American health policy: cracks in the foundation

Much American health policy over the past thirty-five years has focused on reducing the additional health care that is consumed when a person becomes insured, that is, reducing moral hazard. According to conventional theory, all of moral hazard represents a welfare loss to society because its cost exceeds its value. Empirical support for this theory has been provided by the RAND Health Insurance Experiment, which found that moral hazard--even moral hazard in the form of effective and appropriate hospital procedures--could be reduced substantially using cost-sharing policies with little or no measurable effect on health. This article critically analyzes these two cornerstones of American health policy. It holds that a large portion of moral hazard actually represents health care that ill consumers would not otherwise have access to without the income that is transferred to them through insurance. This portion of moral hazard is efficient and generates a welfare gain. Further, it holds that the RAND experiment's finding (that health care could be reduced substantially with little or no effect on health) may actually be caused by the large number of participants who voluntarily dropped out of the cost-sharing arms of the experiment. Indeed, almost all of the reduction in hospital use in the cost-sharing plans could be attributed to this voluntary attrition. If so, the RAND finding that cost sharing could reduce health care utilization, especially utilization in the form of effective and appropriate hospital procedures, with no appreciable effect on health is spurious. The article concludes by observing that the preoccupation with moral hazard is misplaced and has worked to obscure policies that would better reduce health care expenditures. It has also led us away from policies that would extend insurance coverage to the uninsured.     

Health care financing among the elderly: who really pays the bills?

This paper investigates the issue of who pays the health care bills of the elderly by considering the types of subsidized health insurance protection enjoyed by the noninstitutionalized elderly and the way that increased Medicare cost-sharing efforts in the 1980s are affecting those without additional health insurance subsidies. In making this examination we estimate the out-of-pocket health care expenditures of the elderly either directly or as nonsubsidized medigap premiums by income level, taking into account four types of health insurance subsidies received by elderly persons: Medicare, Medicaid, Veterans Administration health care, and subsidized health insurance from either current or former employers. We find that increased cost sharing is likely to fall most heavily on those elderly least likely to afford it: the poor and near-poor elderly who have only Medicare as a health insurance subsidy, particularly those who are older and sicker and who use Medicare services more heavily. These persons are caught between well-intentioned federal cost-cutting efforts and the often confusing panoply of health insurance programs for the aged, and they will bear an inequitably large portion of any future Medicare cost-sharing initiatives.     

Medicaid program; Medicaid managed care. Health Care Financing Administration (HCFA), HHS. Final rule with comment period

This final rule with comment period amends the Medicaid regulations to implement provisions of the Balanced Budget Act of 1997 (BBA) that allow the States greater flexibility by permitting them to amend their State plan to require certain categories of Medicaid beneficiaries to enroll in managed care entities without obtaining waivers if beneficiary choice is provided; establish new beneficiary protections in areas such as quality assurance, grievance rights, and coverage of emergency services; eliminate certain requirements viewed by State agencies as impediments to the growth of managed care programs, such as the enrollment composition requirement, the right to disenroll without cause at any time, and the prohibition against enrollee cost-sharing. In addition, this final rule expands on regulatory beneficiary protections provided to enrollees of prepaid health plans (PHPs) by requiring that PHPs comply with specified BBA requirements that would not otherwise apply to PHPs.     

Medicaid program; Medicaid managed care--HCFA. Proposed rule

This proposed rule would amend the Medicaid regulations to allow the States greater flexibility by giving them the option to require Medicaid recipients to enroll in managed care entities without obtaining waivers. These revisions, which are authorized by the Balanced Budget Act of 1997, would establish new beneficiary protections in areas such as quality assurance, grievance rights, and coverage of emergency services. They would eliminate certain requirements viewed by State agencies as impediments to the growth of managed care programs, such as the enrollment composition requirement, the right to disenroll without cause at any time, and the prohibition against enrollee cost-sharing. They would also permit State agencies to amend their State plans to require enrollment in managed care organizations subject to certain conditions, including limits on whose enrollment can be mandated, and a requirement for beneficiary choice. In addition, this rule would extend most of these new requirements to prepaid health plans.     

