Search the Site

Posts Tagged ‘healthcare’

Transaction Costs: The American Way

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.



Fewer Helmets, Higher Healthcare Costs

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)



Help Wanted. No Smokers Need Apply (Ep. 123)

Our latest podcast is called “Help Wanted. No Smokers Need Apply.”  (You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript.)

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?



Who Steals Healthcare Insurance?

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.



What Surgeons Get Paid, and What Patients Think Surgeons Get Paid

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:

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.



Healthcare Needs Insurance Companies Like a Fish Needs a Bicycle

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).



Do Results of Oregon's Medicaid Lottery Boost the Case for Obamacare?

One of the many debates over the new health care law is whether increased access to health insurance really improves the public’s overall health and financial security. Even though there are hundreds of studies comparing insured and uninsured groups of people, there’s nothing definitive so far that answers the question one way or the other. The problem is getting clean data which clearly demonstrates behavior before and after people have had access to health care, rather than comparing two separate groups of people.
But a new study by a group of economists and health care researchers may provide the first empirical evidence that shows expanding health care coverage to low-income individuals does result in better reported health, more preventative care, and improved financial well-being.



Stumbling Toward a Market for Health Care in the U.K.

Many economists view the health-care bill passed in the U.S. earlier this year as falling somewhere between “a complete waste of time” and “actually making the situation worse.” Will the Conservative Party do better with health-care reform in the U.K.?



Reducing Hospital Bouncebacks

Zachary Meisel and Jesse Pines examine the issue of hospital “bouncebacks” — patients who return to the hospital shortly after discharge: “[B]ouncebacks are massively expensive-a recent study of Medicare patients found that one in five admissions results in a bounceback within 30 days of discharge, costing the federal government an estimated $17.4 billion per year.”







Harnessing Google to Solve Parkinson's

In Wired, Thomas Goetz profiles Sergey Brin’s search for a cure for Parkinson’s disease: “Brin proposes a different approach, one driven by computational muscle and staggeringly large data sets. It’s a method that draws on his algorithmic sensibility-and Google’s storied faith in computing power-with the aim of accelerating the pace and increasing the potential of scientific research.”





Emergency Room Myths

The overutilization of emergency rooms is often cited as a dangerous symptom of America’s broken healthcare system. But a new Slate article from Zachary Meisel and Jesse Pines offers a rosier picture of emergency room usage, and dispels several pervasive myths.




The Power of Pilot Programs

The always-enlightening Atul Gawande evaluates the new health-care bill’s efforts (or lack thereof) to control runaway health-care costs. The bill, which has been widely criticized for its lack of significant cost reductions, proposes a few small pilot programs aimed at cost containment.



Why Does the U.S Rank 29th in Longevity?

Yes, the U.S. healthcare system is full of inefficiencies which lead to bloated costs. But no, that’s not the reason that U.S. longevity ranks only 29th in the world.



Do You — *Achoo* — Support Health Care Reform?

We know polling results are sensitive to the wording of questions. The delivery of those questions could be a factor, too. We’ll know for sure when we see the first health care push-poll featuring sniffling, sneezing pollsters.




Is the Waiting Room Necessary?

I spent 40 minutes waiting to begin diagnostic tests preparatory to seeing my ophthalmologist. What a waste of my valuable time! And my calculations from data from the American Time Use Survey suggest that this is a standard problem: the average adult American spends four hours per year waiting for medical or dental care, with each wait averaging around 45 . . .



The Price of Disability Law

We wrote a column a while back about a variety of powerful unintended consequences.
One example was the Americans With Disabilities Act, and we told the story of a Los Angeles orthopedic surgeon named Andrew Brooks. When a deaf patient came to him for a consultation, he realized that the A.D.A. required him to hire a sign-language interpreter for each visit if that’s what the patient wanted.



When Will Emergency Rooms Go Back to Being Emergency Rooms?

The University of Chicago hospital made headlines this week when it was criticized by the American College of Emergency Physicians for a plan that tries to get non-emergency patients out of its emergency room. I’ve been fortunate to have only made one visit to the University of Chicago emergency room in the five years I’ve lived in Hyde Park. My . . .



In a Parachute-Effectiveness Trial, Who Gets the Placebo?

Photo: soldiersmediacenter How do we know that parachutes are really a good treatment for preventing serious injury in someone falling from an airplane? That’s the subject of this tongue-in-cheek paper on the limits of evidence-based medicine, written by two physicians and published in the British Medical Journal. After applying to parachutes the guidelines usually used to test new drugs, the . . .



End of Days: A Guest Post

We recently featured a Q&A with Julie Salamon, author of Hospital, and last week Julie wrote her first guest post for us. Here is her second. It touches on a subject of great interest to me, something we hope to address empirically in future writing: the cost/benefit dilemma of end-of-life medical care. End of Days A Guest Post by Julie . . .



Newt Gingrich Answers Your Questions

Photo: Callista Gingrich, Gingrich Productions Last week, we solicited your questions for Newt Gingrich, the former speaker of the House whose latest book is “Real Change: From the World That Fails to the World That Works.” His answers, below, are comprehensive, measured, and often fascinating. I think this is easily one of the best Q&A’s we’ve had on this blog. . . .



Is Tooth Cleaning a Scam?

One of my earliest and happiest memories was being released from a hospital oxygen tent when I was a small child. I had developed pneumonia and was in pretty bad shape. They not only kept me under an oxygen tent for several days at St. Luke’s Hospital in Kansas City, but they also gave me massive amounts of tetracycline. The . . .



Why Is One Nursing Home Worse Than the Others? A Guest Post

Please welcome our newest guest blogger, the University of Texas economist Daniel Hamermesh. In a long and distinguished career, Dan has written about everything from the economics of suicide to the impact of the “beauty premium.” Because he kept turning up on our blog, including just last week, we thought we’d invite him to come on over and stay awhile. . . .