Health Policy Agenda for 2001
Advances in Genomics and Technology
Medicare Reform
The Uninsured
The New Health Care Market
A Public-Private Partnership on Quality
The Public View of Health Policy
Pharmaceuticals and Emerging Technologies
The Changing Role of Health Care Consumers
Health Care’s Permanent Auditors 33
The Pundit’s Perspective 34
Kahn CN, Pollack RF. Building a Consensus for Expanding Health 35
Coverage.
. 2001 Jan/Feb; 20(1): 1-9.
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Jeffords J. Prescription Drugs Top Priority List.
. 2001
Jan 8; p.11.
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Stark P. Congress Has Full Plate of Programs to Address.
.
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2001 Jan 8; p.11.
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Pollitz K, Tapay N, Hadley E, Specht J. Early Experience With “New 48
Federalism” in Health Insurance Regulation.
. 2000
Jul/Aug; 19(4): 7-22.
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Roper LW, Cutler CM. Health Plan Accountability and Reporting:
Issues and Challenges.
. 1998 Mar/Apr; 17(2): 152-155.
1
Collins FS. Shattuck Lecture – Medical and Societal Consequences of the Human Genome Project.
.
1999 Jul 1; 341(1): 28-37.
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Moon M. Building on Medicare’s Strengths.
. Winter 1999-2000; 16(2): 65-71.
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68
78
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20
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Reproduced with permission from Health Affairs .
2 Copyright permission requested.
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Dowd B, Coulam R, Feldman R. A Tale Of Four Cities: Medicare Reform 85
And Competitive Pricing.
. 2000 Sep/Oct; 19(5): 9-29.
2
Huskamp HA, Rosenthal MB, Frank RG, Newhouse JP. The Medicare 106
Prescription Drug Benefit: How Will The Game Be Played?
. 2000 Mar/Apr; 19(2): 8-23.
2
Rowland D, Feder J, Seliger P. Uninsured in America: the Causes 122 and Consequences. Chapter 2 in
Altman S,
Reinhardt U, Shields A, Editors. Chicago, IL: Health Administration
Press; 1998.
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Feder J, Levitt L, O’Brien E, Rowland D. Covering the Low-Income 143
Uninsured: The Case for Expanding Public Programs.
.
2001 Jan/Feb; 20(1): 27-39.
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Starr P. Health Care Reform and the New Economy.
. 156
2000 Nov/Dec; 19(6): 23-32.
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Mullan F. A Founder of Quality Assessment Encounters a Troubled 166
System Firsthand.
. 2001 Jan/Feb; 20(1): 137-141.
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Eisenberg JM, Power EJ. Transforming Insurance Coverage Into 171
Quality Health Care: Voltage Drops From Potential To Delivered
Quality.
. 2000 Oct 25;
284(16): 2100-7.
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Moran DW. Prescription Drugs and Managed Care: Can ‘Free-Market 179
Détente’ Hold?
. 2000 Mar/Apr; 19(2): 63-77.
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Reinhardt U. The Rise and Fall of the Physician Practice Management 194
Industry.
. 2000 Jan/Feb; 19(1): 42-55.
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Reinhardt U. Making Economic Valuations Respectable.
208
. 1997 Aug; 45(4): 555-562.
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Miller M. Health Care: A Bolt of Civic Hope.
. 216
2000 Oct; 286(4): 77-87.
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1
Reprinted with permission from Issues in Science and Technology . Copyright 2000 by the University of Texas at
Dallas, Richardson, TX.
2
Reprinted with permission from Health Affairs .
3
Reprinted with permission from the Authors.
4
Copyright permission requested.
5 Reprinted with permission from the Author.
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Reprinted with permission from the Author. ii

Featured Article
Kahn CN, Pollack RF. Building a Consensus for Expanding Health Coverage. Health
Affairs . 2001 Jan/Feb; 20(1): 1-9.
Despite a flourishing economy and recent growth in employment-based health coverage, forty-three million Americans remain uninsured. Extending coverage to the uninsured is not an intractable public policy problem but could be addressed if the various health care stakeholders could only find common ground. The authors argue that to win broad-based support from across the ideological and political spectra, a meaningful proposal should achieve a balance between public-and private-sector approaches, focus attention on those who are most in need of assistance (low-income workers), and build on systems that work today. With the aim of pulling together a political coalition, the authors present a proposal specific enough to attract support but whose details will arise later, in the context of the legislative process.
Other Articles
Davis K, Schoen C, Schoenbaum S. A 2020 Vision for American Health Care . Archives of
Internal Medicine . 2000 December 11/25; 160(22): 3357-62.
This article lays out a bold new vision for the development of America’s health care system over the next generation. The authors argue that because at least a fourth of the projected $4.6 trillion, 10-year federal budget surplus results from greater-than-expected savings in Medicare and Medicaid, health care should be a priority when deciding how to allocate the surplus. The proposed “2020 plan” would expand
Medicare, Medicaid and FEHBP to cover the uninsured, while promoting employer-sponsored insurance.
The authors estimate that their plan would reduce the number of uninsured to below 6 million. While the surplus alone is not enough to sustain the system envisioned, funds from the surplus would give
America breathing room to create a system that emphasizes: automatic and affordable health insurance coverage for all; easy access to health care; patient-responsive health care; information-driven health care; and commitments to quality improvement.
Featured Articles
Jeffords J. Prescription Drugs Top Priority List. Roll Call . 2001 Jan 8; p.11.
In this editorial, Chairmain of the Senate Health, Education, Labor and Pensions Committee, Senator
James Jeffords (R-Vt.) describes his health care priorities for the next congress. Sen. Jeffords writes that congress should work in a bipartisan fashion to address many of the bills that were stalled in the last congress, including a patients’ bill of rights, drug reimportation legislation, and medical privacy. The
Senator also intends to introduce new legislation on insurance coverage expansion and medical errors.
Stark P. Congress Has Full Plate of Programs to Address. Roll Call . 2001 Jan 8; p.11.
In this editorial, the ranking member of the house Ways and Means subcommittee on health,
Representative Pete Stark (D-Calif) outlines his vision of the major health care issues that should be addressed in the 207 th Congress. Among the priorities cited by Rep. Stark are a buy-in expansion of
Medicare, expansion of Medicaid and CHIP, prescription drugs for seniors, and a judicious approach to conservative strategies for expanding insurance coverage, such as the use of tax credits.
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Featured Article
Pollitz K, Tapay N, Hadley E, Specht J. Early Experience With “New Federalism” in
Health Insurance Regulation. Health Affairs . 2000 Jul/Aug; 19(4): 7-22.
The passage of the Health Insurance Portability and Accountability Act (HIPAA) in 1996 marked a new era of federal/state partnership in the regulation of health insurance markets. To determine how federal and state government would handle this new, joint regulatory responsibility, the authors of this article monitored the implementation of HIPAA from 1997 to 1999. Regulators in all states and relevant federal agencies were interviewed and applicable laws and regulations studied. The authors found that HIPAA changed legal protections for consumers' health coverage in several ways. They examine how the process of regulating such coverage was affected at the state and federal levels and under an emerging partnership of the two. Despite some early implementation challenges, HIPAA's successes have been significant, although limited by the law's incremental nature.
Other Articles
National Conference of State Legislatures. 2001 State Health Priorities: Findings From a
Survey of the States . Washington D.C.: National Conference of State Legislatures; January
2001.
Access to health insurance, Children’s Health Insurance Program (SCHIP) expansion, caring for a growing elderly population, prescription drugs, and managed care regulation are among the “hot” issues that state lawmakers plan to address in 2001, according to the annual State Health Priorities Survey, conducted by the National Conference of State Legislatures (NCSL) Health Policy Tracking Service.
Forty-nine states responded to the survey, which has been conducted for the past four years and compiles input form state legislators, legislative staff, governor’s offices, and executive agencies.
Sparer MS, Brown LD. Uneasy Alliances: Managed Care Plans Formed by Safety-Net
Providers. Health Affairs . 2000 Jul/Aug; 19(4): 23-35.
Health care providers that have traditionally served the poor are forming their own managed care plans, often in alliance with local safety-net peers. These alliances make it easier to raise needed capital, increase the pool of likely enrollees, and enable plans to benefit from efficiencies of scale. At the same time, however, the alliances often are undermined by conflicts of interest among the different providers and between the providers and the health plan. This paper suggests that these plans are most likely to do well when the state makes special efforts to support safety net care and when plans have the leadership and financial reserves to take advantage of their supportive state policies.
Fossett JW, Goggin M, Hall JS, Johnston J, et al. Managing Medicaid Managed Care: Are
States Becoming Prudent Purchasers? Health Affairs . 2000 Jul/Aug; 19(4): 36-49.
This article examines the extent to which five states are becoming "prudent purchasers" in their oversight of Medicaid managed care. The authors’ conclusions are mixed. On one hand, these states are making more sustained efforts along these lines than most private purchasers and have improved the amount and quality of the data they collect on the experiences of Medicaid managed care clients compared with the traditional fee-for-service program. However, these states have been less successful in ensuring data quality that is adequate to support contracting decisions and in developing the analytical or political capacity to use data to "manage" the managed care system. Becoming a prudent purchaser appears to be a complex task for states that may prove difficult to achieve.
Coburn AF. The Role Of Health Services Research In Developing State Health Policy.
Health Affairs . 1998 Jan/Feb; 17(1): 139-151.
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As their responsibility for health policy making grows, states are pursuing a variety of strategies for getting the research and analytical assistance they need, including expanding their relationships with university-based health services research and policy analysis programs. These collaborations raise a number of questions about the fit between states' analytic needs and universities' interest and capacity, and about the appropriate role of the university research organization in the often highly politicized state environment. This paper discusses these questions in light of case studies of universities involved in state health policy in five states: Maryland, Minnesota, North Carolina, Washington, and Wisconsin.
Featured Article
Roper LW, Cutler CM. Health Plan Accountability and Reporting: Issues and Challenges.
Health Affairs . 1998 Mar/Apr; 17(2): 152-155.
Despite new measures of health plan performance, the “accountability movement” is still less than a unified front. Further work is needed on the technical issues of performance measures and on related matters such as the automated medical record and community health services. At the same time, those seeking this information need to agree on common reporting sets. Public/private partnerships pursuing the enlightened self-interests of all parties are essential for progress in this area.
Other Articles
Darves B. The Business of Medicine 2000: What Worked? More Than You Might Think.
WebMD . 2000 Dec 19.
