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Ten years after the passage of the HMO Act, health maintenance organizations represent a small proportion of employee health plans; benefits are more comprehensive and worker premiums higher than for traditional insurance, but other variables make comparisons difficult.
Legislation proposed in the 100th Congress and debated during the summer of 1987 would cover prescription drug spending by Medicare enrollees after the enrollee had met a deductible. However, at the time that the legislation was proposed, there were no comprehensive estimates of the extent of current expenditures for prescription drugs by that population, nor of the expected cost of the proposed coverage. In this article, the author estimates "current-law" drug spending by Medicare enrollees. A distribution around the average expenditure is developed, demonstrating the proportion of users that exceed any given annual expenditure and the proportion of total expenditures comprised by spending in excess of that "deductible."
Liability/recovery programs play a major role in attempts by insurers to contain the cost of health care. Because of the controls they have over their organization, HMOs are in an exceptional position to take advantage of the monetary rewards that accompany a liability/recovery program.
This is a discussion of the cost-saving measures designed by American corporations to reduce expenditures on employees' health care. These measures include utilization review, cost sharing, alternative delivery systems, outpatient treatment, self-insurance, preventive care programs, and business coalitions. The author concludes that although some cost-containment measures lower corporate expenditures on health, they may be detrimental to the quality of care. At the same time, measures that have clearly beneficial effects on both quality and cost-efficiency are not fully utilized. The study is based on an analysis of available literature on the subject.
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Despite the buzz about empowering consumers and controlling rising health costs, consumer-directed health plans (CDHPs)--defined as high-deductible plans coupled with savings accounts--have barely gained a toehold among Americans with employer-sponsored insurance, according to a new national study by the Center for Studying Health System Change (HSC). CDHP proponents often assert the plans offer employees greater choice and autonomy in the health care marketplace, but 39 percent of the estimated 2.7 million workers enrolled in employer-sponsored CDHPs had no choice of another type of health plan in 2006. Moreover, among workers with a choice of plans, relatively few (19%) choose CDHPs when offered another type of plan option, such as preferred provider organizations (PPOs) or health maintenance organizations (HMO). Comparable take-up rates for PPO and HMO plans when employees have a choice of another plan type were 55 percent and 40 percent, respectively.
CONTEXT: Rural residents are disproportionately represented among the uninsured in the United States. PURPOSE: We compared nonelderly adult residents in 3 types of nonmetropolitan areas with metropolitan workers to evaluate which characteristics contribute to lack of employment-related insurance. RESEARCH DESIGN AND ANALYSIS: Data were obtained from the Medical Expenditure Panel Survey, pooled across 3 panels (1996--1998) to enhance the rural sample size. Econometric decomposition was used to quantify the contribution of employment structure to differences in the probability of being offered employment-related health insurance. FINDINGS: The most rural workers are 10.4 percentage points less likely to be offered insurance compared with urban workers; the difference is smaller for residents of other rural areas. In rural counties not adjacent to urban areas, lower wages and smaller employers each account for about one-third of the total difference. CONCLUSIONS: Health insurance disparities associated with rural residence are related to the structure of employment. Major factors include smaller employers, lower wages, greater prevalence of self-employment, and sociodemographic characteristics.
This paper investigates the issue of who pays the health care bills of the elderly by considering the types of subsidized health insurance protection enjoyed by the noninstitutionalized elderly and the way that increased Medicare cost-sharing efforts in the 1980s are affecting those without additional health insurance subsidies. In making this examination we estimate the out-of-pocket health care expenditures of the elderly either directly or as nonsubsidized medigap premiums by income level, taking into account four types of health insurance subsidies received by elderly persons: Medicare, Medicaid, Veterans Administration health care, and subsidized health insurance from either current or former employers. We find that increased cost sharing is likely to fall most heavily on those elderly least likely to afford it: the poor and near-poor elderly who have only Medicare as a health insurance subsidy, particularly those who are older and sicker and who use Medicare services more heavily. These persons are caught between well-intentioned federal cost-cutting efforts and the often confusing panoply of health insurance programs for the aged, and they will bear an inequitably large portion of any future Medicare cost-sharing initiatives.
