Robert D. Lieberthal

How Risky Is Individual Health Insurance

This paper describes the relationship between type of insurance coverage in one period and the likelihood of becoming uninsured in the next. We find that for people at the median health status, becoming uninsured is most likely for those with individual insurance, less likely for those with small-group insurance, and least likely for those with large-group insurance. However, for people in poor or fair health, the chances of losing coverage are much greater for people who had small-group insurance than for those who had individual insurance. We attribute these results to the offsetting effects of high loadings and guaranteed renewability in the individual market.

What are the Characteristics that Explain Hospital Quality? A Longitudinal Pridit Approach

Health outcomes vary substantially between high- and low-quality institutions, meaning the difference between life and death in some cases. The prior literature has identified a number of variables that can be used to determine hospital quality, but methodologies for combining variables into an overall measure of hospital quality are not well developed. This analysis builds on the prior investigation of hospital quality by evaluating a method originally developed for the detection of health-care fraud, Pridit, in the context of determining hospital quality. We developed a theoretical model to justify the application of Pridit to the hospital quality setting and then applied the Pridit method to a national, multiyear data set on U.S. hospital quality variables and outcomes. The results demonstrate how the Pridit method can be used predictively, in order to predict future health outcomes based on currently available quality measures. These results inform the use of Pridit, and other unsupervised learning methods, in fraud detection and other settings where valid and reliable outcomes variables are difficult to obtain. The empirical results obtained in this study may also be of use to health insurers and policymakers who aim to improve quality in the hospital setting.

Cost-Effectiveness of Aspirin Adherence for Secondary Prevention of Cardiovascular Events

BackgroundSuboptimal adherence to aspirin therapy for secondary prevention of cardiovascular (CV) events is an important public health problem. Prior studies have demonstrated non-adherent patients are at higher risk of experiencing CV events.ObjectivesThis study aimed to estimate the clinical and economic outcomes of aspirin non-adherence in patients with a prior primary CV event.MethodsWe developed a Markov model to estimate the cost-effectiveness of aspirin adherence from a generic US managed care payer perspective over a 5-year time horizon. Costs, utilities and rates of aspirin adherence, CV events and adverse events were gathered from published literature to populate the model. Outcomes were quality-adjusted life years (QALYs), costs (US

Defining Health Insurance

) and incremental cost-effectiveness ratios (ICERs). We applied the model separately to a population without type II diabetes as a comorbidity (non-diabetic model) and a population with type II diabetes (type II diabetes model). A one-way sensitivity analysis was performed to assess the model uncertainty.ResultsThe base case showed adherent patients lived 0.25 and 0.36 QALYs longer than non-adherent patients in the non-diabetic model and type II diabetes model, respectively. Adherence to aspirin had an ICER of US

Public Policy Choices

25/QALY in the non-diabetic population, while it saved US

The Role of Government

297 per patient over a 5-year period in the type II diabetes population. One-way sensitivity analysis showed the models were most sensitive to rates of non-fatal events in non-adherent patients.ConclusionThis study suggests aspirin adherence may improve QALYs for patients with a prior primary CV event. Further, it may decrease costs in patients with type II diabetes. While additional research is needed to validate these results, payers may wish to increase strategies to promote adherence in order to improve population health.Trial RegistrationNot applicable.

Matching Supply and Demand

This chapter introduces the topic of health insurance. Health insurance can be thought of mainly as a form of healthcare finance, the mechanism by which people pay for healthcare. The majority of healthcare payments come well after the time that services are rendered, and payments come mainly from third parties. Like any economic service, there is a market for healthcare finance with a demand side and a supply side. Unlike many services that are purchased on credit, healthcare is a highly subjective product owing to the subjective nature of health. As a result, health insurance is not the only, nor necessarily the best, way to pay for healthcare. One of the most salient features of the health insurance market is how much it has grown over the past century. Health insurance originated in a number of financial products and organizations—mutual benefit societies, traditional insurance companies, employers, and even healthcare providers. Eventually, health insurance became professionalized, moving from a bespoke product on a small scale to a large industry that financed the majority of healthcare services. Along the way, public policy and regulation played a crucial role in health insurance by defining what was considered health insurance, by setting the parameters of acceptable forms of insurance, and eventually by directly providing health insurance for a large portion of the population. A complex aspect of health insurance policy is that the academic literature concerning health insurance is split into three separate but related fields. The main field that is concerned with health insurance is health economics, which defines health as a form of capital, meaning a valuable asset that people own, as described at greater length in Chap. 2. The field of risk management and insurance (RMI) covers the economics of insurance, and so findings from that literature are crucial to an understanding of health insurance. Finally, health capital is ultimately an asset with a subjective value, so judging effectiveness is more complex in health than in other lines of insurance. As a result, the findings from the health services literature are relevant to a study of health insurance. Integrating these three fields into a fuller understanding of health insurance is both the purpose of this book, and the way to develop policies that can increase the value of health insurance as described in Chap. 9.