In year 2000, there have been small but important health care industry gains, bold practice management innovations and measurable, sustainable gains for physicians and their practices. New models for medical practice organization include the “Idealized Design of Clinical Office Practices,” which provides open access, same-day appointments for most needs, and small-scale population-based medicine, and
“SimpleCare,” which allows patients to pay a reasonable cash fee to access medical care in the physician’s office. Physician salaries have increased due to a boost in productivity, negotiation of better rates from
HMOs, and an increase in physician union movement. Direct contribution of funds for health insurance by employers also caught on as a new model of health care financing. This has led to the development of healthcare “superstores,” where an employee with a specified annual health benefit allotment, chooses his/her primary care physician and type and level of insurance coverage from potentially dozens of options. An increase in the adoption of information technology in the clinical practice arena has also transpired in 2000. Palm for e-prescribing and other handheld e-devices are enabling physicians to retrieve and send patient data more efficiently. Electronic claims submission reached new heights.
Hospitals began moving online their process of supplies ordering and management. In the relationship between health plans and physicians, some MCOs have started to let go of preauthorization requirements and several health plan/physician group relationships have moved cautiously from combat to collaboration, with good results.
Hallam K. Providers Hope Bush Wants ‘Partnership’. Modern Health Care Magazine . 2000
Dec 18; 30(51).
Healthcare lobbyists are hopeful that President-elect George W. Bush will create a consensus on various health issues through a partnership between the administration and the private sector. In this article, healthcare lobbyists suggest that Bush could begin with the coverage for the uninsured issue, an idea embraced by Democrats and Republicans.
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Rector TS. Exhaustion of Drug Benefits and Disenrollment of Medicare Beneficiaries From
Managed Care Organizations. Journal of the American Medical Association . 2000 Apr 26;
283(16): 2163-2167.
This study demonstrates that a significant portion of Medicare beneficiaries exhaust drug benefits provided by managed care and subsequently disenroll from health plans. This finding arouses concern that Medicare beneficiaries must change plans to have financial access to medication, which can lead to discontinuity in care and diversion of resources from care to administrative matters. The author recommends that policymakers should strive to avoid fragmented systems of providing drug benefits.
Pulcini J, Mason DJ, Cohen SS, Kovner C, Leavitt JK. Health Policy and The Private Sector.
New Vistas For Nursing. Nursing Health Care Perspectives . 2000 Jan/Feb; 21(1): 22-28.
During the past two decades, the drive to reign in rising health care costs has shifted some of the power in health care policy making from professional groups, government agencies, and not-for-profit health care organizations to large for-profit corporations. This shift in power is manifested in profound ways.
Market competition and bottom-line economics have permeated the health care system, creating powerful new incentives for corporate restructuring. Moreover, the health insurance industry has been transformed as traditional indemnity insurance is replaced by managed care. The role of government, or the public sector, in setting parameters for health care financing and standards for the delivery of health care services is increasingly outpaced in cost cutting by organizations that directly face the bottom line.
In addition, private foundations, many of which are under the auspices of managed care organizations, now fund a large proportion of health care research and demonstration projects, a task once largely within the realm of the government. The challenge now is to educate nurses to adapt their political and policy strategies to the new health care milieu.
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Featured Article
Collins FS. Shattuck Lecture – Medical and Societal Consequences of the Human Genome
Project. New England Journal of Medicine . 1999 Jul 1; 341(1): 28-37.
The progress made on the Human Genome Project in the past several years is striking. Scientists have now produced a working draft of the human genome, and the complete human DNA sequence is expected to be unraveled in the next few years. As genome technology moves from the laboratory to the health care setting, new methods will make it possible to screen individuals for a wide range of genetic traits and diseases. Such knowledge may foretell future disease and alert patients and providers to undertake better preventative strategies. In the wrong hands, however, the same information could be used for purposes of genetic discrimination. The ready availability of genetic information in the future will provide a wealth of opportunities to scientists, health care providers, and patients, and it will raise a broad range of policy and ethical questions for policymakers.
Other Articles
Collins FS, McKusick VA. Implications of the Genome Project for Medical Science.
Journal of the American Medical Association . Forthcoming, February 2001.
Collins FS, Jegalian KG. Deciphering the Code of Life. Scientific American . 1999 Dec; 281:
86-91.
Advances in genomics, highlighted by the Human Genome Project, raise a wealth of new possibilities for science and health care. These advances have the potential to enlighten our fundamental beliefs about life and evolution and change the face of medical practice. This article discusses a number of questions about how genomics will change our world in the future. These questions range from whether scientists will succeed in creating artificial life to how genomics will change the face of the health care system, to whether understanding the “code of life” will elucidate the path of human evolution or alter fundamental social and religious beliefs.
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Featured Article
Moon M. Building on Medicare’s Strengths. Issues in Science and Technology . Winter
1999-2000; 16(2): 65-71.
Over the next several decades, Medicare will face numerous challenges including dramatic growth in the number of eligible beneficiaries, a wealth of new scientific advances for treating disease, and projected near doubling of Medicare’s share of GDP. Most people agree that Medicare reform is needed to address these challenges. The author argues that in drafting a reform proposal, we should recall the principles on which Medicare was founded and recognize the program’s achievements over the past 33 years. As a social insurance program, Medicare was intended to provide a universal set of benefits to its beneficiaries, to pool the cost of health care across the healthy and sick, and to protect the rights of beneficiaries.
While operating under these principles, Medicare has succeeded in controlling growth in health care costs at rates comparable to or better than private insurers. Most reform proposals suggest that in the future,
Medicare should rely more heavily on the private insurance market to control costs and expand benefits.
When examining these proposals, we should be cautious how such a move would impact the core of the
Medicaid program, and examine a full continuum of options for private sector involvement.
Other Articles
Moon M, Editor. Competition with Constraints: Challenges Facing Medicare Reform .
Washington DC: The Urban Institute Press; 2000.
The most prominent Medicare reform proposal before congress is the “premium support” model proposed by the co-chairs of The National Bipartisan Commission on the Future of Medicare, Senator
John Breaux (D-LA) and Representative Bill Thomas (R-CA). The premium support model is based on a similar structure as the Federal Health Care Benefits Program (FEHBP). This 180-page report contains detailed analysis of several key issues to be considered in moving Medicare to a premium support model.
These issues include: how the program would be administered; contracting with private health plans; how to manage competitive pricing; risk adjustment; and price sensitivity of Medicare beneficiaries.
Cain HP. Moving Medicare To The FEHBP Model, Or How To Make An Elephant Fly.
Health Affairs . 1999 Jul/Aug; 18(4): 25-39
Transforming Medicare into a Federal Employees Health Benefits Program (FEHBP)-type program holds the promise of more choice, lower costs (in the long term), and higher quality – a fine concept that will collapse in its implementation unless at least three conditions are met. (1) Congress gets the regulatory structure right and then refrains from annual tinkering, (2) Congress does not set unrealistic expectations regarding "cost savings," especially if a prescription drug benefit is added, and (3) administrative agency staff members have the requisite training and a "privatizing" orientation. Given
Medicare's history and the "Medicare-industrial complex," none of those conditions is likely to be met.
Merlis M. Medicare Restructuring: The FEHBP Model. Menlo Park, CA: Henry J Kaiser
Family Foundation; February 1999.
Adoption of an FEHBP-like model for Medicare would require solutions to a number of policy and technical questions. These questions include: risk adjustment of premiums and government contributions; managing the competition of national and local plans in local markets; and protecting lowincome beneficiaries. If these issues are resolved, there is no certainty that adoption of a competitive model would necessarily reduce Medicare’s costs over the long term. The author argues that FEHBP is
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one of the many models – successful in some respects, unsuccessful in others – that policymakers should consider in the debate over how to restructure Medicare. However, there is no single off-the-shelf model for Medicare restructuring.
Oberlander J. Is Premium Support The Right Medicine For Medicare? Health Affairs .
2000 Sep/Oct; 19(5): 84-99.
This paper assesses the desirability of transforming Medicare into a premium-support system. The author focuses on three areas crucial to the future of Medicare: cost savings; beneficiary choice; and the stability of traditional Medicare. Based on his analysis of the Bipartisan Commission on the Future of Medicare plan, the author finds substantial problems with adopting premium support for Medicare. In particular, projections of premium-support savings are based on questionable assumptions that the slowdown in health spending during 1993-1997 can be sustained and extrapolated to future Medicare performance.
Consequently, premium support may inadvertently destabilize public Medicare and erode beneficiary choice without achieving substantial savings.
Moon M, Gluck M. Financing Medicare’s Future . Washington DC: National Academy of
Social Insurance; September 2000.
The rising cost of providing health care will have a dramatic impact on the Medicare program in the future. By 2030, Medicare will require over twice as much in taxpayer revenues, simply to finance the same benefits. With the likely addition of new Medicare benefits in coming years, such as prescription drug coverage, the amount of tax revenue needed to sustain the program will grow at an even faster rate.
Policymakers need to begin thinking about establishing mechanisms to finance Medicare’s future. Such mechanisms could include increases in payroll taxes or income taxes, establishing a federal sales tax, increasing taxes for wealthier Medicare beneficiaries, or taxing employer-sponsored health insurance. A panel of experts convened by the National Academy of Social Insurance (NASI) concludes that using the projected budget surplus to finance Medicare in the future will not be sufficient, and that policymakers should take steps now to generate a future revenue base for the program.
Seidman LS. Prefunding Medicare Without Individual Accounts. Health Affairs . 2000
Sep/Oct; 19(5): 72-83.
It has recently been proposed that Medicare be prefunded through the creation of individual medical retirement accounts. There is a strong case for prefunding Medicare in anticipation of the retirement of the numerous baby boomers. But the creation of individual accounts would involve a new departure for
Medicare with serious potential shortcomings. This paper shows how Medicare can be prefunded without the creation of individual accounts through reform of the Medicare trust fund.
Etheredge L. Medicare's Governance And Structure: A Proposal. Health Affairs . 2000
Sep/Oct; 19(5): 60-71.
Medicare and Medicaid need new organizational structures. At the start of a new administration, the
Health Care Financing Administration (HCFA) should be replaced by separate agencies to administer
Medicare (a Federal Health Programs Administration) and Medicaid plus other state grant programs (a
State Health Programs Administration). A new Medicare management agency should have different centers for beneficiary services, provider payments, health plans, prescription drugs, and program development/special populations. The future Department of Health and Human Services (HHS) should have an assistant secretary for prevention and health care quality, and a new Congress should establish a
Joint Health Committee.
Moon M. An Assessment of the President’s Proposal to Modernize and Strengthen Medicare .
Washington D.C.: The Commonwealth Fund; June 2000.