Medicare program; inpatient hospital deductible and coinsurance and skilled nursing facility coinsurance for 1990--HCFA. Notice

This notice announces that the inpatient hospital deductible for calendar year 1990 under Medicare's hospital insurance program (part A) remains the same as announced on September 29, 1989 at 54 FR 40205. However, the repeal of the Medicare Catastrophic Coverage Act of 1988 by the Medicare Catastrophic Coverage Repeal Act of 1989 restored 1988 part A coverage and cost-sharing rules, including the benefit period provisions, coinsurance charges, and the three-day prior hospitalization requirement for skilled nursing facility (SNF) care. Because the Part A catastrophic benefits under the Medicare Catastrophic Coverage Act of 1988 were in effect in 1989, the Medicare Catastrophic Coverage Repeal Act of 1989 included several provisions that apply to beneficiaries who were inpatients of hospitals or SNFs both at the end of 1989 and the beginning of 1990.     

The consequences of respondent attrition in panel studies: A simulation based on the Rochester youth development study

Subject attrition is a potentially serious threat to the validity of inferences drawn from panel studies of delinquency and drug use. Prior assessments of this issue produce somewhat conflicting results, with some finding that respondents who leave the panel have higher rates of delinquency and drug use than those who remain, while other studies report little or no differential attrition. Despite these findings, there has been virtually no examination of the extent to which respondent attrition can bias substantive findings in panel studies of delinquency and drug use. The present article addresses this issue by simulating higher levels of attrition in an ongoing panel study that has a low rate of attrition and little differential attrition. It finds that failure to include more elusive respondents (those who are more mobile) would bias estimates of prevalence and frequency of delinquency and drug use as well as results from basic regression analyses. Failure to include less cooperative respondents (those who require more contacts) produces similar, but somewhat smaller, differences. The methodological implications of the results are discussed.     

Health and occupational consequences of spouse abuse victimization among male U.S. Army soldiers

Little is known about health and occupational outcomes of male spouse abuse victims. In all, 11,294 male spouse abuse victims with a history of spouse abuse perpetration, 3,277 victims without prior spouse abuse perpetration, and 72,855 nonvictims and nonperpetrators were followed for 12 years to assess army attrition and hospitalization risk. In multivariate Cox models controlling for age, race, education, rank, service time, and dependents, victims were at significantly greater risk for early army discharge and hospitalization than were nonvictims- particularly hospitalizations for depression, alcohol dependence, and mental health-even when the hospitalization occurred years after the abuse event. Victim-perpetrators had greater risk than did victim-nonperpetrators for both attrition (1.13, 95% confidence interval [CI] = 1.08-1.18; 1.05, 95% CI = 1.02-1.08, respectively) and hospitalizations (1.45, 95% CI = 1.38-1.52; 1.38, 95% CI = 1.27-1.49, respectively). College education was protective and deserves further inquiry. Male victims need greater support following spouse abuse.     

Medicare program; payment to health maintenance organizations and competitive medical plans--HCFA. Final rules with comment period

These regulations implement section 114 of the Tax Equity and Fiscal Responsibility Act of 1982 by authorizing Medicare reimbursement for health care services to eligible health maintenance organizations (HMOs) and competitive medical plans (CMPs) on a prospective basis for those entities that have a risk contract or on a reasonable cost basis for those that have a cost contract. The regulations set forth the requirements that an entity must meet in order to be: Eligible to enter into a Medicare contract (either risk or reasonable cost) as an eligible organization; and Reimbursed by Medicare on a capitation basis (either prospectively or retrospectively) for items and services furnished to Medicare enrollees. In addition, these regulations implement sections 2322 and 2350 (b) and (c) of Pub. L. 98-369 (Deficit Reduction Act of 1984), which further amended the Social Security Act concerning payments to HMOs and CMPs.     

