A comparison of single- and multi-payer health insurance systems and options for reform.

A major choice confronting many countries is between single-payer and multi-payer health insurance systems. This paper compares single-payer models in the areas of revenue collection, risk pooling, purchasing, and social solidarity. Single-payer and multi-payer systems each have advantages which may meet countries' priorities for their health insurance system. Single-payer systems are usually financed more progressively, and rely on existing taxation systems; they effectively distribute risks throughout one large risk pool; and they offer governments a high degree of control over the total expenditure on health. Multi-payer systems sacrifice this control for a greater ability to meet the diverse preferences of beneficiaries. Several major reforms of single-payer insurance systems--expansion of the role of private insurance and transformation to a multi-payer system--are then described and illustrated using specific country examples. These reforms have been implemented with some success in several countries but face several important challenges.

Double-masked randomized trial comparing alternate combinations of intraoperative anesthesia and postoperative analgesia in abdominal aortic surgery.

BACKGROUND: Improvement in patient outcome and reduced use of medical resources may result from using epidural anesthesia and analgesia as compared with general anesthesia and intravenous opioids, although the relative importance of intraoperative versus postoperative technique has not been studied. This prospective, double-masked, randomized clinical trial was designed to compare alternate combinations of intraoperative anesthesia and postoperative analgesia with respect to postoperative outcomes in patients undergoing surgery of the abdominal aorta. METHODS: One hundred sixty-eight patients undergoing surgery of the abdominal aorta were randomly assigned to receive either thoracic epidural anesthesia combined with a light general anesthesia or general anesthesia alone intraoperatively and either intravenous or epidural patient-controlled analgesia postoperatively (four treatment groups). Patient-controlled analgesia was continued for at least 72 h. Protocols were used to standardize perioperative medical management and to preserve masking intraoperatively and postoperatively. A uniform surveillance strategy was used for the identification of prospectively defined postoperative complications. Outcome evaluation included postoperative hospital length of stay, direct medical costs, selected postoperative morbidities, and postoperative recovery milestones. RESULTS: Length of stay and direct medical costs for patients surviving to discharge were similar among the four treatment groups. Postoperative outcomes were similar among the four treatment groups with respect to death, myocardial infarction, myocardial ischemia, reoperation, pneumonia, and renal failure. Epidural patient-controlled analgesia was associated with a significantly shorter time to extubation (P = 0.002). Times to intensive care unit discharge, ward admission, first bowel sounds, first flatus, tolerating clear liquids, tolerating regular diet, and independent ambulation were similar among the four treatment groups. Postoperative pain scores were also similar among the four treatment groups. CONCLUSIONS: In patients undergoing surgery of the abdominal aorta, thoracic epidural anesthesia combined with a light general anesthesia and followed by either intravenous or epidural patient-controlled analgesia, offers no major advantage or disadvantage when compared with general anesthesia alone followed by either intravenous or epidural patient-controlled analgesia.

The relationship between per capita income and diffusion of medical technologies.

It is commonly known that per capita income is correlated with the level of health care spending and that technology is a major factor in explaining the increase in health care spending. This study examines differences in the rate of diffusion of medical technologies in Organization for Economic Cooperation and Development countries between 1975 and 1995. We find that the importance of income in explaining the long-term availability of a technology generally declines over time and becomes insignificant for some technologies. In other words, more affluent countries are earlier adopters of new technologies, but access to technology becomes less dependent on income over time. The evidence also suggests that the effects of reimbursement incentives are greater for purchases of diagnostic technologies than for lifesaving technologies and that reimbursement incentive effects are less significant for older technologies.

Graduate medical education: the policy debate.

The cost of providing graduate medical education to the approximately 100,000 medical residents in the United States is approximately $18 billion. The government, primarily through the Medicare program, funds almost two thirds of the cost. Unfortunately, the federal government lacks a coherent policy with respect to what objectives it wants to achieve for this expenditure. This article traces (a) the evolution of graduate medical education funding; (b) current proposals to reform the funding mechanism; (c) how the Medicare program currently funds graduate medical education; (d) how funds are allocated to specific institutions; and (e) specific policy objectives that academic medical centers should be held accountable for achieving in return for receiving public funds.

Comparison of risk adjusters for medicaid-enrolled children with and without chronic health conditions.

