Mortality during surgery is dependent on two factors. The first is the probability of having complications during surgery. The second is the probability of dying conditional on having a complication. One would expect that hospitals with low mortality rates would have both fewer complications and lower probability of death conditional [...]
Pay-for-performance has become very fashionable of late. One way to measure physician performance is with episode groupers. This software groups together some or all of the services related to the care of a patient’s chronic or acute medical conditions. Policymakers can then use the episode as the unit of observation [...]
The first American Nobel laureate in economics died on Sunday at age 94. The N.Y. Times has an obituary. Here are other economists’ comments.
[...]One problem with any government-run health insurance program is that politicians have an incentive to make decisions that are attractive to small, wealthy, cohesive constituencies, rather than for the greater good. For instance, although CMS administrator tried to stem the tide of rising physician costs, Congress has repeatedly reinstated [...]
“…the broad generalizations by many presidential candidates can be misleading. These statements convey the message that substantial resources can be saved through prevention. Although some prevention measures do save money, the vast majority reviewed in the health economics literature do not.”
Cohen JT, Neumann PJ, and Weinstein MC (2008) “Does [...]On Tuesday, President Obama unveiled a plan to use repaid TARP monies to fund a job creation program. The question is, can the government actually create jobs?
Initially, one would say yes. If the government hires more workers, this is job creation. If the government hires more contractors, this is [...]
California’s Medicaid program, known as Medi-Cal, is the largest in the nation. The California Health Care Foundation offers some interesting facts about the program in this report. For instance:
In just two years, Medi-Cal’s share of the state’s General Fund spending increased from 17% to 19%. If [...]
“The weak relationship between aggregate spending and health outcomes is in stark contrast to evidence showing pronounced medical benefits for use of specific medical devices, procedures, or pharmaceuticals. For example, advances in the treatment of heart attacks reduced the one-year mortality rate for these patients by 5 percentage points between [...]
In a recent edition of Health Affairs, health economist Tsung-Mei Cheng interviews Taiwan’s Health Minister Ching-Chuan Yeh, M.D. They discuss Taiwan’s adoption of a national health insurance (NHI) system in 1995. Below are some highlights from the interview.
Health spending as a share of GDP was 4.79% in 1993 (prior [...]In The Healing of America, T.R. Reid discusses some ‘interesting’ urinalysis techniques practiced by Dr. Tenzin in Nepal.
“When they do urinalysis up at Khunde [a Western-style clinic in Nepal], all the do is stick a slip of paper into a sample,” he said. ”But that can’t be enough. [...]
Many economists feel that Health Savings Accounts (HSAs) are the direction in which health reform needs to head. HSAs combine high-deductible health plans with tax-deferred savings account. The theory behind HSAs is for the patient to pay for ‘basic’ health care to reduce the problem of moral hazard while letting [...]
Much of my own research has focused on how physician financial incentives affect the quantity and quality of medical care. It should come as no surprise that I found a recent New York Times article on the topic stimulating. Dr. Sandjeep Jauhar examines how hospital and physician financial incentives [...]
A paper by Hofer et al. (JAMA 1999) looked at the reliability of physician report cards having to do with diabetes treatment. The authors looked at variability across physicians in the number of physician visits and hospitalizations among diabetic patients. They found:
Other factors affect hospitalization more than physician care. [...]A paper by Kowalski, Congdon and Showalter (2009) examines how state health insurance regulations affect the price of health insurance. The four regulations are the following:
Community rating regulations limit premium differences across policies. The most stringent form requires insurers to offer the same premium to every individual, regardless of [...]In 1998, Medicare enacted the sustainable growth rate (SGR) which would slowly bring down Medicare physician compensation. However, each year, it gets reversed by Congress. Now, instead of a gradual decline, the implementation of SGR would result in a 21.2% pay cut for Medicare docs.
Before the Thanksgiving holiday, however, [...]
Episodes of care are defined as the bundle of medical treatments used to treat an illness over a specified time period. Because all treatments are bundled together, these episodes have been thought to provide a superior unit of analysis in pay-for-performance (P4P) systems. In fact, Oxford Health Plan pioneered episode [...]
