Multiple payers,commonality and free-riding in health care: Medicare and private payers

Managed health care plans and providers in the US and elsewhere sell their services to multiple payers. For example, the three largest groups of purchasers from health plans in the US are employers, Medicaid plans, and Medicare, with the first two accounting for over 90% of the total enrollees. In the case of hospitals, Medicare is the largest buyer, but it alone only accounts for 40% of the total payments. While payers have different objectives and use different contracting practices, the plans and providers set some elements of the quality in common for all payers. In this paper, we study the interactions between a public payer, modeled on Medicare, which sets a price and takes any willing provider, a private payer, which limits providers and pays a price on the basis of quality, and a provider/plan, in the presence of shared elements of quality. The provider compromises in response to divergent incentives from payers. The private sector dilutes Medicare payment initiatives, and may, under some circumstances, repair Medicare payment policy mistakes. If Medicare behaves strategically in the presence of private payers, it can free-ride on the private payer and set its prices too low. Our paper has many testable implications, including a new hypothesis for why Medicare has failed to gain acceptance of health plans in the US.     

Smoking behaviour and health care costs coverage: a European cross-country comparison

The empirical evidence about the effect of smoking on health care cost coverage is not consistent with the expectations based on the notion of adverse selection. This evidence is mostly based on correlational studies which cannot isolate the adverse selection effect from the moral hazard effect. Exploiting data from the Survey of Health, Aging, and Retirement in Europe, this study uses an instrumental variable strategy to identify the causal effect of daily smoking on perceived health care cost coverage of those at age 50 or above in 12 European countries. Daily smoking is instrumented by a variable indicating whether or not there is any other daily smoker in the household. A self-assessment of health care cost coverage is used as the outcome measure. Among those who live with a partner (72% of the sample), the result is not statistically significant which means we find no effect of smoking on perceived health care cost coverage. However, among those who live without a partner, the results show that daily smokers have lower self-assessed perceived health care cost coverage. This finding replicates the same counter-intuitive relationship between smoking and health insurance presented in previous studies, but in a language of causality. In addition to this, we contribute to previous studies by a cross-country comparison which brings in different institutional arrangements, and by using the self-assessed perceived health care cost coverage which is broader than health insurance coverage.     

Income-based disparities in health care utilisation under universal health coverage in Brazil, 2002–2003

Since Brazil's adoption of universal health care in 1988, the country's health care system has consisted of a mix of private providers and free public providers. We test whether income-based disparities in medical visits and medications remain in Brazil despite universal coverage using a nationally representative sample of over 48,000 households. Additional income is associated with less public sector utilisation and more private sector utilisation, both using simple correlations and regressions controlling for household characteristics and local area fixed effects. Importantly, the increase in private care use is greater than the drop in public care use. Also, income and unmet medical needs are negatively associated. These results suggest that access limitations remain for low-income households despite the availability of free public care.     

Effects of a mental health carve-out on use, costs, and payers: A four-year study

This study examines the effects of a mental health carve-out on a sample of continuously enrolled employees (N = 1,943) over a four-year time frame (1990–1994). The article presents a health care services utilization model of the effect of the carve-out on outpatient mental health use, cost, and source of payment in the three years post implementation relative to the year prior to the carve-out model. In the first three years of the carve-out, the likelihood of employees seeking mental health care increased in significant part because of the carve-out. For the outpatient mental health services user, the carve-out was not associated with the level of mental health services received. The carve-out was significantly associated over time with a reduction in the patient's and employer's mental health costs. This effect was more pronounced in the second and third years of the carve-out. The article explores the policy implications of these and other findings.     

Health insurance coverage at midlife: characteristics, costs, and dynamics

Recent data from the first two waves of the Health and Retirement Study are analyzed to evaluate prevalence of different types of health insurance, characteristics of different plan types, and change sin coverage as individuals approach retirement age. Although overall rates of coverage are quite high among the middle-aged, the risk of noncoverage is high within many disadvantaged groups, including Hispanics, low-wage earners, and the recently disabled. Sixty percent of individuals with health benefits are enrolled in health maintenance organizations (HMOs) or preferred provider organizations (PPOs). In addition, one-fourth of enrollees in fee-for-service (FFS) plans report restrictions in their access to specialists.     

Tuberculosis in Salvador, Brazil: costs to health system and families

OBJECTIVE: Tuberculosis is one the greatest causes of mortality worldwide, but its economic effects are not well known. This study had the objective of estimating the costs to the public and private healthcare systems and to families of tuberculosis treatment and prevention. METHODS: This study was made in the municipality of Salvador, State of Bahia, Brazil, in 1999. Data for estimating the costs to the healthcare system were collected from the Department of Health, healthcare facilities and a philanthropic institution. The public and private costs were analyzed using cost accounting methodology. Cost data relating to families were collected by means of questionnaires, and included data on transportation, food and other expenses, and also income losses associated with this disease. RESULTS: The average cost of treating one new case of tuberculosis was approximately US$103. The cost of treating one multiresistant patient was 27 higher than this. The cost to the public services consisted of 65% on hospitalization, 32% on treatment, and only 3% on prevention. The families committed around 33% of their income on expenses related to tuberculosis. CONCLUSIONS: Despite the fact that the families did not have to pay for medications and treatment, given that this service is offered by the State, the costs to families related to loss of income due to the disease were very high. The proportion of public service funds utilized for prevention is small. Greater investment in prevention campaigns not only might diminish the numbers of cases but also might lead to earlier diagnosis, thus reducing the costs associated with hospitalization. The lack of an integrated cost accounting system makes it impossible to visualize costs across the various sectors.     