OBJECTIVE: Several capitation payment systems have been developed and implemented recently by public and private insurers as well as by individual managed care organizations. Many pediatricians have expressed concern that methods for establishing capitation rates may not adequately account for the higher expected expenditures for children with chronic health conditions. In this study, we evaluate a demographic- and 4 diagnosis-based models, paying particular attention to their performance for children with chronic health conditions. METHODS: We selected children 18 years of age and under who were enrolled in the Maryland Medicaid Program in 1995 and 1996. We defined the population of children with chronic health conditions using ICD-9 codes. Individual and group-level analyses were utilized to measure the ability of the different risk adjustment models to predict expenditures in 1996 based upon information available in 1995. RESULTS: All 4 diagnosis-based models significantly outperformed the demographic model for children overall and for children with chronic health conditions. Differences between diagnosis-based models were small, especially as the size of test populations increased. CONCLUSIONS: Risk adjustment methods that account directly for health status promise to reduce incentives to exclude children with chronic illnesses from managed care plans and to provide a foundation for more appropriate payments to pediatricians who care for these children.

The effect of HMOs on hospital capacity, 1982-1996.

Hospital capacity has declined in recent years and is forecast to decline further. The objective of this study is to determine if hospital capacity has declined more rapidly in metropolitan statistical areas (MSAs) with high HMO market penetration compared with MSAs with low HMO market penetration in the period from 1982 to 1996. The findings presented in this study are that greater reductions in beds per capita occur in MSAs with greater HMO penetration, but the magnitude of the differences is small. Reductions in other measures of hospital capacity--hospital closures, beds per hospital, and occupancy--are not consistently associated with HMO market penetration. Bed capacity occurs at roughly similar rates in all MSAs.

Population aging: a comparison among industrialized countries.

Increasing longevity and declining fertility rates are shifting the age distribution of populations in industrialized countries toward older age groups. Some countries will experience this demographic shift before others will. In this DataWatch we compare the effects of population aging on health spending, retirement policies, use of long-term care services, workforce composition, and income across eight countries: Australia, Canada, France, Germany, Japan, New Zealand, the United Kingdom, and the United States. International comparisons suggest that the United States is generally well positioned to cope with population aging; however, three areas should be carefully monitored: heavy reliance on private-sector funding of retirement, coverage of pharmaceuticals for the elderly, and a high proportion of private long-term care financing.

Hospital expenditures and utilization: the impact of HMOs.

OBJECTIVE: To determine whether hospital utilization and expenditures have declined more rapidly in metropolitan statistical areas (MSAs) with high health maintenance organization (HMO) penetration compared with MSAs with low HMO penetration. STUDY DESIGN: Levels and rates of change in hospital expenditures and hospital utilization in MSAs with varying levels of HMO penetration (1982 to 1996) were compared in a natural experiment. METHODS: MSAs were grouped into 4 categories based on HMO penetration rates in 1996. Levels and rates of change in hospital admission rates, hospital inpatient days, emergency room visits, total expenditures per capita, and expenditures per adjusted inpatient day from 1982 to 1996 were compared. A first-difference multivariate model was evaluated for 1993 to 1996. RESULTS: At the MSA level, the rates of change in hospital utilization and hospital expenditures varied only modestly with the level of HMO penetration. Changes in hospital admission rates did not vary systematically with HMO penetration rates except in the 1993 to 1996 period, when MSAs with the highest HMO penetration had the largest decline. Reductions in hospital days per capita and expenditures per day did not vary systematically by level of HMO penetration. Emergency room days declined most rapidly in the MSAs with the highest HMO penetration in the 1982 to 1993 period and were similar in the 1993 to 1996 period. Hospital expenditures per capita showed the greatest association with managed care penetration. They averaged 1.6% slower annual growth in MSAs with high versus low HMO penetration in the 1982 to 1996 period. CONCLUSIONS: This national study using data from 1982 to 1996 suggests that the effects of HMO penetration on hospital expenditures and hospital utilization at the MSA level are small (generally less than 1% per year).

Perioperative- and long-term mortality rates after major vascular surgery: the relationship to preoperative testing in the medicare population.