Are foreign-born individuals more likely to be literate (in English) than native born Americans? One would think not, but consider the following information:
Robinson (1950) computed the following two pieces of information: the percent of the population who are foreign-born, and the percent who are literate. Robinson observes that states with [...]
Two important stories for you to read. Two things to be thankful for:
How giving thanks improves your health. Packers beat Lions: 34-12. [...]Who does health care reform affect? Charles Kroncke and Ronald White organize individuals into the following four major stakeholder groups:
First-party patients. The patients who seek care. Second-party providers. These include hospitals, physicians, nurses, physical therapists, dentists, and pharmaceutical companies. Third-party payers. The payers are generally either private insurance companies or government programs [...]Some links to tide your over to Turkey Day.
House vs. Senate Reform Bills: A graphic comparison. Physician’s cost to interaction with health plan: over $23 billion. Early Detection Does Not Equal Prevention. Daily Lesson Plan: [...]One laudable goal is to improve medical quality while reducing cost. One way members of Congress have proposed to accomplish this is to use episode groupers in order to provide feedback to doctors regarding their resource use. None other than Max Baucus has advocated this (see p. 45 of this [...]
The CMS’ Office of the Actuary estimates the impact of the House health care reform bill on insurance coverage 10 years in the future:
One can see that the number of uninsured drops dramatically, but there will still be over 20 million Americans without [...]
“The curious task of economics is to demonstrate to men how little they know about what they imagine they can design.”
F. A. Hayek, The Fatal Conceit. [...]Economist Tsung-Mei Cheng has developed three Universal Laws of Health Care Systems. These are:
No matter how good the health care in a particular country, people will complain about it. No matter how much money is spent on health care, the doctors and hospitals will argue it is not enough. The last reform always failed.Source: [...]
Life is full of questions:
What is the meaning of life? Which company will become the next Google? Is getting rid of medical underwriting the right thing to do? Should you risk choosing a business name that can be confused with a cuss word?This blog carnival answers some of these questions [3, [...]
America’s Health Ratings 2009 report ranks states according to overall healthiness. Mississippi is the least healthy state and Vermont is the healthiest state. The ranking methodology is available here.
The following states are the least healthy (starting with the least healthy):
Mississippi Oklahoma Alabama Louisiana South Carolina Nevada Tennessee Georgia West Virginia KentuckyThe following states are the most [...]
According to Eisenberg (Medical Care 2002):
“Although physicians’ professional fees represent only one fifth of health care expenditures, they are responsible far decisions that govern the way that as much as 90% of each health care dollar is used.”
One way to change behavior is to give physician feedback. Here’s how [...]
“Despite the spectacular failure of Fannie Mae and Freddie Mac, some economists insist that Fannie and Freddie need to be kept in place but somehow, just made safer. This optimistic advocacy—which assumes that Fannie and Freddie are like airplanes that need better landing gear—is in spite of the fact that [...]
T.R. Reid’s book The Healing of America looks at the best parts of health care systems around the world. In France, one of the most interesting aspects of their health care system is the pricing mechanism. Prices are regulated by the government and almost every doctor charges the same [...]
A paper by Thomas, Grazier, and Ward (2004) analyzes a variety of risk adjustment software products. Using these six risk adjustment products to calculate physician efficiency scores, they found “moderate to high levels of agreement were observed among the six risk-adjusted measures of practice efficiency.” However:
“And even though our [...]
According to a N.Y. Times editorial, the Congressional Budget Office has consistently underestimated costs savings from a variety of institutional changes to Medicare. For instance:
Medicare enacts the prospective payments system (PPS) for reimbursing inpatient hospital stays.
The CBO projected total Medicare spending will rise to $60 billion in 1986. Actual Medicare [...]The Social Security Administration’s Office of the Actuary projects Medicare costs up to 75 years in the future. How much of your taxable income will be going to pay for Medicare in the next 10, 25, or 75 years? Take a look at this chart.
By 2085, [...]
A Health Reform Bill passed in the House despite declining support among the American people. The Kaiser Family Foundation has a nice summary of what is included in the bill. Today, I will review who wins and who loses from different aspects of the bill.
Individual Mandate.
