The value of remaining lifetime is close to estimated values of life.

Workers under 50 on average will spend 10-20% of their future hours working. So, assuming they value leisure time at the wage rate, the value of their lives is 5-10 times their future lifetime earnings. This value is close to values of life estimated by compensating wage differentials or willingness to pay.

Simulating the impact of medical savings accounts on small business.

OBJECTIVE: To simulate whether allowing small businesses to offer employer-funded medical savings accounts (MSAs) would change the amount or type of insurance coverage. STUDY SETTING: Economic policy evaluation using a national probability sample of nonelderly non-institutionalized Americans from the 1993 Current Population Survey (CPS). STUDY DESIGN: We used a behavioral simulation model to predict the effect of MSAs on the insurance choices of employees of small businesses (and their families). The model predicts spending by each family in a FFS plan, an HMO plan, an MSA, and no insurance. These predictions allow us to compute community-rated premiums for each plan, but with firm-specific load fees. Within each firm, employees then evaluate each option, and the firm decides whether to offer insurance-and what type-based on these evaluations. If firms offer insurance, we consider two scenarios: (1) all workers elect coverage; and (2) workers can decline the coverage in return for a wage increase. PRINCIPAL FINDINGS: In the long run, under simulated conditions, tax-advantaged MSAs could attract 56 percent of all employees offered a plan by small businesses. However, the fraction of small-business employees offered insurance increases only from 41 percent to 43 percent when MSAs become an option. Many employees now signing up for a FFS plan would switch to MSAs if they were universally available. CONCLUSIONS: Our simulations suggest that MSAs will provide a limited impetus to businesses that do not currently cover insurance. However, MSAs could be desirable to workers in firms that already offer HMOs or standard FFS plans. As a result, expanding MSA availability could make it a major form of insurance for covered workers in small businesses. Overall welfare would increase slightly.

A clinically detailed risk information system for cost.

The authors discuss a system that describes the resources needed to treat different subgroups of the population under age 65, based on burden of disease. It is based on 173 conditions, each with up to 3 severity levels, and contains models that combine prospective diagnoses with retrospectively determined elements. We used data from four different payers and standardized the cost of most services. Analyses showed that the models are replicable, are reasonably accurate, explain costs across payers, and reduce rewards for biased selection. A prospective model with additional payments for birth episodes and for serious problems in newborns would be an effective risk adjuster for Medicaid programs.

Outcome measurement in HEDIS: can risk adjustment save the low birth weight measure?

OBJECTIVE: To evaluate whether adjusting the Health Plan Employer Data and Information Set (HEDIS) low birth weight (LBW) measure for maternal risk factors is feasible and improves its validity as a quality indicator. DATA SOURCE: The Washington State Birth Event Record Data for calendar years 1989 and 1990, including birth certificate data matched with mothers' and infants' hospital discharge records, with 5,837 records of singlet on infants identified as LBW (< 2,500 g) and a 25 percent sample ( n = 31,570) of the normal-weight births (

Cost-effectiveness of outpatient geriatric assessment with an intervention to increase adherence.

BACKGROUND: Comprehensive geriatric assessment (CGA) can be effective in inpatient units, but such inpatient settings are prohibitively expensive. If similar benefits could be obtained in outpatient settings, CGA might be a more attractive option. OBJECTIVES: To assess the cost-effectiveness (CE) of an outpatient geriatric assessment with an intervention to increase adherence. SUBJECTS: Three hundred fifty-one community-dwelling, elderly subjects with at least one of four geriatric conditions. MEASURES: In addition to the measures of functioning, we collected data on the costs of the intervention itself and on the use of medical services in the 64 weeks after the intervention. RESULTS: The intervention, which prevented functional decline, cost $273 per participant. The intervention group averaged three more visits than the control group in the first 32 weeks after the intervention, but only 1.2 extra visits in the next 32 weeks. We estimate that the costs of these additional medical services would be $473 for the 5 years after the intervention, leading to a total cost per Quality Adjusted Life Year (QALY) of $10,600. CONCLUSIONS: The CE of this program compares favorably with many common medical interventions. Whether investments should be made in health care resources on treatments that lead to modest improvements in the functioning of community-dwelling elderly people remains a societal decision.

