2026 but would also cut spending by $1,022 by that time period.  Additionally, in the long-run premiums would fall (more about premiums and out-of-pocket cost below).

The bad news: The number of uninsured would increase by 22 million by 2026.  This is largely due to cuts in Medicaid, cuts in subsidies for the health insurance exchanges, and primarily because the penalty for  not having insurance would be eliminated.  Additionally, some nongroup health insurance exchange markets would become unstable as healthier individuals exit the market, as insurers exit the market leaving individuals with fewer choices; however, the CBO estimates that only a few sparsely populated areas would have few insurers.

Mixed: CBO estimates that Better Care would “increase average premiums in the nongroup market prior to 2020 and lower average premiums thereafter, relative to projections under current law, CBO and JCT estimate.”  In the short run, healthy individuals would likely exit the market driving up premiums.  In the long-run, reducing the generosity of the silver plan health insurance (lowering the actuarial value from 70% to 58%) would reduce premiums after this provision kicks in. However, the reduced generosity means that the share of cost patients would pay would increase.

How certain are these estimates?  Predicting the future is no easy task.  However the CBO states:

Despite the uncertainty, the direction of certain effects of this legislation is clear. For example, the amount of federal revenues collected and the amount of spending on Medicaid would almost surely both be lower than under current law. And the number of uninsured people under this legislation would almost surely be greater than under current law.

CBO review of H.R. 1628, Better Care Reconciliation Act of 2017.

Should Republicans support Unions?

Written By: Jason Shafrin - Jun• 30•17

I’m not talking about civil unions (that topic is for another blog)…but instead actual trade unions. Compared to Democrats, Republicans have been relatively pro-business and anti-union for many years.  However, The Atlantic has an article making the case that Republicans should become more pro union.  Perhaps not pro-union in the traditional US union setting but maybe more like German works councils.

Why would Republicans do that?  First, Republicans may for ethical or political reasons decide that some support for lower income individuals is necessary.  If that is the case, then two of the most prominent methods of providing social support or the government.  The problem with unions is that only employed individuals and their families receive union benefits. Unions also often provide financial rewards more based on seniority rather than performance.  In theory, government provision of social support programs (e.g., health insurance, unemployment insurance) could be done fairly for all individuals regardless of employment status.  Government provided benefits, however, have two key problems.  First, politicians may decide to enact programs for political reasons rather than maximizing social welfare.  Second, there is often no hard budget constraint or at the least much less financial discipline.  Firms have an incentive that any benefits provided to unions and their workers is done in a cost effective manner; governments have similar incentives, but the budget constraint is not as strong.  For instance, it is very difficult for governments to roll back benefits in tough times without significant backlash; it is also difficult for businesses to do this as well, but they have a financial reason to make these hard choices.

I am not advocating for or against an increasing role of unions in the workplace, but the proposition that Republicans could actually become the pro-union party would be an interesting turn of events.

Wise words on State vs. Federal Administration of Medicaid

Written By: Jason Shafrin - Jun• 28•17

Yuval Levin has an interesting article in The Nation on Obamacare and the Senate’s most recently proposed bill, the Better Care Reconciliation Ace.  There has been a lot of arguments on both sides of the aisle about Better Care especially in terms of the provisions to decrease Medicaid funding and devolve more power to the States.  Mr. Levin believes that this is generally a good idea, but his comments below suggest that more of us should be less certain in our beliefs and more open to the possibility the opposition–whether Democrat or Republican–actually has some valid points.

In its scope and structure, this redesigned waiver would be unlike anything else in American federalism — which also means we don’t know how it would work.  Those of us inclined to look favorably upon a bottom-up, experimental mindset in policy design will be inclined to think the best of the possibilities here. I am very much in the grip of this prejudice myself. Those inclined to think the state governments are filled with bumbling fools while Washington overflows with subtle expertise will think the worst of this idea. But these different expectations are all rooted in roughly equal ignorance, and the results will probably be mixed enough to leave us all feeling mostly confirmed in our presuppositions in time — just as the performance of Obamacare has.

Do read the full article.

