Medical Care Prices Research Articles

The impact of the Mexico-San Diego border wall extension on spine injuries: a retrospective cohort review.

The recent San Diego-Mexico border wall height extension has resulted in an increased injury risk for unauthorized immigrants falling from greater heights. However, the effects of the border wall extension on frequency and morbidity of spinal injuries and related economic costs have yet to be highlighted. We retrospectively compared two cohorts who presented to the UC San Diego Health Trauma Center for border wall falls: pre-height extension (12 patients; January 2016-May 2018), and post-height extension (102 patients; January 2020-December 2021). Patients presented during border wall construction (June 2018-December 2019) were excluded. Demographics, clinical data and hospital costs were collected. Spinal injuries were normalized using Customs and Border Protection apprehensions. Costs were adjusted for inflation using the 2021 medical care price index. The increase in spine injuries per month (0.8-4.25) and operative spine injuries per month (0.3- 1.7) was statistically significant (P < 0.001). Increase in median length of stay from 6 [interquartile range (IQR) 2-7] to 9days (IQR 6-13) was statistically significant (P = 0.006). Median total hospital charges increased from $174 660 to $294 421 and was also significant (P < 0.001). The data support that the recent San Diego-Mexico border wall extension is correlated with more frequent, severe and costly spinal injuries. This current infrastructure should be re-evaluated as border-related injuries represent a humanitarian and public health crisis.

Are Medical Care Prices Still Declining? A Re‐Examination Based on Cost‐Effectiveness Studies

More than two decades ago, a well‐known study on heart attack treatments provided evidence suggesting that, when appropriately adjusted for quality, medical care prices were actually declining (Cutler, McClellan, Newhouse, and Remler (1998)). Our paper revisits this subject by leveraging estimates from more than 8000 cost‐effectiveness studies across a broad range of conditions and treatments. We find large quality‐adjusted price declines associated with treatment innovations. To incorporate these quality‐adjusted indexes into an aggregate measure of inflation, we combine an unadjusted medical‐care price index, quality‐adjusted price indexes from treatment innovations, and proxies for the diffusion rate of new technologies. In contrast to official statistics that suggest medical care prices increased by 0.53 percent per year relative to economy‐wide inflation from 2000 to 2017, we find that quality‐adjusted medical care prices declined by 1.33 percent per year over the same period.

Diaphragm pacing decreases hospital charges for patients with acute cervical spinal cord injury

BackgroundCervical spinal cord injury (CSCI) is devastating and costly. Previous research has demonstrated that diaphragm pacing (DPS) is safe and improves respiratory mechanics. This may decrease hospital stays, vent days,...

Preparing for higher inflation: Portfolio solutions using U.S. equities

AbstractInvestors have always been interested in reducing inflation risk in their portfolios. However, investors face different types of inflation than those measured by the Consumer Price Index (CPI). Moreover, different asset classes can be used to hedge portfolio inflation. In this paper, we show how individual equities can be used to construct equity portfolios sensitive to customized inflation targets. We illustrate portfolios for three types of inflation: US headline CPI, Forbes Cost of Living Extremely Well Index, and the US Medical Care Price Index. We also show how alternative weighting schemes, such as minimum volatility and maximum inflation beta, can be used to construct inflation‐hedged portfolios.

The Determinants and Variation of Nursing Home Private-Pay Prices: Organizational and Market Structure.

Nursing home (NH) care is arguably the most significant financial risk faced by the elderly without long-term care insurance or Medicaid coverage. Annual out-of-pocket expenditures for NH care can easily exceed $70,000. However, our understanding of private-pay prices is limited by data availability. Utilizing a unique data set on NH prices from 2005 through 2010 across eight states, we find that NH price growth has consistently outpaced growth in consumer and medical care prices. After adjusting for geographical and facility differences, for-profit chains charge the lowest prices, independently operated for-profit and nonprofit NHs have similar prices, and nonprofit chains charge the highest prices. Adjusted prices are also likely to be higher when NHs have higher occupancy rates and markets are more concentrated. The significant differences in price across organizational and market structures suggest private-pay prices can be an important factor when evaluating and comparing the value of NH care.

INSURANCE‐INDUCED MORAL HAZARD: A DYNAMIC MODEL OF WITHIN‐YEAR MEDICAL CARE DECISION MAKING UNDER UNCERTAINTY

AbstractThis study quantifies the moral hazard effect of health insurance on medical expenditure by estimating a dynamic model of within‐year medical care consumption that allows for insurance selection, endogenous health transitions, and individual uncertainty about medical care prices in an environment where insurance has nonlinear cost‐sharing features. The results suggest that moral hazard accounts for 53.1%, on average, of total annual medical expenditure when insured. This estimate is significantly different, and generally larger, than that produced by an alternative model that is representative of the annual medical care decision‐making models commonly found in the literature.

