Season 5, Episode 2
In part one (“How Do We Know What Really Works in Healthcare?“), Freakonomics co-author Steve Levitt discussed the randomized control trial, or RCT, which he calls “the very best way to learn about the world around us.” Then Amy Finkelstein, a professor of economics at MIT, talks about using RCTs to explore healthcare delivery — and the “accidental” RCT she discovered when Oregon expanded Medicaid. Read More »
Our latest Freakonomics Radio episode is called “How Many Doctors Does It Take to Start a Healthcare Revolution?” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above. You can also read the transcript, which includes credits for the music you’ll hear in the episode.) The gist of the episode: The practice of medicine has been subsumed by the business of medicine. This is great news for healthcare shareholders — and bad news for pretty much everyone else. Read More »
The rest of the world likes to say that everything in America is big: the cars, the CO2 emissions, the buildings, even the hamburgers. The farce at the U.S. government’s website for enrollment in health insurance under the so-called Affordable Care Act (ACA) shows that we also supersize our transaction costs.
In a news report from NPR, Alaska Public Radio Network, and Kaiser Health News, even a computer programmer who had also created websites needed many attempts over many weeks to use the site to enroll for health insurance. And she still awaits the enrollment confirmation (with luck in the new year, said the radio version of the report). If it arrives, she gets affordable health insurance ($110 instead of $1200 per month), but then still has the joy of dealing with an insurance company and the claim paperwork. Read More »
We’ve written before about an unintended consequences of state repeals of motorcycle helmet laws: more organs available for transplant. Here’s one more consequence, from Michigan, which stopped requiring helmets last year:
State legislators changed the law last year so that only riders younger than 21 must wear helmets. The average insurance payment on a motorcycle injury claim was $5,410 in the two years before the law was changed, and $7,257 after it was changed – an increase of 34 percent, the study by the Highway Loss Data Institute found.
After adjusting for the age and type of motorcycle, rider age, gender, marital status, weather and other factors, the actual increase was about 22 percent relative to a group of four comparative states, Illinois, Indiana, Ohio and Wisconsin, the study found.
“The cost per injury claim is significantly higher after the law changed than before, which is consistent with other research that shows riding without a helmet leads to more head injuries,” David Zuby, chief research officer for the data institute and an affiliated organization, the Insurance Institute for Highway Safety, said.
(HT: Kevin Murphy)
In many states (21, to be precise), it is perfectly legal for an employer to not hire someone who smokes. This might seem understandable, given that health insurance is often coupled to employment, and since healthcare risks and costs are increasingly pooled. And so: if employers can exclude smokers, should they also be able to weed out junk-food lovers or motorcyclists — or perhaps anyone who wants to have a baby? Read More »
What happens when a firm starts a “dependent verification” program designed to make sure that its employees are carrying only legitimate dependents on their health insurance? The economists Michael Geruso and Harvey Rosen ask that question in a new working paper called “Fraud in the Workplace? Evidence from a Dependent Verification Program” (abstract; PDF). A few key sections are bolded below:
In recent years many employers, both in the private and public sectors, have implemented dependent verification (DV) programs, which aim to reduce employee benefits costs by ensuring that ineligible persons are not enrolled in their health plan as dependents. However, little is known about their efficacy. In this paper, we evaluate a DV program using a panel of health plan enrollment data from a large, single-site employer who implemented it several years ago. We find that relative to all other years, dependents were 2.7 percentage points less likely to be reenrolled in the year that DV was introduced, indicating that this fraction of dependents was ineligibly enrolled prior to the program’s introduction. These disenrollment effects were especially large for same-sex partners and older children. We show that the program did not induce employees to leave the employer’s plan and (say) put themselves and their dependents on the spouse’s plan. We also show that disenrollment occurred because dependents were actually ineligible, not because of compliance costs that might be associated with providing documentation. The DV program saved about $46 per enrolled employee. A considerable fraction of these cost savings came from removing older children who didn’t meet additional criteria. Therefore, the dependent coverage provision of the Affordable Care Act of 2010, which essentially renders all children up to age 26 eligible in all employer health plans, will substantially limit the future cost saving potential of such programs. Hence, as the state governments and private employers that have implemented DV programs adapt to the new regulatory environment, the popularity of dependent verification programs may well diminish.
The next time you’re counting up all the reasons why employer-based healthcare insurance is a bad idea, you can include this one, too.
Jared Foran, an orthopedic surgeon in Denver, is a co-author of a new study called “Patient Perception of Physician Reimbursement in Elective Total Hip and Knee Arthroplasty” (PDF here). The authors surveyed 1,200 patients to see how much they thought orthopedic surgeons should make and what Medicare actually pays for a hip or knee replacement.
In an e-mail, Foran describes their results:
Read More »
On average, patients thought that surgeons should receive $18,501 for total hip replacements, and $16,822 for total knee replacements. Patients estimated actual Medicare reimbursement to be $11,151 for total hip replacements and $8,902 for total knee replacements. Seventy per cent of patients stated that Medicare reimbursement was “much lower” than what it should be, and only 1% felt that it was higher than it should be.
My reveries about toasts landing butter side down — the subject of an upcoming blog entry — were pleasantly broken by the discussion on this blog of Ezekiel Emanuel’s analysis of healthcare spending, in which Emanuel goes to town on Left and Right policy ideas for cutting spending. Among his criticisms of Left ideas:
[I]t turns out that the combined profits of the country’s five largest for-profit health insurance companies — United, WellPoint, Aetna, Humana and Cigna — were $11.7 billion, only 0.5 percent of total health-care spending. Even confiscating every penny of those profits would add up to less than half of the cost-saving threshold.
I liked how he quoted the savings as a dimensionless number (the percentage of total healthcare spending). Read More »