Access to credible information on schizophrenia patients’ medication adherence by prescribers can change their treatment strategies

Written By: Jason Shafrin - Jun• 27•17

Below is the abstract for my most recent publication titled “Access to credible information on schizophrenia patients’ medication adherence by prescribers can change their treatment strategies: evidence from an online survey of providers“.  It is work with Suepattra G May, Anshu Shrestha, Charles Ruetsch, Nicole Gerlanc, Felicia Forma, Ainslie Hatch, Darius N Lakdawalla, and Jean-Pierre Lindenmayer.  The video abstract is also posted below.

Objective: Overestimating patients’ medication adherence diminishes the ability of psychiatric care providers to prescribe the most effective treatment and to identify the root causes of treatment resistance in schizophrenia. This study was conducted to determine how credible patient drug adherence information (PDAI) might change prescribers’ treatment decisions.
Methods: In an online survey containing 8 clinical case vignettes describing patients with schizophrenia, health care practitioners who prescribe antipsychotics to patients with schizophrenia were instructed to choose a preferred treatment recommendation from a set of predefined pharmacologic and non-pharmacologic options. The prescribers were randomly assigned to an experimental or a control group, with only the experimental group receiving PDAI. The primary outcome was the prescribers’ treatment choice for each case. Between-group differences were analyzed using multinomial logistic regression.
Results: A convenience sample (n=219) of prescribers completed the survey. For 3 nonadherent patient vignettes, respondents in the experimental group were more likely to choose a long-acting injectable antipsychotic compared with those in the control group (77.7% experimental vs 25.8% control; P<0.001). For 2 adherent but poorly controlled patient vignettes, prescribers who received PDAI were more likely to increase the antipsychotic dose compared with the control group (49.1% vs 39.1%; P<0.001). For the adherent and well-controlled patient vignette, respondents in both groups made similar treatment recommendations across all choices (P=0.099), but respondents in the experimental arm were more likely to recommend monitoring clinical stability (87.2% experimental vs 75.5% control, reference group).
Conclusion: The results illustrate how credible PDAI can facilitate more appropriate clinical decisions for patients with schizophrenia.


Trials in Health Policy

Written By: Jason Shafrin - Jun• 26•17

Scientists often use randomized controlled trials (RCT) to examine whether certain treatments have a causal effect on patient outcomes.  For social scientists, however, conducting an RCT is more difficult.  Nevertheless, there have been a number of health policy trials.

In a recent NEJM paper, Newhouse and Normand (2017) review some of these trials.  A summary is below:

Trials that vary prices paid by patients:

Trials that vary reimbursement.

  • RAND Health Insurance Experiment. This experiment also randomized people between traditional fee-for-service practices and an HMO where physicians were salaried employees and the HMO received a flat per-member, per-month payment.  Their study found that patients in the HMO had fewer hospitalizations compared to those in FFS practices.
  • Randomization for treatment of LDL cholesterol (LDL-C) . Physicians in the incentives arm were eligible to receive bonus payments when their patients met LDL-C goals and in the control arm no incentative payments were made.  The physician incentives did lead to a reduction in LDL-C.

The article also provides a summary of some of the key decisions researchers need to make when designing a health policy trial.  These decisions include:

  • What Inducement, if Any, Should Be Offered to Participants?
  • How Many Sites Should There Be?
  • How Long Should the Experiment Run?
  • How Should Individual Patients or Families Be Assigned to Treatments?
  • To What Degree Should Groups of Special Interest Be Oversampled?
  • What Baseline Physiological Characteristics, if Any, Should Be Measured?


Medicare’s value-based purchasing fail?

Written By: Jason Shafrin - Jun• 25•17

Value-based payment is the latest hot topic.  One question remains, however, does it work?  Does paying for quality improve quality.  A study by Zuckerman et al. (2016) finds that the hospital readmissions reduction program (HRRP) did appear to reduce re-hospitalization rates among the targeted conditions.

What about the hospital value-based purchasing program (HVBP).  Beginning in fiscal year 2013, the Affordable Care Act mandated that Medicare payments to acute care hospitals be tied to some performance metrics.  Initially the incentive payment was 1% of total reimbursement, but by FY2017, this figure has climbed to 2%.  A question is, did HVBP improve patient outcomes?

According to a study by  Ryan et al. (2017):

Our results are consistent with those from studies that have shown that HVBP did not increase quality with regard to clinical process or patient experience in its first 9 months 15 and more recent research indicating that HVBP did not reduce mortality over the first 30 months of the program.

