Published by De Gruyter

Volume 9 Issue 1

January 2006

Issue of Forum for Health Economics & Policy

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Contents
Journal Overview

Article

December 1, 2006

The Business Case for Diabetes Disease Management for Managed Care Organizations

Nancy Beaulieu, David M Cutler, Katherine Ho, George Isham, Tammie Lindquist, Andrew Nelson, Patrick O'Connor

Abstract

Diabetes is a common and very costly chronic disease. There is broad-based agreement on how to manage diabetes, yet less than 40% of adults with diabetes achieve guideline-recommended levels of medical care. We investigate the reasons for this phenomenon by examining the business case for improved diabetes care from the perspective of a single health plan (HealthPartners of Minnesota). The potential benefits accruing to a health plan from diabetes disease management include medical care cost savings and higher premiums. The potential costs to the health plan derive from disease management program costs and adverse selection. We find that the implementation of diabetes disease management coincided with large health improvements. For a defined population of diabetes patients, medical care cost savings over several years were small in the closed panel medical group but moderate for the health plan overall. We find evidence that adverse selection and the timing of cost and benefits worsen the health plan business case. In addition, the payment systems, from purchaser to health plan and health plan to provider, are very weakly connected to the quality of diabetes care, further weakening the business case. Finally, overlapping provider networks create a public goods externality that limits the health plans ability to privately capture the benefits from its investments. Nonetheless, it is clear that improved diabetes care affords economic benefits to health plans as well as valuable quality of life benefits to adults with diabetes.

December 1, 2006

Who Pays? The Incidence of High Malpractice Premiums

Mark Pauly, Christy Thompson, Thomas Abbott, James Margolis, William Sage

Abstract

This paper uses data from physician group practice to examine the relationship between malpractice premium levels and physician net incomes for the years 1994, 1998, and 2002, a period in which malpractice premiums rose rapidly. We find, as did work covering earlier periods of premium growth, that physician net incomes were not reduced by high or rising premiums, and that gross practice revenues were higher when premiums were higher. There is evidence that this forward shifting of costs was associated more with higher quantities of services than with higher unit fees.

December 1, 2006

Is Managed Care Still an Effective Cost Containment Device?

Yu-Chu Shen, Glenn Melnick

Abstract

In this paper we take a historical perspective to examine the effects of managed care and hospital competition on hospital cost and revenue growth during managed cares boom period (1990-1994), mature period (1995-1999), and backlash period (2000-2003). We find that while higher managed care presence, in particular, HMOs, was effective in slowing down hospital cost and revenue growth during the boom and the mature periods, its cost containment effect diminished during the backlash period. This result is stable under different specifications and sensitivity analyses. Hospital competition effects, however, remain strong throughout the three periods. It appears that hospital competition effects were initially the result of aggressive selective contracting in the high managed care markets, but were later fueled by the less saturated, but growing managed care markets that seemed to catch up with the more developed markets.

December 2, 2006

Adverse Selection in Retiree Prescription Drug Plans

Dana P Goldman, Geoffrey Joyce, Pinar Karaca-Mandic, Neeraj Sood

Abstract

We used claims data from a large U.S. employer that introduced changes in its medical and drug coverage offerings in 2002 for non-Medicare eligible retirees. In addition to the existing plans, the employer introduced two new plans in 2002 that were less generous both in terms of medical and drug coverage. Further, one of the new plans had an annual benefit limit of $2,500 on prescription drugs, similar to the doughnut hole in the standard Medicare Part D benefit. We examined beneficiaries switching behavior in response to the new choice set and estimated the independent effects of medical and drug benefits on plan selection. We found that beneficiaries in better health were more likely to switch to the new, less generous plans. While the generosity of the medical benefit played a more important role in choosing a plan, choices did not vary significantly by health status. In contrast, sicker individuals were more likely to enroll in plans with generous drug benefits. This suggests that drug coverage may be more susceptible to adverse selection than medical insurance.

December 3, 2006

Real Output in Mental Health Care during the 1990s

Ernst R. Berndt, Alisa B. Busch, Richard G. Frank, Sharon-Lise Normand

Abstract

Health accounts document changes over time in the level and composition of health spending. There has been a continued evolution in the ability to track such outlays. Less rapid has been the ability to interpret changes in spending. In this paper we apply quality adjusted price indexes for several major mental disorders to national mental health expenditure account estimates to assess changes in real "output". We show that using the new price indexes reveals large gains in real output relative to the application of the U.S. Bureau of Labor Statistics' indexes.

About this journal

Objective
Forum for Health Economics & Policy (FHEP) showcases articles in key substantive areas that lie at the intersection of health economics and health policy. The journal uses an innovative structure of forums to promote discourse on the most pressing and timely subjects in health economics and health policy, such as biomedical research and the economy, and aging and medical care costs. Forums are chosen by the Editorial Board to reflect topics where additional research is needed by economists and where the field is advancing rapidly. The journal is edited by, Pinar Karaca Mandic of the University of Minnesota, Abe Dunn from the U.S. Bureau of Economic Analysis and David Grabowski and John Romley of the University of Southern California. FHEP is sponsored by the Schaeffer Center for Health Policy and Economics at the University of Southern California.

Topics

Economics
Political economics
Biomedical research and the economy
Aging and medical care costs
Nursing
Cancer studies
Medical treatment
Others related

Article formats
Original Research Articles, Review Articles, Research Reports

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