The Affordable Care Act creates state-based health exchanges that will begin acting as a market place for health insurance plans and consumers in 2014. This paper compares the financial protection offered by today’s group and individual plans with the standards that will apply to insurance sold in state-based exchanges. Some states may apply these standards to all health insurance sold within the state. More than half of Americans who had individual insurance in 2010 were enrolled in plans that would not qualify as providing essential coverage under the rules of the exchanges in 2014. These people were enrolled in plans with an actuarial value below 60 percent, which means that the plans covered less than that proportion of the enrollees’ health expenses. Many of today’s individual health plans are below the “bronze” level, the lowest level of plan that can be sold through exchanges. In contrast, most group plans in 2010 had an actuarial benefit of 80–89 percent and would qualify as highly rated “gold” plans in the exchanges. To sell to ten million new buyers on the exchanges, insurers will need to redesign benefit packages. Combined with a ban on medical underwriting, the individual insurance market in a post–health reform world will sharply contrast with the market of past decades.

There are two figures in the paper, and both are worth looking at. Here’s the first, describing the actuarial values of individual plans:

Percentage Of Individual Policies, By Actuarial Value And Plan Type, 2010

As you can see, a ton of them fall below what would be considered “bronze” under the ACA’s exchanges. This means that all of those plans would have to be significantly improved if they want to be offered in the future. This is what I mean when I say that many people in the US are “underinsured”. It also means that the majority of people with individual policies are going to see a nice improvement come 2014.

On the flip side, here are the actuarial values of group policies, or those likely to be offered by employers:

Percentage Of Group Policies, By Actuarial Value And Plan Type, 2010

About two-thirds of employees have policies that would qualify as gold or platinum. That’s great for them now. But if employers decide in the future to go to the exchanges for their employees’ plans, many will likely choose to go with cheaper options, such as silver or bronze. Should that happen, many employees will find their out of pocket health care costs rising in 2014.

It’s likely that these two messages will allow for differing interpretations of the results of this study. Those who support the ACA will likely cite the first figure, pointing out how bad things are and showing how much things will be improved for those in the individual market. Those who oppose the ACA will likely cite the second figure, contending that those who already have insurance through their jobs may see a drop in the quality of their insurance coverage. Both may be right.

But let’s not forget how bad things are right now. This is from the Discussion of the manuscript:

Third, very sick patients—those in the top 1 percent of medical spending—incur sizable out-of-pocket expenses regardless of coverage. For example, these top spenders face out-of-pocket expenses of nearly $3,800 in a group platinum plan. But there are substantial differences in out-of-pocket spending between plans with high actuarial value and plans with low value. A family in the top 1 percent of medical spenders with tin coverage in the individual market incurs annual out-of-pocket expenses of more than $27,000.

The health care system is supposed to be for sick people. It’s currently failing them. If you’re lucky enough to have the best insurance in the country, getting really sick can cost thousands of dollars a year. If, however, you have crappy insurance, then getting sick can bankrupt you. If you’re among the tens of millions of Americans who are completely uninsured, you’re likely completely screwed.

Whether you love or hate the ACA, the status quo is terrible.

@aaronecarroll

My comment: This is, of course, controversial. I’d like to see the “other side’s” version. Then I’d like to hear a reasoned, respectful debate over the two, one that is accessible to a lay audience not familiar with the relevant studies. If anyone could produce such an event, I’d be impressed and grateful.

@afrakt

Context: States have long lobbied to be given more flexibility in designing their Medicaid programs, the nation’s health insurance program for the low-income, the elderly, and individuals with disabilities. The Bush Administration and the Deficit Reduction Act of 2005 have put in place policies to make it easier to grant states this flexibility.

Methods: This article explores trends in states’ Medicaid flexibility and discusses some of the implications for the program and its beneficiaries. The article uses government databases to identify the policy changes that have been implemented through waivers and state plan amendments.

Findings: Since 2001, more than half the states have changed their Medicaid programs, through either Medicaid waivers or provisions in the Deficit Reduction Act of 2005. These changes are in benefit flexibility, cost sharing, enrollment expansions and caps, privatization, and program financing.

Conclusions:With a few important exceptions, these changes have been fairly circumscribed, but despite their expressed interest, states have not yet fully used this flexibility for their Medicaid programs. However, states may exercise this newly available flexibility if, for example, the nation’s health care system is not reformed or an economic downturn creates fiscal pressures on states that must be addressed. If this happens, the policies implemented during the Bush administration could lead to profound changes in Medicaid and could be carried out relatively easily.

As a reminder, this paper is discussing “The Deficit Reduction Act of 2005″, which the Republican House and the Republican Senate passed in 2005. When President Bush signed it, it became law. Here is his administration’s description of its effect (emphasis mine):

The Deficit Reduction Act Will Also Reduce The Growth In Medicaid By Nearly $5 Billion Over The Next Five Years. The Deficit Reduction Act helps restrain Medicaid spending by reducing Federal overpayment for prescription drugs so that taxpayers do not have to pay inflated markups. The bill also gives governors more flexibility to design Medicaid benefits that efficiently and affordably meet their states’ needs, and tightens the loopholes that allowed people to game the system by transferring assets to their children so they can qualify for Medicaid benefits.

