Unbiased Analysis of Today's Healthcare Issues

Trump Links

Written By: Jason Shafrin - Jan• 19•17

In honor of inauguration day, some Trump-relevant links:

Cost-Effectiveness Analysis 2.0

Written By: Jason Shafrin - Jan• 19•17

High drug prices are in the spotlight. While expensive, many of these treatments improve patients quality of life and even extend patient’s life expectancy. How do you balance treatment cost and benefits?

Peter Neumann and Gillian Sanders have a perspective piece in NEJM describing the findings of the Second Panel on Cost-Effectiveness in Health and Medicine.

As prominent groups in U.S. health care ramp up use of cost-effectiveness analysis to measure and communicate the value of new drugs and other interventions, an expert panel has released updated guidelines for such analysis.

Please do read the entire piece.

Can we explain the growth in health care spending with growth in pet care spending?

Written By: Jason Shafrin - Jan• 18•17

A blog post by Austin Frakt of the Incidental Economist says the answer is yes.

In almost every year since the 1960s, health care spending has grown at least as fast as the overall economy, and often much faster. Health economists have long debated why.

Strange as it may sound, how we care for our pets offers some answers.

The pet care markets look a little like the market for human health care. Health spending by American households has grown 50 percent between 1996 and 2012. Pet care spending has grown by a similar amount, 60 percent, though from a much smaller base. (Americans spent more than $15 billion on pet health care in 2015, but $3.2 trillion on human health care.)

An estimated 68 percent of households have pets; those families with higher incomes spend more, which is also true of human care. And they spend more toward the end of humans’ and pets’ lives alike.

The supply of both physicians and of veterinarians has grown at a more rapid rate than overall employment. Since 1996, the number of physicians has grown by about 40 percent. The number of veterinarians is up 100 percent.

Frakt cites an NBER paper by Einav, Finkelstein and Gupta (2017) and gives a few possibilities. First, doctors and veteranarians are highly credentialed individuals with high wages. Second, there is a lot of innovation in the healthcare treatment of both humans and animals. Third, the spending on healthcare for family members and pets are both emotionally charged and individuals have a hard time limiting spending when people or pets become ill. Fourth, in both markets–more so for humans, but increasingly so for pets–individuals value insurance to smooth consumption in the case that they, their family members or their pets become ill.

In the case of health care spending, it looks like a dog can teach a person new tricks.

Single Payer vs. 300 million payer

Written By: Jason Shafrin - Jan• 17•17

Drug prices are in the spotlight of late.  From Pharma bro to EpiPen price hikes to Trump’s most recent press conference high drug prices are getting a lot of attention.  One solution is to have a single payer system whereby the government negotiates drug prices directly with pharmaceutical firms.  Michael Cannon proposes an alternative, the 300 million payer solution.  He writes in USA Today:

To make drugs more affordable, we need not one tough-talking negotiator but 300 million of them. Congress can raise and equip that army by returning to the people the $3 trillion of health care spending that government and employers control, and by eliminating government-imposed barriers to affordable medicine.

When Americans control their health care dollars, they drive health care prices down. In California, cost-conscious patients brought prices for hip and knee replacements at high-cost hospitals down by an average of $16,000, or 37%.

Yet Americans rarely shop around or demand discounts for medical care. Why? We pay directly for just 11 cents of every dollar of medical care. Why shop around when 89% of the savings go to someone else? That will change when consumers control all the money.

Putting more healthcare spending in the hands of consumers is surely a good thing compared to a single payer system.  At the same time, however, this approach does have its flaws.  While it is true that patients can shop for Lasik surgery or breast implants, patients with a more debilitating disease are not able to shop around.  In addition, some patients who must pay for care out of pocket may forego useful preventive care. This could result in higher overall cost if patients are myopic and don’t take into account potential downstream cost.  Additionally, patients actually value having insurance.  Most individuals are risk averse and place a high value of in smoothing incomes across health states.  Thus, simply giving individuals their premiums back will not fully compensate them for the cost shocks that could occur if one falls ills.  While high-deductible plans do provide some form of insurance, it is not full insurance.

Thus, while Cannon’s plan is clearly better than a one-size-fits-all single payer system, it does have its own limitations as well.


