Unbiased Analysis of Today's Healthcare Issues

Quotation of the Day: Economists are Useless

Written By: Jason Shafrin - Sep• 25•17

“So now you know why economists are useless: when they actually do understand something, people don’t want to hear about it”

  • Paul Krugman, on economists’ consensus view of rent control

Does calorie labeling work?

Written By: Jason Shafrin - Sep• 24•17

I am generally skeptical of broad, top-down approaches to improve health. For instance, soda taxes are one example.  While soda is clearly not got for you, should unhealthy drinks like Red Bull be taxed?  Why single out soda?  What about cheesecake?  Thus, these efforts–while well intentioned–can seem arbitrary and paternalistic.

On the other hand, posting calorie counts I would regard as somewhat different. While there are clear costs to businesses, providing information to consumers and allowing consumers to make their own decisions seems like a more reasonable approach.  The question is whether the cost of the regulation outweight the benefits…and more specifically, whether there are any benenfits.  Specifically, does posting calories lead to reduction in body mass index (BMI)?

That is exactly the question that Restrepo (2017) attempts to answer using data from New York City.   They find that:

…the point-of-purchase provision of calorie information on chain restaurant menus reduced body mass index (BMI) by 1.5% and lowered the risk of obesity by 12%. Quantile regression results indicate that calorie labeling has similar impacts across the BMI distribution. An analysis of heterogeneity suggests that calorie labeling has a larger impact on the body weight of lower income individuals, especially lower income minorities. The estimated impacts of calorie labeling on physical activity, smoking, and the consumption of alcoholic beverages, fruits, and vegetables are small in magnitude, which suggests that other margins of adjustment drive the body-weight impacts estimated here.

A very interesting piece of evidence that will be useful for this debate on whether to extend the calorie information more broadly.


What is Graham Cassidy?

Written By: Jason Shafrin - Sep• 21•17

The Republican’s latest health care bill is the Graham-Cassidy-Heller-Johnson (GCHJ) proposal or Graham Cassidy for short. Below is my super short summary of the bill.

What does it propose?

The Washington Post has a nice summary which shows that the bill would:

  • Not force you to buy insurance (repeal the individual mandate)
  • Not force employers to provide you with insurance (repeal the employer mandate)
  • Lets states decide how to help you with health insurance premiums (Remove ACA premium subsidies and replace with block grants to states)
  • Health insurers have to cover people with pre-existing conditions, but states have the option of allowing insurers to not cover all the care associated with these conditions
  • Insurers would be able to charge older customers up to five times as much as they charge younger customers (under the ACA this was 3 times as much), but, states could overrule this.
  • There are no lifetime limits but…states can waive this clause.
  • Less generous Medicaid funding (moving from an entitlement program to a block grant program)
  • Short-term reinsurance fund for 2018 and 2020
  • Decrease taxes for medical device makers.

In short, there is no mandate and although there are some protections for individuals (e.g., mandatory coverage of pre-existing, and lifetime limits) states can get around these provisions if they so choose.

The bill would also result in a transfer of funds from blue states to red states as many blue states expanded Medicaid.

What does this mean for you?  

The answer to this question likely depends a lot on what state you live in.  Some states may opt to have higher taxes and provide more generous insurance.  Other states may opt for lower taxes and less generous insurance support.  Some may increase insurance coverage of less generous coverage (e.g., a Medicaid for all plan) and others may use their block funding to support existing insurance programs (e.g., reinsurance subsidies) but not support people who don’t have access to these plans.  Thus, Graham-Cassidy is a way to reduce federal government spending, repeal individual and employer mandates, and let states decide whether or not to provide broad based coverage approaches to their residents.