The Clinton Administration first announced its proposal for Medicare reforms in June 1999, and revised it moderately for its fiscal year 2001 budget submission. This proposal represents an alternative to the
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plan developed for the National Bipartisan Commission on the Future of Medicare. Although the approach of the Administration proposal is more incremental, the plan nonetheless offers a broad range of changes that could have a dramatic impact on the program. This paper discusses four elements of that proposal: improving the benefit package; enhancing the management tools available for the traditional
Medicare program; redirecting competition in the private plan options; and adding further resources to ensure the program’s security in the coming years.
Waidmann TA. Potential Effects of Raising Medicare’s Eligibility Age. Health Affairs .
1998 Mar/Apr; 17(2): 156-164.
Recent fiscal pressures on Medicare and an already enacted increase in Social Security's normal retirement age have generated discussion of raising Medicare's age of entitlement. This article examines potential impacts of raising Medicare's eligibility age to sixty-seven on public-sector health spending and individual insurance coverage. The proposed increase would affect a substantial fraction of beneficiaries without having a commensurate effect on expenditures, even in the long run. It is estimated that if the eligibility age were sixty-seven, upwards of 500,000 persons ages sixty-five and sixty-six would be left without any insurance, and even more would not be able to afford coverage with benefits similar to those of
Medicare.
Neuman P, Rowland D, Kitchman M, Altman D, et. al. Understanding the Diverse Needs of the Medicare Population: Implications for Medicare Reform . Journal of Aging Social
Policy . 1999; 10(4): 25-50.
Meeting the health care needs of millions of elderly and disabled Americans is central to the debate over
Medicare's future. Using data from a nationally representative survey of 3,309 beneficiaries, this report profiles Medicare's most vulnerable beneficiaries, examining variations in coverage, satisfaction, access, and financial difficulties. A substantial portion of the Medicare population – two-thirds – were found to have health problems or low incomes. The analysis shows that about 40% of beneficiaries with incomes below the poverty level, in fair or poor health, or with activities of daily living (ADL) limitations, have difficulties paying their medical bills or getting needed health care. Medicare's disabled, under-65 beneficiaries are at even higher risk: nearly half (47%) have health care access problems or deal with financial hardship due to medical bills. The diverse needs and experiences of the Medicare population are underscored, providing new insights into the challenge of maintaining or improving protection for those with greatest need while assuring the long-term fiscal viability of the program.
For Further Reference:
Moon M. Medicare Matters: Building on a Record of Accomplishments . Health
Care Financing Review . Forthcoming .
Feldman R, Dowd B, Coulam R. The Federal Health Benefits Plan: Implications for
Medicare Reform. Inquiry . 1999 Summer; 36(2): 188-199.
Vladeck BC. The Political Economy Of Medicare. Health Affairs . 1999 Jan/Feb;
18(1): 22-36
McClellan M, Skinner J. Medicare Reform: Who Pays And Who Benefits? Health
Affairs . 1999 Jan/Feb; 18(1):48-62.
Wilensky GR, Newhouse JP. Medicare: What's Right? What's Wrong? What's Next?
Health Affairs . 1999 Jan/Feb; 18(1): 92-106.
Cassel CK, Besdine RW, Siegel LC. Restructuring Medicare For The Next Century:
What Will Beneficiaries Really Need? Health Affairs . 1999 Jan/Feb; 18(1): 118-131.
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Whitelaw NA, Warden GL. Reexamining The Delivery System As Part Of Medicare
Reform. Health Affairs . 1999 Jan/Feb; 18(1): 132-143.
Bernstein J, Stevens RA. Public Opinion, Knowledge, And Medicare Reform.
Health Affairs . 1999 Jan/Feb; 18(1): 180-193.
McKusick D. Demographic Issues In Medicare Reform. Health Affairs . 1999
Jan/Feb; 18(1): 194-207.
Stevens R. Health Care in the Early 1960s. Health Care Financing Review . Winter
1996; 18(2): 11-22.
Featured Article
Dowd B, Coulam R, Feldman R. A Tale Of Four Cities: Medicare Reform And Competitive
Pricing. Health Affairs . 2000 Sep/Oct; 19(5): 9-29.
The current payment system for Medicare+Choice (M+C) plans is based on prices calculated from administrative records. This system has been criticized as arbitrary, inefficient, and unfair. Most Medicare reform proposals would replace the current payment system with some form of competitive pricing.
However, efforts over the past five years to demonstrate competitive pricing for M+C plans have been blocked repeatedly by Congress, even when the demonstrations were directly responsive to a congressional mandate. In the absence of political support, a demonstration of competitive pricing may be infeasible, and Congress could be forced to take the risky step of implementing broad Medicare reforms with very little information about their effects.
Other Articles
Nichols LM, Reischauer RD. Who Really Wants Price Competition In Medicare Managed
Care? Health Affairs . 2000 Sep/Oct; 19(5): 30-43.
There is much policy talk about making Medicare more competitive, like private markets. But when reform proposals near implementation, local opponents of competition are often able to stop reform experiments. This paper reports on one recent example, the Competitive Pricing Advisory Committee, created by the 1997 Balanced Budget Act (BBA) to bring competitive bidding to Medicare+Choice plans.
After design and site-selection choices were announced, members representing local interests were able to delay and perhaps kill competitive bidding before it could start, once again. A public report of this story may save future market-based Medicare reforms from a similar fate.
Gold M, Smith A, Cook A, Delilippes P. Medicare Managed Care: Preliminary Analysis of
Trends in Benefits and Premiums, 1997-1999 . Washington DC: Mathematica Policy
Research; June 1999.
Medicare managed care has historically financed supplemental benefits at little additional costs and hence has served as an important source of affordable coverage to moderate income elderly and disabled individuals. With the implementation of the 1997 Balanced Budget Act, many thought that Medicare managed care plans would be under financial pressure to drop supplemental benefits or raise premiums.
This paper provides an early analysis of the major trends in benefits and premiums offered by Medicare managed care plans from 1997 to 1999. The authors find that over this period, the benefits offered by
Medicare managed care plans did not change significantly. The evidence of this trend is particularly strong from 1998-1999, a period for which there exists detailed data on plan benefits.
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Neuman P, Langwell KM. Medicare's Choice Explosion? Implications For Beneficiaries.
Health Affairs . 1999 Jan/Feb; 18(1): 150-160.
Medicare+Choice was established under the 1997 Balanced Budget Act to expand the range of health plan options available to beneficiaries and to encourage plans to compete on the basis of price and quality, with potential savings to beneficiaries and the program. However, it is unclear whether the envisioned positive outcomes will occur. This paper reviews the rationale for expanding choices under
Medicare. It considers how the rapidly changing health insurance market poses uncertainties for beneficiaries and concludes with a discussion of safeguards that may be necessary to assure that the program continues to work well for beneficiaries with diverse needs and circumstances.
Laschober MA, Neuman P, Kitchman MS, Meyer L, Langwell KM. Medicare HMO
Withdrawals: What Happens To Beneficiaries? Health Affairs . 1998 Nov/Dec; 18(6): 150-
157.
More than 400,000 Medicare beneficiaries had to seek other insurance arrangements when their health maintenance organization (HMO) withdrew from Medicare at the end of 1998. According to a new survey of 1,830 involuntarily disenrolled Medicare beneficiaries, two-thirds subsequently enrolled in another Medicare HMO, one-third experienced a decline in benefits, and 39 percent reported higher monthly premiums. One in six lost prescription drug coverage; about one in five had to switch to a new primary care doctor or specialist. Those with traditional Medicare by itself or with Medigap, the disabled under age sixty-five, the oldest old, and the near-poor experienced the greatest hardship after their HMO withdrew.
For Further Reference:
Iglehart JK. Bringing Forth Medicare+Choice: HCFA's Robert A. Berenson. Health
Affairs . 1999 Jan/Feb; 18(1): 144-149.
Riley GF, Ingber MJ, Tudor CG. Disenrollment of Medicare Beneficiaries from
HMOs. Health Affairs . 1997 Oct/Nov; 16(5): 117-124.
Featured Article
Huskamp HA, Rosenthal MB, Frank RG, Newhouse JP. The Medicare Prescription Drug
Benefit: How Will The Game Be Played? Health Affairs . 2000 Mar/Apr; 19(2): 8-23.
Most recent proposals to add a prescription drug benefit to the Medicare program suggest using pharmacy benefit managers (PBMs) to control costs and promote quality. However, the proposals give little detail on the institutional arrangements that would govern PBM operations and drug procurement.
The recent Congressional Budget Office cost estimate of the Clinton administration's proposal reflects this lack of detail on how PBMs would function. The authors sketch an approach for structuring PBM operations that focuses on competition among PBMs, manufacturers, and distributors; incentive pricing; and risk sharing with PBMs.
Other Articles
McClellan M, Spatz ID, Carney S. Designing A Medicare Prescription Drug Benefit: Issues,
Obstacles, And Opportunities. Health Affairs . 2000 Mar/Apr; 19(2): 26-41.
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The authors review the policy concerns underlying some of the most contentious issues that must be resolved prior to the enactment of a Medicare drug benefit. They consider critical issues both in benefit design-targeted versus universal eligibility, benefit subsidies, and benefit comprehensiveness – and in benefit administration, focusing especially on issues involving the administration of the drug benefit in traditional Medicare. Despite the apparent contentiousness of the drug benefit debate, alternative proposals may not be so far apart on these issues.
Lipton HL, Gross DJ, Stebbin MR, Syed LH. Managing The Pharmacy Benefit In
Medicare HMOs: What Do We Really Know? Health Affairs . 2000; 19(2): 42-58.
An estimated five million Medicare beneficiaries received outpatient prescription drug benefits through
Medicare+Choice in 1999. However, little is known about how these benefits are managed or about their effects on costs and quality of care. This exploratory study applies a case-study methodology to four large
Medicare health maintenance organizations (HMOs) to identify and assess drug-use management strategies. It also poses a number of important issues for consideration by both policymakers and health services researchers, as the debate rages on over the creation and administration of a Medicare outpatient drug benefit, especially in light of the predilection for the use of private pharmacy benefit managers
(PBMs) in many of these proposals.
Newcomer LN. Perspective: Medicare Pharmacy Coverage: Ensuring Safety Before
Funding. Health Affairs . 2000 Mar/Apr; 19(2): 59-62.
Prescription-related deaths far outnumber other accidental deaths in other areas subject to federal oversight (such as cars and airplanes). Without changes in the health care system, the problem of prescribing errors is likely to increase as more drugs enter the market and increasing consumer awareness pressures physicians to prescribe drugs with which they are unfamiliar. Most prescription-related injuries are due to errors that could be easily caught by computerized systems: incorrect dosage; inappropriate drug choice; failure to see an allergy warning; or interactions between multiple drugs. Indeed, research has shown that computerized systems can reduce prescription-related injuries and deaths. Given these facts, it would be irresponsible for Medicare policymakers to increase access to a flawed system without addressing the issues of safety.