Winners: High [...]Claudia Goldin and Lawrence Katz have a nice list of the Ten Most Important Rules of Writing Your Job Market Paper. However, these tips can be used for almost any type of non-fiction writing. Some of my favorites include:
Rule #1: You will probably not have a Nobel Prize winning [...]
Most economists begin to learn about health insurance market with the classic models developed by Rothschild and Stiglitz. In these models, individual risk and characteristics are measured along a single dimension. Insurance contracts pay a lump sum amount in the case of a loss. In the real world of health [...]
Today we will discuss how the tax code affects health care.
Tax exemption of employer-provided health insurance. “In 1943, the Internal Revenue Service (ruled) that employees could exclude the value of employer-paid health insurance premiums from their taxable income. In 1954, Congress excluded by statute the value of employer-purchase health insurance [...]The largest provider of medical services in the United States is Medicare. Forty five million Americans receive Medicare. Out of this total only 85% are elderly (aged 65 or older). Disabled individuals, individuals with end-stage renal disease or Lou Gehrig’s disease are also eligible for Medicare coverage.
Medicare has 4 parts. [...]
The Wall Street Journal has a revealing article concerning why the production of H1N1 vaccines has moved at such a slow pace. The reasons include:
Foregoing additives. The green movement doesn’t like additives in anything, but removing additives–called adjuvants–from vaccines has a cost. ”An adjuvanted H1N1 vaccine being used in [...]Sunday marks a historic day…Brett Favre returns to Lambeau Field. Many Packers fans are conflicted about whether or not to boo the legend.
Former Packer LeRoy Bulter advises: “But if you’re going to stand up wearing Packer clothing or a Packer uniform and cheer when Brett Favre comes out, [...]
Currently, organic farming supplies less than 3% of America’s food, but this figure is on the rise. Does organic farming provide a “sustainable” of how to grow food in the next millennium?
Paul Roberts thinks not. Eliminating chemical fertilizers and pesticides would reduce crop yields. Thus, the amount of additional [...]
Currently there are about 45 million uninsured individuals in the United States. The Urban Institute predicts would happen to the number of individuals uninsured under the following of reforms.
Expand Medicaid to individuals with incomes up to 133 percent of the federal poverty line (FPL): 17 million uninsured would receive [...]In an article called “That Loving Feeling,” Judy Capko gives some tips for providers on how to treat patients. Some gems include:
“A sign in sheet is an excuse to ignore patients.” Nurses and receptionists need to introduce themselves. Otherwise, patients just feel if they are another name in the schedule. Ambience makes [...]Dr. Bruce Douglas’s perspective on taking money out of health care:
“Health care is a ’service,’ provided by health care practitioners, that does not belong in the competitive, so-called free enterprise marketplace. Of course, doctors have to be paid, but the payment should not come directly from the patient. Reception areas [...]
As I predicted, the H1N1 influenza virus has returned to the U.S. this fall. FluTracker gives a visual representation of the spread of the disease.
In response to the spread of H1N1, President Obama declared the H1N1 outbreak a national emergency. The declaration will ”allow a hospital to [...]
“…individuals who carry the [Huntington Disease] genetic mutation are up to 5 times as likely as the general population to own long-term care insurance…relatively limited increases in genetic information may threaten the viability of private long-term care insurance.”
Oster et al. (2009) “Genetic Adverse Selection: Evidence from Long-Term Care Insurance [...]Public-Private partnerships (PPP) are becoming increasingly popular. In Europe, the annual value of PPP is 22.9 billion Euros. In the United States, where until recently PPPs played a smaller role than in many European countries, financing of transportation infrastructure via PPPs increased almost tenfold, on an annual basis, between 2006-2008 [...]
Workers Comp Insider has a pre-Halloween edition of the Cavalcade of Risk full of treats (and a few tricks).
[...]Measuring efficiency is a difficult business. As AHRQ, “In most cases, individuals and firms will define efficiency as a relationship between what it costs them and what service or outcome they receive, rather than as a trait inherent in the provider.”
Further, efficiency can be measured as either production efficiency [...]
Two weeks ago, the U.S. government released its H1N1 vaccine to the public. Many people have had a number of questions about whether or not they should get the vaccine. The CDC website has a list of Key Facts and a Q&A section that is helpful.