The changing effects of competition on non-profit and for-profit hospital pricing behavior.

Has the nature of hospital competition changed from a medical arms race in which hospitals compete for patients by offering their doctors high quality services to a price war for the patients of payors? This paper uses time-series cross-sectional methods on California hospital discharge data from 1986-1994 to show the association of hospital prices with measures of market concentration changed steadily over this period, with prices now higher in less competitive areas, even for non-profit hospitals. Regression results are used to simulate the price impact of hypothetical hospital mergers.

A model of the impact of reimbursement schemes on health plan choice.

Flat capitation (uniform prospective payments) makes enrolling healthy enrollees profitable to health plans. Plans with relatively generous benefits may attract the sick and fail through a premium spiral. We simulate a model of idealized managed competition to explore the effect on market performance of alternatives to flat capitation such as severity-adjusted capitation and reduced supply-side cost-sharing. In our model flat capitation causes severe market problems. Severity adjustment and to a lesser extent reduced supply-side cost-sharing improve market performance, but outcomes are efficient only in cases in which people bear the marginal costs of their choices.

Adjusting cesarean delivery rates for case mix.

OBJECTIVES: (1) To describe the issues in developing a clinical predictor of cesarean delivery that could be used to adjust reported cesarean rates for case mix, and (2) to compare its performance to other, simpler predictors using clinical and statistical criteria. DATA SOURCES: Singleton births greater than 2,500 grams in Washington State in 1989 and 1990 for whom mothers and infant hospital discharge records could be matched to birth certificate data. DESIGN: Statistical analysis of retrospective merged hospital and birth certificate data, which were used to develop variables and models to predict the probability that any particular delivery would be a cesarean. PRINCIPAL FINDINGS: Merged data led to better predictor variables than those based on one source. A simple four-category hierarchical classification into births with prior cesarean, breech but no prior cesarean, first birth, and other explains 30 percent of the variance in individual cesarean rates. The full clinical model fit the data well and explained 37 percent of the variance. Multiparas without serious complications comprised 35 percent of the mothers and averaged less than 2 percent cesareans. A hospital's predicted cesarean rate depends strongly on the proportion of its births that are first births. CONCLUSION: Government and private agencies have reported cesarean rates as measures of hospital performance. Depending on data and resources available, both simple and complex measures of case mix can be used to adjust reported rates. These adjustments should not include all variables related to the rates. Proper adjustments may not alter hospital rankings greatly, but they will improve the validity and acceptability of the reports.

The validity of a nursing assessment and monitoring of signs and symptoms scale in ICU and non-ICU patients.

PURPOSE: This study examined the validity of medical-record-based nursing assessment and monitoring of signs and symptoms (nursing surveillance) in predicting patients who were admitted to ICUs and those admitted to non-ICUs. The association of this assessment and monitoring with differences in an intermediate patient outcome, instability at discharge, was also explored. Patients admitted to either setting with a diagnosis of acute myocardial infarction, cerebrovascular accident, congestive heart failure, or pneumonia, were included in the study. METHOD: A secondary analysis was carried out using a subset of data originally collected for a quality-of-care study. Data from the medical records of 11,246 patients (52% female, 48% male) with a mean age of 76.4 years were used in the present study. RESULTS: ICU patients (n = 3969) were found to have a longer length of stay and to be sicker on admission than non-ICU patients (n = 7277). Overall, patients in the ICU received significantly higher nursing assessment and monitoring of signs and symptoms scores than non-ICU patients. Nursing assessment and monitoring of signs and symptoms scores were lower for patients discharged with greater instability for three of the four diseases (cerebrovascular accidents, congestive heart failure, and pneumonia).