Utilization of health care services in Brazil: gender, family characteristics, and social status]

OBJECTIVE: To investigate the pattern of utilization of health care services by men and by women in Brazil. METHODS: We used data from the Brazilian National Household Sample Survey (Pesquisa Nacional por Amostra de Domicílios) carried out in 1998. Logistic regression models were developed to analyze information concerning men and women who had and who did not have restrictions in their routine activities due to health problems during the 15 days before the survey. The individual variables considered were: labor market position (type of employment), amount of schooling completed, and race. Also analyzed were family-related variables: per capita family income, size of the family, and, for the head of the family, the amount of schooling and labor market position. The two-level models (with family and individual variables) showed an effect from family characteristics, but the variables analyzed did not explain that effect. RESULTS: Women used health services more often than did men, even after controlling for restrictions in routine activities due to health reasons. The use of health services by men and women was dependent on family income and on the social status of the individual, indicating a pattern of social inequality. In both the group with restrictions in their activities and in the group without such restrictions, the men and women differed from each other in their utilization of health care services. Family variables were more important in explaining the utilization of health services among people without restrictions in their activities. CONCLUSIONS: Policies aimed at reducing inequalities in access to health care services must take into consideration the differences between women and men as well as the importance of family characteristics. It is also important to stress the need to include the dimensions of gender and family in the design of health service utilization models.     

Women and divorce: health insurance coverage, utilization, and health care expenditures

Estimates from the 1977 National Medical Care Expenditure Survey suggest that divorced women are twice as likely as married women to be uninsured, and also more likely to depend on Medicaid assistance. Divorced women use slightly more health services than married women, but also appear to have somewhat poorer health status.     

Private health care

During the last decade there has been considerable international mobilisation around shrinking the role of States in health care. The World Bank reports that, in many low and middle-income countries, private sources of finance comprise the largest share of total national health expenditures. Private sector health care is ubiquitous, reaches throughout the population, preferred by the people and is significant from both economic as well as health perspective. Resources are limited, governments are weak, and a new approach is needed. This paper provides a broad overview and raises key issues with regard to private health care. The focus is on provision of health care by private medical providers. On the background of the world's common health problems and interventions available to tackle them, the place of private health care in the overall context is first discussed. The concept of privatisation within the various forms of health care systems is then explained. The paper then describes the genesis and key elements of rapidly enhancing role of the private sector in health care and points to the paucity of literature from low and middle-income countries. Common concerns about private health care are outlined. Two illustrative examples--tuberculosis, the top infectious killer among the poor and coronary heart disease, the top non-infectious killer among the rich--are presented to understand the current and possible role of private sector in provision of health care. Highlighting the need to distinguish between health care as a public good or a market commodity, the paper leaves it to the reader to draw conclusions.     

Private costs almost equal health care costs when intervening in mild Alzheimer's: a cohort study alongside the DAISY trial

Background  

Alzheimer's disease is the leading cause of dementia and affects about 25 million people worldwide. Recent studies have evaluated the effect of early interventions for dementia, but few studies have considered private time and transportation costs associated with the intervention. This study assessed the total economic costs associated with a multifaceted intervention for mild Alzheimer's disease, including an estimate of the ratio of public to private costs.     

Health care coverage and costs in small business: an exploratory study

Health coverage and health care costs continue to frustrate employers, employees, and public policy makers. Controlling escalating health costs, improving coverage for the uninsured, and providing retiree health care are all important to the small employer. This study was undertaken to investigate the availability and extent of health care coverage and to assess the effects of health care costs on small firms. The results revealed that the percentage of small firms offering health benefits totaled 58 percent. The availability of group health insurance increases as firm size increases. Small employers cited insufficient profits, high insurance costs, and unavailable group coverage as the primary reasons for not offering health benefits. The results also indicated that the vast majority of small firms opposed a mandated employer-provided health coverage and suggested that small businesses should pool together to form groups to reduce the cost of health care coverage for small firms.     

Business, households, and governments: health care costs, 1990

This annual article presents information on health care costs by business, households, and government. Households funded 35 percent of expenditures in 1990, government 33 percent, and business, 29 percent. During the last decade, health care costs continued to grow at annual rates of 8 to 16 percent. Burden measures show that rapidly rising costs faced by each sponsor sector are exceeding increases in each sector's ability to fund them. Increased burden is particularly acute for business. The authors discuss the problems these rising costs pose for business, particularly small business, and some of the strategies businesses employ to constrain this cost growth.     

Insurance coverage,long-term care utilization,and health outcomes

The European Journal of Health Economics - How does the generosity of social insurance coverage affect the demand for healthcare and health outcomes of elderly people? This paper presents an...