A tale of four cities: Medicare reform and competitive pricing. (1/31)

The current payment system for Medicare + Choice (M + C) plans is based on prices calculated from administrative records. This system has been criticized as arbitrary, inefficient, and unfair. Most Medicare reform proposals would replace the current payment system with some form of competitive pricing. However, efforts over the past five years to demonstrate competitive pricing for M + C plans have been blocked repeatedly by Congress, even when the demonstrations were directly responsive to a congressional mandate. In the absence of political support, a demonstration of competitive pricing may be infeasible, and Congress could be forced to take the risky step of implementing broad Medicare reforms with very little information about their effects.  (+info)

Who really wants price competition in Medicare managed care? (2/31)

There is much policy talk about making Medicare more competitive, like private markets. But when reform proposals near implementation, local opponents of competition are often able to stop reform experiments. This paper reports on one recent example, the Competitive Pricing Advisory Committee, created by the 1997 Balanced Budget Act (BBA) to bring competitive bidding to Medicare + Choice plans. After design and site-selection choices were announced, members representing local interests were able to delay and perhaps kill competitive bidding before it could start, once again. A public report of this story may save future market-based Medicare reforms from a similar fate.  (+info)

Is premium support the right medicine for Medicare? (3/31)

This paper assesses the desirability of transforming Medicare into a premium-support system. I focus on three areas crucial to the future of Medicare: cost savings, beneficiary choice, and the stability of traditional Medicare. Based on my analysis of the Bipartisan Commission on the Future of Medicare plan, I find substantial problems with adopting premium support for Medicare. In particular, projections of premium-support savings are based on questionable assumptions that the slowdown in health spending during 1993-1997 can be sustained and extrapolated to future Medicare performance. Consequently, premium support may inadvertently destabilize public Medicare and erode beneficiary choice without achieving substantial savings.  (+info)

The health plan choices of retirees under managed competition. (4/31)

OBJECTIVE: To investigate the effect of price on the health insurance decisions of Medicare-eligible retirees in a managed competition setting. DATA SOURCE: The study is based on four years of administrative data from the University of California (UC) Retiree Health Benefits Program, which closely resembles the managed competition model upon which several leading Medicare reform proposals are based. STUDY DESIGN: A change in UC's premium contribution policy between 1993 and 1994 created a unique natural experiment for investigating the effect of price on retirees' health insurance decisions. This study consists of two related analyses. First, I estimate the effect of changes in out-of-pocket premiums between 1993 and 1994 on the decision to switch plans during open enrollment. Second, using data from 1993 to 1996, I examine the extent to which rising premiums for fee-for-service Medigap coverage increased HMO enrollment among Medicare-eligible UC retirees. PRINCIPLE FINDINGS: Price is a significant factor affecting the health plan decisions of Medicare-eligible UC retirees. However, these retirees are substantially less price sensitive than active UC employees and the non-elderly in other similar programs. This result is likely attributable to higher nonpecuniary switching costs facing older individuals. CONCLUSIONS: Although it is not clear exactly how price sensitive enrollees must be in order to generate price competition among health plans, the behavioral differences between retirees and active employees suggest that caution should be taken in extrapolating from research on the non-elderly to the Medicare program.  (+info)

Capitation and risk adjustment in health care financing: an international progress report. (5/31)

In every system of health care, capitation payments have become the accepted tool used by health care purchasers in much of the developed world to determine prospective budgets. The policy prescription of capitation is perceived to address both equity objectives (of great importance in publicly funded systems of health care) and efficiency objectives (the dominant concern in competitive insurance markets). An examination of the current state of the art in 20 countries outside the United States in which health care capitation has been implemented confirms that capitation has assumed central importance within diverse systems of health care. In practice, however, the setting of capitation payments has been heavily constrained to date by poor data availability and unsatisfactory analytic methodology.  (+info)

Confirmatory factor analysis of the Consumer Assessment of Health Plans Study (CAHPS) 1.0 Core Survey. (6/31)

The National Consumer Assessment of Health Plans Study (CAHPS) Benchmarking Database was used to assess the factor structure and invariance of the CAHPS 1.0 Core Survey. Separate analyses were conducted with Latino and non-Latino Caucasian consumers drawn from commercial and Medicaid sectors (N = 15,092). Results demonstrated that the 23 CAHPS 1.0 report items measure consumer reports of experiences with 5 aspects of health plan performance: Access to Care, Timeliness of Care, Provider Communication, Health Plan Consumer Service, and Office Staff Helpfulness. Four items assessed global ratings of care. Analyses revealed an identical pattern of fixed and free factor loadings across all samples. Magnitude of factor loadings and correlations among factors was essentially equivalent within a common health service sector. A higher order factor analysis revealed that rating and reports of care showed marked convergence.  (+info)

Will choice-based reform work for Medicare? Evidence from the Federal Employees Health Benefits Program. (7/31)

OBJECTIVE: . To examine the effect of premiums and benefits on the health plan choices of older enrollees who choose Federal Employees Health Benefits Program (FEHBP) health plans as their primary payer. DATA SOURCES: Administrative enrollment data from the Office of Personnel Management (OPM) and plan premiums and benefits data taken from the Checkbook Guide to health plans. STUDY DESIGN: We estimate individual plan choice models where the choice of health plan is a function of out-of-pocket premium, actuarial value, plan attributes, and individual characteristics. Plan attributes include plan structure (fee-for-service/preferred provider organization, point-of-service, or health maintenance organization), drug benefit structure, and whether or not the plan covers other types of spending such as dental services and diabetic supplies. The models are estimated by conditional logit. Our study focuses on three populations that currently choose FEHBP as their primary health care coverage and are similar to the Medicare population: current employees and retirees who are approaching the age of Medicare eligibility (ages 60-64) and current federal employees age 65+. Current employees age 65+ are eligible for Medicare, but their FEHBP plan is their primary payer. Retirees and employees 60-64 are not yet eligible for Medicare but are similar in many respects to recently age-eligible Medicare beneficiaries. We also estimate our model for current employees age 55 and younger as a comparison group. DATA COLLECTION METHODS: We select a random sample of retirees and employees age 60-64, as well as all current employees age 65+, from the OPM administrative database for the calendar year 2001. The plan choices available to each person are determined by the plans participating in their metropolitan statistical area. We match plan premium and attribute information from the Checkbook Guide to each plan in the enrollee's list of choices. PRINCIPAL FINDINGS: We find that current workers 65+, 60-64, and non-Medicare eligible retirees are sensitive to variation in plan premiums. The premium elasticities for these groups are similar in magnitude to those of the age 55 and under employee group. Older workers and retirees not yet eligible for Medicare are willing to pay a substantial amount for plans with open provider networks. The willingness to pay for open networks is significantly greater for these groups than for younger employees. Willingness to pay for open network plans varies significantly by income, but varies little by age within group. CONCLUSIONS: Our finding that older workers and non-Medicare eligible retirees are sensitive to plan premiums suggests that choice-based reform of Medicare would lead to cost-conscious choices by Medicare beneficiaries. However, our finding that these groups are willing to pay more for open network plans than younger employees suggest that higher risk individuals may migrate toward higher benefit, higher cost plans. Our findings on the relationship between income and willingness to pay for open network plans suggest that means testing is a viable reform for lowering Medicare program costs.  (+info)

Insuring Californians: a proposal that matters. (8/31)

The basic provisions of the proposal by George Halvorson and colleagues provide a realistic way for many states to afford coverage for their uninsured residents. In this commentary we suggest some modifications to achieve a more viable plan.  (+info)