OBJECTIVES: To examine whether there are differential impacts of patient cost sharing and health plan organizational characteristics on the use of a recommended cancer screening service (mammography) versus a controversial cancer screening service (prostate cancer screening [PCS]). STUDY DESIGN: Observational cohort using the 1996 Medical Expenditure Panel Survey. PATIENTS AND METHODS: A nationally representative sample of privately insured individuals was examined. Outcome measures were the receipt of mammography and PCS. Logistic regression was used to assess the impact of patient cost sharing and health plan organizational characteristics on the receipt of mammography and PCS, controlling for other covariates. RESULTS: Patient cost sharing and gatekeeper requirements were strong predictors of PCS but were statistically insignificant predictors of mammography. Men in health plans with a copayment over dollar 10 (odds ratio [OR] = 0.38, 95% confidence interval [CI] = 0.19-0.78) or with deductibles over dollar 250 (OR = 0.38, 95% CI = 0.23-0.62) were significantly less likely to receive PCS than men in plans with no or lower copayments and deductibles. Men in gatekeeper plans were less likely to receive PCS than those without gatekeepers (OR = 0.48, 95% CI = 0.29-0.81). CONCLUSIONS: We found the impact of cost sharing on utilization is different between mammography and PCS. Prostate cancer screening utilization appears to respond to financial incentives while mammography utilization does not. The use of copayments, deductibles, and gatekeepers may discourage controversial services but may not have an adverse effect on more recommended services. These findings have implications for the design of insurance benefits and plan organizational structure.
This paper estimates that if a cross-section of nonelderly adults switched from comprehensive insurance to a combination of catastrophic insurance and a medical savings account (MSA), they would reduce their medical spending by between 2% and 8%. The author constructs measures of the prices individuals pay for medical care under a typical comprehensive insurance policy and a particular combination of catastrophic insurance and MSA. The difference in prices paid in the two health plans is combined with price elasticity estimates from the Health Insurance Experiment to predict changes in spending. Several qualifications to the estimate are considered.
In 1974, more than three-fourths of the civilian population had substantial economic protection through private health insurance against the costs of hospital and surgical care. Smaller proportions were covered at least in part for other health care costs, usually after payment of deductibles and coinsurance. Consumers got back 87 percent of their premium dollars in the form of benefits. The rise in premium income in 1974 lagged 4 percentage points behind the growth in claims incurred. The result was a net underwriting loss of $359.7 million or 1.3 percent of premium income. Most consumers bought their health insurance protection through insurance companies, although Blue Cross-Blue Shield plans served about two-fifths of the insured population for hospital-associated care. In addition, about 6 percent received health care through independent prepayment and self-insured plans.
OBJECTIVES: The aims of this study were to estimate the effects of demographics, location, severity of multiple sclerosis (MS), comorbidities, plan type, coinsurance levels, and time of entry into the sample on the use of disease-modifying agents. METHODS: A retrospective analysis of medical claims data from 1996 through 2000 was conducted with a sample of MS patients covered by self-insured, employer-sponsored health plans. Proportional hazard analysis with the SAS procedure for proportional hazards regression was used to estimate the impact of the factors of interest on the use of disease-modifying agents. A simulation was conducted to assess the impact of changing drug copayments on the use of disease-modifying agents for MS. RESULTS: The sample included 1807 patients. Patients were followed for as long as possible, but most were observed for <3 years; the mean (SD) follow-up time was 972.88 (440.59) days. Most factors associated with the use of disease-modifying agents were immutable. They included the following: high severity of illness (only marginally related; P = NS); history of seizures (P = 0.03), depression (P < 0.01), or heart disease (P = 0.01); census region of location (P < 0.01); union membership or association with a union member (P < 0.01); drug copayment requirements (P < 0.05); and year of entry into the sample (P < 0.01). In the simulation, a 50% reduction in drug copayments was associated with an increase of the proportion of patients treated with disease-modifying drugs from 41.2% to 54.7%. Patients' and physicians' preferences for treatment could not be measured directly. The true onset of MS may be unknown for many patients, but this would be the case even if medical records or other data were used for this study. CONCLUSIONS: Our analyses showed an association between copayments and the use of disease-modifying drugs for MS. Insurance policies can be tailored to influence the use of disease-modifying drugs, enhancing the quality of care for MS patients and reducing price-related barriers to beneficial treatment. Future research should test whether reducing copayments for MS treatment would reduce the use of other health care services (via better MS treatment that modifies the course of illness), or whether the use of disease-modifying drugs would increase total costs to the plan, resulting in slightly higher premiums.
