Rising medical costs and the reform of Japan's health insurance system

From the early twentieth century until recently, the Japanese health insurance system consistently expanded its coverage and benefits. In 1961, Japan achieved universal coverage for health insurance. In the 1970s, however, the insurance system began to experience severe fiscal problems, as total medical expenditures rose faster than national income, as medical costs for the elderly increased rapidly, and as enormous budget deficits accumulated in several insurance schemes. Controlling the increase in medical care expenditures became the top priority of the 1980s for the Ministry of Health and Welfare. The paper presents recent government policies and efforts to contain medical expenditures and establish a firm financial basis for Japan's social security system. The government began with regulating the demand side of medical care but is also introducing planning measures for supply factors. Possible government interventions to contain medical expenditures are proposed for both demand and supply approaches. Measures for cost containment, however, need to be balanced with efforts to improve people's health and maintain equity in the health insurance system.     

The value of medical care for health promotion.

A "rediscovery" of the value of prevention in the 1970s has led to the denigration of medical care, which had been occurring also for other reasons--aversion to high technology, demonstrable abuses, spiraling medical costs, etc. The achievements of prevention in conquering infectious diseases had long been recognized, and preventive strategies in the 1970s and 1980s were beginning to show reductions in mortality from the non-communicable chronic diseases as well. Yet the benefits of medical care in extending life expectancy over recent decades have often been overlooked. The quality of life in the later years has also been substantially improved by effective medical care. Most important, access to medical care has definite value in facilitating the prevention of disease and the promotion of health, both in developing and developed countries. It is too often forgotten that prevention embodies a range of activities, merging from general health promotion through specific disease prevention and early case-detection to rehabilitation and prevention of disability. Medical care, in other words, should not be counterposed to prevention, but rather should be integrated with it for the benefit of both health strategies.     

Balancing adoption and affordability of medical devices in Europe

Dramatic increases in health expenditures have led to a substantial number of regulatory interventions in the markets for devices over the last years. However, little attention has been paid thus far to the regulation of medical devices and its effects. This article explores the policies pursued by European countries to find the right balance between improving access to new medical devices and restricting market forces to contain costs and ensure affordability. We outline the medical device policies of the four European countries with the largest expenditures on devices: Germany, France, Italy, and the UK. Subsequently, we discuss how these policies attempt to balance technological adoption and affordability by illustrating two case studies from Italy and Germany. We find that reference prices, if defined as maximum reimbursement levels, can help to achieve balance, because they are supposed to contain costs effectively, but do not necessarily act as a hurdle for the adoption of innovations. We also find that policy tools that encourage technological adoption should be used carefully since the benefits of a new technology are often difficult to predict. Finally, we draw a number of policy implications based on our observations.     

Evaluation of the costs and benefits of motorcycle helmet laws

Since 1976, 28 states have repealed or significantly amended their motorcycle helmet laws. The change in legislation was not based on an evaluation of the costs and benefits of such laws. This paper attempts such an assessment by comparing the cost of motorcycle helmets with the medical costs averted due to helmet use using data primarily based on motorcycle crashes in Colorado, Oklahoma, and South Dakota. Nationwide, at least $61 million could be saved annually if all motorcyclists were to use helmets. Helmet law repeals have been observed to lead to a 40 to 50 per cent point reduction in helmet use. The associated additional medical care costs substantially exceed cost savings produced by reduced helmet use. It is estimated that helmet law repeals may produce annually between $16 and 18 million of unnecessary medical care expenditures. Several alternatives to increase motorcycle helmet use are briefly discussed. It is concluded that helmet laws are effective in encouraging helmet use among motorcyclists and will prevent unnecessary medical expenditures as well as unnecessary pain and suffering among injured motorcyclists.     

Medical care in the last twelve months of life: the relation between age, functional status, and medical care expenditures

Medical care expenditures of a group of decedents during their last year of life suggest that high-technology medical services may be allocated most rationally than is generally assumed. Patients who received intensive hospital and physician services were largely the "young old," aged 65 to 79 years with good functional status, while the frail "older old," aged 80 years and over, received largely supportive care. Total care expenses of the older old were only slightly below those of the most expensive decedents, however, as expenses for nursing home and home health care more than offset lower medical service expenses. Further studies are needed before concluding that the major cause of high costs at teh end of life is the inappropriate use of high-technology care.     