UNLABELLED: Debate continues regarding the value of cardiovascular testing and coronary revascularization before major vascular surgery. Whereas recent guidelines have advocated selective preoperative testing, several authors have suggested that it is no longer necessary in an era of low perioperative cardiac morbidity and mortality. We used data from a random sample of Medicare beneficiaries to determine the mortality rate after vascular surgery, based on the use of preoperative cardiac testing. A 5% nationally random sample of the aged Medicare population for the final 6 mo of 1991 and first 11 mo of 1992 was used to identify a cohort of patients who underwent elective infrainguinal or abdominal aortic reconstructive surgery. Use within the first 6 mo of 1991 was reviewed to determine if preoperative noninvasive cardiovascular imaging or coronary revascularization was performed. Thirty-day (perioperative) and 1-yr mortalities were assessed. Perioperative mortality was significantly increased for aortic surgery (209 of 2865 or 7.3%), compared with infrainguinal surgery (232 of 4030 or 5.8%); however, 1-yr mortality was significantly increased for infrainguinal surgery (16.3% vs 11.3%, P < 0.05). Stress testing, with or without coronary revascularization, was associated with improved short-and long-term survival in aortic surgery. The use of stress testing with coronary revascularization was not associated with reduced perioperative mortality after infrainguinal surgery. Stress testing alone was associated with reduced long-term mortality in patients undergoing infrainguinal revascularization. IMPLICATIONS: Analysis of the Medicare Claims database suggests that vascular surgery is associated with substantial perioperative and long-term mortality. The reduced long-term mortality in patients who had previously undergone preoperative testing and coronary revascularization reinforces the need for a prospective evaluation of these practices.

Predicting expenditures for Medicare beneficiaries with diabetes. A prospective cohort study from 1994 to 1996.

OBJECTIVE: To describe health care expenditures and utilization patterns among older adults with diabetes and to examine factors associated with expenditures over a 3-year period. RESEARCH DESIGN AND METHODS: We conducted a prospective cohort study of health care expenditures and utilization by diabetic patients from a random nationwide sample of aged Medicare beneficiaries from 1994 to 1996. All services covered by the Medicare program were examined. Multivariate regression was used to assess the contribution of patient characteristics in 1994 on Part B, inpatient, and total expenditures in 1995 and 1996. RESULTS: Per capita expenditures for beneficiaries with diabetes (n = 169,613) were 1.7 times greater than those for those beneficiaries without diabetes (n = 968,832) in 1994. This ratio remained fairly constant over the 2 years of follow-up. Expenditures for beneficiaries with diabetes were highly skewed. However, few of these individuals remained in the highest expenditure quintile over the 2 years of follow-up. Using multiple regression analysis to adjust for demographic and clinical characteristics, we were able to explain 7% of the variation in total expenditures in 1995 and 6% of the variation in 1996. Using the same model, we were able to explain 10.7% of the variation in Part B expenditures in 1995 and 8% in 1996. CONCLUSIONS: Beneficiaries with diabetes are consistently more expensive than beneficiaries without diabetes. Demographic and clinical factors at baseline are able to predict only a small portion of future expenditures among this population, and the most expensive patients in one year were often not the most expensive in subsequent years. More work is necessary to assure equitable risk adjustment in the calculation of capitation rates for health plans and practitioners who specialize in the care of individuals with diabetes.

Health spending, access, and outcomes: trends in industrialized countries.

In 1997 the United States spent $3,925 per capita on health or 13.5 percent of gross domestic product (GDP), while the median Organization for Economic Cooperation and Development (OECD) country spent $1,728 or 7.5 percent. From 1990 to 1997 U.S. health spending per capita increased 4.3 percent per year, compared with the OECD median of 3.8 percent. The United States has the lowest percentage of the population with government-assured health insurance. It also has the fewest hospital days per capita, the highest hospital expenditures per day, and substantially higher physician incomes than the other OECD countries. On the available outcome measures, the United States is generally in the bottom half, and its relative ranking has been declining since 1960.

The relation between funding by the National Institutes of Health and the burden of disease.

BACKGROUND: The Institute of Medicine has proposed that the amount of disease-specific research funding provided by the National Institutes of Health (NIH) be systematically and consistently compared with the burden of disease for society. METHODS: We performed a cross-sectional study comparing estimates of disease-specific funding in 1996 with data on six measures of the burden of disease. The measures were total mortality, years of life lost, and number of hospital days in 1994 and incidence, prevalence, and disability-adjusted life-years (one disability-adjusted life-year is defined as the loss of one year of healthy life to disease) in 1990. With the use of these measures as explanatory variables in a regression analysis, predicted funding was calculated and compared with actual funding. RESULTS: There was no relation between the amount of NIH funding and the incidence, prevalence, or number of hospital days attributed to each condition or disease (P=0.82, P=0.23, and P=0.21, respectively). The numbers of deaths (r=0.40, P=0.03) and years of life lost (r=0.42, P=0.02) were weakly associated with funding, whereas the number of disability-adjusted life-years was strongly predictive of funding (r=0.62, P<0.001). When the latter three measures were used to predict expected funding, the conclusions about the appropriateness of funding for some diseases varied according to the measure used. However, the acquired immunodeficiency syndrome, breast cancer, diabetes mellitus, and dementia all received relatively generous funding, regardless of which measure was used as the basis for calculating support. Research on chronic obstructive pulmonary disease, perinatal conditions, and peptic ulcer was relatively underfunded. CONCLUSIONS: The amount of NIH funding for research on a disease is associated with the burden of the disease; however, different measures of the burden of disease may yield different conclusions about the appropriateness of disease-specific funding levels.