CS4 - Alzheimer’s Attributable Costs in the United States: A Secondary Analysis of Medical Expenditure Panel Survey 2011-2015

Alzheimer’s disease is the 6th leading cause of death in the United States and the 5th leading cause of death among people older than 65 years of age. As of 2017, almost 5.5 million people are living with Alzheimer’s dementia. Given such high prevalence and a rapid rise in the incidence rate the Alzheimer’s associated expenditure has been increasing significantly over the years. This study aims to calculate the health care cost attributable to Alzheimer’s disease using household and medical condition files of Medical Expenditure Panel Survey (MEPS), 2011-2015. MEPS datasets were merged for each corresponding year. Propensity score matching technique was used to match control group based on the variables age, sex, race, region, family income, marital status and comorbidity (using Charlson Index). Generalized linear model(GLM) with log link and gamma family was fitted for each year data. Differences between the estimated average cost of Alzheimer’s disease and the non-Alzheimer’s group was calculated to determine cost attributable to Alzheimer’s disease. Using the Medical Care Price Index costs for all year were converted to 2015 dollars to analyze the trend in Alzheimer’s attributable cost. The total cost attributable to Alzheimer’s disease incurred by the nation was calculated using the prevalence of Alzheimer’s Disease. The lowest Alzheimer’s attributable cost was reported in 2011 which was 11185$ for a single patient whereas, the highest cost was reported in 2013, 23290$ in 2015 dollars. The lowest national expenditure attributable to Alzheimer’s disease was in 2011 (60 Billion Dollar) and highest expenditure was in 2015 (121.2 billion). The results indicate that Alzheimer’s disease is a potent cost driver of the US healthcare system. This is high time to formulate and implement policies directed towards cost containing strategies to manage Alzheimer’s disease without reducing the quality of care.

What does a Deductible Do? The Impact of Cost-Sharing on Health Care Prices, Quantities, and Spending Dynamics*

Abstract Measuring consumer responsiveness to medical care prices is a central issue in health economics and a key ingredient in the optimal design and regulation of health insurance markets. We leverage a natural experiment at a large self-insured firm that required all of its employees to switch from an insurance plan that provided free health care to a nonlinear, high-deductible plan. The switch caused a spending reduction between 11.8% and 13.8% of total firm-wide health spending. We decompose this spending reduction into the components of (i) consumer price shopping, (ii) quantity reductions, and (iii) quantity substitutions and find that spending reductions are entirely due to outright reductions in quantity. We find no evidence of consumers learning to price shop after two years in high-deductible coverage. Consumers reduce quantities across the spectrum of health care services, including potentially valuable care (e.g., preventive services) and potentially wasteful care (e.g., imaging services). To better understand these changes, we study how consumers respond to the complex structure of the high-deductible contract. Consumers respond heavily to spot prices at the time of care, reducing their spending by 42% when under the deductible, conditional on their true expected end-of-year price and their prior year end-of-year marginal price. There is no evidence of learning to respond to the true shadow price in the second year post-switch.

Does It Pay to Know Prices in Health Care?

Consumers rarely know the price of medical care before they consume it. I use variation in the timing of access to a new source of price information to show how access to and search for price information leads consumers to pay significantly less for care. I provide suggestive evidence that insurance coverage inhibits the use of price information, rationalizing the relatively low rates of search. The results indicate that availability of price information could have large impacts on prices even in the absence of general equilibrium effects. (JEL D82, D83, G22, I11, I13)

Revisiting Inflation and Individual Equities

This paper reexamines the inflation-hedging properties of individual equities. When determining inflation betas for individual equities we use multivariate regressions, which utilize all available data and account for equity market factor and reporting lags in inflation indices. We show how such an approach can even be used to create inflation-sensitive strategies for customized inflation indices. The facet of customization is necessary since different kinds of inflation impact different investors. For example, in retirement an investor is more concerned about medical expenses. We illustrate strategies for the US headline CPI, Forbes Cost of Living Extremely Well Index (CLEWI), and the US Medical Care Price Index. When constructing inflation-sensitive portfolios, besides using equally weighting scheme, we show how alternative weighting schemes can be used alongside the choice of inflation sensitive equities to accentuate inflation sensitivity, by using maximum beta optimization or to manage equity risk exposure — low volatility and equity beta as result of using minimum volatility optimization.

