Tag: Medicare

Must-Read: Richard Mayhew: Medicare Reimbursement, Public Options and Medicare Buy-In

Posted on by Brad DeLong

Must-Read: Richard Mayhew: Medicare Reimbursement, Public Options and Medicare Buy-In: “There has been a flurry of liberal health wonk reform proposals this week…

…@HuffPostPol: Clinton formally endorses public option and Medicare for under-55s by @citizencohn http://huff.to/29vZ1Td

…I want to see details just exactly what is meant by the Clinton proposal as it can range from aggressive administrative action small ball (as we talked about in February) to another whack at the legislative pinata…. But before I do a long wonk dive, I just want to re-iterate a very simple point. Most liberal health policy goals have a very simple summary: get more people on insurance that pays providers rates that are closer to Medicare rates than commercial large group rates. Large group rates pay providers between 40% and 100% more than Medicare for physical health service. Moving the entire employer sponsored coverage universe to paying Medicare like rates would knock 30% off of the current bill. We see this in Exchange…. Plans that are profitable tend to be paying providers Medicare plus a little bit while offering narrow networks. We see this in the proposal to move the Medicare buy-in age to 55. We see this in the proposal to have a public option…. All of these efforts are just different ways to achieve an underlying goal of reducing provider compensation by lowering the average payment per service by having more people move from high payment to provider coverage to Medicare based pricing. Everything else is details. Those details matter a lot, but the core policy thrust is fairly simple.

Must-Read: Zack Cooper et al.: The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured

Posted on by Brad DeLong

Must-Read: Yes. Constraining hospital and doctor-group market power is very important to creating a more efficient health-care system. Why do you ask?:

Zack Cooper et al.: The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured: “Insurance claims data for 27.6 percent of individuals with private employer-sponsored insurance in the US…

…between 2007 and 2011… [shows] the variation in hospital prices within and across geographic areas…. First, health care spending per privately insured beneficiary varies by a factor of three across the 306 Hospital Referral Regions (HRRs) in the US…. The correlation… [with] Medicare… across HRRs is only 0.14. Second, variation in providers’ transaction prices across HRRs is the primary driver of spending variation for the privately insured, whereas variation in the quantity of care provided across HRRs is the primary driver of Medicare spending variation…. Third, we document large dispersion in overall inpatient hospital prices and in prices for seven relatively homogenous procedures…. Finally, hospital prices are positively associated with indicators of hospital market power… prices in monopoly markets are 15.3 percent higher than those in markets with four or more hospitals.

Must-Read: Nicholas Bagley, Amitabh Chandra, and Austin Frakt: Correcting Signals for Innovation in Health Care

Posted on by Brad DeLong

Nicholas Bagley, Amitabh Chandra, and Austin Frakt: Correcting Signals for Innovation in Health Care: “A combination of legal rules and institutional forces pushes health plans to cover nearly every medical innovation…

…The result is that many Americans are effectively forced to over-insure themselves for coverage of some therapies they do not much value. At the same time, others might be willing to spend even more on health plans that would cover therapies that are not considered medically necessary or that have not yet been developed. Technology developers thus receive distorted signals about the size of the market for new innovations, leading them to develop medical treatments that are not in line with what Americans would demand in a wellfunctioning market….

The most prominent policy ideas for reining in spending growth concentrate on slowing the rate of technology diffusion. In so doing, they fail to fully grapple with the mix and pace of technology innovation…. Addressing the incentives for technology development, and not just its diffusion once invented, is critical. We therefore advance a handful of policy proposals to adjust the innovation signal…. (1) Replacing the tax exclusion for employer-provided health insurance with a tax credit, (2) strengthening Medicare’s coverage determination process, and (3) experimenting with reference pricing for certain therapies…. Alternative approaches to tackling the one-size-fits-all nature of insurance–in particular, allowing health plans to compete on the scope of what technologies they cover–would require regulations that are unlikely ever to be politically and culturally attractive.