Methods of reducing the financial risk of physicians under capitation.

In today's rapidly changing medical marketplace, managed care plans are not the only entities assuming risk for the care of enrollees through capitation. Increasingly, managed care plans are transferring this risk to their primary care and specialty physicians by paying them on a fully or partially capitated basis. Although capitation provides a strong incentive for physicians to provide cost-effective care, there are concerns that capitation may place some physicians at considerable financial risk. Our purpose is to familiarize physicians with issues they will want to consider when they evaluate capitation options and methods that are available to reduce their financial risk. Specifically, we analyze 3 issues: the range of services that are capitated, who accepts the risk, and size of patient panel. We conclude with a discussion of 3 methods for reducing or limiting risk--reinsurance, "carve outs," and risk adjustment.

Intraoperative clinical practice and risk of early complications after cataract extraction in the United States, Canada, Denmark, and Spain.

OBJECTIVE: To examine variation in intraoperative clinical practice and rates of adverse events after cataract surgery across four different healthcare systems. DESIGN: Multicenter cohort study. PARTICIPANTS: Patients were recruited from ophthalmic clinics in the United States (n = 75); in the Province of Manitoba, Canada (n = 12); in Denmark (n = 17); and the City of Barcelona, Spain (n = 10). In all, 1420 patients undergoing first eye cataract surgery were enrolled, with preoperative, perioperative, and postoperative clinical data collected on 1344 patients (95%). MAIN OUTCOME MEASURES: Occurrence of 23 specified intraoperative and early postoperative adverse events was measured. Four-month postoperative visual acuity outcome also was measured. RESULTS: Phacoemulsification was performed in two thirds of the extractions in the United States and Manitoba, in one third in Denmark, and in 3% in Barcelona (P < 0.001). More than 96% of extractions in North America and Denmark were performed with the patient under local anesthesia, whereas general anesthesia was used for 38% of extractions in Barcelona (P < 0.001). Rates of intraoperative adverse events were 11% to 12.8% in Manitoba, Denmark, and Barcelona and significantly lower in the United States (6%), mainly because of a lower rate of capsular rupture (P < 0.01). Significantly higher rates of early postoperative events were seen in the United States (18.8%) and Manitoba (20.4%) compared to Denmark (7.9%) and Barcelona (5%) (P < 0.001). The differences among sites in rates of events could not be explained by differences in recorded patient characteristics or surgical techniques. The occurrence of perioperative events was significantly associated with a worse 4-month visual outcome. CONCLUSION: The observed variation in clinical practice might represent a general trend of a slower diffusion of new medical technology in Europe compared with that of North America. Rates of intraoperative and early postoperative events varied significantly across sites.

The costs of children with sickle cell anemia: preparing for managed care.

PURPOSE: To anticipate the clinical challenges and financial risks facing physicians and managed care organizations who care for children with chronic illnesses, such as sickle cell anemia (SCA), under capitated managed care arrangements. PATIENTS AND METHODS: A cross-sectional study based on claims data from the Washington State Medicaid Program (WSMP) and the Federal Employees Health Benefits Program (FEP). Expenditure patterns were compared for children 18 years of age or younger for whom a claim with a diagnosis of SCA was submitted and paid in the State of Washington during fiscal year 1993 (FY1993) or by the FEP during FY1992 to expenditure patterns for all children. RESULTS: Children with SCA had mean expenditures 8.8 times the mean expenditures for all children in WSMP. There was wide variation in the annual expenditures among children with SCA; the most expensive 10% of children accounted for 56% of total expenditures. Ninety-seven percent of the expenditures were concentrated in four broad categories: 72% for inpatient care, 11% for outpatient care, 11% for physician payments, and 3% for prescription drugs. Examination of expenditure and utilization patterns for children with sickle cell anemia enrolled in the FEP yielded similar results. CONCLUSIONS: Unless managed care organizations and capitated pediatricians receive payment rates that reflect the higher expected expenditures of caring for these children, access to and quality of care may suffer. Analyses of practice guidelines and utilization patterns suggest that newborn screening, regular access to specialty facilities, and comprehensive education programs are critical areas that are vulnerable to reductions under capitation.