Good News-Bad News in Covered California

Written By: Jason Shafrin - Jan• 15•17

First the good news, it appears that the Covered California marketplace is working.  People are selecting lower cost options and forcing insurers to compete.  Gabel et al. (2017) state that

…the average purchased price for all plans was 11.6 percent less than the average offered price in 2014, 13.2 percent less in 2015, and 15.2 percent less in 2016. Premium growth measured by plans purchased was roughly 2 percentage points less than when measured by plans offered in 2014–15 and 2015–16. We observed shifts in consumer choices toward less costly plans, both between and within tiers…

More, generally patients visiting federally funded health clinics in states that had Medicaid expansions saw the quality of care they received improve.  Cole et al. (2017) write that:

states’ decisions about Medicaid expansion have important consequences for health center patients, with expansion improving treatment and outcomes of chronic disease and bolstering the use of recommended preventive services.

On the other hand, many people are not getting the subsidies for which they are eligible, particularly the poor.   Fung et al. (2017) find that:

…31 percent of individual-market enrollees in California who were likely eligible for financial assistance purchased plans that were not silver tier or that were not sold on the state’s exchange and thus missed opportunities to receive premium or cost-sharing assistance or both. Lower-income enrollees who chose plans not eligible for subsidies had two to three times higher odds of reporting difficulty paying premiums and out-of-pocket expenses during the year, compared to those who chose eligible plans. Regardless of how the structure of the individual market evolves in the coming years, efforts are likely needed to steer lower-income enrollees away from financially suboptimal plan choices.

Of course, all of this may be a moot point if Trump fully repeals Obamacare and its health insurance exchanges.

Friday Links

Written By: Jason Shafrin - Jan• 13•17

Trump Press Conference: Healthcare related comments

Written By: Jason Shafrin - Jan• 11•17

Below is a summary of Donald’s Trump’s press conference today with all his comments related to health care (HT NYT).

On keeping preventing foreign firms from acquiring U.S. pharma firms for tax purposes

We’ve got to get our drug industry back. Our drug industry has been disastrous. They’re leaving left and right. They supply our drugs, but they don’t make them here, to a large extent. And the other thing we have to do is create new bidding procedures for the drug industry because they’re getting away with murder.

On drug prices

Pharma, pharma has a lot of lobbies and a lot of lobbyists and a lot of power and there’s very little bidding on drugs. We’re the largest buyer of drugs in the world and yet we don’t bid properly and we’re going to start bidding and we’re going to save billions of dollars over a period of time.

Trunk appointed David Shulkin to run the Veterans Administration. He commented on the current state of care that the VA provides.

One of the commitments I made is that we’re gonna straighten out the whole situation for our veterans. Our veterans have been treated horribly. They’re waiting in line for 15, 16, 17 days, cases where they go in and they have a minor early-stage form of cancer and they can’t see a doctor. By the time they get to the doctor, they’re terminal. Not gonna happen, it’s not gonna happen…
So, David is going to do a fantastic job. We’re going to be talking to a few people also to help David. And we have some of the great hospitals of the world going to align themselves with us on the Veterans Administration, like the Cleveland Clinic, like the Mayo Clinic, a few more than we have. And we’re gonna set up a — a group.

These are hospitals that have been the top of the line, the absolute top of the line. And they’re going to get together with their great doctors — Dr. Toby Cosgrove, as you know from the Cleveland Clinic, has been very involved.

Ike Perlmutter has been very, very involved, one of the great men of business. And we’re gonna straighten out the V.A. for our veterans. I’ve been promising that for a long time and it’s something I feel very, very strongly.

On Obamacare repeal and replace

Obamacare is a complete and total disaster.

They can say what they want, they can guide you anyway they wanna guide you. In some cases, they guide you incorrectly. In most cases, you realize what’s happened, it’s imploding as we sit.

Some states have over a hundred percent increase and ’17 and I said this two years ago, ’17 is going to be the bad year. It’s going to be catastrophic. Frankly, we could sit back and it was a thought from a political standpoint, but it wouldn’t be fair to the people.

We could sit back and wait and watch and criticize and we could be a Chuck Schumer and sit back and criticize it and people would come, they would come, begging to us please, we have to do something about Obamacare. We don’t wanna own it, we don’t wanna own it politically. They own it right now.