Consolidation of community hospitals

The largest component of U.S. health care expenditures is the cost of hospital care. Evidence seems to indicate that community hospital costs can be reduced through the consolidation of some, or even all, hospital services. Although no discernible set of relevant minimal costs for the hospital industry has been established as yet, significant economies of scale can be attributed to the consolidation process. In addition to potential economic benefits, medical benefits can also accure to the community as well when inefficient, low-volume services are combined to provide more attractive resources to highly qualified specialists. Many independent community hospitals operate autonomously, often to the detriment of community health needs and economy. Those hospitals that fail to take advantage of the opportunities offered by consolidation may not be keeping faith with the population they claim to serve.     

Life expectancy and health care expenditures: a new calculation for Germany using the costs of dying

Some people believe that the impact of population ageing on future health care expenditures will be quite moderate due to the high costs of dying. If not age per se but proximity to death determines the bulk of expenditures, a shift in the mortality risk to higher ages will not affect lifetime health care expenditures as death occurs only once in every life. We attempt to take this effect into account when we calculate the demographic impact on health care expenditures in Germany. From a Swiss data set, we derive age-expenditure profiles for both genders, separately for persons in their last 4 years of life and for survivors, which we apply to the projections of the age structure and mortality rates for the German population between 2002 and 2050 as published by the Statistische Bundesamt. In the extreme case, we assume that morbidity is compressed at the end of life in such a way that a 60-year old in 2050 is as healthy as a 56-year old today if his life expectancy is 4 years higher. We calculate that at constant prices, per-capita health expenditures of Social Health Insurance would rise from 2596 Euro in 2002 to between 2959 Euro and 3102 Euro in 2050 when only the age structure of the population changes and everything else remains constant at the present level, and to between 5232 Euro and 5485 Euro with a technology-driven exogenous cost increase of 1% per annum. A "na?ve" projection based only on the age distribution of health care expenditures, but not distinguishing between survivors and decedents, yields values of 3217 Euro and 5688 Euro for 2050, respectively. Thus, the error of excluding the "costs of dying" effect is small compared with the error of underestimating the financial consequences of expanding medical technology.     

Association Between Perinatal Medical Expenses and a Waiver to Increase Florida Healthy Start Services Within Florida Medicaid Programs: 1998 to 2006

To assess the association between perinatal care expenditures and a Medicaid waiver to increase Florida Healthy Start services among Florida Medicaid non-managed care organization (non-MCO) program enrollees. We assessed perinatal care expenditures from Medicaid claims and encounter data among non-MCO enrollees with increased risk pregnancies who gave birth in Florida during 1998?C2006. We used a pre-post design to compare adjusted perinatal medical expenditures among women who received Healthy Start care coordination (n?=?41,067) to women who were not contacted by the Healthy Start program after screening (n?=?24,282). We calculated adjusted average costs and difference-in-differences using marginal estimates from multivariable linear mixed regression models. From the pre-waiver (January 1998?CJuly 2001) to the late-post waiver (July 2004?CDecember 2006), all prenatal medical costs increased $274 among care coordination participants and decreased $601 among women not contacted by the Healthy Start program, equaling a $875 increased cost difference between care coordination and no contact groups. During this same time period, delivery related expenditures increased $395 less among care coordination participants compared to women not contacted by Healthy Start. Additionally, infant medical care costs during days 29?C365 decreased by an average of $240 less among the care coordination compared to the no contact group. The Medicaid waiver may have decreased delivery costs, but medical costs were increased following the waiver when considering all perinatal care. Further exploration of factors associated with the decreased delivery costs may help develop more efficient prenatal support programs.     

Cigarette smoking and lifetime medical expenditures.

The cumulative impact of excess medical care required by smokers at all ages while alive outweighs shorter life expectancy, and smokers incur higher expenditures for medical care over their lifetimes than never-smokers. This accords with the findings by Manning et al. (1989) of positive lifetime medical care costs per pack of cigarettes, but disagrees with the results found by Leu and Schaub (1983, 1985) for Swiss males. The contradictory conclusions of the analyses are undoubtedly due to a large difference in the amount of medical care used by smokers relative to neversmokers in the United States and Swiss data. Excess expenditures increase with the amount smoked among males and females so that lifetime medical costs of male heavy smokers are 47 percent higher than for neversmokers when discounted at 3 percent. Each year more than one million young people start to smoke and add an extra $9 to $10 billion (in 1990 dollars discounted at 3 percent) to the nation's health care bill over their lifetimes. Given the smoking behavior, medical care utilization and costs of care, and population size embedded in the data used in this analysis, I have concluded that in the first five years from baseline the population of smokers aged 25 and over incurs excess medical expenditures totaling $187 billion, which is $2,324 per smoker. The excess cost of medical care associated with cigarette smoking is 18 percent of expenditures for hospital care, physicians' services, and nursing-home care required by all persons (smokers and neversmokers) aged 25 and over. In the absence of large and rapid changes in the values of the underlying parameters, $187 billion, 18 percent of medical expenditures, can be taken as the premium currently being paid every five years to provide medical care for the excess disease suffered by smokers. Even without the addition of any new smokers, the present value of the bill that will be incurred for excess medical care required by the current population of smokers over their remaining lifetimes is high. The civilian noninstitutionalized population of cigarette smokers in 1985 who are age 25 and older is expected to incur over its remaining lifetime excess medical expenditures of $501 billion, or $6,239 per smoker. It is possible that future changes beyond recent historical trends in the habits of those who currently smoke, such as reductions in the amount smoked, higher rates of quitting, whether occurring fortuitously or brought about by design, may result in lower costs of smoking than estimated.(ABSTRACT TRUNCATED AT 400 WORDS)     

