March 4, 2015
The health economics literature contains two models of selection, one with endogenous plan characteristics to attract good risks and one with fixed plan characteristics; neither model contains a regulator. Medicare Advantage, a principal example of selection in the literature, is, however, subject to anti-selection regulations. Because selection causes economic inefficiency and because the historically favorable selection into Medicare Advantage plans increased government cost, the effectiveness of the anti-selection regulations is an important policy question, especially since the Medicare Advantage program has grown to comprise 30 percent of Medicare beneficiaries. Moreover, similar anti-selection regulations are being used in health insurance exchanges for those under 65.
Contrary to earlier work, we show that the strengthened anti-selection regulations that Medicare introduced starting in 2004 markedly reduced government overpayment attributable to favorable selection in Medicare Advantage. At least some of the remaining selection is plausibly related to fixed plan characteristics of Traditional Medicare versus Medicare Advantage rather than changed selection strategies by Medicare Advantage plans.
via MIT Press Journals – American Journal of Health Economics – Abstract.
February 24, 2015
Sometime next year Social Security’s $150 billion disability-insurance program will become insolvent. The program, which offers income supplements to those who cannot work full time due to physical or mental disabilities, has buckled as the number of beneficiaries has soared to more than 11 million in 2014, from 3.8 million in 1984. The bipartisan Social Security Advisory Board has urged reforms.
Yet the Obama administration’s 2016 budget proposes the opposite of reform: an unconditional transfer of revenues from Social Security’s retirement program. The president’s proposal will likely be blocked thanks to a House budget rule that forbids unconditional revenue transfers. The question now is: Will serious reform be a reality under President Obama?
Americans today are about as likely as those in the past to report that they have a work-limiting disability, according to Census Bureau data. For instance, 5.6% of Americans ages 35-44 reported having a work-limiting disability in 1984, while in 2014 that figure was 5.4%. Likewise, self-reported measures of overall health have improved and workplace injuries have fallen.
via Averting the disability-insurance meltdown » AEI.
February 23, 2015
This unsustainable spending growth occurs because we continue to increase spending on Social Security, Medicare, Medicaid, and now on the massive expansion of federal health spending embodied in the Affordable Care Act. Growth in these four categories of federal entitlement spending accounts for our whole fiscal imbalance.
via Mindless Yes, Austerity No: The Real Budget Problem | Mercatus.
February 2, 2015
The U.S. government will begin releasing Medicare physician-payment records every year, cementing public access to how tens of billions of dollars are spent annually on everything from office visits to radiation therapy.
Last April, a year’s worth of the data was released for the first time in more than three decades after Wall Street Journal parent Dow Jones & Co. challenged a 1979 injunction that prohibited Medicare from disclosing its payments to doctors. It was unclear at the time if any more records would be released.
The data provided the first comprehensive look at a central part of the taxpayer-funded program for the elderly and disabled. It detailed payments to 880,000 individuals and organizations totaling more than $77 billion from the Medicare program in 2012, covering more than 5,000 different procedures.
via Medicare to Publish Physician-Payment Data Yearly – WSJ.
February 1, 2015
Medical testing is a huge industry in the United States, with prices that are highly variable in different parts of the country. And while Medicare, the government insurance program for those older than 65 or with disabilities, strictly regulates the price of tests and procedures, doctors who treat seniors can increase revenues by simply expanding the volume of such services and ordering tests of questionable utility.
In some areas where many retirees live, most notably Florida, the data suggests that they do. In 2012, according to a New York Times analysis of Medicare data released last year, more than twice the number of nuclear stress tests, echocardiograms, and vascular ultrasounds were ordered per Medicare beneficiary in doctor’s offices in Florida than in Massachusetts.
When researchers from Dartmouth last year looked at the number of tests and imaging studies received by Florida Medicare patients in the last two years of life, with the exception of the Panhandle, totals were far above the national average, said Dr. Elliott Fisher, director of the Dartmouth Institute for Health Policy and Clinical Practice.
via Patients find winter havens push costs up – Nation – The Boston Globe.
January 28, 2015
Holding the rate of increase in health-care costs to the growth rate of the economy would be an exceptional achievement. Even if that happened, federal health-care outlays as a share of GDP would rise by 37% over the next two decades. And this, says CAP, would eventually force either much higher taxes or steep reductions in discretionary spending, including vital public investments in infrastructure and basic research. The more likely projection—health-care costs rising between 1.15% and 1.65% a year faster than economic growth—makes the problem even more threatening.
via William Galston: The Secret to Taming Health-Care Costs – WSJ.
January 26, 2015
In the near future, the new Medicare rules may prove increasingly more onerous than the private ones. It could yield another hit to Medicare’s fee for service scheme. Doctors may well choose to see Medicare patients only under the auspices of an Advantage plan – preferring to deal with the rules imposed by one or a few insurers, rather than the increasingly more byzantine rules imposed by Washington.
The political irony is that there’s a class of progressive policy wonks who decry the growth of Medicare Advantage, fearful that the rise of these plans represents the slow privatization of how the Medicare benefit gets delivered. They favor, instead, a single payer scheme administered by Washington. Yet we already have a single payer scheme – it’s Medicare’s traditional fee for service program.
The same political class that targets the Advantage plans has presided over successive waves of new regulations on providers, and repeated failures to improve how Medicare pays doctors. That failure to maintain a workable alternative is one of the single biggest factors in the burgeoning success of Medicare Advantage.
via Who benefits as Medicare burns? » AEI.