Thomas E. Getzen

Economic Expansion Is a Major Determinant of Physician Supply and Utilization

OBJECTIVE To assess the relationship between levels of economic development and the supply and utilization of physicians. DATA SOURCES Data were obtained from the American Medical Association, American Osteopathic Assocation, Organization for Economic Cooperation and Development (OECD), Bureau of Health Professions, Bureau of Labor Statistics, Bureau of Economic Analysis, Census Bureau, Health Care Financing Administration, and historical sources. STUDY DESIGN Economic development, expressed as real per capita gross domestic product (GDP) or personal income, was correlated with per capita health care labor and physician supply within countries and states over periods of time spanning 25-70 years and across countries, states, and metropolitan statistical areas (MSAs) at multiple points in time over periods of up to 30 years. Longitudinal data were analyzed in four complementary ways: (1) simple univariate regressions; (2) regressions in which temporal trends were partialled out; (3) time series comparing percentage differences across segments of time; and (4) a bivariate Granger causality test. Cross-sectional data were assessed at multiple time points by means of univariate regression analyses. PRINCIPAL FINDINGS Under each analytic scenario, physician supply correlated with differences in GDP or personal income. Longitudinal correlations were associated with temporal lags of approximately 5 years for health employment and 10 years for changes in physician supply. The magnitude of changes in per capita physician supply in the United States was equivalent to differences of approximately 0.75 percent for each 1.0 percent difference in GDP. The greatest effects of economic expansion were on the medical specialties, whereas the surgical and hospital-based specialties were affected to a lesser degree, and levels of economic expansion had little influence on family/general practice. CONCLUSIONS Economic expansion has a strong, lagged relationship with changes in physician supply. This suggests that economic projections could serve as a gauge for projecting the future utilization of physician services.

International health spending forecasts: Concepts and evaluation

Health care depends on the organizational and financial decisions which constituted each national system. Since those decisions were made at various times over the preceding years under different macroeconomic conditions, current expenditures are a distributed lag function of GDP growth and inflation rates. The accuracy of forecasts from such causal econometric models are compared to exponential smoothing, moving average, and ARIMA methods. Data fro 19 OECD countries 1965-79 are used for calibration, and then ex ante forecasts are generated for 1980-87 so that actual forecast accuracy can be tested. The greatest reduction in mean absolute error was obtained with the econometric model estimated in aggregate across all 19 countries, although single-country models, exponential smoothing and international averaging were also effective. A combination of all four forecasts was more accurate than any one alone, reducing MAE by 25% relative to a constant growth projection.

Macroeconomic Dynamics of Health: Lags and Variability in Mortality, Employment and Spending

ABSTRACT/SYNOPSIS. Medicine is technologically dynamic but fiscally inertial. Major change in the health sector takes time. Responses to macroeconomic shocks are subject to lags of varying lengths, from several years to many decades. There may also be feedback and reverse causality, as when better health leads to higher incomes, and vice-versa. These lags and interactions complicate measurement so that the strong linkages between human health and the economy are sometimes obscured and difficult to estimate with precision.

The Hungarian Care Managing Organization Pilot Program

OBJECTIVES The aim of this article was to provide a description of the Hungarian care managing organization (CMO) pilot program and its environment, incentive structure, and preliminary outcomes. The need to change the behavior of doctors to increase the effectiveness and cost-effectiveness of the system was the key rationale for the Hungarian CMO pilot program. METHODS After an application process, nine CMOs were entitled to enter into the system in July 1999. By 2006, there were 14 CMOs covering 2.1 million people. The Hungarian CMO program tried to combine the advantages of both the US managed care programs and the UK general practitioner fundholding system, within the constraints and opportunities of a Central-European country committed to a single-payer health insurance system. RESULTS The revenue of CMOs derived from a risk-adjusted capitation. The capitation formula was weighted only by age and sex. The expenditures of the CMOs included all the health expenditures on their patients that occurred in any part of the health care system. The average savings rate for all CMOs for the fiscal years 1999 to 2007 was 4.94%. The highest rates of savings were realized in chronic and acute inpatient care and medical devices. The pilot was discontinued in 2008 without a comprehensive evaluation of the experience. CONCLUSIONS We can conclude that this pilot had a significant contribution to the modernization of the Hungarian health care system.

