Unbiased Analysis of Today's Healthcare Issues

Should patients pay high-cost sharing for treatments for the Hepatitis C Virus?

Treatments for the hepatitis C virus (HCV) are expensive.  At one point they cost over $80,000 per year, although costs have decreased since then.  To prevent moral hazard, should insurance companies rely on cost sharing to decrease utilization?  An article by Lakdawalla, Linthicum, and Vanderpuye-Orgle (2016) argues that they shouldn’t. Cost sharing appears even less efficient when […]

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How does cost sharing affect drug utilization?

Any economist knows that if you raise the price of a good, demand goes down.  Thus, one should not be surprised to find numerous studies that show that increased cost sharing decreases drug utilization.  But how does drug utilzation decrease?  Is it along the extensive margin (i.e., the decision to initiate the drug) or along the intensive margin […]

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“Affordable” Care Act

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), […]

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Do physicians care about patients’ cost?

A paper by Li and Laxminarayan (Health Econ forthcoming) examines an interesting question: Are physicians sensitive to drug prices faced by their patients? In an ideal world, physicians act as perfect agents for their patients, taking into consideration their medical needs and financial constraints. In reality, the choice of drug and whether a generic or brand-name […]

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How Immediate vs. Delayed Reimbursement Affects Utilization

Insurance schemes offer two types of reimbursement to beneficiaries for health care services: immediate reimbursement and delayed reimbursement.  In the former, the patient only pays the copayment or deductible, the insurer reimburses the providers directly for their services.  In the latter case, the patient pays for the full cost of care and is only later […]

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Do higher copayments decrease health care costs?

Merrill Goozner of GoozNews writes the following: The share of health care costs borne by individuals has remained fairly steady over the past several decades, and that is the prime argument behind conservative and economist claims that making patients have “more skin in the game” will drive health care costs lower. That ignores the fact […]

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Value-Based Cost Sharing

Many policy experts have been proponents of value-based cost sharing.  Under value-based cost sharing, medical care that is seen to provide a higher marginal benefit to the patient will have lower coinsurance rates than medical care with lower marginal benefits.  If value-based cost sharing would be implemented, preventive care should have low coinsurance rates because […]

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Physician Reimbursement and Technology adoption

Economists and health researchers have generally shown that when doctors are paid on a fee-for-service basis, they will advice the patient to undergo more medical procedures than when the doctor is paid on a capitation or salaried basis (see my own paper: “Operating on Commission“). Which payment method maximizes welfare has not been proven and […]

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