What's New with HCFO - May 19, 2006 (Print All Articles)Health Insurance and Small Businesses: Ways to Make Coverage More AffordableHealth Insurance and Small Businesses: Ways to Make Coverage More Affordable As policymakers continue to struggle with how best to meet the health care coverage needs of employees of small businesses, legislation has once again stalled in Congress. On May 11, 2006, a bill that would have allowed small businesses to join together and create association health plans (S. 1955) failed to pass in the Senate. Introduced in November 2005, this bill sponsored by Senate Health, Education, Labor and Pensions Committee Chair Mike Enzi (R-WY) would have allowed small businesses and trade associations to form association health plans across state lines. These association-sponsored Small Business Health Plans (SBHPs) would contract with a licensed insurance carrier to provide health insurance to the association’s members and their employees. Unlike current regulations, insurers would be allowed to sell plans to employers and individuals as part of the SBHP that do not meet current state benefits mandates. They would then, however, also be required to offer a plan with benefits provided under a state employees’ plan in one of the five most populous states (California, Florida, Illinois, New York and Texas). Variation in premiums from one small business to another would be also limited, preempting current state laws.1 Of the three bills currently before Congress, the Enzi bill was widely viewed as having the best chance of passing. Proponents of the Enzi bill, including the Bush administration and trade associations, argued that it would help small businesses by improving affordability to employers and employees, exempting small businesses from having to comply with expensive and varying state requirements.2, 3, 4 Those opposing the Enzi legislation, as well as the formation of association health plans in general, contend that insurers and small businesses will be exempt from state mandated protection, resulting in possible harm and increased costs for sicker workers.5 Group purchasing arrangements, including AHPs, vary widely in their structure, and state regulation of such plans also varies. All such plans seek to achieve cost savings by encouraging employers and/or self-employed individuals to combine their purchasing power to negotiate lower health insurance premiums than they could otherwise achieve. Some group purchasing arrangements are self-insured, and therefore, able to save additional costs, including premium taxes. Group Purchasing Arrangements: Issues for States, an issue brief prepared for the State Coverage Initiatives program, highlights policy and regulatory issues arising from group purchasing arrangements. In a HCFO-funded study, Mila Kofman, J.D., and colleagues at Georgetown University have been examining the dynamics of pooled purchasing arrangements, including association health plans (AHPs), multiple employer welfare arrangements (MEWAs), and health insurance purchasing coalitions (HIPCs). In particular, she has examined market problems, like the historically high risk of insolvencies in self-insured arrangements and fraudulent health insurance promoted through pooled purchasing arrangements. Kofman’s work suggests that the challenge for policymakers will be to balance the benefits of association health plans with the potential that these arrangements have for financial instability. A searchable database, with information gathered as part of this study, is available at http://www.hcfo.net/mewa/index.cfm. In an effort to better understand the likely impact of exempting AHPs from state regulation, some analysis of group purchasing arrangements has been done. In particular, Mila Kofman and colleagues at the Health Policy Institute at Georgetown University examined states’ experiences with Multiple Employer Welfare Arrangements (MEWAs), self-insured AHPs, often with less stringent licensing requirements than traditional insurers. As reported in a Commonwealth Fund issue brief, MEWAs have “a troublesome history of financial instability.” Kofman warns that policymakers must be aware of the need for consumer protections, particularly with respect to plan solvency. Despite the frustration of three failed attempts to establish AHPs to address the health coverage needs of small businesses, in as many years, federal policymakers are likely to revisit this issue. As Senator Joe Lieberman (D-CT) said, the “failure ultimately will signify nothing good for millions of Americans who need health insurance.”6 With this debate remaining on the policy agenda, ongoing and completed HCFO projects can inform discussion and policy proposals addressing the health insurance needs of small businesses, in general, and the merits of association health plans, in particular. HCFO Funded Research Title: Private Insurance Markets: The Missing Link—Association Health Plans and Other Pooled Purchasing Arrangements Click here for more information. Click here for more information. Title: Sustaining Individual Health Insurance Markets Under Community