The purposes of this study were to examine the process of benefit determination, approval, and variation among Substance Abuse Treatment (SAT) clients. A convenience sample of 20 SAT clients admitted to 1 of 2 treatment programs within Matrix Center were followed. Clients of clinicians who agreed to participate were given an invitation letter to hear more about the study. After informed consent, clients granted 3 interviews and gave permission for the researcher to examine client records to ascertain the benefit determination process. Referral sources were the clients' insurances, their MDs, a counselor, hospital, Employee Assistance Program, case manager, and another treatment program. Ten of the insurances were PPOs, 9 were HMOs, and 1 was a contract. All but 2 had benefits managed by a behavioral care organization (MBCO). Case managers of the MBCOs were all clinicians, most frequently ACSWs. All programs authorized outpatient care and the first approval authorized from 6 to 52 visits. From 1 to 5 different authorizations were used for each client. The co-pay ranged from $0 to $35 per visit. This study illustrates the details of how benefits for substance abuse treatment under managed care are negotiated and used.
The cost of expanding health insurance coverage increases when people who would otherwise purchase insurance obtain public coverage. This paper investigates the effects of one of the first efforts to target insurance benefits to the most needy, the 1982 medicare as secondary payer (MSP) provisions. We find strong evidence of low compliance with the MSP both in terms of medical bill payments (payment compliance) and employer-sponsored insurance coverage (coverage compliance). We estimate payer compliance at approximately 33%. Coverage compliance is lower, at under 25%. We find weak evidence that the MSP caused older workers to shift toward MSP-exempt jobs.
BACKGROUND: Incentive-based formularies have been widely instituted to control the rising costs of prescription drugs. To work properly, such formularies depend on patients to be aware of financial incentives and communicate their cost preferences with prescribing physicians. The impact of financial incentives on patient awareness of and communication about those costs is unknown. OBJECTIVE: To evaluate the relationship between enrollment in incentive-based pharmacy benefit plans and awareness of out-of-pocket costs and rates of communication about out-of-pocket costs. DESIGN: A matched telephone survey of patients and their primary care physicians. SETTING: Los Angeles County. PARTICIPANTS: One thousand nine hundred and seventeen patients aged 53 to 82 (73% response rate). MEASUREMENTS: Patient-reported pharmacy benefit design, knowledge of out-of-pocket costs, and discussion of out-of-pocket costs with physicians. RESULTS: Sixty-two percent of patients who had prescription drug coverage and were aware of their pharmacy benefit design reported being enrolled in incentive-based plans. The majority of these (54%) were "never" or only "sometimes" aware of their out-of-pocket cost requirements at the time of the physician visit. After controlling for numerous physician and patient level variables, we found that patients enrolled in pharmacy benefit designs requiring no copayments were more likely to report they "never" discuss out-of-pocket costs with physicians compared with patients enrolled in incentive-based pharmacy benefit designs (81% vs 67%, P=.001) and patients with no prescription drug insurance (57%, P<.001). CONCLUSIONS: Incentive-based pharmacy benefit plans and lack of insurance are associated with increased rates of discussions about out-of-pocket costs. Nonetheless, most incentive-based enrollees are unaware of out-of-pocket costs when prescriptions are written and never discuss out-of-pocket costs with their physicians, likely mitigating the effectiveness of financial incentives to guide decision making. Considering that out-of-pocket costs are associated with adherence to medical therapy, interventions to improve patient access to out-of-pocket cost information and the frequency of patient-physician discussions about costs are needed.
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In a climate of increasing pressure to contain health care costs, legislators and health services researchers from time to time have proposed experiments involving reductions in benefits currently authorized under the Medicare and Medicaid programs. This paper examines three court challenges to the conduct of such experiments in California, New York, and Georgia. The rulings on the California and New York cases were in favor of continuing the experiments on the grounds that the Secretary of Health, Education, and Welfare had judged the projects to be helpful in promoting the objectives of Titles XIX and IV-A, respectively, of the Social Security Act. In the Georgia case, however, the plaintiffs contended that federal regulations protecting human subjects were applicable to the experiment at issue. While the precedent of past cases upholding the Secretary's authority to approve benefit-reducing experiments was not overturned in Georgia, the Court held that the human subjects regulations were applicable and, consequently, that such experiments must be reviewed prior to implementation by an Institutional Review Board. If the experiment places human subjects at risk, the regulations require that informed consent be obtained from participating subjects. The paper concludes by examining the implications of the Georgia ruling in terms of future efforts to contain health care costs while ensuring that the rights of individual beneficiaries are adequately safeguarded.
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