Prevention: rhetoric and reality.

This article examines the value context in which health policy is decided and reviews the empirical evidence in support of present and future initiatives in preventie psychiatry. Health ministries today enthusiastically embrace the rhetoric of prevention because of the relentless growth of medical care costs. US health expenditures in 1981 for example accounted for 9.8% of the gross national product, up from 8.9% 2 years previously. A comparison of health gains from vaccination against poliomyelitus with health gains from vaccination against influenza virus illustrates that the dollar amount expended per year of life saved may vary greatly. Vaccination of persons against influenza and pneumonia would necessitate increasing the very health expenditures that governments are trying to reduce. Fundamental problems of social justice exist in the asymmetry between those who pay and those who benefit from preventive health measures, and in the scales on which costs and benefits are assessed. Moreover, prevention of premature death results in a larger population in the older age groups which consume proportionately more health resources. Such consideratons make obvious the danger of trying to justify prevention on purely economic grounds. Medical knowledge provides a technological base for the analysis of health policy options, but the political process, reflecting the power and the values of the various constituencies in society, is what determines which choices are made. Present knowledge of prevention of psychiatric disorders in children must be considered against the context in which policy decisions are made. Prenatal preventive measures migh address birth weight, maternal smoking and alcohol intake, and rubella, and the conditions diagnosed by amnioscentesis. Neonatal screening could be used to identify phenylketonuria and congenital hypothyroidism. Measures to prevent accidents and poisonings could minimize brain trauma. Vaccination has become the paradigm for prevention, an inexpensive measure applied once or a few times to yield permanent immunity, but the model does not apply to the prevention of psychosocial disorders: there is no shortterm psychiatric intervention that confers immunity to later challenge. Psychosocial measures proposed for the reduction of psychiatric morbidity and mortality in childhood and adolescence include family planning, preschool intervention programs, shortterm psychotherapy, and suicide prevention.     

On the economic analysis of response to preventive measures

There are many circumstances in which the effectiveness of preventive measures depends to a large extent on the compliance of the patient in changing his or her behavior or lifestyle. It is shown how economic techniques can be used (i) to describe the rationale of individuals and predict their behavior (Section 2); and (ii) to assess preventive measures that, by requiring a change of conduct, imply "costs" to the individual due to a decline in the quality of life (Appendix). Cigarette smoking and coronary heart disease are used as an illustration. While the analysis of Section 2 uses graphical techniques, a simple textbook-type of lifetime utility model with a mathematical emphasis is used in the Appendix. It is also shown that techniques often used to assess health care programs such as the QALYs (Quality-Adjusted Life Years) are inappropriate to the evaluation of preventive programs aiming at behavioral changes. Finally, topics that call for further research are indicated.     

The impact of publicly funded family planning clinic services on unintended pregnancies and government cost savings

Publicly funded family planning clinics serve millions of low-income women each year, providing a range of critical preventive services and enabling women to avoid unintended pregnancies. It is important to quantify the impact and cost-effectiveness of such services, in addition to these health benefits. Using a methodology similar to prior cost-benefit analyses, we estimated the numbers of unintended pregnancies prevented by all U.S. publicly funded family planning clinics in 2004, nationally (1.4 million pregnancies) and for each state. We also compared the actual costs of providing these services ($1.4 billion) with the anticipated public-sector costs for maternity and infant care among the Medicaid-eligible women whose births were averted ($5.7 billion) to calculate net public-sector savings ($4.3 billion). Thus, public expenditures for family planning care not only help women to achieve their childbearing goals, but they also save public dollars: Our calculations indicate that for every $1 spent, $4.02 is saved.     