Rating and Open Enrollment Grantee Publications: Title: Market Watch: Community Rating and Sustainable Individual Health Insurance Markets in New Jersey Title: Simulation of the Impact of Modified Community Rating in the New Jersey Individual Health Coverage Program Click here for more information. Title: State Health Care Purchasing Practices Grantee Publications: Title: Corporate Health Care Purchasing Among Fortune 500 Firms Title: Managed Competition in Practice: 'Value Purchasing' by Fourteen Employers Title: Corporate Health Care Purchasing Among The Fortune 500 Title: The Benefits Divide: Health Care Purchasing in Retail versus Other Sectors Title: Private Health Purchasing Practices in the Public Sector: A Comparison of State Employers and the Fortune 500 Click here for more information. Title: Guaranteed Renewability in Individual and Group Health Insurance: Functioning and Future Prospects Grantee Publications: Title: The Non-Group Health Insurance Market: Short on Facts, Long on Opinions and Policy Disputes Click here for more information. Title: Studies of the Working Uninsured, Their Dependents and Insurance Reform on Their Behalf Grantee Publications: Title: Exploring State Variation in Uninsurance Rates Among Low-Income Workers Title: Consider the Source: Studying Low-Income Uninsured Workers Using Three Different Surveys Click here for more information. Title: An Evaluation of the Primary and Secondary Effects of Insurance Market Reform Grantee Publications: Title: The Geography and Health Insurance Regulation: A Guide to Identifying, Exploiting, and Policing Market Boundaries Title: Purchasing Cooperatives for Small Employers: Performance and Prospects Click here for more information. 1 “Senate Democrats Block Cloture Motion on Association Health Plan Bill; Measure Now Stalled”. Kaiser Daily Health Policy Report, Friday May 12, 2006. http://www.kaisernetwork.org/daily_reports/print_report.cfm?DR_ID=37234&dr_cat=3 This Month in the NewsThis Month in the News Susan Zahner, Ph.D., an assistant professor of nursing at the University of Wisconsin-Madison, was recently presented the Van Hise Outreach Award as part of the 2006 Distinguished Teaching Awards. The award, which carries a $5,000 stipend, was presented at a ceremony on April 18th.
Richard Johnson, Ph.D., a principal research associate at the Urban Institute, was quoted in an April 18, 2006 article in the Sacramento Bee that examined the increasing trend of older women living alone into their final years. The article states that according to the U.S. Census Bureau, “older women are nearly twice as likely as older men to live alone and in poverty.” Johnson states that “most frail older people rely on an informal network of unpaid caregivers” because “Medicare covers only limited long-term care, and Medi-Cal (California’s version of Medicaid) is insufficient and limited to those with low incomes and few assets.” Glen Mays, Ph.D., M.P.H., a professor at the College of Public Health at the University of Arkansas for Medical Sciences, was quoted in an April 19, 2006 article in the Arkansas Democrat-Gazette that detailed the expansion of the Arkansas Surgical Hospital. The article describes a $10 million expansion, which includes increasing the number of beds from 16 to 33, and adding six operating rooms. The expansion was announced only one year after the hospital’s opening. Mays states that although the number of beds is still fairly small, “that kind of growth certainly would attract the attention of hospitals in the market. If that continues, they ultimately are going to be competing more head to head.” Mila Kofman, J.D., an associate research professor at Georgetown University’s Health Policy Institute, was quoted in an April 24, 2006 article in the Dallas-Fort Worth Star-Telegram that examined how health care costs burden small businesses. The article states that many small businesses are asking employees to contribute more towards their health insurance or attempting to offer health plans options with stingier benefits to reduce their costs. Kofman states that, “the rising cost of drugs, the development of new medical treatments and the aging population’s greater need for health services all contribute to the rising price of health coverage.” Bruce Stuart, Ph.D., director of the Peter Lamy Center on Drug Therapy & Aging at the University of Maryland, was quoted in a May 1, 2006 article in BusinessWeek Online that examined why some seniors will temporarily lose drug coverage through Medicare Part D. The article states that many seniors were stunned when they unknowingly fell into what policymakers refer to as the “doughnut hole,” the $2,850 gap in coverage by many Medicare prescription drug plans. Stuart said that “about 38 percent of Medicare beneficiaries are at risk” of losing drug coverage in this gap. David Blumenthal, M.D. , a health policy professor at Harvard Medical School, was recently named one of the 50 most powerful physicians in the United States by Modern Healthcare, according to a May 1, 2006 article in the Boston Globe.
Grantee Spotlight - Thomas C. Buchueller, Ph.D.
