General equilibrium and marketability in the health care industry.
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Biomedical subjects
Publications and source records attributed to M Chernew.
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This article examines the relationship between 1996 health plan enrollment and both HEDIS-based plan performance ratings and individual HEDIS measures. Data were obtained from a large firm that collected, aggregated, and disseminated plan performance ratings to its employees. Plan market share regressions are estimated controlling for out-of-pocket price and model type in addition to the plan ratings and HEDIS measures. The results suggests that employees did not respond strongly to the provided ratings. There are several potential explanations for the lack of response, including difficulty understanding the ratings and never having seen them. In addition, employees may base their plan choices on information that is obtained from their own past experience, friends, family, and colleagues. The pattern of results suggests that such information is important. Counterintuitive signs most likely reflect an inverse correlation between some HEDIS ratings (or measures) and attributes employees observe informally.
BACKGROUND: Despite the considerable attention paid to the collection of data and the publication of health plan report cards, there is no available study on the comparability of published report cards. Ratings from seven health plan report cards publicly available in fall 1996 were compared--including those produced by major periodicals, a large national employer, a nonprofit consumer group, a health maintenance organization accreditation agency, and a consortium of employers. METHODS: Dimensions of plan performance common to the seven report cards were identified. Spearman rank correlation coefficients were computed for each pair of report cards for each of the three dimensions that were evaluated. COMPARABILITY OF REPORT CARDS: Although plan ratings tended to be positively correlated as hypothesized, the magnitude of the estimated correlation coefficients varied. For example, the estimated correlation coefficient between two periodicals' overall plan ratings was 0.48. The ranges of estimated correlations were 0.18-0.70 for preventive care (among four report cards) and 0.19-0.73 for enrollee satisfaction (among three report cards). DISCUSSION: Discrepancies in ratings may reflect methodologic issues pertaining to the sample of health plans used, plan performance measures included, and the processes by which individual measures were aggregated to construct indices and ratings. Health plan report cards may be sending mixed signals to consumers. These inconsistencies may explain why focus group studies have found that despite the widespread indication that plan performance measures would be useful, relatively few of those who had seen such information report using it in making their plan choice. Future efforts to evaluate health plans should clearly identify assumptions, methods, normative judgments, and limitations.
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Although managed care seems to serve well the interests of non-elderly enrollees and their payers, elderly people face more risks. Chronic conditions, multiple problems, and more limited resources make them more vulnerable, whereas multiple payer sources make them more complicated to cover. This synthesis of managed care delivered in Medicare and Medicaid demonstration projects serving elderly beneficiaries shows that managed care plans either select or attract enrollees who suffer fewer frailties than those served in fee-for-service settings, exhibit reluctance to enter rural markets, provide a broad range of elderly-specific services, offer more comprehensive coverage and services, and result in greater perceived access problems, particularly for vulnerable subgroups. Plans operate more cheaply by using fewer resources, even after adjusting for case mix differences. Managed care enrollees tend to be more satisfied with financial and coverage aspects, whereas fee-for-service enrollees report higher satisfaction on other dimensions. In acute care settings, process of care findings were mixed, whereas clinical and self-reported outcome indicators were no better and in some instances worse in managed care. Long-term care enrollees, in the few studies reported, consistently faired worse in both the processes and outcomes of care. These findings suggest that further research on the effects of managed care in its rapidly changing incarnations is needed, particularly with respect to how to improve the quality of acute and long-term care delivered to elderly people and the proper role of government and other key actors in the health care system.
This paper examines the relationship between consumers' health plan choices and health plan performance ratings. We make use of an initiative at a large firm to collect, aggregate, and disseminate to employees plan performance ratings. We estimate several statistical models, including share equations--which allow for the presence of important unobserved plan attributes--and logit models. Although report card ratings appear to be related to enrollment choices, the relationship is not uniform. For some dimensions of performance, the results are consistent with the hypothesis that employees respond to the performance ratings. For other dimensions, the ratings seem less influential than other plan attributes that employees likely observed without the data release.