There [...]
GoozNews reports that “the Senate Judiciary Committee…passed legislation prohibiting brand name drug manufacturers from paying off generic manufacturers in patent disputes. They get the money in exchange for not bringing the cheaper drug to market.” Is this a wise move for Congress?
The main question one should ask is why [...]
Efficiency in the field of economics increases when either 1) outputs are increased for a given level of inputs, or 2) inputs are decreased for a given level of output. Estimating efficiency in the medical field is more difficult, however, since the output (marginal health improvement) is difficult to measure. [...]
This American Life has a two-part series on America’s healthcare system. Below are some highlights from the first part: More is Less.
On supplier-induced demand
My old partner that I joined here in 1971 was asked by a friend of his
“…at what level of vision do you do a cataract [...]
Here’s some fun reading to take you into the weekend:
Employer-provided family health insurance premiums reach $13,375, a 131% increase over the 1999 levels. Contracting out medical care in prisons increases mortality. Long wait times in Europe? Not for the highly educated. Optimal level of market power for health insurers. Best [...]Hank Stern of InsureBlog hosts the latest edition of the Health Wonk Review.
My favorite posts include:
Hank has his own post on which insurers are most likely to deny claims. The top offender? Medicare! The CBO calculates how the government will pay for health reform. The answer: more taxes.How does one model a demand system? In general, researchers only observe the equilibrium prices and quantities of goods over time. Changing prices or quantities could be due to shifts in either the demand or supply curve. Thus, modeling demand systems is difficult.
Deaton and Muellbauer (1980) propose one method: [...]
The lobbying group America’s Health Insurance Plans (AHIP) is touting a study by PriceWaterhouseCoopers showing that health reform would increase premiums significantly. The findings claim that insurance premiums would rise between “26 percent between 2009 and 2013 under the current system and by 40 percent during this same period” [...]
Many of the healthcare reform bills under consideration include an individual mandate. If you don’t purchase health insurance you pay a fee. For the Senate Finance Committee and Senate Health Committee, this penalty would be up to $750. The House Version would assess the fee as 2.5 percent of [...]
A paper written by John Fontanesi and myself was recently published in the October 2009 edition of the American Journal of Managed Care. The paper is titled “Delivering Vaccines: A Case Study of the Distribution System of Vaccines for Children.” The abstract of the paper [...]
Today, Elinor Ostrom of Indiana University and Oliver E. Williamson of the University of California, Berkeley won the Nobel prize in Economics. Dr. Ostrom won “for her analysis of economic governance, especially the commons” and Dr. Williamson “for his analysis of economic governance, especially the boundaries of the firm.”
According to [...]
In his healthcare speech, President Obama cited Intermountain Healthcare in Utah and the Geisinger Health System in rural Pennsylvania as two healthcare organizations that offer high-quality care at costs below average. In Medicare’s Physician Group Practice demonstration project, Forsyth Medical Group in North Carolina and St. John’s Health [...]
The Nobel Prize in Medicine went to Elizabeth Blackburn from the University of California, San Francisco, Jack Szostak from Harvard Medical School and Carol Greider from Johns Hopkins University. The nobel prize was awarded “for work on the existence and nature of telomerase, an enzyme that helps [...]
“A strong conviction that something must be done is the parent of many bad measures.”
Daniel Webster [...]Indonesia. Indonesia has the fourth largest population in the world and is the country with the largest Muslim population in the world. The island of Bali–where I went for my honeymoon–is the most famous island for tourists. Unlike most islands, it is largely Hindu. Java, where the capital of Jakarta [...]
Adverse Selection.
The firm wants to attract healthy individuals at all ages. Gym membership may be observable, but it is difficult to observe frequency of gym visits. By advertising at 24-hour Fitness, Kaiser Permanente’s ads have the strongest effect on those who go to the gym most frequently. If [...]
Certificate of Need (CON) were enacted in order to try to stem the wave of increasing health care costs. In order for hospitals or other providers to expand or build a new facility, CON requires these organizations to get prior government approval. The logic was that when providers expanded [...]