The ethics of the affordability of health insurance

In this essay we argue that the concept of affordable health insurance is rooted in a social obligation to protect fair equality of opportunity. Specifically, health insurance plays a limited but significant role in protecting opportunity in two ways: it helps keep people functioning normally and it protects their financial security. Together these benefits enable household members to exercise reasonable choices about their plans of life. To achieve truly affordable coverage, society must be able to contain the overall cost of health care, and health insurance must be progressively financed, meaning that those who are best able to pay for coverage should pay the largest share. While the recently passed Patient Protection and Affordable Care Act (ACA) falls short on both of these counts, we argue that it makes important contributions toward household affordability through the use of subsidies and regulations. The main shortcoming of the ACA is an insufficient protection against burdensome cost sharing, which we illustrate using several hypothetical scenarios. We conclude with recommendations about how to make opportunity-enhancing expansions to the current coverage subsidies.     

Standards for privacy of individually identifiable health information. Office of the Assistant Secretary for Planning and Evaluation, DHHS. Proposed rule

This rule proposes standards to protect the privacy of individually identifiable health information maintained or transmitted in connection with certain administrative and financial transactions. The rules proposed below, which would apply to health plans, health care clearinghouses, and certain health care providers, propose standards with respect to the rights individuals who are the subject of this information should have, procedures for the exercise of those rights, and the authorized and required uses and disclosures of this information. The use of these standards would improve the efficiency and effectiveness of public and private health programs and health care services by providing enhanced protections for individually identifiable health information. These protections would begin to address growing public concerns that advances in electronic technology in the health care industry are resulting, or may result, in a substantial erosion of the privacy surrounding individually identifiable health information maintained by health care providers, health plans and their administrative contractors. This rule would implement the privacy requirements of the Administrative Simplification subtitle of the Health Insurance Portability and Accountability Act of 1996.     

Civilian Health and Medical Program of the Uniformed Services (CHAMPUS); partial hospitalization--DoD. Final rule

This final rule establishes a CHAMPUS benefit for partial hospitalization and makes corrections and clarifications on other mental health issues resulting from implementation of recent legislative changes. The partial hospitalization benefit is being added at the request of Congress to improve the availability of mental health services under CHAMPUS. The intent is to provide a needed service at a lower cost than the full hospitalization rate, and allow more efficient use of resources for needed mental health care. Facilities must be certified and enter into a participation agreement with CHAMPUS and obtain the required preauthorization prior to admitting CHAMPUS patients. Applications for facility approval may be obtained from the Director, OCHAMPUS, or a designee.     

Civilian Health and Medical Program of the Uniformed Services (CHAMPUS); program for persons with disabilities; basic program--DoD. Final rule

This final rule simplifies the administration of benefits under the CHAMPUS Program for the Handicapped (PFTH) and changes the name of this benefit to Program for Persons with Disabilities (PFPWD); adds occupational therapists in independent practice to the list of authorized individual professional providers; provides criteria for cost-sharing certain procedures when data is transferred electronically from the patient's home to a medical practitioner; defines and limits plans recognized as supplemental insurance under CHAMPUS; and adopts the Federal Claims Collection Act and the Federal Claims Collection Standards by reference.     

Will physician unions improve health system performance?

In the public debate over the extension of collective bargaining rights to independent physicians, union proponents' primary argument has been that patients would benefit from allowing physicians to bargain collectively with health plans. This article examines the likely effects of physician unions on the U.S. health care system. Specifically considered are likely effects on economic efficiency, quality, access, and cost. Under none of these criteria are physician unions likely to improve health system performance, particularly when compared with available alternative strategies for dealing with problems identified by union proponents.     

Patient rights meet managed care: understanding the underlying conflicts

During the past several years, one of the favored areas for legislative (and editorial) debate in our Nation has been the proper level of legal protections that should be accorded to those individuals who have chosen to become members of managed care plans. As examined in the following article, this debate often rages with little notice being paid to the underlying conflicts between managed care and "patient's rights." Indeed, at times, the vociferousness of the debate obscures even those instances in which there is little fundamental conflict.