So the easiest thing would be to let it implode in ’17 and believe me, we’d get pretty much whatever we wanted, but it would take a long time. We’re going to be submitting, as soon as our secretary’s approved, almost simultaneously, shortly thereafter, a plan.

It’ll be repeal and replace. It will be essentially, simultaneously. It will be various segments, you understand, but will most likely be on the same day or the same week, but probably, the same day, could be the same hour.

So we’re gonna do repeal and replace, very complicated stuff. And we’re gonna get a health bill passed, we’re gonna get health care taken care of in this country. You have deductibles that are so high, that after people go broke paying their premiums which are going through the roof, the health care can’t even be used by them because their deductibles bills are so high.

Obamacare is the Democrats problem. We are gonna take the problem off the shelves for them. We’re doing them a tremendous service by doing it. We could sit back and let them hang with it. We are doing the Democrats a great service.

So as soon as our secretary is approved and gets into the office, we’ll be filing a plan. And it was actually, pretty accurately reported today, The New York Times. And the plan will be repeal and replace Obamacare.

We’re going to have a health care that is far less expensive and far better.

Health Care Spending is Complicated

Written By: Jason Shafrin - Jan• 11•17

Healthcare Triage reviews a recent publication in JAMA that describes health care spending in detail.  A nice summary.

Some good news on cancer

Written By: Jason Shafrin - Jan• 10•17

In the long-run, death rates from cancer are falling.  The L.A. Times reports:

In the year to come, an estimated 1,688,780 people in the United States are expected to get a cancer diagnosis, and cancer will claim the lives of a projected 600,920.

That death toll, however grim, represents a death rate from cancer that is 25% lower than it was a quarter-century ago — a drop driven by steady reductions in smoking rates and advances in early detection and treatment. Between 1991 and 2014, that boost in cancer survivorship translates to approximately 2,143,200 fewer cancer deaths than might have been expected if death rates had remained at their peak.

Better treatment protocols and more targeted therapies have driven the most dramatic improvements in the survival of patients with malignancies of the blood and lymph system, says the American Cancer Society’s annual report card on cancer.

Let’s hope the next 25 years bring further advances to fight this terrible disease.

Stratified Covariate Balancing

Written By: Jason Shafrin - Jan• 08•17

When selection bias is an issue, many researchers use propensity score matching to insure that observable differences in patient characteristics are balanced between individuals who receive a given treatment and those who do not.  If unobservable characteristics are correlated with observable characteristics, propensity score matching generally works well.

Cases where propensity score matching does not work well include cases where balancing patient characteristics is not simply a linear combination of covariates.  For instance, matching the square of a variable (e.g., age) or the interaction of multiple covariates (e.g., comorbidity interactions) may be needed to avoid misspecification.

A paper by Alemi, ElRafey and Avramovic (2016) propose one method of achieving this: stratified covariate balancing.  Their approach is as follows.

  1. Identify Naturally Occurring Strata. Here the authors look at all 2-variable interactions. For instance, many patients in a dataset may have hypertension and diabetes. Using SQL, the authors look at all covariate combinations where there are at least one observation of a person receiving a treatment and one observation of a person receiving the control. Each of these interactions is considerate a strata.
  2. Matched Estimation of the Effect. Once natural strata have been organized, the estimation of impact follows statistical procedures known since the 1950s for analysis of stratified
    case–control design (Cochran 1950; Mantel and Haenszel 1959). The chi-square
    test for homogeneity is used to see whether, across strata, a common odds ratio exists.” One can calculate the matched effect for each strata as the difference in the average outcome for people receiving the treatment and the average outcome of those not receiving the treatment. The strata are weighted by the number of people receiving the treatment in each strata.
  3. Weighted Estimation of the Effect. Step 2 above assumes that there will be the same number of individuals and controls receiving the treatment with each strata. However, this is unlikely to be the case. To address this, observations are weighted so that the number of people receiving the treatment and control are the same within strata. In the typical case where fewer people receive the treatment then the control, the authors propose weighting the treatment arm within each strata with a 1 and weighting the people in the control arm by the ratio of the people receiving the treatment divided by the number of people receiving the control in each strata.

The paper has an empirical application of stratified covariate balancing and demonstrates that it is able to balance covariates and covariate interactions. You can try this out yourself as the authors have created a StratifiedBalancing package in R available here.