Insurance-Induced Moral Hazard: A Dynamic Model of Within-Year Medical Care Decision Making Under Uncertainty

Existing studies estimate health insurance-induced increases in medical care expenditure by examining medical care decisions that are aggregated to the annual level. Using employer-employee matched data from the Medical Expenditure Panel Survey, I quantify the moral hazard effect of insurance on medical care expenditure by estimating a dynamic model of within-year medical care consumption that allows for insurance selection, endogenous health transitions, and individual uncertainty about medical care prices in an environment where insurance has non-linear cost-sharing features. The results suggest that the additional consumption induced by moral hazard amounts to 53.1 percent, on average, of total annual medical care expenditure when insured. In order to understand the relationship between the dynamic features of the model and the estimated moral hazard effects, I estimate a second model that is representative of the annual decision-making models found in the literature. The within-year decision-making model produces a moral hazard effect that is significantly different, and generally larger, than the alternative model. To illustrate the importance of the within-year decision-making model, I quantify the welfare and spending implications of health insurance alternative sets with more and less generous options.

INDIVIDUAL WELFARE WHEN CONSUMERS CAN SHOP FOR HEALTH INSURANCE

The statewide system of health insurance exchanges established by the Affordable Care Act (ACA) of 2010 will allow millions of U.S. citizens to change their health care policies more easily than they can switch automobile or homeowner insurance coverages, because deniability based on prior claim history is illegal. Focusing on this consumer endogeneity of health insurance policy choice, we examine the individual moral hazard welfare implications of a reduction in the price of medical care, which is a potential consequence of the ACA. We show that endogenous policy choice plays a key role in determining the welfare outcome. While moral hazard welfare improvement is not precluded, a distinctly possible outcome is that the consumer revises his/her choice of insurance policy so as to retain some portion of the reduction in expenditure risk caused by the medical care price decrease. In this event, moral hazard welfare loss is higher than it was before the price decrease, although the increased loss is tempered by the endogenous contract choice effect. This result resuscitates an old conventional wisdom. (JEL I11, I13, I30)

Price Increases Were Much Lower In Ambulatory Surgery Centers Than Hospital Outpatient Departments In 2007-12.

Ambulatory surgery centers (ASCs) are freestanding facilities that provide services to patients who do not require an overnight stay. The number of ASCs has grown rapidly over the past fifteen years, as have the number of surgical procedures performed at them. ASCs now compete with hospital outpatient departments. This study examined the revenue side of ASC growth by using a large national claims database that contains information on actual prices paid. For six common outpatient surgical procedures, prices paid to ASCs on the whole grew in line with general medical care prices, while overall prices paid to hospital outpatient departments for the same procedures climbed sharply. This provides no evidence that ASCs are successfully pressuring hospital outpatient departments to lower their prices. Not unexpectedly, private insurers paid ASCs considerably more than Medicare paid ASCs for the same procedures. Medicare currently pays ASCs a legislated percentage of what it pays hospital outpatient departments for the same services, but there is a considerable discrepancy between this ratio and the ratio of payments by private insurers across provider types and procedures. This finding questions the wisdom of using a single ratio for ASC payments to hospital outpatient department payments.

Does hospital competition improve health care delivery in China?

This paper analyzes whether hospital competition is associated with improved health care delivery in China, particularly in the dimensions of health care quality and cost. We explore the differences in competition over time and across regions to examine the relationship in an environment wherein the hospital industry is largely state owned, the price of medical care is partially regulated, and hospitals can compete on both quality and cost. Using provincial- and individual-level data, along with a set of outcome indicators, we find that hospital competition is significantly correlated with lower observation room mortality, shorter outpatient waiting time, and fewer outpatient costs, while we do not find evidence that would suggest negative influences of competition on the other measures of hospital performance. Our results offer new evidence in support of competition-based reforms in China's health care sector and provide implications for other developing countries facing similar health care challenges.

Is the United States in the middle of a healthcare bubble?

This study investigates the possibility of multiple healthcare bubbles in the US healthcare market. We first applied the newly developed Generalized Sup ADF test to locate multiple healthcare bubble episodes and then estimated the switching regression model specifying multiple healthcare bubble periods to evaluate to what extent macroeconomic variables (such as the interest rate, public debt, and fiscal deficit) and public financing healthcare programs influence the magnitude of healthcare bubbles in terms of the deviation of the medical care price inflation from either the overall price inflation or the money wage growth. Our results show that expansionary monetary and fiscal policies play important roles in determining the deviation of the medical care price inflation from the overall price inflation and that the net government debt has a positive impact on the deviation of the medical care price inflation from the money wage growth. The US healthcare market is now in the middle of a healthcare bubble, and this healthcare bubble has developed slowly and has lasted for approximately 3 decades, mirroring an increased societal preference for healthcare. Policymakers in the US should cautiously consider the fact that healthcare bubbles must imply a misallocation of resources into healthcare, leading to negative consequences on the sustainability of the healthcare system.

Sticker shock and the price of new therapies for hepatitis C: Is it worth it?

Sticker shock and the price of new therapies for hepatitis C: Is it worth it?

How Might the Affordable Care Act's Coverage Expansion Provisions Influence Demand for Medical Care?