Grantee Spotlight May 2006 Thomas C. Buchmueller, Ph.D. Tom Buchmueller is professor of Economics and Public Policy in the Paul Merage School of Business at the University of California at Irvine (UCI), where he is also director of the Center for Healthcare Management and Policy. In addition, Buchmueller is a faculty research associate of the National Bureau of Economic Research and is currently a visiting scholar at the Federal Research Bank of San Francisco. His research focuses on health economics, particularly the economics of insurance and interactions between public programs and private markets. In 2005, he and co-author Tony LoSasso received AcademyHealth’s Article-of-the-Year Award for their work on the effect of SCHIP on public and private insurance coverage. Buchmueller was recently awarded a Packer Policy Fellowship through the Commonwealth Fund and the Australian Department of Health and Ageing to study the effect of rating rules on the market for health insurance in Australia. To conduct this research he will spend the 2006-07 academic year at the Centre for Health Economics Research and Evaluation in Sydney. Buchmueller has received two HCFO grants. The first, awarded in November 1996, examined employee health plan choice and switching behavior under managed competition. Using data on the open enrollment choices for over 100,000 University of California (UC) employees and retirees, Buchmueller and his colleagues Paul Feldstein and Bruce Strombom analyzed the effect of price on health plan choice and switching behavior and the implications of these choices on risk selection among competing plans. They found that the competitive approach was effective in controlling health spending for the UC active employee population. In the three years immediately after UC altered its contribution policy to emphasize price difference among competing health plans, per-employee spending on health benefits fell by 26 percent. However, there was considerable variation in the response to price across employees in different risk categories. Older employees with serious health conditions were much less sensitive to price than younger, healthier ones. Similarly, employees with longer job tenure were less likely to switch health plans in response to a change in premiums than new employees. As a result of this pattern, the higher cost fee-for-service plan that was preferred by older employees and those in poor health experienced a classic adverse selection death spiral. As lower cost employees left the plan, its premiums skyrocketed leading to further declines in enrollment. Buchmueller concluded that without risk adjustment, plans that are more attractive to higher risk individuals may not be viable in a competitive market.1 Buchmueller’s second HCFO grant used a similar research design applied to different data to further investigate the price sensitivity of retirees in a multiple option “managed competition” setting. The data for this research came from a large employer-sponsored health benefit program where the premium contributions required of retirees varied according to when a person retired and years of service at that point in time. This variation created an excellent natural experiment for estimating price effects. Because the structure of the program resembled “premium support” models that have been proposed for the Medicare program, the results have implications for the effect of such reforms. In the first paper using these data, Buchmueller estimated the effect of out-of-pocket premiums on plan choice. He found a statistically significant, but economically modest, effect. The estimated premium elasticities are slightly larger in magnitude than those from his earlier research on UC employees and smaller than results from the literature on active employees. The second paper from this grant, which is forthcoming, was co-authored with Sabina Ohri and examines the effect of premiums on the decision by early retirees who are not yet eligible for Medicare to take up coverage offered by their former employer. In light of the decline in employer-sponsored retiree health insurance, this population is increasingly vulnerable. Consistent with other research in this area, Buchmueller’s results suggest that the take-up decision is less price sensitive than the choice among plans. Simulations suggest that if Medicare coverage were extended to adults between the ages of 55 to 64, as has been proposed, the number of people enrolling would not be particularly sensitive to the extent to which coverage was subsidized. Publications from HCFO-Sponsored Work: Buchmueller, T.C., “Does a Fixed-Dollar Contribution Lower Spending,” Health Affairs, 17(6), 1998. Buchmueller, T.C., “The Health Plan Choices of Retirees Under Managed Competition,” Health Services Research, 35(5), 2000. Buchmueller, T.C., 2000 “Price Sensitivity of Medicare Beneficiaries in a ‘Premium Support’ Setting,” in Competition With Constraints". Challenges Facing Medicare Reform, Washington, DC: Urban Institute Press. Strombom, B.A., Buchmueller, T.C. and Feldstein, P.J. “Switching Costs, Price Sensitivity and Health Plan Choice,” Journal of Health Economics, 21(1), 2002. Buchmueller, T.C. “Price and the Health Plan Choice of Retirees,” Journal of Health Economics, 25(1), 2006. Buchmueller, T.C. and Ohri, S. “Health Insurance Take-up by the Near-Elderly,” Health Services Research, publication forthcoming. 1 Buchmueller, Thomas C., “The Health Plan Choices of Employees and Retirees in a Managed Competition Setting: Evidence from the University of California,” Testimony, Senate Finance Committee, April 4, 2001. Spotlight on Grantee Publication
Spotlight on Grantee Publication J. William Thomas, Ph.D., a professor at the Institute for Health Policy at the Edward J. Muskie School of Public Service, University of Southern Maine, is the author of an article that appeared in the April 2006 issue of HSR, titled “Should Episode-Based Economic Profiles Be Risk Adjusted to Account for Differences in Patients' Health Risks?”. The article details HCFO sponsored research examining the effect of risk-adjustment on cost efficiency rankings of physicians. Current HCFO grantee publications and recent grant findings will be regularly featured in the results section of our Web site.