OBJECTIVE: To examine the effect of insurance type on the relationship between hospital attributes and patient flows, with particular attention to whether HMO enrollees are more or less likely than other patients to receive care at high-quality hospitals and whether HMO enrollees travel farther to receive care. DATA SOURCES/STUDY SETTING: Data on patient flows, taken from discharge abstracts compiled by the California Office of Statewide Health Planning and Development. Our sample consists of patients undergoing coronary artery bypass graft surgery (CABG) in 1991 who resided in three California markets. Only patients under the age of 65 and insured by HMOs, Blue Cross/Blue Shield, or other commercial insurance were included. Hospital quality is based on hospital-specific measures of excess mortality from CABG. Other hospital attributes were taken from American Hospital Association survey data. STUDY DESIGN: Conditional-choice models were used to estimate the probability that patients would receive care at any given hospital as a function of their insurance type and the hospital's attributes. PRINCIPAL FINDINGS: Patients were more likely to receive care from hospitals closer to their residence. However, HMO patient flows were less sensitive to proximity. In general, the likelihood that an HMO enrollee received care at a given hospital was positively related to hospital quality. Moreover, quality had a greater effect on patient flows for HMO enrollees than for non-HMO enrollees. However, the evidence suggests that the effect of quality on patient flows is neither uniform across markets nor across HMOs. CONCLUSIONS: HMOs do not appear to direct patients to low-quality hospitals. However, heterogeneity among HMOs and across markets suggests that buyers must recognize that choosing an HMO involves greater scrutiny than simply picking a plan labeled "HMO."
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A keystone of the competitive strategy in health insurance markets is the assumption that "consumers" can make informed choices based on the costs and quality of competing health plans, and that selection effects are not large. However, little is known about how individuals use information other than price in the decision making process. This review summarizes the state of knowledge about how individuals make choices among health plans and outlines an agenda for future research. We find that the existing literature on health plan choice is no longer sufficient given the widespread growth and acceptance of managed care, and the increased proportion of consumers' income now going toward the purchase of health plans. Instead, today's environment of health plan choice requires better understanding of how plan attributes other than price influence plan choice, how other variables such as health status interact with plan attributes in the decision making process, and how specific populations differ from one another in terms of the sensitivity of their health plan choices to these different types of variables.
OBJECTIVE: To assess the degree to which premium reductions will increase the participation in employer-sponsored health plans by low-income workers who are employed in small businesses. DATA SOURCES/STUDY SETTING: Sample of workers in small business (25 or fewer employees) in seven metropolitan areas. The data were gathered as part of the Small Business Benefits Survey, a telephone survey of small business conducted between October 1992 and February 1993. STUDY DESIGN: Probit regressions were used to estimate the demand for health insurance coverage by low-income workers. Predictions based on these findings were made to assess the extent to which premium reductions might increase coverage rates. DATA COLLECTION/EXTRACTION METHODS: Workers included in the sample were selected, at random, from a randomly generated set of firms drawn from Dun and Bradstreet's DMI (Dun's Market Inclusion). The response rate was 81 percent. FINDINGS: Participation in employer-sponsored plans is high when coverage is offered. However, even when coverage is offered to employees who have no other source of insurance, participation is not universal. Although premium reductions will increase participation in employer-sponsored plans, even large subsidies will not induce all workers to participate in employer-sponsored plans. For workers eligible to participate, subsidies as high as 75 percent of premiums are estimated to increase participation rates from 89.0 percent to 92.6 percent. For workers in firms that do not sponsor plans, similar subsidies are projected to achieve only modest increases in coverage above that which would be observed if the workers had access to plans at unsubsidized, group market rates. CONCLUSIONS: Policies that rely on voluntary purchase of coverage to reduce the number of uninsured will have only modest success.