Can medical savings accounts for the nonelderly reduce health care costs?

OBJECTIVE: To understand how medical savings account (MSA) legislation for the nonelderly would affect health care costs. DESIGN: Economic policy evaluation based on the RAND Health Expenditures Simulation Model. SETTING: National probability sample of nonelderly noninstitutionalized households. PARTICIPANTS: Persons in 23 157 sampled households from the 1993 Current Population Survey. INTERVENTIONS: Medical savings account legislation would allow all Americans who are covered only by a catastrophic health care plan to set up a tax-exempt account that they can use to pay medical bills not covered by their health insurance. The interventions we evaluate differ in the deductibles of the catastrophic plan and in whether the employee or employer funds the MSA. MAIN OUTCOME MEASURES: Changes in national health expenditures and net societal benefits of health care. RESULTS: If all insured nonelderly Americans switched to MSAs, their health care expenditures would decline by between 0% and 13%, depending on how the MSAs are designed. However, not all nonelderly Americans would choose MSAs; taking into account selection patterns, health spending would change by + 1% to -2%. CONCLUSIONS: Medical savings account legislation would have little impact on health care costs of Americans with employer-provided insurance. However, depending on the size of the catastrophic limit, waste from the excessive use of generously insured care could be reduced, and MSAs would be attractive to both sick and healthy people.

Effect of epidural analgesia for labor on the cesarean delivery rate.

OBJECTIVE: To use meta-analysis to evaluate the effect of epidural analgesia on the cesarean delivery rate. DATA SOURCES: The MEDLINE data base was searched for articles published in English between January 1981 and April 1992. We also interviewed experts and conducted a bibliographic follow-up and manual review of recent journals published from April to July 1992. METHODS OF STUDY SELECTION: We excluded articles with irrelevant titles, and those case studies, book chapters, or articles that did not provide primary and relevant data. Two hundred thirty articles were read, including articles that reported on women of standard obstetric risk and on cesarean delivery rates for an epidural group and for a concurrent no-epidural group. These criteria yielded six studies for a primary analysis and two others for a secondary analysis. DATA EXTRACTION AND SYNTHESIS: The sample size of the epidural and no-epidural groups and the number of cesareans within each group were extracted. Tests of homogeneity were conducted. The pooled cesarean delivery risk difference as a result of epidural analgesia was estimated. The cesarean rate for women undergoing epidural analgesia was ten percentage points greater than for no-epidural women (P < .05). More than a nine percentage point increase was shown for cesarean deliveries for dystocia (P < .05), when pooling either all studies or only randomized studies. CONCLUSIONS: The results of this meta-analysis strongly support an increase in cesarean delivery associated with epidural analgesia. Further research should evaluate the balance between analgesia associated with the use of epidurals, and postpartum morbidity and costs associated with cesarean deliveries.

Health care for black and poor hospitalized Medicare patients.

OBJECTIVE: To analyze whether elderly patients who are black or from poor neighborhoods receive worse hospital care than other patients, taking account of hospital effects and using validated measures of quality of care. DESIGN: We compare quality of care provided to insured, hospitalized Medicare patients who are black or live in poor neighborhoods as compared with others, using simple and multivariable comparisons of clinically detailed measures of sickness at admission, quality, and outcomes. SETTING: Two hundred ninety-seven acute care hospitals in 30 areas within five states. PATIENTS OR OTHER PARTICIPANTS: The sample includes a nationally representative sample of 9932 patients 65 years of age or older who lived at home prior to hospitalization for congestive heart failure, acute myocardial infarction, pneumonia, or stroke. INTERVENTIONS: This was an observational study. MAIN OUTCOME MEASURES: Processes of care, length of stay, instability at discharge, discharge destination, and mortality. RESULTS: Within rural, urban nonteaching, and urban teaching hospitals, patients who are black or from poor neighborhoods have worse processes of care and greater instability at discharge than other patients (P < .05). However, this worse quality is offset by patients who are black or from poor neighborhoods being 1.8 times more likely to receive care in urban teaching hospitals that have been shown to provide better quality of care (P < .001). Because these patients receive more of their care in better-quality hospitals, there are no overall differences in quality by race and poverty status. Death rates did not vary by race or poverty status. CONCLUSIONS: Quality of hospital care for insured Medicare patients in influenced both by the patient's race and financial characteristics and by the hospital type in which the patient receives care.

