Welfare gains from user charges for government health services.
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The World Bank's Financing health services in developing countries emphasizes demand-side issues--highlighting user fees, insurance, and the private sector as tools for strengthening the health sector. That approach is a major departure from the focus on the supply side--public sector spending, costs, management, and efficiency--that has dominated the international health finance agenda for many years. An important set of empirical papers by Paul Gertler and his co-authors coincided with the release of the policy paper. Gertler's work has questioned a policy of greater dependence on user fees by emphasizing the potential welfare costs to consumers of higher fees for medical services. Many health professionals have adopted the jargon of this new approach without understanding the underlying analysis. This article attempts to demystify the debate that has ensued by illustrating economists' idiosyncratic approach to welfare, explaining how the policy paper and Gertler differ, and suggesting alternative approaches to testing the feasibility of the policy paper's prescriptions. (+info)
The lessons of user fee experience in Africa.
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This paper reviews the experience of implementing user fees in Africa. It describes the two main approaches to implementing user fees that have been applied in African countries, the standard and the Bamako Initiative models, and their common objectives. It summarizes the evidence concerning the impact of fees on equity, efficiency and system sustainability (as opposed to financial sustainability), and the key bottlenecks to their effective implementation. On the basis of this evidence it then draws out three main sets of lessons, focusing on: where and when to implement fees; how to enhance the impact of fees on their objectives; and how to strengthen the process of implementation. If introduced by themselves, fees are unlikely to achieve equity, efficiency or sustainability objectives. They should, therefore, be seen as only one element in a broader health care financing package that should include some form of risk-sharing. This financing package is important in limiting the potential equity dangers clearly associated with fees. There is a greater potential role for fees within hospitals rather than primary facilities. Achievement of equity, efficiency and, in particular, sustainability will also require the implementation of complementary interventions to develop the skills, systems and mechanisms of accountability critical to ensure effective implementation. Finally, the process of policy development and implementation is itself an important influence over effective implementation. (+info)
User fees, self-selection and the poor in Bangladesh.
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The widespread uncontrolled introduction of user fees in any developing country is likely to have a disastrous impact on poorer patients. Furthermore, traditional targeting schemes aimed at their exemption are often expensive, difficult to administer and ineffective at reaching those in greatest need. This research study examines how user fees can raise revenue and target poorer patients, under the right market conditions, without resorting to costly targeting schemes. The authors draw their findings from case studies of cost recovery in the health and population sectors in Bangladesh. The mechanism suggested in the paper is to use self-selection. It is argued that under certain market conditions poorer patients will choose the health-care option that is appropriate to their means. They will thus identify themselves as poor without having to be selected or tested by an independent authority. This self-selection allows the relevant authorities to cross-subsidize their market choice by over-charging the non-poor in other segments of the market. (+info)
Differences in costs of treatment for foot problems between podiatrists and orthopedic surgeons.
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We examined charge data for health insurance claims paid in 1992 for persons under age 65 covered by a large California managed care plan. Charge and utilization comparisons between podiatrists and orthopedic surgeons were made for all foot care and for two specific foot problems, acquired toe deformities and bunions. Podiatrists provided over 59% of foot care services for this commercial population of 576,000 people. Podiatrists charged 12% less per individual service than orthopedists. However, podiatrists performed substantially more procedures per episode of care and treated patients for longer time periods, resulting in 43% higher total charges per episode. Hospitalization was infrequent for all providers, although podiatrists had the lowest rates. In a managed care setting in which all providers must adhere to a preestablished fee schedule, regardless of specialty, the higher utilization by podiatrists should lead to higher overall costs. In some cases, strong utilization controls could offset this effect. We do not know if the utilization difference is due to actual treatment or billing differences. Further, we were unable to determine from the claims data if one specialty had better outcomes than the other. (+info)
Determinants of resource utilization in the treatment of brain arteriovenous malformations.