Why “value” is central to true health care reform

Written By: Jason Shafrin - Sep• 20•17

Morning Consult has an interesting piece from Mark Linthicum, the Director of Scientific Communication at the Innovation and Value Initiative (IVI) titled “Why Understanding Value Is Central to True Health Care Reform“.  In the piece he argues:

The true problem is that dollars are poured into a system without any clear understanding of how worthwhile one dollar spent is, relative to another. The remedy lies in making spending and coverage decisions based on the value – not just the price tag – of health care treatments and services.

Value-based spending is a simple notion that amounts to prioritizing spending on services where the benefits outweigh cost – spend less on recognized areas of low-value care, like unnecessary tests and procedures, and more on high-value areas like vaccines.

Implementing value-based spending in practice, however, is more complicated because health care system stakeholders each have disparate, and sometimes conflicting, definitions of value.

Interesting throughout. Do read the whole piece.

Tuesday Links

Written By: Jason Shafrin - Sep• 18•17

How doctor’s die

Written By: Jason Shafrin - Sep• 17•17

Although this Saturday Evening Post article comparing how physicians and patients prefer end of life treatment is from 2013, it is interesting throughout.

Years ago, Charlie, a highly respected orthopedist and a mentor of mine, found a lump in his stomach. He had a surgeon explore the area, and the diagnosis was pancreatic cancer. This surgeon was one of the best in the country. He had even invented a new procedure for this exact cancer that could triple a patient’s five-year-survival odds—from 5 percent to 15 percent—albeit with a poor quality of life. Charlie was uninterested. He went home the next day, closed his practice, and never set foot in a hospital again. He focused on spending time with family and feeling as good as possible. Several months later, he died at home. He got no chemotherapy, radiation, or surgical treatment. Medicare didn’t spend much on him.

Why did this renowned surgeon forego medical treatment that could have potentially extended his life?

Of course, doctors don’t want to die; they want to live. But they know enough about modern medicine to know its limits. And they know enough about death to know what all people fear most: dying in pain and dying alone. They’ve talked about this with their families. They want to be sure, when the time comes, that no heroic measures will happen—that they will never experience, during their last moments on earth, someone breaking their ribs in an attempt to resuscitate them with CPR (that’s what happens if CPR is done right).

So why don’t physicians treat patients like they would like to be treated?  Oftentimes, caregiver preferences may be to extend the patient’s life whereas patients may focus on improved quality of life.  Patients themselves may ask to “do everything” to save their life, but without a sense of what everything means.  In addition, incentives in the health care system favor more intervention.

Consider the case of a man named Jack who had documented do not resuscitate (DNR) order.  When the patient’s primary physician intervened to end the provision of life support, here is what happened.

One of the nurses, I later found out, even reported my unplugging of Jack to the authorities as a possible homicide. Nothing came of it, of course; Jack’s wishes had been spelled out explicitly, and he’d left the paperwork to prove it. But the prospect of a police investigation is terrifying for any physician. I could far more easily have left Jack on life support against his stated wishes, prolonging his life, and his suffering, a few more weeks. I would even have made a little more money, and Medicare would have ended up with an additional $500,000 bill. It’s no wonder many doctors err on the side of over-treatment.


HWR is up

Written By: Jason Shafrin - Sep• 14•17

Yesterday was an eventful day in health policy world with Medicare for All bill and Graham-Cassidy both being introduced almost simultaneously and a Health Affairs event on Understanding the Value of Medical Innovations … but despite this,Louise Norris was still managed to compile The Neverending Summer of Healthcare Legislation Edition of the Health Wonk Review at Colorado Health Insurance Insider.  Check it out!

Understanding The Value Of Innovations In Medicine

Written By: Jason Shafrin - Sep• 13•17

Today, there was an excellent briefing put on by Health Affairs at the National Press Club. The topic was “Understanding the Value of Innovations in Medicine” and the briefing contained two panel discussions (see agenda).  The first panel , “Many Stakeholders, Many Values: Measuring Value In A Diverse Healthcare” featured expert economists, epidemiologists, and patient advocates and was moderated by Sam Nussbaum, who also serves as the Chair of the Innovation and Value Initiative’s Strategic Advisory Panel.   Bios of all panelists are here.