Economic incentives in the choice between vaginal delivery and cesarean section.

The dramatic rise in cesarean-section (C-section) rates, and their high costs and wide variation, has raised interest in understanding the factors affecting decisions to use this procedure. The economic incentives of physicians, hospitals, payers, and mothers are examined. In the economic framework, physicians must balance their short-term interests against their reputation, which is derived from efficiently providing what mothers want. Providers who encounter higher opportunity costs while attending to mothers in prolonged labor can reduce these costs by operating or by restructuring their practices. The mainly indirect evidence on financial incentives indicates that insured mothers have low marginal financial costs when they undergo C-section. Mothers with private, fee-for-service insurance have higher C-section rates than mothers who are covered by staff-model HMOs, who are uninsured, or who are publicly insured. In conclusion, research and payment reforms to reduce distortions to good practice are proposed.

Risk adjustment for a children's capitation rate.

Few capitation arrangements vary premiums by a child's health characteristics, yielding an incentive to discriminate against children with predictably high expenditures from chronic diseases. In this article, we explore risk adjusters for the 35 percent of the variance in annual out-patient expenditure we find to be potentially predictable. Demographic factors such as age and gender only explain 5 percent of such variance; health status measures explain 25 percent, prior use and health status measures together explain 65 to 70 percent. The profit from risk selection falls less than proportionately with improved ability to adjust for risk. Partial capitation rates may be necessary to mitigate skimming and dumping.

Choosing quality of care measures based on the expected impact of improved care on health.

Consumers, payers, and policymakers are demanding to know more about the quality of the services they are purchasing or might purchase. The information provided, however, is often driven by data availability rather than by epidemiologic and clinical considerations. In this article, we present an approach for selecting topics for measuring technical quality of care, based on the expected impact on health of improved quality. This approach employs data or estimates on disease burden, efficacy of available treatments, and the current quality of care being provided. We use this model to select measures that could be used to measure the quality of care in health plans, but the proposed framework could also be used to select quality of care measures for other purposes or in other contexts (for example, to select measures for hospitals). Given the limited resources available for quality assessment and the policy consequences of better information on provider quality, priorities for assessment efforts should focus on those areas where better quality translates into improved health.

HMO vs fee-for-service care of older persons with acute myocardial infarction.

OBJECTIVES: Health maintenance organizations (HMOs) continue to grow in number and in their enrollment of Medicare recipients. They are also increasingly viewed as organizational structures that might contribute to control of health care costs. Yet little is known about the quality of care that elderly HMO enrollees receive. METHODS: We compared patients from three HMOs to a fee-for-service (FFS) sample that was national in scope. Sickness at admission, the quality of process of care, and mortality were assessed for patients aged 65 years and older who had been hospitalized with a diagnosis of acute myocardial infarction. RESULTS: After adjustment for sickness at admission, there were no significant mortality differences between the HMO and FFS groups at either 30 (23.2% vs 23.5%) or 180 days (34.4% vs 34.5%) after admission. Compliance with process criteria was higher for the HMO group as a whole (P < .05). The HMOs had greater compliance with three of five scales measuring different aspects of care for patients with acute myocardial infarction. CONCLUSIONS: We conclude that older patients from our participating HMOs who were hospitalized for acute myocardial infarction received hospital care that was generally better in terms of process than that received by patients in a national FFS sample.