Unbiased Analysis of Today's Healthcare Issues

Share of Small Employers Offering Health Insurance

Written By: Jason Shafrin - Oct• 04•15

Although the ACA certainly expanded health insurance coverage, mostly through subsidies, creation of insurance exchanges, and Medicaid, small businesses generally did not expand coverage.  A RWJ report from Lucia et al. (2015) used MEPS-IC data to track insurance offering among businesses with fewer than 50 workers.

Part of the reason is the rise of health insurance premiums.  Further, the Small Business Health Options Program (SHOP) program–a ACA initiated  marketplace in every state through which small employers can shop, compare and buy health insurance coverage–has had very low enrollment as most businesses feel SHOP offers little value over their current insurance options. Further the federal program is “so complicated and so hard to actually qualify for” that the modest tax credit employers received was not worth the effort to apply.  Finally, some small employers are dropping  coverage and transitioning employees to enroll in the individual health insurance exchange marketplaces.


Friday Links

Written By: Jason Shafrin - Oct• 02•15

Increased access to CMS data

Written By: Jason Shafrin - Sep• 30•15

The Research Data Assistance Center (ResDAC) has announced that individuals and firms will now be able to get access to more CMS data.  They describe their “Innovator Research” program as follows:

Innovators and entrepreneurs may now access CMS data as part of a research study to create products or tools that they intend to sell or to conduct research that creates analyses related to their own business needs. For example, an innovator could use CMS data to develop care management or predictive modeling tools.

The agency has established certain conditions under which innovator researchers may access CMS data. These conditions include:

  1. Approval of a research protocol under the existing research request process,
  2. An additional level of review that will focus on whether the product, tool, or analyses could exploit beneficiaries or create the potential for fraud and/or abuse in CMS programs, and
  3. A requirement that they access data via the CMS Virtual Research Data Center (VRDC).

The data will include Medicare Parts A, B, and D data as well as Medicare assessment data (e.g., MDS) as well as Medicaid claims data. See the full list of available data here.

Improved access to data will help a variety of stakeholders to use quantitative evidence to answer policy relevant questions. It is imperative, however, that the system is constructed so that beneficiary identity remain confidential.

Vertical Integration

Written By: Jason Shafrin - Sep• 29•15

30 Rock has a clever explanation for the benefits and perils of vertical integration.  Enjoy.


HT: Leemore Dafny during her presentation at USC Schaeffer School.


2015 Medicare Advantage Enrollment

Written By: Jason Shafrin - Sep• 28•15

About two-thirds of Medicare beneficiaires are enrolled in tradiational Medicare FFS, but the remaining thrid is now enrollingin Medicare Advantage plans.  Which plans are dominant?

The following figure from Avalere provides a breakdown.

Medicare enrollment 2015

Note that this figure obscures significant regional variation in plan market share. For instance, Kaiser Permanente has almost half (48%) of the MA market share in California, but doesn’t rank in the top five plans in either Florida, New York, Texas or Pennsylvania. Although United Health has fairly wide geographic coverage, Humana is the market leader in the southeast. In Florida, for instance, Humana has 37% MA market share. Further, in Pennsylvania, UPMC (15%) and Geisinger (7%) have significant market share in their state, but little is all other states. Despite the growth of large national insurers, there are still significant regional variation in plan market share.

“An astonishingly naïve approach”

Written By: Jason Shafrin - Sep• 27•15

That was Amitabh Chandra’s comment on Hillary Clinton’s plan to reign in drug prices and I don’t disagree.

According to the N.Y. Times, her plan:

…includes regulating the percentage of revenues pharmaceutical companies must spend on research and development, instituting a cap on the cost of many out-of-pocket drugs for chronic and serious health conditions, and allocating additional funding to put more generic versions of drugs on the market…

That plan includes a monthly cap on the amount insurers could ask people to pay out of pocket for specialty drugs, and increased competition for generic versions of specialty drugs.

The plan would also allow Americans to import lower-cost drugs from abroad, within the confines of Food and Drug Administration safety regulations, and prohibit drug companies from keeping generics off the market, which would save an estimated $10 billion, according to her campaign.

Capping out-of-pocket costs will reduce payments for sick patients but will raise premiums for everyone since insurers will need to cover costs. Allowing patients to buy drugs abroad could reduce drug safety. Even if US patients are able to import safe drugs, this policy could increase drug prices worldwide if innovators are not able to earn sufficient worldwide returns on investment due to reduced returns in the US.