Christensen S, Wagner J. The Costs Of A Medicare Prescription Drug Benefit. Health
Affairs . 2000 Mar/Apr; 19(2): 212-218.
This paper describes a preliminary cost estimate, prepared by the Congressional Budget Office (CBO), of
President Clinton's 1999 prescription drug benefit proposal. The CBO estimated that the new benefit would increase net Medicare outlays by $136 billion between 2002 and 2009, although these estimates are highly uncertain. Because the proposal included an annual cap on the amount of the benefit, it did not require consideration of an important effect of a more comprehensive benefit: higher prices for some drugs. Estimates of future proposals for a Medicare prescription drug benefit may require consideration of that pricing effect.
Poisal JA, Chulis GS. Medicare Beneficiaries And Drug Coverage. Health Affairs . 2000
Jan/Feb; 19(2): 248-256.
Whether or not to add a prescription drug benefit to the basic Medicare package is at the forefront of congressional debate. Using data from the 1996 Medicare Current Beneficiary Survey (MCBS), the authors examine changes in drug insurance coverage levels from 1995 to 1996 and compare drug use and spending data for Medicare beneficiaries with and without drug coverage. The data show that enrollees without drug insurance consistently use fewer prescriptions, spend more out of pocket, and have less in total drug expenditures than their insured peers.
For Further Reference:
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Etheredge L. Purchasing Medicare Prescription Drug Benefits: A New Proposal.
Health Affairs . 1999 Jul/Aug; 18(4): 7-19.
Gluck ME. A Medicare Prescription Drug Benefit. Medicare Brief . 1999 Apr; (1): 1-
13.
Cook AE. Strategies for Containing Drug Costs: Implications for a Medicare
Benefit. Health Care Financing Review . 1999 Spring; 20(3): 29-37.
Davis M, Poisal J, Chulis G, Zarabozo C, Cooper B. Prescription Drug Coverage,
Utilization, And Spending Among Medicare Beneficiaries. Health Affairs . 1999;
18(1): 231-243.
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Featured Article
Rowland D, Feder J, Seliger P. Uninsured in America: the Causes and Consequences.
Chapter 2 in The Future of the American Health Care System: Who will Care for the Poor and Uninsured?
Altman S, Reinhardt U, Shields A, Editors. Chicago, IL: Health
Administration Press; 1998.
This chapter describes who the uninsured are and why they lack health insurance. The combination of private and public mechanisms that provide health insurance to most Americans has always fallen short, leaving millions without adequate protection. Employer-based coverage is eroding. Most significant to date has been the decline in employer-based coverage of workers’ families. At the same time, Medicaid has been expanding, mitigating the impact of private insurance declines on the number of the uninsured.
However, projections of future Medicaid enrollment show a slowing down in Medicaid expansion, which when combined with the potential loss of enrollment as welfare reform is implemented, portend a more limited role for Medicaid in filling coverage gaps. Hence, the number of Americans without insurance coverage will likely continue to grow. The chapter also reviews the evidence on why health insurance matters to people’s health. The authors found that a substantial body of research demonstrates that people without insurance get inadequate or insufficient care and suffer as a result.
Other Articles
Holahan J, Kim J. Why Does The Number Of Uninsured Americans Continue To Grow? Health
Affairs . 2000 Jul/Aug; 19(4): 188-196.
This article finds that the uninsurance rate in the U.S. continued to rise despite a strong economy and uninsurance rates have risen within all income groups. For those below 200 percent of poverty, reductions in Medicaid and private non-group coverage have more than offset any increases in employersponsored coverage. For higher-income groups, the decline in employer-sponsored and private nongroup coverage has caused the uninsurance rate to rise. Because the number of low-income persons fell between 1994 and 1998, the number of uninsured increased by only 0.8 million. Because the number of high-income persons grew, the number of uninsured increased by 1.8 million during this period. More than 80 percent of the growth in the uninsured in the past five years was among those with incomes above 200 percent of the poverty line. All of this suggests that the lack of insurance would have increased much faster had it not been for the strong economy and the associated increase in incomes, as well as lower rates of premium increase.
Kaiser Commission on Medicaid and the Uninsured. The Uninsured in America: A Chart
Book . Menlo Park, CA: The Henry J. Kaiser Family Foundation; May 2000.
This chart book profiles the uninsured and depicts the trends and major shifts in health insurance coverage that resulted in recent increases in the number of uninsured Americans. It also answers the question of why so many Americans are uninsured and provides compelling evidence that the uninsured do not have the same access to health care those who are insured. The chart book also has sections containing tables that provide detailed information on health insurance coverage for the total nonelderly population and the low-income population, as well as socioeconomic characteristics of the nonelderly and low-income uninsured populations. It also contains tables for adults, workers, and children and two sets of state-level data tables. The information contained in this chart book is intended to broaden both the public and policymakers’ understanding about the uninsured.
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Fronstin P. The Working Uninsured: Who They Are, How They Have Changed, And The
Consequences Of Being Uninsured. EBRI Issue Brief . 2000 Aug; (224): 1-23.
This issue brief presents data on workers who do not have health insurance. It offers a description of this population, discusses how this population has changed over time, and reviews the consequences of being uninsured. Also included is a description of the 2000 presidential candidates' proposals to reduce the number of uninsured Americans. The author reports that the number of uninsured workers is increasing, and that they accounted for 56 percent of the uninsured population in 1998. Furthermore, the working uninsured are heavily concentrated in certain segments of the population. In 1998, 53 percent of uninsured workers were under age 35, 58 percent were male, 57 percent were white, nearly 90 percent had not received a college diploma, 78 percent worked full time, 20 percent worked in the service industry, 60 percent were employed in small firms or were self-employed, 42 percent earned $7.00 or less per hour, and 99 percent earned less than $50,000 per year.
Farber HS, Levy H. Recent Trends in Employer-Sponsored Health Insurance Coverage:
Are Bad Jobs Getting Worse? Journal of Health Economics . 2000 Jan; 19(1): 93-119.
This article examines whether the decline in the availability of employer-provided health insurance is a phenomenon common to all jobs or is concentrated only in certain jobs. Study findings show that declines in own-employer insurance coverage over the 1988-1997 period were driven primarily by declines in take-up rates for long-term full-time workers and declines in eligibility for new and part-time workers. The authors also look at trends by workers’ education level and examine how much of the decline in own-job coverage is offset by an increase in coverage through a spouse’s policy.
Cunningham PJ, Schafer E, Hogan C. Who Declines Employer Sponsored Health
Insurance and is Uninsured? HSC Issue Brief . 1999 October; (22): 1-4.
Twenty percent of all uninsured persons are offered health insurance by their employer or a family member's employer but choose not to enroll in the offered plan(s). Most persons who do not "take up" or enroll in available employer-sponsored coverage cite cost as the main reason why. This Issue Brief, based on two surveys conducted as part of the Center for Studying Health System Change's (HSC)
Community Tracking Study, presents new findings on who declines employer- sponsored coverage and is uninsured as a result. Given the importance of cost in an individual's decision whether to enroll in employer-sponsored coverage, policy makers need to consider ways to address the problem identified by this study: low take-up rates among lower-income workers.
O’Brien E, Feder J. How Well Does the Employment-based Health Insurance System Work for Low-Income Families? Menlo Park, CA: The Henry J. Kaiser Family Foundation;
September 1998.
The employment-based health insurance system on which most Americans depend has never reached all workers and their families. However, in the past decade and a half its reach has declined. This report documents that the drop in job-based coverage was concentrated on low-wage workers. Low-wage workers have always been less likely to have employer-sponsored coverage. But the disparity in coverage between low-wage and high-wage workers has widened as coverage for low-wage workers declined.
Although the most recent data suggest some improvement in health coverage for low-wage workers and their families, today’s gap in coverage between low-wage and high-wage workers is far larger than it was in 1979.
Cooper PF, Schone BS. More Offers, Fewer Takers for Employment-Based Health
Insurance: 1987 and 1996. Health Affairs . 1997 Nov/Dec; 16(6): 142-149.
Using the 1996 panel of the Medical Expenditure Panel Survey and the 1987 National Medical
Expenditure Survey, the study provides evidence of a decline in employment-related insurance coverage.
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The decline appears to be the result of falling take-up rates, since offer rates have increased and access rates have been stable over time. The falling take-up rates observed may be attributable to declining real incomes, especially among workers who are the least likely to have coverage; increasing costs of insurance; rising employee contributions to health insurance premiums; and expansions in Medicaid.
Declining take-up rates also may reflect increased price-consciousness among workers, as a result of more intense health insurance market competition and greater media attention to health care issues.
Employees may also be responding to a decrease in the generosity of insurance offered by employers.
Chernew M, Frick K, McLaughlin CG. The Demand For Health Insurance Coverage By
Low-Income Workers: Can Reduced Premiums Achieve Full Coverage? Health Services
Research . 1997 Oct; 32(4): 453-470.
This study estimates the responsiveness of currently uninsured, low-income, small business employees to premium reductions, providing insight into the likely effectiveness of many proposed programs aimed at reducing the number of uninsured. It shows that 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 employersponsored 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.
Ayanian JZ, Weissman JS, Schneider EC, Ginsburg JA, Zaslavsky AM. Unmet Health
Needs of Uninsured Adults in the United States. Journal of the American Medical
Association . 2000 Oct 25; 284(16): 2061-2069.
The focus of this study was on determining the unmet health needs of the 33 million US adults aged 18 to 64 years who lack health insurance. Characterizing the needs of the uninsured may aid efforts to improve access to care in the future. The authors compare nationally representative estimates of the unmet health needs of uninsured and insured adults, particularly among persons with major health risk.
They find that long-term-uninsured adults, those without insurance for over a year, reported much greater unmet health needs than insured adults. Measures of unmet health needs included: failure to seek care due to cost; failure to seek regular checkups; and failure to receive clinically indicated preventive care. Providing insurance to improve access to care for long-term-uninsured adults, particularly those with major health risks, could have substantial clinical benefits.
Kaiser Commission on Medicaid and the Uninsured. In their Own Words: The Uninsured
Talk About Living Without Health Insurance . Menlo Park, CA: The Henry J. Kaiser
Family Foundation; September 2000.
As essential as facts and data-driven analysis are to health policymaking, understanding the issues through personal experiences adds an equally important dimension to the discussion. This report shares the experiences of eight families affected by lack of insurance. Through this report we hear from these families first hand what it means to be among America’s 44 million uninsured. Each chapter in the report is a separate and unique family story that weaves health problems, financial insecurity, and health system barriers into the full context of one family’s life.
