This regular feature of the journal includes a discussion of each of the following four topics: community hospital statistics; employment, hours, and earnings in the private health sector; health care prices; and national economic indicators. These statistics are valuable in their own right for understanding the relationship between the health care sector and the overall economy. In addition, they allow us to anticipate the direction and magnitude of health care cost changes prior to the availability of more comprehensive data.
This study examines Medicare health maintenance organization (HMO) enrollment under the Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982 (Public Law 97-248) from 1986 to 1993. It shows that there was moderate growth in the number of Medicare beneficiaries participating in the TEFRA risk program, reaching 1 in 20 beneficiaries in 1993. Medicare HMO enrollment is heavily concentrated in a few large plans, resulting in heavy concentrations geographically. California and Florida accounted for over one-third of Medicare HMO enrollees. One-half of the States have no Medicare HMO enrollment and one-fifth of the States have fewer than 15,000 Medicare HMO enrollees.
The Ambulatory Patient Groups (APGs) are a patient classification system that was developed to be used as the basis of a prospective payment system (PPS) for the facility cost of outpatient care. This article will review the key characteristics of a patient classification system for ambulatory care, describe the APG development process, and describe a payment model based on the APGs. We present the results of simulating the use of APGs in a prospective payment system, and conclude with a discussion of the implementation issues associated with an outpatient PPS.
Since 1985, the Health Care Financing Administration (HCFA) has encouraged health maintenance organizations (HMOs) to provide Medicare coverage to enrolled beneficiaries for fixed prepaid premiums. Our evaluation shows that the risk program achieves some of its goals while not fulfilling others. We find that HMOs provide care of comparable quality to that delivered by fee-for-service (FFS) providers using fewer health care resources. Enrollees experience substantially reduced out-of-pocket costs and greater coverage. However, because the capitation system does not account for the better health of those who enroll, the program does not save money for Medicare.
Little research has been done to ascertain what enrollment in a health maintenance organization (HMO) may mean for the care of Medicaid recipients who regularly require specialty health services. This article presents the results of a survey of all State Medicaid agencies regarding their policies for enrolling and serving special-needs children in HMOs. The survey revealed that many States have implemented one or more strategies to protect special-needs Medicaid recipients enrolled in HMOs. The survey results suggest, however, that such strategies are too limited in scope to ensure appropriate access to specialty services for all children with special health needs.
This thesis brings together three essays on issues in the economics of health insurance. The first study considers the effects of average per-patient caps on Medicare reimbursement for home health care, which took effect in October 1997. I use regional variation in the restrictiveness of per-patient caps to identify the short-run effects of this reimbursement change on home health agency behavior, beneficiary health care utilization, and health status. The empirical evidence suggests that agencies responded to the caps by shifting the composition of their caseload towards healthier beneficiaries. In addition, I find that decreases in home care utilization were associated with an increase in outpatient care, and had little adverse impact on the health status of beneficiaries. In the second paper, I examine the impact of Medicare balance billing restrictions on physician behavior and on beneficiary spending. My findings include a significant decline in out-of-pocket expenditures for medical care by elderly households, but no impact on the quantity of care received or in the duration of office visits. The third paper (written with Jonathan Gruber) explores the causes of the dramatic rise in employee contributions to employer-provided health insurance over the past 20 years. We find that there was a large impact of falling tax rates...
Since 1981, States have been experimenting with Medicaid managed care programs to improve access and continuity of care and to contain costs by reducing inappropriate and unnecessary utilization. To determine the impact of primary care case management (PCCM) on utilization, the authors examine data from the Kentucky Patient Access and Care program (KenPAC). Using monthly utilization data from 1984 to 1989 and an interrupted time-series research design, the authors find that PCCM reduces the use of independent laboratory, physician, emergency department, and outpatient hospital services. PCCM does not appear to affect utilization of inpatient hospital services or prescription drugs.
In this article, the authors explore geographic border crossing for the use of Medicare physician services. Using data from the 1988 Part B Medicare Annual Data (BMAD) file, they find that there is substantial geographic variation across both States and urban and rural areas in border crossing to seek services. As might be expected, there is more border crossing among smaller geographic areas than among States. Predominantly rural areas tend to be major importers of services, but urban areas, on average, export services. Border crossing tends to be greater for high-technology services such as advanced imaging, cardiovascular surgery, and oncology procedures. These results suggest that expenditure-control policies applying to States or metropolitan areas should incorporate adjusters for patients' current geographic patterns of care.
Few capitation arrangements vary premiums by a child's health characteristics, yielding an incentive to discriminate against children with predictably high expenditures from chronic diseases. In this article, we explore risk adjusters for the 35 percent of the variance in annual outpatient expenditure we find to be potentially predictable. Demographic factors such as age and gender only explain 5 percent of such variance; health status measures explain 25 percent, prior use and health status measures together explain 65 to 70 percent. The profit from risk selection falls less than proportionately with improved ability to adjust for risk. Partial capitation rates may be necessary to mitigate skimming and dumping.
Medicaid exerts a strong “pull” on potential welfare recipients, increasing the probability that a number of single mothers will apply for and stay on welfare in order to be covered by Medicaid. However, the availability of private health insurance coverage exerts a strong positive influence on women's decisions to work and a strong negative effect on welfare participation rates. If private insurance coverage were as comprehensive as Medicaid and readily available at all jobs, its impact on promoting work would be substantially greater than is the impact of Medicaid in promoting the use of welfare.