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More than 25 percent of hospitals in California that offer open-heart surgery performed fewer than the number recommended by minimum volume guidelines in 1991. This DataWatch examines the characteristics of these hospitals and the patients they treat. The analysis suggests that the market share of these providers has remained constant over recent years, despite substantial growth in managed care. Simple explanations--for example, that these hospitals are serving isolated geographic markets or are hospitals in transition--do not explain the phenomenon. Medicare beneficiaries represent approximately half of the patient volume at these facilities. Health maintenance organizations (HMOs) are more likely to send their enrollees to high-volume facilities.
Concentration in the hospital market could limit the success of health care reform strategies that rely on managed care to constrain costs. Hospital market capacity also is important because capacity affects both costs and the degree of price competition. Because managed care plans, particularly non-individual practice association (non-IPA) model HMOs, practice a less hospital-intensive style of care, consolidation and downsizing in the hospital market potentially will accompany managed care growth, influencing the long-run effectiveness of managed care cost-containment strategies. Using Standard Metropolitan Statistical Area (SMSA) data from 1982 and 1987, a 10-percentage point increase in non-IPA HMO market share is estimated to reduce the number of hospitals by about 4%, causing an approximate 5% reduction in the number of hospital beds. No statistically significant relationship is found between non-IPA HMO penetration rates and hospital occupancy rates.
The use of high-flux dialysis in clinical practice increased rapidly despite an absence of reports on the clinical effectiveness of the technique. Mortality and hospital admission rates of patients treated with high-flux dialysis were evaluated and compared with those of patients treated with conventional dialysis in a hospital-based renal dialysis unit in northern California. By use of a retrospective, cross-over design, 253 patients enrolled in the dialysis unit from January 1987 to January 1991 were studied. During this period, 107 patients were treated with high-flux dialysis for at least 1 month, and all but 17 of them had received conventional dialysis before switching to high-flux dialysis. The remaining 146 patients were treated with only conventional dialysis. Of the 80 patients who died during the study period, 69 were receiving conventional dialysis and 11 were receiving high-flux dialysis. The multivariate analyses, adjusted for age, gender, ethnic background, type of renal failure, comorbid conditions, and duration of ESRD, showed that annual mortality was substantially less for patients treated with high-flux dialysis compared with that for patients treated with conventional dialysis (7 versus 20%; P < 0.001). The difference in the rate of hospital admissions was not statistically significant. In this nonexperimental study, methods were applied to control for selectivity bias and other factors that might confound the apparent treatment effect. The findings suggest that the potential benefits of high-flux dialysis are sufficient to justify further confirmation in a randomized, controlled trial.
Managed care health plans, particularly health maintenance organizations (HMOs), have been shown to reduce the level of health care spending. Their ability to constrain the long-term rate of health care cost growth is less certain and will depend largely on their ability to constrain the use of emerging medical technologies. Evidence from experience with one important medical technology, laparoscopic cholecystectomy, suggests no systematic difference between HMOs and the general population in the rate of growth in utilization following the introduction of new medical technology.
Rising drug spending has generated concern among purchasers and policymakers. This paper compares drug cost growth in a capitated system with that in managed care systems that generally did not place physicians directly at risk for drug spending. We focus on cost growth because a substantial body of literature indicates that managed care interventions that reduce the level of costs may not influence the rate of cost growth. Drug cost growth under capitation initially was below that of other systems but still above targeted rates. Over time the capitation rates rose, the amount of risk transferred to physicians declined, and spending growth accelerated.
Evaluations of home care for chronically ill elderly people have shown disappointing results for many years. Improvements in outcomes have been slight and costs high. We offer a system for setting budget targets based upon effectiveness of home care in mitigating certain adverse outcomes, the risk of those outcomes those outcomes. We believe that such a budgeting system will encourage improved measurement of outcomes and more rigorous justification for expenditures. Moreover, such a system is designed to reallocate resources to higher-risk patients and those more likely to benefit, focusing caregiving on specific outcomes and improving those outcomes.
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