Schoen C. DesRoches C. Uninsured and Unstably Insured: The Importance of Continuous
Insurance Coverage. Health Services Research . 2000 Apr; 35(1 Pt 2): 187-206.
This article examines the access and care experiences of adults who were insured when surveyed but had a recent lapse in insurance coverage. Using data from three recent cross-sectional household surveys that asked currently insured adults if they had recently been uninsured, the authors compared the health care experiences of this “unstably insured” group to currently uninsured and continuously insured adults. The
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study finds that compared to the continuously insured, those insured but with a recent time uninsured were at high risk of going without needed care and of having problems paying bills. This group was two to three times as likely as those with continuous coverage to report access problems. Rates of access and cost problems reported by insured adults with a recent time uninsured neared levels reported by those who were uninsured at the time of the survey. These two groups also rated care received more negatively than did adults with continuous insurance coverage. In general, the access gap between persons insured and uninsured widened as a result of distinguishing insured adults with a recent time uninsured from insured adults with no time uninsured.
Wielawski I. Gouging The Medically Uninsured: A Tale Of Two Bills. Health Affairs . 2000
Sep/Oct 19(5): 180-185
This article is an essay on the author’s encounter with the gap between what providers charge insured patients and what they charge the uninsured. It relates that uninsured patients can be charged twice as much as insured patients for exactly the same medical service. The author challenges us to look at health care pricing to see what policy solutions are available to protect uninsured Americans from price gouging by providers.
Kuttner R. The American Health Care System. Health Insurance Coverage. New England
Journal of Medicine . 1999 Jan 14; 342(2): 163-169.
This article addresses several trends that account for the erosion of health insurance coverage. These include: the deterioration of employer-provided coverage; rising premiums; the trend toward temporary and part-time work; reductions in specific benefits, most notably drug coverage; greater de facto limitations on covered care, especially by health maintenance organizations; a broad shift from traditional
HMOs requiring very low out-of-pocket payments to point-of-service plans and preferred-provider organizations requiring higher payments by patients; loss of Medicaid coverage due to welfare reform; the rising cost of “Medigap” coverage for the elderly; the crackdown on illegal immigrants and the reduction in services to legal immigrants; and the trend away from community rating of individual insurance premiums.
For Further Reference:
American College of Physicians-American Society of Internal Medicine. White
Paper: No Health Insurance? It’s Enough to Make You Sick. Philadelphia:
American College of Physicians-American Society of Internal Medicine; 2000.
Center for Studying Health System Change. Managed Care Cost Pressures Threaten
Access for the Uninsured. HSC Issue Brief # 19. March 1999.
Kuttner R. The American Health Care System – Employer Sponsored Health
Coverage. New England Journal of Medicine . 1999 Jan 21; 340(3): 248-252.
Cunningham P, Kemper P. The Uninsured Getting Care: Where You Live Matters.
Center for Studying Health System Change. HSC Issue Brief #15. September 1998.
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Featured Article
Feder J, Levitt L, O’Brien E, Rowland D. Covering the Low-Income Uninsured: The Case for Expanding Public Programs. Health Affairs . 2001 Jan/Feb; 20(1): 27-39.
In a new administration and Congress, any health insurance coverage initiative will focus on some, rather than all, Americans. Because lack of affordability is the main reason people lack coverage, most observers acknowledge that government-financed subsidies are needed to expand coverage. But there is considerable disagreement about how these subsidies should be provided. Here the authors argue that priority in expanding coverage should go to the uninsured population that is least able to afford coverage and most likely to have difficulties getting appropriate and timely care. Despite flaws in existing public programs, which can and should be remedied, strengthening these programs establishes a foundation for truly effective health insurance coverage for all low-income Americans.
Other Articles
Feder J, Burke S, Editors . Options for Expanding Health Insurance Coverage: A Report on a Policy Roundtable . Executive Summary. Menlo Park, CA: The Henry J. Kaiser Family
Foundation; October 1999.
This conference report summarizes a discussion among policymakers and researchers from across the political and policy spectrum. The report focuses on four analyses of alternative options for expanding insurance coverage. The first approach is a comparison of the predicted impact of alternative strategies on coverage of the uninsured. The second is a consideration of the policy and political issues of federal entitlements vs. state discretion, as raised by passage and implementation of the Children’s Health
Insurance Program (CHIP). The third is an assessment of the relative strengths and weaknesses of two specific strategies, tax preferences vs. direct subsidies, in reaching the uninsured. The last approach is an examination of the causes, costs and consequences of “crowd-out” – the potential substitution of public for private expenditures posed by coverage initiatives. The summary presents evidence of commitment across the political and philosophical spectrum to continued expansion of health insurance coverage.
Spillman BC. Adults Without Health Insurance: Do State Policies Matter? Health Affairs .
2000 Jul/Aug; 19(4): 178-187.
Using data from the National Survey of America’s Families, this paper examines how different state approaches affected the number of nonelderly adults who obtained public coverage in 1996. The results of the study demonstrate that states’ approaches do matter in whether and which low-income adults obtain coverage. However, the study also finds that even the most expansive programs fail to reach substantial proportions of low-income adults who lack other coverage.
Kinney ED, Tai-Seale M, Greene JY, Murray R, Tierney W. Three Political Realities In
Expanding Coverage For The Working Poor: One State's Experience. Health Affairs . 1999
Jul/Aug; 18(4): 188-192.
This paper describes the bipartisan effort of the Indiana Commission of Health Care for the Working
Poor, established in 1995, to design coverage expansions for uninsured, low-income workers and families in Indiana. It illustrates, based on Indiana’s experience, three of the realities many states face as they craft health coverage expansions for the uninsured poor in today’s health policy environment. First, many state policymakers are unwilling to pay the cost of even limited coverage for low-income workers and families. Second, the uninsured poor already obtain care from safety-net providers, which are programmatically constituted to serve them and ideologically committed to the task. Third, the documented lack of demand among low-income workers for health care coverage with minimum benefits threatens voluntary participation in a subsidized private program.
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Sloan FA, Conover CJ. Effects of State Reforms on Health Insurance Coverage of Adults.
Inquiry . 1998 Fall; 35(3): 280-293.
States have tried a number of strategies to reduce the growing number of uninsured people. These include Medicaid expansions and various insurance reforms, such as low-cost plans, subsidized insurance products, risk pooling, open enrollment and continuity of coverage requirements, and community rating.
Using data from 1989 to 1994, the authors examine the impact of such policies on health insurance coverage for adults. They find that few state policies have succeeded in increasing health insurance coverage. For those that work, impacts are very modest or are accompanied by adverse effects such as crowd-out. Implementing effective state policies to reduce the number of uninsured remains a great challenge.
Holohan J, Uccello C, Feder, J, Kim J. Children’s Health Insurance: The Difference Policy
Choices Make. Inquiry . 2000 Spring; 37(1): 7-22.
This paper provides estimates of the cost and coverage impacts of the new State Children’s Health
Insurance Program (SCHIP). The estimates reflect the many choices the states are given by the legislation: whether to use traditional Medicaid or establish separate state-run programs; how far to extend eligibility up the income distribution; and how much to use premiums. The authors estimate the impacts of these choices on participation by the uninsured as well as by the insured – that is, the crowdout effects – and on public expenditures. They also estimate the savings to families and firms that substitute SCHIP for private coverage. The authors conclude with estimates of the cost and coverage impacts of the actual initial choices that states have made.
Reschovsky J, Cunningham P. CHIPing Away at the Problem of Uninsured Children. HSC
Issue Brief #14 . 1998 Aug.
The State Children's Health Insurance Program (CHIP), enacted one year ago this August, is the largest expansion of health insurance in more than three decades. One of the measures of its success will be whether state officials are able to enroll children who are eligible. Research conducted by Health System
Change (HSC) shows that uninsured children are a diverse group, and that for CHIP to be successful, policy makers will need to target programs to specific groups and local market conditions. This Issue
Brief discusses why children lack health insurance and the implications for implementing CHIP.
Felland LE, Lesser CS. Local Innovations Provide Managed Care for the Uninsured. HSC
Issue Brief . 2000 Jan; (25): 1-6.
A number of communities in the United States are adopting a managed care approach to caring for lowincome uninsured individuals. This issue brief focuses on such programs in five of the 12 communities that the Center for Studying Health System Change (HSC) is tracking intensively. It describes the local market factors that motivated the creation and varying design of these initiatives, all of which seek to increase access to primary and preventive care while managing the use of more costly inpatient and emergency care. The issue brief also discusses the long-term viability of these programs as they attempt to simultaneously expand access to services and contain costs for this growing population.
Gruber J, Levitt L. Tax Subsidies for Health Insurance: Costs and Benefits. Health Affairs .
Jan/Feb 2000; 19(1): 72-85.
The continued rise in the uninsured population has led to considerable interest in tax-based policies to raise the level of insurance coverage. Using a detailed microsimulation model for evaluating these policies, we find that while tax subsidies could significantly increase insurance coverage, even very generous tax policies could not cover more than a sizable minority of the uninsured population. For example, a generous refundable credit that costs $13 billion per year would reduce the ranks of the uninsured by only four million persons. We also find that the efficiency of tax policies, in terms of the cost per newly insured, inevitably would fall as more of the uninsured were covered.
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Pauly M, Percey A, Herring B. Individual Versus Job-Based Health Insurance: Weighing the Pros and Cons. Health Affairs . 1999 Nov/Dec; 18(6): 28-44.
Although the majority of insured Americans receive their health insurance through their employers, some depend on the individual health insurance market. However, with increased criticism of the lack of choice in group coverage and various proposals including subsidies or tax credits to decrease the number of uninsured, the individual market may start to play a larger role. In this paper we conclude that although efficient large-group insurance will appropriately continue to exist, the individual market appears to be improving, in both administrative cost and protection against high premiums associated with high risk.
For diverse workers now in small groups with little plan choice, the individual market might become a reasonable alternative.
Butler S, Kendall DB. Expanding Access and Choice For Health Care Consumers Through
Tax Reform. Health Affairs . 1999 Nov/Dec; 18(6): 45-57.
A refundable tax credit for the uninsured would complement the existing job-based health insurance system while letting people keep their job-based coverage if they wish. Among the wide variety of design options for a tax credit, policy and political analysis does not reveal an obvious choice, but a tax credit based on a percentage of spending may have a slight advantage. Congress should give states maximum flexibility to use existing funding sources to supplement the value of a federal tax credit and encourage the use of techniques to create stable insurance pools.
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Featured Article
Starr P. Health Care Reform and the New Economy. Health Affairs . 2000 Nov/Dec; 19(6):
23-32.