New HCFO Findings BriefA new project from the University of Minnesota and The University of Pennsylvania offers fresh insights into the relationship between hospital consolidation, the managed care environment, and consumer welfare. Robert Town; Ph.D., Douglas Wholey Ph.D., and Roger Feldman Ph.D., in collaboration with Lawson R. Burns Ph.D., conducted two related analyses, the first examining the relationship between managed care and hospital consolidation, and the second examining the impact of hospital consolidation on consumers. Their research reveals that hospital consolidation has a distinct impact on consumer interests, increasing both HMO premiums in the most competitive markets and the number of uninsured. These findings are the result of the first systematic examination of the consequences of hospital consolidation for consumers. New Data Available for Researchers
National Data on Hospitalizations
The National Center for Health Statistics (NCHS) is pleased to announce the availability of 2004 data from the National Hospital Discharge Survey (NHDS). Data from the NHDS are used to profile hospital use, conditions resulting in hospitalization, disparities in use, diffusion of new technologies, and trends over time.
In addition to announcing the availability of public use data files, a new NCHS report released this month provides key estimates for 2004 and highlights trends affecting patients age 65 and over. Findings show that while hospitalization rates declined for all other age groups, rates increased 24 percent for the elderly during the period from 1970 through 2004 (despite a temporary decrease in the 1980s). Though persons age 65 and over comprised 12 percent of the US population in 2004, they accounted for 38 percent of all hospital discharges and used 44 percent of all inpatient days of care.
The NHDS, which has been conducted continuously since 1965, provides the country’s most current, and only nationally representative, data on hospitalizations and the characteristics of patients discharged from non-Federal, short-stay hospitals. Public use data files and information about the surveys may be found at http://www.cdc.gov/nchs/about/major/hdasd/nhds.htm Users are encouraged to subscribe to the NHDS listserv, which provides information about data from the NHDS and its companion survey, the National Survey of Ambulatory Surgery (NSAS).
The NHDS and NSAS are two in a family of provider and establishment-based surveys known collectively as the National Health Care Survey. These surveys collect data from health care providers about practice and organizational characteristics, patient characteristics, and details about patients’ clinical management. Other component surveys include the National Ambulatory Medical Care Survey and National Hospital Ambulatory Medical Care Survey (NAMCS and NHAMCS, respectively, which cover care delivered in physicians’ offices, hospital outpatient and emergency departments), and the National Nursing Home Survey, National Nursing Assistant Survey, and National Home and Hospice Care Survey (NNHS, NNAS and NHHCS, respectively, which cover long term care): http://www.cdc.gov/nchs/nhcs.htm.
AcademyHealth 2006 Annual Research Meeting
AcademyHealth 2006 Annual Research Meeting June 25-27 Washington State Convention & Trade Center in Seattle Join more than 2,000 health services researchers, policymakers, and practitioners in Seattle to hear the latest health services research, discuss timely health policy issues, develop new research methodologies, and network with friends and colleagues. The ARM provides access to more than 130 breakout sessions and 700 poster presentations covering 17 health care theme areas such as coverage and access, public health systems research, health workforce, disparities, health information technology, long-term care, health care quality, and patient safety. Jobs at AcademyHealthJobs at AcademyHealth AcademyHealth is currently seeking candidates for a Senior Associate to work on public health services research activities, a Program Coordinator for the State Coverage Initiatives program, and a Marketing Manager. Click here for more information about these positions and working at AcademyHealth. |