The authors reached this conclusion by running a difference-in-difference analysis of acute care hospitals.  They compared differences in these key outcomes before and after the implementation of HVBP for acute care hospitals subject to bonuses and penalties and compared them against critical access hospitals (CAH), which were not subject to the HVBP financial incentives.

What would have worked? To be honest, that is not known.  However, the authors hypothesize that:

…alternative incentive designs — including those with simpler criteria for performance and larger financial incentives — might have led to greater improvement among hospitals.



Will Better Care deliver better care?

Written By: Jason Shafrin - Jun• 23•17

The Senate’s new health care bill, the Better Care Reconciliation Act of 2017, proposes a number of changes to the Affordable Care Act.  The Kaiser Family Foundation has a detailed breakdown of the bill and compares it with the Affordable Care Act that President Obama passed and the American Health Care Act that was proposed by the House of Representatives. How should we evaluate these changes?

From an economist’s point of view, there are generally two dimensions over which one evaluates economic policy: efficiency and equity.   Efficiency asks whether the bill will increase market efficiency and improve overall social welfare.  Efficiency is not everything.  As a society we value providing support for the least fortunate among us.  Whereas maximizing efficacy is generally a good thing, equity depends on societal preferences.  No redistribution would provide little support to the poor, complete equity would lead to a communist society with little incentives for innovation or hard work.

Now back to the Better Care bill.

In terms of efficiency of health insurance markets, there is little to like.  The bill keeps in place premium subsidies for the working poor, but the value of these subsidies drops from 70% of the plan’s actuarial value to 58%.  Additionally, provisions to reduce cost sharing provisions for the poor  have been stripped.  Thus, fewer people are likely to buy insurance, particularly healthy people.  Second, the bill eliminates the individual mandate.  Thus, fewer people are likely to buy insurance, particularly healthy people.  Third, the employer mandate will be repealed meaning that fewer employers will offer insurance.   Many people may claim that the Obamacare health insurance exchanges were suboptimal.  For instance, community rating gives health insurers an incentive to provide poor care to the sickest patients to get them off their plan.  Nevertheless, a suboptimal but functional insurance market is better than one likely to go into a premium death spiral, which is likely what we have with the Better Care plan.

In terms of overall societal efficiency–taking into account things besides health care–there are some small things to like.  Taxes are lowered, which is a positive due to the deadweight loss taxes create.  For instance, distortionary taxes on specific services (e.g., health insurers, pharmaceuticals, medical devices) are dropped.  Allowing individuals to buy health insurance at 58% of actuarial value will allow more people to buy insurance, and still have funds left over for other expenses (even though some of those expenses will inevitably be out-of-pocket health care costs not covered by insurance).

In terms of equity, the plan is certainly bad for the poor.  Medicaid expansions will be rolled back over time (although not as quickly as in the AHCA).  As described above, premium and cost sharing support will decrease.   As described by Axios, the biggest winners of the bill are young healthy people who either no longer need to buy health insurance or who can buy less generous but less expensive (58% actuarial value) coverage.  The biggest losers are the poor and elderly, who will face some combination of higher premiums, or more cost sharing.  Better Care does provide some funds to States to set up high risk pools–which could be separate from the general health insurance exchanges and thus could drive down premiums–through the State Stability and Innovation Program.

In short, despite some tax cuts, there is a serious risk that the health insurance exchanges  collapse and poor and near elderly individuals are left with either no insurance or much less generous insurance.

Politically, this was much less of a repeal and replace, rather just more of the same.  According to Megan McArdle:

I called the House health care bill “Obamacare Lite,” but compared to the Senate bill, the House was offering a radical new taste sensation. The Senate bill touches very little of the underlying architecture of Obamacare; all it does is eliminate the insurance mandates, cut spending and give states somewhat more autonomy in how those dollars are spent. Repeal Obamacare, you say? They’re barely even worrying it.


Health Wonk Review is up

Written By: Jason Shafrin - Jun• 23•17

Joe Paduda has posted  this week’s version of the Health Wonk Review (HWR) – The double edition at Managed Care Matters.  Check it out.

I also found this very honest discussions of effects of concussions in the NFL from former player and Hall of Famer Warren Sapp.  The video is below and the article here.