I’ve been hearing a lot of talk about how what we really need to do is give states more flexibility. Then they can “innovate” and solve the problems we have with Medicaid. I know we sometimes have a short memory in policy, but for anyone who can think back all the way to 6 or 7 years ago, how’d that plan work out?

@aaronecarroll

So, that’s all good. Then, from Health Affairs, there’s this:

The lower cancer detection rates linked to self-referring urologists suggest that financial incentives prompt those urologists to perform prostate biopsies on marginal cases. Thus, self-referral of prostate surgical pathology services leads to increased use and higher Medicare spending, but lower cancer detection rates.

And this:

In a cross-sectional study of prostate cancer patients from 2004 to 2005, we found that regions with lower rates of inappropriate imaging also had lower rates of appropriate imaging. Similarly, regions with higher overall imaging rates tended to have not only higher rates of inappropriate imaging, but also higher rates of appropriate imaging. In fact, men with high-risk prostate cancer were more likely to receive appropriate imaging if they resided in areas with higher rates of inappropriate imaging.

And this:

We found that in the early period of IMRT adoption (2001–03) men with high-risk disease were more likely to receive IMRT, whereas after IMRT’s initial dissemination (2004–07) men with low-risk disease had fairly similar likelihoods of receiving IMRT as men with high-risk disease. This raises concerns about overtreatment, as well as considerable health care costs, because treatment with IMRT costs $15,000–$20,000 more than other standard therapies.

And this:

Forty-two percent of the [direct-to-consumer promotional] pages listed no risks of robotic prostatectomy on the landing page or a page one link away. [...]

In a survey of 400 men who had open prostatectomy or robotic prostatectomy, 24 percent of those who had robotic prostatectomy expressed regret with their treatment choice, while only about 15 percent who had open prostatectomy expressed similar regret.

Sigh. Let’s put all that in or near the “bad” category. No surprise here, really. And it clearly is not all bad. Many who received these services (biopsies, imaging, radiation treatment, robotic prostatectomy) benefited or feel they did. Yet, there is tremendous room for efficiency gain in our health system, corresponding to appropriate application of comparative effectiveness evidence and shared decision making. Naturally, many well-meaning policy initiatives toward this end might cause too abrupt a disruption and loss of income for certain types of providers, which is the source of resistance to them. So, why not pay for efficiency and use of evidence and consumer-involvement and penalize in cases of lack of application of them? It may cost something (or save less than blunt cuts, which are politically challenged anyway), but at least we’d be getting something for our money.

So, what about “ugly?” Look no further than the Wall Street Journal. Bill Gardner provides a counterpoint.

@afrakt

However, my awesome family agreed that I could likely do both. Later, when my daughter learned that I would be introducing ”Dr. Rachel” to talk, she demanded to come along with me. We’ll have a hectic morning together, heading first downtown to Riley Hospital and then quickly back up to her school for the ceremony.

So I won’t be blogging this morning, because I will be honoring two special women instead. The first will be at Pediatric Scholars Day at IU, where one of my favorite pediatric health services researchers will get her due. The second is going to stand up on stage in her tiny cap and gown and make her daddy swell with pride, and likely cry.

I’m sure you’ll understand if I take a moment to enjoy the morning. Back to blogging later.

@aaronecarroll

In a NEJM editorial, Anthony Miller tries to make sense of the contradictory results from two recent studies of the PSA test.

After 11 years of follow-up in the European Randomized Study of Screening for Prostate Cancer (ERSPC), Schröder et al. report in this issue of the Journal that there has been little change in the apparent benefit of screening men for levels of prostate-specific antigen (PSA), as compared with an earlier report. Both studies showed a relative reduction of 21% in the rate of death from prostate cancer in the screening group, as compared with the control group. This reduction was achieved after considerable use of resources: in order to prevent one death from prostate cancer at 11 years of follow-up, 1055 men would need to be invited for screening and 37 cancers would need to be detected. Only in the Netherlands and Sweden was the between-group difference statistically significant []. No significant between-group difference in all-cause mortality was noted.

In a similar update on prostate-cancer mortality in the Prostate, Lung, Colorectal, and Ovarian (PLCO) Cancer Screening Trial  investigators reported no significant change from the findings of the earlier study. Thus, regarding PSA screening, the negative findings of the PLCO trial and the positive findings of the ERSPC are unchanged. [...]

What the PLCO trial seems to show is that adding organized screening to opportunistic screening will result in no benefit and many adverse effects. These effects include false positive screening tests, unnecessary biopsies, overdiagnosis, and impaired quality of life.