Modifiable health risk factors and medical expenditures - The case of Taiwan

To contain escalating healthcare spending has become a great challenge for many countries around the world. Among all factors influencing medical costs, extensive studies have shown that adoption of healthy lifestyles such as not smoking, moderate drinking, eating healthy food, and exercising regularly can contribute to good health and lower the odds of having diseases that result in higher medical spending. The goal of this paper is to explore the relationship between modifiable risk factors and healthcare costs in Taiwan. A two-part model is employed to estimate the association between modifiable risk factors and medical expenditures. A logit model is used in the first stage of estimation and a generalized linear model is used in the second stage of estimation. Linking the 2001 National Health Interview Survey (NHIS) and the claims data in the National Health Insurance Research Database (NHIRD) in Taiwan, I find some significant associations between several lifestyle variables and medical expenditures. Former smokers are found to have higher probability of using medical care and incur higher medical expenses. People with exercise habits are less likely to use inpatient care services, and they incur lower inpatient expenses. Therefore, healthcare policies promoting non-smoking and physical activities should be used in Taiwan to curb rising expenditures and to achieve better care for people with chronic diseases.     

Expenditure effects of changes in Medicaid benefit coverage: an alcohol and substance abuse example.

An evaluation of the effect on total health care costs of a Medicaid demonstration project to provide coverage for alcoholism and substance abuse was conducted in Illinois in 1985. A pre/post-treatment analysis of expenditures for a subgroup of demonstration clients suggests that the addition of the alcohol and drug benefit did not result in higher total expenditures. [An important policy implication is that, when medical services substitute for one another, costs savings (increases) will not necessarily be realized when benefit packages are cut (expanded).]     

Racial and ethnic differences in public and private medical care expenditures among aged Medicare beneficiaries

This study examines the current allocation of medical care expenditures among non-Hispanic white, non-Hispanic black, and Hispanic seniors who are Medicare beneficiaries. Analyses of both "need-based" and "demand-based" perspectives found that white, black, and Hispanic seniors in similar health had similar total annual expenditures for medical care. The groups did, however, differ substantially in the distribution of expenditures between public and private sources of payment. Notably, racial and ethnic differences in public and private expenditures all but vanished when socioeconomic variables and health insurance coverage were included in the analyses. The findings suggest that public sources of payment for medical care services, especially public supplementary coverage have helped to eliminate racial and ethnic gaps in expenditures.     

Estimating lifetime medical costs from censored claims data

Claims databases consisting of routinely collected longitudinal records of medical expenditures are increasingly utilized for estimating expected medical costs of patients with a specific condition. Survival data of the patients of interest are usually highly censored, and observed expenditures are incomplete. In this study, we propose a survival‐adjusted estimator for estimating mean lifetime costs, which integrates the product of the survival function and the mean cost function over the lifetime horizon. The survival function is estimated by a new algorithm of rolling extrapolation, aided by external information of age‐ and sex‐matched referents simulated from national vital statistics. The mean cost function is estimated by a weighted average of mean expenditures of patients in a number of months prior to their death, of which the number could be determined by observed costs in their final months, and the weights depend on extrapolated hazards. We evaluate the performance of the proposed approach in comparison with that of a popular method using simulated data under various scenarios and 2 cohorts of intracerebral hemorrhage and ischemic stroke patients with a maximum follow‐up of 13 years and conclude that our new method estimates the mean lifetime costs more accurately.     

Accounting for future costs in medical cost-effectiveness analysis

Most medical cost-effectiveness analyses include future costs only for related illnesses, but this approach is controversial. This paper demonstrates that cost-effectiveness analysis is consistent with lifetime utility maximization only if it includes all future medical and non-medical expenditures. Estimates of the magnitude of these future costs suggest that they may substantially alter both the absolute and relative cost-effectiveness of medical interventions, particularly when an intervention increases length of life more than quality of life. In older populations, current methods overstate the cost-effectiveness of interventions which extend life compared to interventions which improve the quality of life.     

Planning Models for Tuberculosis Control Programs

A discrete-state, discrete-time simulation model of tuberculosis is presented, with submodels of preventive interventions. The model allows prediction of the prevalence of the disease over the simulation period. Preventive and control programs and their optimal budgets may be planned by using the model for cost-benefit analysis: costs are assigned to the program components and disease outcomes to determine the ratio of program expenditures to future savings on medical and socioeconomic costs of tuberculosis. Optimization is achieved by allocating funds in successive increments to alternative program components in simulation and identifying those components that lead to the greatest reduction in prevalence for the given level of expenditure. The method is applied to four hypothetical disease prevalence situations.