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BACKGROUND AND PURPOSE: Preoperative embolization of arteriovenous malformations (AVMs) is thought to improve outcome following surgical resection of these lesions. The purpose of this study was to examine the cost associated with preoperative embolization and different surgical risk categories in the surgical treatment of brain AVMs. METHODS: In a review of 126 patients treated surgically for resection of AVMs, we noted the total days spent in the hospital and calculated the associated costs (from hospital and estimated professional fees). Surgical risk category was determined using the Spetzler-Martin grading system. We examined the effect of risk category, preoperative embolization, and outcome (Rankin score) on cost and inpatient days. RESULTS: Preoperative embolization and greater surgical risk were independently associated with higher total costs. Average adjusted cost for embolization and surgery was $78,400 +/- $4,900 versus $49,300 +/- $5,800 for surgery alone. Patients ranged in preoperative risk category from Spetzler-Martin grades II through V, with an average increase of $20,100 in total cost per Spetzler-Martin grade (95% CI, $13,500 to $28,100). Higher surgical risk category was also associated with more days spent in hospital, with an average increase of 6 days per increment in Spetzler-Martin grade (95% CI, 4 to 8). After surgical resection of an AVM, new neurologic deficits were associated with large differences in cost: $68,500 +/- $6,100 and 15 +/- 2 days in hospital for patients who were neurologically worse after surgery, versus $44,700 +/- $3,900 and 10 +/- 1 days for patients who were unchanged. CONCLUSION: Preoperative embolization in the treatment of AVMs is associated with higher cost but not more days in the hospital. Patients with higher Spetzler-Martin grade AVMs utilize more hospital resources, in part because they have poorer neurologic outcome, and postoperative deficits are associated with higher costs and more days in the hospital. (+info)
The effect of longevity on spending for acute and long-term care.
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BACKGROUND: The proportion of the population made up of elderly persons in the United States is projected to increase from 13 percent of the population in 2000 to 20 percent by 2030. The implications for health care expenditures may be profound, because elderly persons use health care services at a greater rate than younger persons. We estimated total expenditures for acute and long-term care from the age of 65 years until death and in the last two years of life. METHODS: We combined data from Medicare, the National Mortality Followback Survey, and the National Medical Expenditure Survey to estimate total national expenditures for health care according to the age at death. We also simulated expenditures with the use of projected demographic characteristics of two cohorts: people turning 65 in 2000 and those turning 65 in 2015. RESULTS: Total expenditures (in 1996 dollars) from the age of 65 years until death increase substantially with longevity, from $31,181 for persons who die at the age of 65 years to more than $200,000 for those who die at the age of 90, in part because of steep increases in nursing home expenditures for very old persons. Spending in the last two years of life also increases with longevity, but a reduction in Medicare expenditures ($37,000 for persons who die at the age of 75 years and $21,000 for those who die at the age of 95) moderates the effect of the increase in nursing home expenditures ($6,000 for those who die at the age of 75 years and $32,000 for those who die at the age of 95). Health care spending for women is consistently higher than that for men, after adjustment for the increased longevity of women. Simulations show that increased longevity after the age of 65 years has a relatively small effect on the anticipated increase in spending, especially for services covered by Medicare, from 2000 to 2015. The effects of the larger number of people born in 1950 than in 1935 and the larger number of people surviving to the age of 65 years are much more important. CONCLUSIONS: In the United States, the effect of longevity on expenditures for acute care differs from its effect on expenditures for long-term care. Acute care expenditures, principally for hospital care and physicians' services, increase at a reduced rate as the age at death increases, whereas expenditures for long-term care increase at an accelerated rate. Increases in longevity after the age of 65 years may result in greater spending for long-term care, but the increase in the number of elderly persons has a more important effect on total spending. (+info)
The Chinese experience of hospital price regulation.
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This paper analyzes the distortion effects of the hospital pricing policies in China. To help maintain equitable access to hospital services, the Chinese government regulates prices of hospital services, and provides subsidies to public hospitals. Comparing the regulated fees of selected hospital services with their average unit costs indicates that the average cost-recovery rate of the fees is only 50%. The fees for 90% of the services are less than their average unit costs, while the fees for the high-tech services exceed their costs. Moreover, the State Price Commission allowed a drug profit margin of 15-20% over the wholesale price. The distorted fee schedule affects the behaviour of hospitals. Empirical evidence revealed problems of violation of price regulations (charging a fee exceeding the regulated fee), over-provision of profitable high-tech services and over-prescription of drugs. The Chinese experience shows that low regulated fees cannot reduce the economic burden on patients, and that distorted medical fees can result in distorted service provision and low efficiency of medical resources. Strategies to correct for the price distortions are discussed. (+info)
Paying for informed consent.
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The Japanese Ministry of Health and Welfare has implemented a policy of paying physicians to explain the nature of the patient's medical condition and the treatment plan. We describe the precepts of this policy and examine ethical dimensions of this development. We question whether this policy will be sufficient to ensure patients will have the opportunity to become informed participants in medical decision making. The policy also raises a broader philosophical question as to whether informed consent is a fundamental ethical requirement of all doctor-patient encounters or an option that can be exercised by physicians for financial gain. The impact of this policy in Japan merits continued observation from abroad. (+info)