  • Lou Garrison presented on the ISPOR value Framework.
  • Rena Conti discussed how well prices currently align  with value in the pharmaceutical market.
  • Darius Lakdawalla highlighted the importance of measuring value to the patients, including less well known components of value such as the value of hope, option value, and insurance value.
  • Jeroen Jansen focused on the need for open source, transparent models to measure value.
  • Anna Hyde discussed the need to incorporate the patient’s perspective into any value assessment.

The second panel on “What’s Next For Value-Based Reimbursement In Healthcare?” was lead by Alan Weil, the editor in chief of Health Affairs. The panelists included:

  • Peter Neumann – A Tufts Professor and Chair of the Second Panel on Cost Effectiveness in Health and Medicine
  • Alan Balch – CEO of the Patient Advocate Foundation and National Patient Advocate Foundation
  • Michael Sherman – The senior vice president and chief medical officer of Harvard Pilgrim Health Care.
  • Kavita Patel, a nonresident fellow at the Brookings Institution, was not able to make the meeting due to a last minute family emergency and Darius Lakdawalla sat in her place for the discussion.

You can view video of the whole panel discussion here and also view the slide presentations from the first panel here.  It was a very interesting morning and well worth the trip to DC.

Health care market concentration

Written By: Jason Shafrin - Sep• 13•17

One question is whether more physician concentration is a good thing.  On the one hand, larger practices could lead to more efficient care. On the other hand, larger practices could give providers more market power and could drive up prices.

A separate question is whether federal authorities could do anything about increased physician market concentration.  According to a paper by Capps, Dranove, and Oby (2017), the answer is no.

Using proprietary claims data from states collectively containing more than 12 percent of the US population, we found that 22 percent of physician markets were highly concentrated in 2013, according to federal merger guidelines. Most of the increases in physician practice size and market concentration resulted from numerous small transactions, rather than a few large transactions. Among highly concentrated markets that had increases large enough to raise antitrust concerns, only 28 percent experienced any individual acquisition that would have been presumed to be anticompetitive under federal merger guidelines. Furthermore, most acquisitions were below the dollar thresholds that would have required the parties to report the transaction to antitrust authorities. Under present mechanisms, federal authorities have only limited ability to counteract consolidation in most US physician markets.

Concentrations levels among physicians, however, are lower compared to other providers.  A paper by Fulton (2017) finds that

In 2016, 90 percent of Metropolitan Statistical Areas (MSAs) were highly concentrated for hospitals, 65 percent for specialist physicians, 39 percent for primary care physicians, and 57 percent for insurers.



The cost of cancer care: Examining four common cancers

Written By: Jason Shafrin - Sep• 11•17

An interesting study by Chen et al. (2017) examines the cost of cancer care among Medicare patients.  Using SEER-Medicare data of people diagnosed with cancer between 2007 and 2011, they found:

Over the year of diagnosis, mean per-patient annual Medicare spending varied substantially by cancer type: $35,849 for breast cancer, $26,295 for prostate cancer, $55,597 for lung cancer, and $63,063 for colorectal cancer. More advanced stage at diagnosis was associated with higher annual spending for breast, prostate, and colorectal cancer…Over the year of death, mean per-patient annual spending was more consistent across cancer types: Breast cancer patients had an average of $61,429 in annual spending, compared to prostate ($62,351), lung ($59,912), and colorectal ($72,883).

In what care setting did the costs occur?

Over the year of diagnosis, inpatient services accounted for 50 percent of lung and 58 percent of colorectal cancer spending but only 22 percent of breast and 25 percent of prostate cancer spending (Figure 4). Outpatient costs were responsible for the majority of initial spending among patients newly diagnosed with breast and prostate cancer (66 percent for both).

Note that most injectable cancer drugs are included in the outpatient spending category.