The Affordable Care Act (ACA) is predicted to expand health insurance to 25 million individuals. Since insurance reduces the price of medical care, the quantity of services demanded by these newly covered individuals is expected to rise. In this article I provide a comprehensive picture of the demographics, health status, and medical care utilization of the population targeted for the ACA's expansion of coverage, contrasted with that of other nonelderly, insured populations. In addition, I synthesize the current evidence regarding the causal impact of insurance on medical care demand, drawing heavily on recent evidence from Massachusetts and Oregon. Using the 2008 to 2010 Medical Expenditure Panel Survey, I conducted bivariate and multivariate analyses to examine differences between the ACA target population and other insured groups. I used the results from the descriptive analysis and quasi-experimental literature to generate "back of the envelope" estimates of the potential impact of the coverage expansion on total medical care utilization by the noninstitutionalized US population. Comparisons of the potential ACA target population with the privately and publicly insured reveal that the former is younger and more likely to be male. The ACA target population, and particularly the uninsured with incomes under 200% of the federal poverty line, reports lower rates of several medical conditions relative to those of the privately and publicly insured. Future changes in rates of inpatient hospitalization and ED use among the newly insured could vary widely, based on descriptive findings and inferences from the quasi-experimental literature. Results also suggest moderate increases in ambulatory care. Total increases in overall demand for medical care by the newly insured comprise a modest proportion of the aggregate utilization. With the expected increases in utilization resulting from the coverage expansion, stakeholders will need to monitor local health care delivery system capacity and respond where needed with policy- and/or market-based innovations.

Medical Care Price Indexes for Patients with Employer‐Provided Insurance: Nationally Representative Estimates from MarketScan Data

Commonly observed shifts in the utilization of medical care services to treat diseases may pose problems for official price indexes at the Bureau of Labor Statistics (BLS) that do not account for service shifts. We examine how these shifts may lead to different price estimates than those observed in official price statistics at the BLS. We use a convenience sample of enrollees with employer-provided insurance from the MarketScan database for the years 2003 to 2007. Population weights that consider the age, sex, and geographic distribution of enrollees are assigned to construct representative estimates. We compare two types of price indexes: (1) a Service Price Index (SPI) that is similar to the BLS index, which holds services fixed and measures the prices of the underlying treatments; (2) a Medical Care Expenditure Index (MCE) that measures the cost of treating diseases and allows for utilization shifts. Over the entire period of study the CAGR of the SPI grows 0.7 percentage points faster than the preferred MCE index. Our findings suggest that the health component of inflation may be overstated by 0.7 percentage points per year, and real GDP growth may be understated by a similar amount. However, more work may be necessary to precisely replicate the indexes of the BLS to obtain a more accurate measure of these price differences.

Conduction Mechanism of Medical Service with Environmental Factors: A Nonparametric Approach

Reasonable adjustment of medical service price is of critical importance and remains puzzled in health reform in China. Previous literatures only present qualitative suggestions or implement quantitative analysis from the perspective of price adjustment itself. Innovatively, the research establishes a conduction mechanism measurement of medical care price from the perspective of joint investigation of other environmental factors through the bridge of production efficiency in complex reform. The conduction mechanism is identified by conduction style and conduction effect with the monthly data of 16 provincial public hospitals in Zhejiang Province during 200701-201107. First, the main conduction style is labor input during 201006-201107. Second, different environment factors exert different roles on conduction style. (1) Both personal expenditures and governmental fiscal inputs promote the production efficiency of labor input, with the conduction strengths reaching 2.55% and 16.58%. (2) Running cost and health price index hardly promote the production efficiency of labor input, with conduction strengths reaching -1.33% and -1.94%. (3) Jointly, the four environmental factors exert positive impact on production efficiency of labor input overall, with conduction strength reaching 12.48%, which presents strongly evidence that government should raise medical service price so as to adjust the price distortion due to different environmental factors.

Forecasting medical cost inflation rates: A model comparison approach

Due to healthcare costs rising faster than overall cost of living, decision makers (i.e., households, businesses, and governments) must cut back on healthcare utilization or spending elsewhere to be fiscally responsible. Accurate forecasts of future medical costs are critical for efficient planning, budgeting and operating decisions at all levels. This research compares the accuracy of the linear autoregressive moving average (ARMA) model and the nonlinear neural network model in producing forecasts of medical cost inflation rates. The analysis focuses on twelve monthly measures of medical costs including the overall medical care price index and eleven (disaggregated) subsectors of medical costs. In addition to standard symmetric measures of forecast accuracy, we utilize two asymmetric error measures designed to capture and penalize preferences for under- and overprediction in model selection. The findings indicate that the neural network model outperforms the univariate ARMA in both 1-step and 12-step ahead forecasts. A number of important practical implications are discussed, such as the use of accurate forecasts in contract negotiations, budgeting and planning.