Modeling Medical Cost Trends for Advancing Age in the Long Run

Medical costs are among the most significant factors in determining long run fiscal requirements for the federal budget of the United States, and for the individual household budgets of retirees. Rapid growth and high individual variance make projections of future expenditures in the 20 to 50 year range both difficult and uncertain. This paper builds upon prior work to demonstrate that the apparent patter process changes systematically as the span and unit of observation changes; linear in the short-run of months, morphing into a smoothed reflection of GDP growth over multiple years, and ultimately fitting a logistic growth curve over decades in the long run. A structural model of the health system as a function of decisions made at different levels of organization (individual, employer, group, city, nation, global) with effects that endure for differing amounts of time is constructed. The nature of medical transactions and the importance of budgetary boundaries are considered. Data from U.S. Health Expenditures 1929-2013 are used to makes estimates. Results show lags of 3 to 6 years, and suggest lower-frequency effects that last for decades. It appears that the excess growth rates of medical costs during the 1970s and 1980 has moderated considerably, and is likely to continue to bend the medical cost curve downward. However, the budgetary impact of increasing longevity is apt to continue to increase over the next fifty years, by which time it is not implausible that the elderly could account for more than 40% of medical expenditures and require 10% of GDP funded through taxes or premiums. Questions are raised as to whether aging, medical costs, retirement and technological advances are best modeled as quasi-independent elements with causal effects, or as integral aspects of joint process characteristic of modern economies.

Symposium Introduction: Papers on ‘Modeling National Health Expenditures’

Significant contributions have been made since the World Health Organization published Brian Abel-Smiths pioneering comparative study of national health expenditures more than 50 years ago. There have been major advances in theories, model specifications, methodological approaches, and data structures. This introductory essay provides a historical context for this line of work, highlights four newly published studies that move health economics research forward, and indicates several important areas of challenging but potentially fruitful research to strengthen future contributions to the literature and make empirical findings more useful for evaluating health policy decisions. Copyright

Accuracy of Long-Range Actuarial Projections of Health Care Costs

The Office of the Actuary, mandated to provide projections of future medical spending for use by the U.S. Medicare and Medicaid programs, publishes forecasts that have been widely used by private firms and government budget officials as a baseline for expected long-run premium trends and to estimate liabilities for retiree health benefits. Although these projections have been made publicly available since 1986, they have not yet been subject to systematic evaluation by an external reviewer. This article develops a method for assessment of both short- and long-run accuracy and applies it to the 17 sets of projections made public over the last 25 years. The more recent set of projections (1998–2010) incorporating lagged macroeconomic effects appear to be more accurate than the older (1986–1995) projections that relied more heavily on demographic cost of illness trends. The average annualized error of the forecasts is approximately 0.5–1% per year, whether assessed over a span of one, two, or 10 years. Projecting “excess” growth in health spending (the rise in the share of wages or GDP) tends to be more accurate than forecasting nominal or real spending per capita.

Bet doubling in gambling and investing

Purpose - The purpose of this paper is to analyze strategies for gamblers/investors to increase their chances of reaching certain monetary and/or survival goals while facing a losing proposition. Design/methodology/approach - The paper investigates the use of credit by gamblers/investors as a means of increasing their expected survival time and thus their likelihood of winning. The paper considers a strategy in which a gambler/investor engages in bet doubling and uses credit to maximize the probability of winning a specified amount. Findings - The model presented in this paper identifies the amount of credit that will make it possible for a gambler/investor to become a winner with an arbitrarily high degree of probability, even while facing a losing proposition. However, bet doubling can lead to large losses, and negative profits can be expected if the gambler/investor is faced with unfavorable odds. As an extension, the paper considers the impact of limited liability and finds that in that case, total losses are restricted and the gambler/investor can expect a positive net gain even while facing a losing proposition. It is also shown that the cost of obtaining credit is an important consideration and that it is ill-advised for a gambler/investor to engage in such a strategy when the cost of credit is high relative to the probability of winning. Originality/value - Although bet doubling is not new to the gambling literature, this paper considers the use of credit as a means of increasing survival time and expected net gain. Applications of the model are particularly useful to gamblers/investors when credit can be obtained at low costs.

Can a violation of investor trust lead to financial contagion in the market for tax-exempt hospital bonds?

Not-for-profit hospitals rely heavily on tax-exempt debt. Investor confidence in such instruments was shaken by the 1998 bankruptcy of the Allegheny Health and Education Research Foundation (AHERF), which was the largest U.S. not-for-profit failure up to that date and whose default was accompanied by claims of accounting irregularities. Such shocks can result in contagion whereby all hospitals are viewed as riskier. We test for the significance and duration of resulting contagion using an industry-specific model of interest cost determinants. Empirical tests indicate that contagion does occur, resulting in higher interest on new debt issues from other hospitals.

Poverty And Health Care Reform

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