The objectives and assumptions of health care reform have changed repeatedly during the past century and may now be entering a new historical phase as a result of the "new economy" rooted in information technology. In a high-growth context, proponents of reform may no longer feel obliged to bundle expanded coverage with tighter cost containment. At the same time, the new digital environment may facilitate innovations intended to inform and expand consumer choice and to improve quality. The new environment elevates "transparency" to a guiding principle. Health informatics has long been peripheral to reform and must now become more central.
Other Articles
Burns LR, Bazzoli GJ, Dynan L, Wholey DR. Impact of HMO Market Structure on
Physician-Hospital Strategic Alliances. Health Services Research . 2000 April, Part I:35(1);
101-132.
Contrary to conventional wisdom, this study finds that alliance formation is shaped by the number of
HMOs in the market rather than by HMO penetration. This confirms a growing perception that hospital-sponsored alliances with physicians are contracting vehicles for managed care: the greater the number of HMOs to contract with, the greater the development of alliances. Models used in the study also show that alliance formation is low in markets where a small number of HMOs have deeply penetrated the market. The models further show that alliance formation is linked to HMO consolidation
(drop in the number of HMOs in a market) and hospital downsizing. Alliance formation is not linked to changes in hospital costs, profitability, or market competition with other hospitals. The study concludes that hospitals appear to form alliances with physicians for several reasons. Alliances serve to contract with the growing number of HMOs, to pose a countervailing bargaining force of providers in the face of
HMO consolidation, and to accompany hospital downsizing and restructuring efforts.
Dudley RA, Johansen KL, Brand R, Rennie DJ, Milstein A. Selective Referral to High-
Volume Hospitals, Estimating Potentially Avoidable Deaths. Journal of the American
Medical Association . 2000 Mar 1; 283(9):1159-1166.
This study determines the difference in hospital mortality between high-volume hospitals (HVHs) and low-volume hospitals (LVHs) for conditions for which good quality data exist and estimates how many deaths potentially would be avoided in California by referral to HVHs. Findings show that mortality was significantly lower at HVHs for elective abdominal aortic aneurysm repair, carotid endarterectomy, lower extremity arterial bypass surgery, coronary artery bypass surgery, coronary angioplasty, heart transplantation, pediatric cardiac surgery, pancreatic cancer surgery, esophageal cancer surgery, cerebral aneurysm surgery, and treatment of human immunodeficiency virus (HIV)/acquired immunodeficiency syndrome (AIDs). A total of 58,306 of the 121,609 patients with these conditions were admitted to
LVHs in California in 1997. After applying the calculated odds ratios for in-hospital mortality for LVHs vs. HVHs, the authors estimated that 602 deaths at LVHs could be attributed to their low volume.
Additional analyses were performed to take into action emergent admissions and distance traveled, but the impact of loss of continuity of care for some patients and reduction in the availability of specialists for patients remaining at LVHs could not be assessed. The authors recommend that initiatives to facilitate referral of patients to HVHs have the potential to reduce overall hospital mortality in California
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for the conditions identified. Further study is also recommended to determine the extent to which selective referral is feasible and to examine the potential consequences of such initiatives.
Fraser I, McNamara P, Lehman GO, Isaacson S and Moler K. The Pursuit of Quality By
Business Coalitions: A National Survey. Health Affairs . 1999 Nov/Dec; 18(6): 158-165.
The extent to which business coalitions and their employer members are catalysts for improving quality of care is of interest to policymakers, who need to know where and under what circumstances the marketplace succeeds on its own in assuring quality. Using data from the 1998 National Business
Coalition on Health annual survey, this paper indicates that most coalitions have an infrastructure in place that could be tapped to advance quality goals. Although the survey data cannot tell us the extent to which coalitions are exercising their enhanced market influence specifically to improve quality, interviews with coalition leaders provide insights about how quality considerations can factor into coalition strategies.
Bernstein AB, Gauthier AK. Editors. The Power of Choice In the Health Care Marketplace and Its Consequences. Medical Care Research and Review , Special Supplemental Issue.
1999: 56(Supplement 1).
This special supplement issue contains four main papers originally commissioned in 1997 for a conference entitled “The Power of Choice in the Health Care Marketplace and Its Consequences,” sponsored by The Robert Wood Johnson Foundation Changes in Health Care Financing and
Organization (HCFO) program.
The first paper, “Health Care Consumers: Choices and Constraints,” written by Catherine G. McLaughlin from University of Michigan, summarizes the research and data currently available on different dimensions of consumer choice. These dimensions include not only whether to participate in a health care plan and which plan to select if given a choice but also the decisions that lead to having a choice and the implications of making the choice. Data are presented on what choices consumers face, how many are given what kinds of choices, and what information they are given and what they use. The author finds that a majority of the Americans are offered some kind of health insurance plan either through their place of employment or as a dependent on someone else’s employer-sponsored health plan. About half of those offered health insurance are offered a choice, usually of only two or three plans. The majority elects to participate in one of those plans.
The second paper, “What Do Consumers Want and Need to Know in Making Health Care Choices?” written by James S. Lubalin and Lauren D. Harris-Kojetin from Research Triangle Institute, assesses the presumption that consumer choice in health care is based on a rational weighing of alternatives – that informing consumers about plan or provider performance, when coupled with information on cost plus service scope and limitations, will lead consumers to select high-quality, low-priced plans or providers.
The authors review research on what health care consumers know, what they want to know, and what others think they should know. They also consider how people use information in making decisions and what this implies for what consumers really need to know to make effective decisions. The article concludes that assuming a rational consumer does not account for choice among options in the increasingly complex health care context facing consumers today. Based on this review, the article identifies gaps in the knowledge and sketches out a prospective research agenda in the area of consumer health care decision making.
The third article, “Choice and Representation in Health Care,” is written by Ezekiel J. Emanuel from the
Warren G. Magnuson Clinical Center, National Institutes of Health, and Center for Ethics in Managed
Care, Harvard Medical School. It discusses the roles and responsibilities of physicians, employers and other parties with respect to serving as representatives of health care consumers. The author concludes that to make representation more legitimate and effective in health care will require significant changes, which include (1) changing business to a stakeholder theory, (2) involving employees in health care coverage decisions, and (3) involving members of health plans in policy decisions.
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The fourth and last article, “Management by Objection? Public Policies to Protect Choice in Health
Plans,” is written by Lawrence Brown from The Joseph L. Mailman School of Public Health of Columbia
University. It points to an important ambiguity that U.S. policy makers must grapple with regarding consumer choice: is the objective to expand choice or protect choosers, and what should be done if the two goals conflict? Concerns about health care market malfunctions trigger a politics of consumer protection that may emphasize regulatory standards over market flexibility. To complicate matters further, hopes that deluging consumers with information can ensure that choices are at once ample and prudent are likely to be disappointed.
Other Articles
Trude S, Ginsburg PB. Are Defined Contributions a New Direction for Employer-
Sponsored Coverage? HSC Issue Brief #32 . October 2000.
Defined contributions for health benefits are being promoted as the new silver bullet for employers to combat the rising costs of health care, the managed care backlash and the changing climate for employer liability. As interest in this concept grows, so does the number of proposed alternatives for implementing it. Originally called fixed contributions, defined contributions now also refer to cash transfers or vouchers, with reliance on the individual market for health insurance. A more recent angle for defined contributions is using the Internet as an on-line marketplace for purchasing health insurance. This issue brief examines defined-contribution strategies and assesses issues relevant to employers, employees and public policy makers.
Battistella R, Burchfield D. The Future of Employment-Based Health Insurance. Journal of Healthcare Management . 2000 Jan/Feb; 45(1): 46-56.
A transformation of employment-connected health insurance from a defined benefit to defined contribution arrangement is projected based on new economic realities affecting the competitiveness of the business environment. This article discusses those new realities along with the future of employment-based health insurance. In light of new pressures to produce profits, employers are realizing they cannot afford to continue paying for and overseeing the provision of healthcare benefits to employees amid increasing premiums, state and federal mandates, the overbearing cost of managing healthcare benefits, and the threat of loss of protection under ERISA. Yet, the political and social pressures on businesses to continue to provide health insurance are formidable, perhaps impregnable, barriers to complete withdrawal of what has come to be thought of as a "right" of employees. Companies are anxious to find alternatives to the status quo, but any feasible alternative must cost less, require less administrative oversight, and ensure that employees still maintain a measure of choice. Two possible solutions for American businesses are adoption of (1) a "medical savings account" system, or (2) a
"voucher" system. Either system would result in lower costs and greater fiscal stability for both employers and employees. They would also remove much of the responsibility for healthcare decisions from employers and place it in the hands of the employees. But, perhaps the greatest contribution of either system would be the reduction in moral hazard and its inflationary effect on medical costs.
Other Articles
Cunningham R. Two Old Hands and the New Thing. Health Affairs . 2000 Nov/Dec;
19(6): 33-40.
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In his interview with Newt Gingrich and Ira Magaziner, Rob Cunningham explores how these two key figures in health care reform view the internet as a solution to many of our nation’s health care challenges. Gingrich and Magaziner agree that the Internet will have a dramatic effect on the way our health system operates, ranging from how consumers get health information to how doctors write prescriptions and order laboratory tests. Gingrich and Magaziner predict that in the future we will see greater personalization of health information delivered to consumers and increased electronic communication of medical information between providers, plans and patients. They suggest that this focus on individualized health care information could spawn a shift from group insurance back to the individual market. Other changes of the Internet revolution will include an increased on line presence by major health plans and providers, and hard times for the internet-only health companies of the 1990’s.
Moran DW. Health Information Policy: On Preparing For The Next War. Health Affairs .
1998 Nov/Dec; 17(6): 9-22.
As policymakers demand more and better information about health care, the private health information technology industry is investing heavily to produce the ''paperless clinical enterprise'' of the future: the infrastructure that will be required to satisfy those demands. Developments on a number of policy fronts
− from medical privacy legislation to clinical software regulation to ''telehealth'' − suggest the need for a conscious health information policy that will inform the debate in each niche area with a larger sense of whether public policy will promote or retard private innovation in this area. Given the stakes involved, and the immediacy of the issues, leadership in this direction is badly needed.
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Featured Articles
Mullan F. A Founder of Quality Assessment Encounters a Troubled System Firsthand.
Health Affairs . 2001 Jan/Feb; 20(1): 137-141.