“…the lessons of history makes me mindful of a lesson I learned as an operations-research student at the Naval Postgraduate School some years ago. While trying to develop a mathematical model to explain the complexities of naval warfare, I realized that it was simply impossible to develop the perfect model. [...]
After viewing a cute ad, I went to the AHRQ homepage. The agency gives a nice list of 10 recommended questions you should ask your doctor. Additional questions directly pertaining to specific types of [...]
The healthiest 76% of Medicare beneficiaries consume only 14% of program expenditures. The sickest 15% consume 75% of Medicare expenditures.
Hughes et al. (2004). [...]Why do people change health plans? Of course, the most obvious reasons are moving, changing jobs, or qualifying for Medicare. However, some people change health plans even when they remain in the same job. Why is this? A working paper by Cutler, Lincoln and Zeckhauser (2009) give the following [...]
“…being president of the University of California is like being manager of a cemetery: there are many people under you, but no one is listening. I listen to them.”
Mark Yudof, President of the University of California , N.Y. Times 24 Sept. 2009. [...]Robert Fogel has a very well-written, well thought-out piece in The American on the topic of Forecasting the Cost of U.S. Healthcare. The article breaks down the forces affecting the future cost of medicine into five categories. The section below list each category which Dr. Fogel’s arguments and my [...]
The book Black Swan by Nassim Nicholas Taleb is an interesting book about probability outside of the traditional Gaussian framework and how paradigm changing often arise. The highlight of the book is its philosophy of the black swan, and its unknown unknown. The book also includes discussion of behavioral [...]
Researches at UNC found that marriage may make you happy and healthy but fat as well. If you’ve been a loyal reader of the Healthcare Economist, however, you knew that already.
Jason Shafrin’s research on marriage and weight gain already showed that marriage leads to increased weight gain. In [...]
The latest edition of the Cavalcade of Risk has been posted at Wisdom from Wenchypoo’s Mental Wastebasket.
[...]Yesterday, the winners of the prestigious MacArthur ‘Genius’ Fellowships were unveiled. Twenty winners received $500,000 of funding over 5 years with no strings attached. Some of the winers include:
Esther Duflo is a development economist exploring the social and economic forces perpetuating the cycle of poverty for the poorest [...]Many people have asked me, what do you think about the Baucus health reform plan? Taking the bird’s eye view, the Baucus plan does a very good job at expanding insurance coverage. Eligibility limits for public plans (i.e., Medicaid and SCHIP) are more generous. Lower middle class and middle class [...]
Monday Links:
Economists solve an age-old economics problem: toilet seat up or down? Is Sweden is more capitalist than the U.S.? Is $100 million proton beam radiation therapy technology worth the money? Anti-depressants reduce crime? Ahmadinejad denies the Holocaust. He needs to review the many resources available at the [...]What is Max Baucus proposing in his inital health reform bill? Most of the principles are based on the Senate Finance Committee 2009 white paper. Below
Creation of a Health Insurance Exchange. Insurers participating in the exchange could would be precluded from discriminating based on pre-existing conditions. Expand Medicaid to all [...]“A lot of people think government action saved capitalism. It didn’t. Capitalism saved capitalism.
A lot of people think the government didn’t have any plans with regard to Lehman Brothers. It did. The plans just didn’t work.”
Tom Junod “The Deal of the Century” Esquire. [...]Some links for you to enjoy over the weekend.
The public plan will cost the same as private plans. How to get your economics article published? Make it complicated. How much does your healthcare reform bill cost? Opening the Health Insurance Exchange to all. Measuring (healthcare) consumer confidence. President Obama promised to [...]The Medicare Reimbursement series continues with a look at physician reimbursement in more detail. The source of this information is MedPAC’s Payment Basics.
Physician Reimbursement
Physicians payment is based on 3 factors: RVU, GPCI and the MEI conversion factor.
The latest edition of the Health Wonk Review is up at Healthcare Technology News. This is a great source for commentary about Obama’s speech last week.
[...]The Medicare Reimbursement series continues with the big money payments: acute inpatient hospital care, long-term care facilities and critical access hospitals. The sources of this information is MedPAC’s Payment Basics.
Hospital Acute Inpatient Services
Payments made under the acute inpatient prospective payment system (IPPS) totaled $105 billion and accounted for [...]