Friday Links

Written By: Jason Shafrin - Sep• 24•15

Health Wonk Review: Fall Edition

Written By: Jason Shafrin - Sep• 24•15

Louise Norris ushers in the change of season with her Fall Colors Health Wonk Review over at Colorado Health Insurance Insider.  Check it out.

Insider vs. Outsider

Written By: Jason Shafrin - Sep• 23•15

A post from Ben Casnocha has some really good insights about the pros and cons of being an insider vs. an outsider. I excerpt a parts of the post below:

A striking section of Elizabeth Warren’s memoir is about advice she says Larry Summers once offered her:

After dinner, “Larry leaned back in his chair and offered me some advice,” Ms. Warren writes. “I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don’t listen to them. Insiders, however, get lots of access and a chance to push their ideas. People — powerful people — listen to what they have to say. But insiders also understand one unbreakable rule: They don’t criticize other insiders.

…As an outsider, I relish the opportunity to think independently and speak my mind. But as Summers suggests, my outsider status relegates me to the margins of the “conversation.” As an insider, I tend to feel muzzled — i.e. countless blog posts drafted and then deleted. But I have the most impact on the world when I’m on the inside of a power structure, exerting influence.

Clearly, this is a challenge many economists face when looking for jobs after graduate school. The prototypical “outsider” is the academic who has the opportunity to be critical of nearly all parties. Academics, however, are often seen as “ivory tower” and aloof from the on the ground details necessary for successful implementation of policy. Insiders, on the other hand, could be people working on behalf of industry. There is more power to make change as an insider, but one must be aware of potential conflicts of interest. Outsiders often view insider as corrupt; insiders often view outsiders as detached from reality or insufficiently detail oriented. There is no clear “optimal” career path, but there exciting avenues for both the insider and outsider perspective.

Risk Sharing Agreements in the US

Written By: Jason Shafrin - Sep• 22•15

Outcomes-based risk sharing agreements tie reimbursement for medical goods or services to patient outcomes.  Despite the increasing demand from policymakers for value-based payment mechanism, risk-sharing agreements are not that comment.  A paper by Garrison et al. (2015) found that there were only 148 risk sharing agreements (RSAs) worldwide between the late 1990s and 2013 and only 18 of the 148 RSAs occured in the U.S.

RSAs were most often considered when there are treatment alternatives in a given drug therapeutic class. The benefits of RSAs include that:

…they allow payers to ensure that the price of a drug is more closely aligned to its value…payers indicated interest in RSAs for products that are more costly (eg, specialty drugs, biologics, combination products) and for disease areas for which cost consequences are substantial.

If RSAs are selected, RSAs of length 18-36 months are idea because the enable sufficient time for follow-up data collection without committing payers to significant unknown long-term risks.

What are the barriers to adopting outcomes-based RSAs?  Garrison and co-authors interview 16 key stakeholders and found that implementing RSAs is often difficult.

Roughly half of manufacturers and payers expressed interest in outcomes-based RSAs and see value in their use; almost all were optimistic about the use of financial-based RSAs…Outcomes-based agreements…were perceived by interviewees to be difficult to execute and as having high transaction costs. Interview respondents were skeptical about being able to use outcomes-based RSAs, citing challenges in implementing and executing outcomes-based RSAs that would mitigate their potential in the United States, particularly given the fragmented payer system with patient movement across plans, as well as the current lack of data infrastructure that limits feasibility and, to some extent, interest in measuring long-term outcomes.

The authors list the top barriers to RSA use in the US as follows:

  1. Significant additional effort required to establish/execute RSAs (eg, compared to traditional rebates/discounts)
  2. Challenges in identifying/defining meaningful outcomes
  3. Challenges in measuring relevant real-world outcomes
  4. Data infrastructure inadequate for measuring/monitoring relevant outcomes
  5. Difficulty in reaching contractual agreement (eg, on the selection of outcomes, patients, data collection methods)
  6. Implications for federal (Medicaid) best price
  7. Payer concerns about adverse patient selection
  8. Fragmented multi-payer insurance market with and significant patient switching among plans
  9. Challenges in assessing risk upfront due to uncertainties in real-world performance
  10. Lack of control over how product will be used
  11. Significant resources and/or costs associated with ongoing adjudication

Although the US has few RSAs, countries such as Italy and Sweden have a number of RSAs. As payers and provider continue to consolidate, however, the US may have more RSAs in the upcoming years.