Avedis Donabedian, physician, scholar, and poet, died on 9 November 2000 at age eighty-one, a month after this conversation with Fitzhugh Mullan about health care and his own experiences as a cancer patient. Known fondly by his students as “Mr.Structure-Process-Outcome ”and internationally for his
“Seven Pillars of Quality,” Donabedian through his research and writing created much of the conceptual underpinnings for quality assessment in health systems used today. Donabedian studied medicine at the
American University in Beirut and immigrated to the United States in 1953 to study public health at
Harvard. In 1961 joined the faculty of the School of Public Health at the University of Michigan, where he spent the balance of his career. His work was framed by a simple question that he asked often: “How can you tell if you have good-quality health care?” His books include the classics, Aspects of Medical Care
Administration (1973 ), Benefits of Medical Care Programs (1976), and the three-volume Explorations in Quality
Assessment and Monitoring (1980-1985). In this interview, Donabedian speaks about his experience as a patient navigating the U.S. health care system. He discusses how patient autonomy often gets translated into patient abandonment; the commitment of health care providers to their patients; and the current commercialization of care, which he finds is a big mistake.
Eisenberg JM, Power EJ. Transforming Insurance Coverage Into Quality Health Care:
Voltage Drops From Potential To Delivered Quality. Journal of the American Medical
Association . 2000 Oct 25; 284(16): 2100-7.
Although the US health care system is often touted as one of the best in the world, disparities exist in quality of care received by different populations, in different regions, and across different institutions and clinicians. Initiatives to provide access to health insurance have been a major policy tool to ensure that
Americans receive high-quality health care. However, availability of insurance coverage does not automatically lead to high-quality care. This article explores points of vulnerability in the US health care system at which the potential to achieve high-quality care can be lost: (1) access to insurance coverage; (2) enrollment in available insurance plans; (3) access to covered services, clinicians, and health care institutions; (4) choice of plans, clinicians, and health care institutions; (5) access to a consistent source of primary care; (6) access to referral services; and (7) delivery of high-quality health care services. Ensuring high-quality health care requires that each of these "voltage drops" be recognized and addressed.
Other Articles
Fraser I, McNamera P, Lehman GO, Isaacson S, Moler K. The Pursuit of Quality by
Business Coalitions: A National Survey. Health Affairs . 1999 Nov/Dec; 18(6): 158-165.
The extent to which business coalitions and their employer members are catalysts for improving quality of care is of interest to policy-makers, who need to know where and under what circumstances the marketplace succeeds on its own in assuring quality. Using data from the 1998 National Business
Coalition on Health annual survey, this paper indicates that most coalitions have an infrastructure in place that could be tapped to advance quality goals. Although the survey data cannot tell us the extent to which coalitions are exercising their enhanced market influence specifically to improve quality, interviews with coalition leaders provide insights about how quality considerations can factor into coalition strategies.
Galvin RS. An Employer’s View of The U.S. Health Care Market. Health Affairs . 1999;
18(6): 166-170.
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In this article, the author contends that employers, as purchasers of health benefits for their employees, should be disappointed with the progress of managed care, which has produced a current environment of
“market gridlock.” While managed care organizations have improved the efficiency of the health system, they have failed to create systems of care that promote quality, satisfy consumers, and seek to control cost growth. Similarly, providers and employers have not provided consumers with incentives to make value-based decisions, nor have they forced health plans to develop compelling measures of provider quality. The author predicts that when the current economic boom ends, employers will again pressure health plans to reduce costs and (hopefully) prompt a move to health plans that offer greater consumer choice and value.
Brook RH, McGlynn EA, Shekelle PG. Defining and Measuring Quality of Care: A
Perspective from US Researchers. International Journal of Quality Health Care . 2000 Aug;
12(4): 281-95.
The modern quality field in medicine is about one-third of a century old. The purpose of this paper is to summarize what is known about quality of care and indicate what can be done to improve quality of care in the next century. The authors assert that quality can be measured, that quality of care varies enormously, that improving quality of care is difficult, that financial incentives directed at the health system level have little effect on quality, and that we lack a publicly available tool kit to assess quality. To improve quality of care it will be necessary to have: an adequate data on patient care from patients, physicians and medical records; and a strategy to measure quality, report the results and place in the public domain tool kits that can be used by physicians, administrators, and patient groups to assess and improve quality. One important tool for quality improvement will be computerized monitoring of the
70-100 procedures that dominate what physicians do. Quality improvement tools could be used to comprehensively assess the quality of primary care across multiple conditions at the country, regional, and medical group level.
McGlynn EA. Six Challenges In Measuring the Quality of Health Care. Health Affairs .
1997 ` May/Jun; 16(3): 7-21.
Quality monitoring is becoming an accepted method for purchasers, patients, and providers to evaluate the value of health care expenditures. Important advances in the science of quality measurement have occurred over the past decade, but many challenges remain to be addressed so that quality monitoring may realize its potential as a counterforce to the demands of cost containment. This paper describes six such challenges in measuring quality (balancing perspectives, defining accountability, establishing criteria, identifying reporting requirements, minimizing conflict between financial and quality goals, and developing information systems) and proposes some ways in which the public and private sectors might collaborate to respond effectively.
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Articles
Blendon RJ, Benson JM, Brodie M, Altman DE, James M. Health Care in the Upcoming
2000 Election. Health Affairs . 2000 Jul/Aug; 19(4): 210-221.
Health care will be one of the top issues in the year 2000 election, but voters' interest in health care is not as great as it was in 1992. There is no single unifying theme to the health care issue. Rather, there are multiple concerns: making Medicare financially sound, providing coverage for prescription medicines for seniors, covering the uninsured, and addressing patients' rights. Voters favor an incremental approach to expanding health insurance coverage rather than a major program. They express about equal levels of support for plans similar in concept to those proposed by presidential candidates Al Gore and George W.
Bush.
Blendon RJ, Young JT, DesRoches CM. The Uninsured, The Working Uninsured, And The
Public. Health Affairs . 1999 Nov/Dec; 18(6): 203-211.
Recent opinion surveys show a high level of public support for the current employer-based health insurance system. Many Americans are not aware that this system is endangered or that the number of uninsured persons is growing. The public appears to favor a two-track system for the working uninsuredstrengthening the existing employer-based system and developing a parallel system for those without employer coverage.
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Featured Article
Moran DW. Prescription Drugs and Managed Care: Can ‘Free-Market Détente’ Hold?
Health Affairs . 2000 Mar/Apr; 19(2): 63-77.
The rapid rise in pharmaceutical benefits costs, often cited as a major contributor to the resurgence in health care cost growth, is beginning to strain the relationship between the pharmaceutical and managed care industries in the United States. In interviews conducted in 1999, executives from both industries maintained a continued preference for a market-based resolution of these tensions. There is evidence, however, that this private-sector détente may give way in the face of the rising business and political pressures that both industries face. Active leadership will be required to prevent deterioration of the prevailing political climate toward economic controls.
Other Articles
Kleinke JD. Just What the HMO Ordered: The Paradox of Increasing Drug Costs. Health
Affairs . 2000 Mar/Apr; 19(2): 78-91.
Drug companies argue that newer, more expensive drugs offset other medical costs; health plans counter that they increase pharmacy costs more than they offer a pharmacoeconomic benefit. Neither side is universally right or wrong, and neither has the data to support its case. Increasing drug costs for selective therapeutic classes represent the fulfillment of managed care's original promise. Certain therapeutic classes of drugs offer pharmacoeconomic benefit, while others represent induced costs in excess of this benefit. Health maintenance organizations (HMOs) should determine one from the other and incorporate these findings into their plan designs; multitier drug coverage is the best method to achieve this.
Croghan TW. The Controversy of Increasing Spending for Antidepressants. Health Affairs.
Forthcoming. 2001 Mar/Apr;20(2).
Spending for antidepressants has increased by about 600 percent, or more than $6 billion, during the
1990s, driven in large part by increased use. Although restrictions on this use might seem to be good fiscal management, the author challenges us to remember the equally important problem that depressive disorders are undertreated. The extent to which unnecessary care contributes to rising expenditures is not yet known. Until there is understanding of the magnitude of the problem and how to encourage proper matching of treatment and patient, overzealous cost cutting directed at reducing utilization could result in reducing medication treatment for those truly in need.
Frank RG, McGuire TG, Normand ST, Goldman HH. The Value of Mental Health Care At the System Level: The Case of Treating Depression. Health Affairs . 1999 Sep/Oct; 18(5):71-
88
The value of mental health services is regularly questioned in health policy debates. Although all health services are being asked to demonstrate their value, there are special concerns about this set of services because spending on mental health care has grown markedly over the past twenty years. The authors propose a method for using administrative data to develop a comprehensive assessment of value for mental health care, which they call systems cost-effectiveness (SCE). The method is applied to acutephase treatment of depression in a large insured population. Analysis of the SCE trends suggests that changes in clinical science – introduction of a number of new antidepressant medications – and the delivery system has led to improvements in the efficiency of acute-phase treatment for major depression during the 1990s.
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Frank RG, Berndt ER, Busch SH. Price Indexes for the Treatment of Depression. Chapter
3 in Measuring The Prices of Medical Treatments . Triplett J, Editor. Washington, DC:
Brookings Institution Press; 1999.
In the last three decades, several study results suggest that the Bureau of Labor Statistics (BLS) should use the value of health care outcomes rather than health care inputs for certain treatments, such as heart attack treatment and cataract surgery, to generate medical price indexes. Building on these studies, the authors consider a different category of illness, mental illnesses, specifically, major depression. Their findings suggest that by constructing a price index for the treatment of a specific illness that uses the episode of care to define quantity, that attempts to incorporate outcome information in defining output, and that focuses on transaction prices for both suppliers and consumers, one obtains results that depart substantially from the medical care component of the CPI (MCPI) – which incorporates the out-ofpocket costs by the patient-consumer – and specific health care PPIs – which represents the supply price or total receipts received by providers of the medical treatment from the CPI. The authors feel that their results should be viewed as suggestive that the MCPI and PPIs may be particularly prone to distortion for medical treatments where: managed care has potentially large impacts on both input prices and the composition of treatment; and there has been important technical change in treatment methods. The substantial fall in prices for all index formulations is dramatic and points to potentially important misinterpretations of spending data on mental health services over the past ten years. Specifically, the authors’ work points to the possibility that recent increases in spending are generated primarily by quantity increases in the volume of care delivered rather than input price increases. The authors cite a number of important issues that need to be addressed before arriving confidently at conclusions regarding the movement of prices and quantities for the treatment of depression: account for quality difference across similarly effective treatment bundles; address potential precision of estimated costs and shares for specific treatment bundles; and address the characterization of mental health production function as used in their analysis. They also cite practical problems with regards to their approach to price index calculation if it is to be implemented by the BLS and provide options on how to address those problems.
Cutler D, McClellan M, Newhouse J. The Costs and Benefits of Intensive Treatment for
Cardiovascular Disease. Chapter 2 in Measuring The Prices of Medical Treatments . Triplett
J, Editor. Washington, DC: Brookings Institution Press; 1999.