In much of the rest of the editorial, Miller explains some of the differences between the two studies that might explain the divergence of results. In light of these differences, he concludes,

We are left with an unsatisfactory situation, in which many practitioners will think there are insufficient data to recommend abandoning PSA screening for prostate cancer. However, the findings of the PLCO trial are more applicable to the situation in the United States, since the ERSPC was conducted in a largely PSA-naive population. Therefore, an intensification of PSA screening would be unwise, and I think it would be advisable to follow the [] recommendations of the U.S. Preventive Services Task Force.

The ERSPC study is here. The PLCO study is here.

@afrakt

Given the overall condition of the human race during most of the history of the civilized world, you would think that simply not having bubonic plague would be enough to put most of us in cheerful moods — but, no, we want a hot tub too.

That’s from The First National Bank of Dad, by David Owen, a delightful and short book mostly about teaching your children financial literacy, but about a great deal more too. Russ Roberts interviewed the author in a recent episode of EconTalk.

@afrakt

Eighteen months after her husband, Robert Capato, died of cancer, respondent Karen Capato gave birth to twins conceived through in vitro fertilization using her husband’s frozen sperm. Karen applied for Social Security survivors benefits for the twins. The Social Security Administration (SSA) denied her application, …

Facing a statute that didn’t anticipate modern assisted reproductive technology, the Court unanimously agreed that the twins are not Robert Capato’s “children of the marriage” eligible for Social Security benefits because they were conceived after his death. Not clear how the Court would have ruled if the IV conception had occurred before his death, but the implantation was posthumous.

Perfect case for law school discussions.

h/t Adam B at DailyKos

@koutterson

Many Americans who have experienced a serious illness or injury within the past 12 months are concerned about the financial costs of medical care, and struggle to ensure that their care is appropriate, according to a new poll released today by the Robert Wood Johnson Foundation (RWJF), NPR and Harvard School of Public Health. RWJF commissioned the poll to better understand Americans’ experiences and attitudes related to cost and quality of U.S. medical care.

A large majority of the general public (87%) thinks the cost of care is a serious problem for the country. In addition, about two-thirds of the general public (65%) believes the cost of care has gotten worse over the last five years.

They also looked at what “sick” Americans had to say about the health care system. Thirteen percent of sick Americans thought they were given the wrong diagnosis, test, or treatment. About 15% of sick Americans thought they got tests they didn’t need and 18% thought they didn’t get the tests they did. More than a quarter of sick Americans thought they were not well managed. These are the people the health care system is supposed to serve. But nearly three quarters of them see the cost of health care as a “very serious” problem, and another 16% think it’s “somewhat serious”.

And just when I thought I couldn’t feel worse, I saw this:

More than 10% of sick Americans report being turned away from a doctor or hospital because they couldn’t pay.

I wanted to end with a snarky line, but I got nothing. That’s just unacceptable in the richest country in the world.

@aaronecarroll

For my money, Pauly and Town win in the category of best paragraph. It’s the middle of three on cost shifting.

There is still a puzzle here, we must admit. Low market power on the parts of buyers of hospital care can make hospitals that are interested in profits or in what they can do with profits charge higher prices than if there were more buyer market power. But the only way hospitals can have an ability to charge ever higher prices is if their market power is continually increasing over time relative to buyers. While the competitive positions of hospitals relative to insurers ebb and flow over time and vary across markets, we are aware of no theory and no evidence, even circumstantial, that it is ever increasing. Moreover, it is important to remember that lower prices should not be society’s objective; a buyers’ cartel can lower prices (even below what would have been the competitive level), but that does not lead to an efficient outcome. And the outcome of bilateral bargaining of oligopolists versus oligopsonists can lead to an even worse situation (Pauly 1987). The key question is which arrangement gets quantity and quality of output to settle at the efficient level (where marginal benefit to consumers equals marginal cost to producers), and there is no easy way to handicap which balance of power will do that. Only perfect competition on both sides gets the theoretical gold medal, but if we must be or choose to be away from that outcome we are lost in speculation about the second best.

It is refreshing to see such honesty. Anyone who insists either that more or less regulation is certain to come closest to optimality is blowing smoke. As such, perhaps you can tell that Pauly and Town don’t really take the “con” side of the all-payer debate. They merely note that it isn’t necessary best, but we can’t really know. Earlier in the paper, they write,

Both the unsatisfactory performance of markets and the past failures of limited regulatory systems are certainly cautionary. No doubt we can learn from the past, but simply stating that we need to implement the optimal rate-setting body seems to assume away some fundamental problems. To be clear, setting the “right” prices for thousands of often complex and evolving services is extremely challenging. We see no evidence that our political environment has sufficiently moved up the evolutionary chain since the 1970s to now broadly put into place the optimal regulatory structure (one that is accurate, evidence based, and insulated from political and financial pressures) that would allow it to better price hospital services than our current imperfect system.

Of course, a lot rides on what one means by “better.”

In the category of referencing my work on cost shifting (ungated PDF), Murray takes top prize by citing my 2011 literature review of the topic.

@afrakt