Producing Health Insurance

Chapter 8 describes the role of government in terms of health insurance policy. This chapter examines specific public policy choices that can improve the health insurance system in the United States. The chapter starts with a review of the economics of value. Value in an economic sense defines the objectives that policymakers would like to achieve. Policymakers need to address the variation in value of health insurance in order to identify a minimum value for health insurance. Policies to improve value either increase marginal benefit , reduce marginal cost , or integrate changes in marginal costs and benefits into an overall increase in value. The next section of the chapter describes two high-level strategies that can be used to improve value in health insurance—expansion and reduction. Expansion refers to situations where the current quantity of health insurance provided to a population is suboptimally low, while reduction refers to situations where the current quantity of coverage is suboptimally high. The section on expansion and reduction describes specific markets where expansion can improve value, as well as markets where reduction in the quantity of coverage can increase the value of health insurance by reallocating resources to other goods and services or other populations. Neither of these solutions will achieve a permanent improvement in the value of health insurance. The main reason that no fix can be permanent has to do with difficulties in health insurance analysis as well as limitations of health insurance as a tool to improve health and protect health capital . These challenges give raise to important public choice problems that require solutions that imply interventions in both health insurance and in other parts of the health and healthcare system. The chapter concludes with a view of the future of health insurance. Health insurance is part of a menu of risk management choices that individuals can utilize. Health insurance is an “entree” for financing health—other techniques are needed to round out the menu of options for improving health capital . The chapter touches several alternatives to health insurance. Finally, it describes how improvements in health insurance can improve health, thereby leading to better lives for all members of society.

Demand for Health Insurance

Chapter 7 examines the role of group purchasing as a form of health insurance policy. This chapter describes the role of government in terms of health insurance policy. The chapter begins with a description of the goal of government, which is to move the health insurance system to providing optimal health insurance arrangements. A beneficent “social planner” could, in theory, implement a set of prices that would maximize the utility of health insurance to society. However, many of the implied policy solutions may be infeasible. As a result, health insurance policy is concerned with “second best” policies that optimize health insurance subject to constraints facing policymakers and markets. These policies can improve health insurance by addressing market failures in the health insurance market. Policymakers have a number of policy and regulatory tools that they can use to improve health insurance. Ultimately, any health insurance policy implemented by the government relies on the benefits of scale and scope if it is to make society better off. The trade-off for any governmental intervention are the costs arising from crowd out and deadweight loss. That trade-off leads to a consideration of universal group coverage and, in particular, full group coverage provided by the government. These are two types of single payer approaches to health insurance, which is an approach with both benefits and costs. As a result, policymakers may want to consider the wider menu of health insurance policy options that fall short of a single payer approach. Finally, this chapter assesses the meaning of public health insurance. How does the federal government operate as a group purchaser? How can group insurance for large populations account for diversity and heterogeneity in preferences and the variation in prices paid by different individuals within a public system? The answers to these questions imply an ongoing role for the private sector in any governmental approach to health insurance. That conclusion also provides a segue to Chap. 9, which considers the broader range of public policy choices with respect to health insurance in the United States.

The Scope of Health Insurance

Chapter 5 describes the supply and production of health insurance by different groups in the health economy. The study of matching supply and demand in order to determine the features of health insurance plans in the marketplace is the subject of this chapter. This chapter begins with an examination of equilibrium, an economic concept that refers to the matching of supply and demand, trading-off the consumer’s willingness to pay a premium for health insurance with the producer’s willingness to accept that premium. In theory, the equilibrium provision of health insurance should be optimal under specific market conditions. In health insurance, market failures may result in suboptimal health insurance, and health insurance policymakers can attempt to use subsidies, taxes, and regulation to optimize health insurance. In all health insurance markets, the result of choices by health insurance consumers and producers leads to partial health insurance. Individuals have choices about whether to accept or reject coverage. Health insurance companies have a range of choices about what types of health insurance to offer, and which markets to participate in. Employers and governments have choices about whether to offer health insurance, what type of health insurance to offer, and how much of a subsidy to provide for health insurance. Providers also have choices about whether to offer health insurance services. Finally, this chapter examines the result of the choice about health insurance on one group in particular—the uninsured. This group of individuals does not have health insurance coverage, although that definition becomes difficult to implement in terms of measuring the size of the uninsured population. There are several important explanations of uninsurance, as well as alternatives to health insurance for the uninsured. Finally, this chapter examines the consequences of uninsurance, both for the individual without health insurance and for society at large. Those consequences motivate the discussion of health insurance policy in the final section of the book.