The authors focus on the dramatic improvement in cardiovascular health and its implications for understanding the medical sector by using heart attacks – a major and particularly severe form of cardiovascular disease – as a case study. Understanding the importance of this trend requires asking several questions: Why has cardiovascular health improved? Has the money spent on cardiovascular disease care been “worth it?” How are changes in the medical sector affecting this benefit-cost calculation? The authors document a large role for medical care in improving the health of heart attack patients and estimate, based on a sample of Medicare beneficiaries with a heart attack, that for an additional cost of $4,000 per heart attack patient, a patient’s life may be extended by an average of eight months. They conclude that although we pay more for medical care than we used to, we also get more in return. Receiving more in improved health than we pay in treatment costs implies that medical care is a more productive investment than the average use of our funds outside the medical sector. It also implies that a true cost-of-living index for heart attack care – a price index for health after a heart attack – is falling over time, whereas conventional medical care price indexes have suggested rapid rise. Whether the study results could be generalized to other types of medical care, the authors do not know. In a medical care system accused of having a bias toward high-tech treatment of very severe illness, this suggests heart attacks may be a best-case analysis. On the other hand, there is a long-standing literature suggesting only a small role for acute interventions in improved cardiovascular disease health. The fact that the authors find such a large role for medical care in the treatment of a condition commonly believed to respond more to behavior than to medical inputs suggests that their findings might be indicative of the medical sector more broadly. They also believe that their results provide a framework for analyzing the productivity of the medical care sector.
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Articles
Kleinke JD. Vaporware.com: The Failed Promise of the Health Care Internet. Health
Affairs . 2000 Nov/Dec; 19(6): 57-71.
Contrary to the claims of its well-financed promoters, the Internet will not solve the administrative redundancies, economic inefficiencies, or quality problems that have plagued the U.S. health care system for decades. These phenomena are the result of economic, organizational, legal, regulatory, and cultural conflicts rooted in a health care system grown from hybrid public and private financing; cultural expectations of unlimited access to unlimited medical resources; and the use of third-party payers rewarded to constrain those expectations. The historic inadequacy of information technology to solve health care's biggest problems is a symptom of these structural realities, not their cause. With its revolution of information access for consumers, the Internet will exacerbate the cost and utilization problems of a health care system in which patients demand more, physicians are legally and economically motivated to supply more, and public and private purchasers are expected to pay the bills.
Goldsmith J. The Internet and Managed Care: A New Wave of Innovation. Health Affairs .
2000 Nov/Dec; 19(6): 42-56.
Managed care firms have been under siege in the political system and the marketplace for the past few years. The rise of the Internet has brought into being powerful new electronic tools for automating administrative and financial processes in health insurance. These tools may enable new firms or employers to create custom-designed networks connecting their workers and providers, bypassing health plans altogether. Alternatively, health plans may use these tools to create a new consumer-focused business model. While some disintermediation of managed care plans may occur, the barriers to adoption of Internet tools by established plans are quite low. Network computing may provide important leverage for health plans not only to retain their franchises but also to improve their profitability and customer service.
Cain MM, Sarasohn-Kahn J, Wayne JC. Health E-People: The Online Consumer
Experience . Institute for the Future. Oakland, CA: California HealthCare Foundation;
August 2000.
This report explores who the consumers of electronic health care services and information are and discusses how the e-health marketplace will change over the next five years to meet consumers’ needs.
The report discusses four major areas of growth in e-health: providing content; facilitating community among patients and health professionals; conducting commerce, such as the online sale of prescription drugs; and delivering care services. In the next five years, the authors predict that online health-related products and services will develop in two stages. After a business shakeout leaving a few survivors in each e-health niche, the nearer-term e-health environment (between now and the end of 2002) will be market driven, with ability to show a return on investment coloring continued venture capital support.
The longer-term, and more significant, shift online (from 2003 through 2005) will result from an accumulation of health care data and an agreement on information standards that will make apparent the advantage of an online platform for business.
McGoldrick C, O’Dell S. Where Will the Road to E-Health Lead?
Long Beach, CA: First
Consulting Group; May 2000.
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This brief report highlights ten trends that will guide the future of the e-health marketplace. These include: 1) Online health content, as a standalone business model, is starving to death; 2) The connectivity and transaction vendor market space is consolidating rapidly – yet the promise of delivering bundled solutions and a sustainable business model remains elusive; 3) E-transformation of healthcare has not yet taken hold among providers or payers; 4) The e-transformation of supply chain management for providers and referral, authorization, claims eligibility and reporting management for payers will set the stage for the e-transformation of the care chain tomorrow; 5) Provider-based medical records will become the remnants of the episodic and fragmented healthcare and legal systems; 6) The battle over the physician desktop will become the battle over the physician handheld; 7) “Hypermediation” (as opposed to disintermedication) will create the need for value-driven “navigators;” 8) Demanding connectivity and communication with their providers of care and payers, consumers will begin to vote with their feet; 9)
Consumers will finally trust online healthcare companies when the Dalai Lama becomes the Master of the Internet in 2077; and 10) The devolution of employer-purchased health insurance will be a major stimulus for the eruption of consumerism and emergence of 1-to-1 marketing in health care.
Articles
Marsteller JA, Bovbjerg RR . Federalism and Patient Protection: Changing Roles for State and Federal Government . Assessing the New Federalism, Occasional Paper Number 28.
Washington DC: The Urban Institute Press; August 1999.
Patient protection and regulation of managed care have become important legislative issues for both state and federal government. This report describes the major state laws and federal proposals for managed care regulation. The authors find that in many cases, federal proposals are redundant with existing state laws. However, some major differences exist. A federal patient protection law would set universal standards, establishing a comprehensive nationwide package of patient protections. Federal regulation would also impose these standards on employer-sponsored plans which are insulated from state regulations by the Employee Retirement Income Security Act of 1974 (ERISA). In addition, some federal proposals contain provisions that depart significantly from existing state practice. These include rules regarding patient appeals of health plan decisions, a patient’s ability to sue their plan, and addition of federal enforcement powers under the Departments of Labor and Health and Human Services.
Feder J, Sorian R. Why We Need a Patients’ Bill of Rights. Journal of Health Politics,
Policy and Law . 1999 Oct; 24(5): 1137-1144.
Over the past 10 years, the shift to managed care has generated popular discontent and growing public support for expanded government regulation of managed care organizations. In this short essay, the authors argue that the push for federal and state managed care regulation is a result of the American reliance on a market-based health care system without appropriate accountability. They state that legislative action is needed to create a better balance between HMOs’ desire to control costs and patients’ desire to get appropriate medical care. Such action should include establishing uniform, fair standards for external review of health plan decisions and allowing patients to seek an additional review through the courts. These legal avenues for addressing grievances, the authors argue, are the same as those allowed to consumers in all other markets.
Bovbjerg RR, Miller RH. Managed Care and Medical Injury: Let’s Not Throw Out the
Baby with the Backlash. Journal of Health Politics, Policy and Law . 1999 Oct; 24(5): 1145-
1154.
In the midst of the consumer and provider backlash against managed care, the public has lost sight of the fact that, in many cases, managed care companies have quietly been making qualitative improvements in the health care system while cutting health care costs. In this short essay, the authors argue that there is
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little evidence that the broad shift to managed care has decreased the quality of care or increased the incidence of malpractice claims. However, they point out that the managed care revolution has brought valuable changes to health care, including increased efficiency, improved systems for error detection, greater use of clinical protocols for management of patient care, and general improvements in the organization of the health care system. The authors caution that the adoption of open-ended liability against managed care plans would place additional financial pressure on HMOs and could have unintended consequences including increasing direct controls placed on physicians by HMOs and diverting money from preventative care and patient management to pay for open access to expensive, specialist-driven therapies.
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Featured Articles
Reinhardt U. The Rise and Fall of the Physician Practice Management Industry. Health
Affairs . 2000 Jan/Feb; 19(1): 42-55.
The dominant view among academic economists is that the financial markets value financial securities
"efficiently," in the sense that the prevailing prices of widely traded securities fully and properly reflect, at any time, all publicly available information that bears on these securities. Although that theory has great intuitive appeal, it requires intellectual effort to reconcile it with the rise and fall of the physician practice management industry. This paper explores how acquisition-driven firms are valued in the financial markets and what structural factors may stand in the way of truly efficient security valuation.
Reinhardt U. Making Economic Valuations Respectable. Social Science Medicine . 1997
Aug; 45(4): 555-562.
Policymakers worldwide are on a quest to control national spending for health care and to enhance the value received for whatever is being spent on health care. One should think that the economic evaluation of clinical practice would play a major role in this quest. Alas, so far it has not, in spite of considerable progress in the development of suitable methodology for such evaluations. The central point of this paper is that the sheer conceptual and practical complexities of economic evaluations in this context are not the only and possibly not the major barrier to a more widespread use of this type of analysis. Just as important may be the suspicion among lay persons that such analyses are easily driven by the assumptions the analyst packages into the analysis which, in turn, opens economic evaluation to hidden bias toward favored results. It is proposed in this paper that this particular barrier to use of economic evaluations in health policy could be overcome if these analyses were more routinely subjected to the rigorous and penetrating audits that are customary in financial accounting. Typically, research papers in economics are audited through peer review only as to the methodology employed. The suggestion here is that a proper, respectable audit ought to penetrate all the way to the data that were used to produce the findings in a study. The paper concludes with some suggestions on how to develop such an audit infrastructure.
Other Article
Eisenberg JM. Health Services Research In A Market-Oriented Health Care System.
Health Affairs . 1998 Jan/Feb; 17(1): 98-108
A fundamental premise of market-based changes in health care delivery is that consumers will choose from among the options available in accord with their expectations concerning cost, outcomes, and quality. These choices assume that accurate information is available about health care services and that providers and plans are accountable for the services they deliver. Health services research can provide information about what works, when, and at what cost, to guide decisions about clinical services and the organization and financing of health care.
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Featured Article
Miller M. Health Care: A Bolt of Civic Hope. The Atlantic Monthly . 2000 Oct; 286(4): 77-
87.
In this article summarizing an interview with U.S. Representatives Jim McCrery (R-Lous.) and Jim
McDermott (D-Wash.), journalist Matthew Miller explores the potential for political compromise on health care issues. The author begins his interview by proposing that the federal government enact a generous individual tax credit (one in the ballpark of $5,000-$6,000, similar to George Bush’s proposal in
1992) for the purchase of health insurance, combined with the introduction of large insurance pools to ensure affordable group rates. While the specific details of a proposal are not enumerated, Miller explores with Reps. McCrery and McDermott whether such an approach could be embraced by those with opposing political sensibilities. From expanding insurance coverage, Miller digresses to explore the potential for bipartisan solutions on topics ranging from advances in genetics, to rising health care costs.
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