Health care consumers: choices and constraints.

This article summarizes the research and data currently available on different dimensions of consumer choice. These dimensions include not only whether to participate in a health care plan and which plan to select if given a choice but also the decisions that lead to having a choice and the implications of making the choice. Data are presented on what choices consumers face, how many are given what kinds of choices, what constraints they face, what we know about how they make these choices, and what information they are given and what they use. The majority of Americans are offered some kind of health insurance plan either through their place of employment or as a dependent on someone else's employer-sponsored health plan. About half of those offered health insurance are offered a choice, usually of only two or three plans. The majority elect to participate in one of those plans.

The demand for health insurance coverage by low-income workers: can reduced premiums achieve full coverage?

OBJECTIVE: To assess the degree to which premium reductions will increase the participation in employer-sponsored health plans by low-income workers who are employed in small businesses. DATA SOURCES/STUDY SETTING: Sample of workers in small business (25 or fewer employees) in seven metropolitan areas. The data were gathered as part of the Small Business Benefits Survey, a telephone survey of small business conducted between October 1992 and February 1993. STUDY DESIGN: Probit regressions were used to estimate the demand for health insurance coverage by low-income workers. Predictions based on these findings were made to assess the extent to which premium reductions might increase coverage rates. DATA COLLECTION/EXTRACTION METHODS: Workers included in the sample were selected, at random, from a randomly generated set of firms drawn from Dun and Bradstreet's DMI (Dun's Market Inclusion). The response rate was 81 percent. FINDINGS: Participation in employer-sponsored plans is high when coverage is offered. However, even when coverage is offered to employees who have no other source of insurance, participation is not universal. Although premium reductions will increase participation in employer-sponsored plans, even large subsidies will not induce all workers to participate in employer-sponsored plans. For workers eligible to participate, subsidies as high as 75 percent of premiums are estimated to increase participation rates from 89.0 percent to 92.6 percent. For workers in firms that do not sponsor plans, similar subsidies are projected to achieve only modest increases in coverage above that which would be observed if the workers had access to plans at unsubsidized, group market rates. CONCLUSIONS: Policies that rely on voluntary purchase of coverage to reduce the number of uninsured will have only modest success.

Small-business winners and losers under health care reform.

To meet its goal of universal health insurance coverage, the Clinton health plan requires all employers to offer health insurance to their employees. Using survey data on more than 2,200 small businesses, we estimate how many firms and employees would be affected by this mandate and calculate the financial burden, adjusting for the small-business subsidies recommended in the Clinton plan. Because of the payroll caps, almost 60 percent of small businesses that now offer insurance will experience a reduction in premiums. The average reduction is approximately $1,500 per full-time equivalent (FTE) per year. The majority of firms that offer insurance and face an increase in liability under the Clinton plan will incur an increase of less than $1,000 per FTE per year. Firms that do not now offer insurance will incur, on average, a liability of $500 to $900 per FTE.

Changing patterns of hospital use for patients with musculoskeletal disease in Michigan, 1980 to 1987.

Over the past 10 years there have been dramatic changes in health care financing in the United States, such as Medicare's Prospective Payment System for hospitalized Medicare beneficiaries, and in health services delivery, such as the growth in health maintenance organizations and other forms of managed care. These changes have occurred largely in response to payors' concerns about the rising cost of health care. A study of such changes in financing and delivery, and how specific groups of patients are affected is necessary so that the effects of these changes on patients' health can be determined. We examined the hospitalization rates for patients with musculoskeletal diseases in Michigan from 1980 through 1987. During this period, the overall age-adjusted hospitalization rates decreased 7.0% per year (p = 0.001). The decrease occurred less for surgical discharges (6.0% per year) than for medical discharges (8.6% per year) (p < 0.001). While these overall trends are of interest, they obscure disease-specific trends that vary significantly from both the overall, and the medical and surgical trends. For example, while surgical discharges, in general declined, procedures related to major joint and limb reattachment (DRG #209) increased at a rate of 6.3% per year. And while medical discharges in general decreased over this period, discharges for osteomyelitis increased 5.4% per year. The patterns of disease-specific trends offers insight into the possible causes for these changes. Finally, it is important to understand the epidemiology of hospital use to evaluate the effects of new medical care delivery and payment systems on the care of subsets of patients.

Cigarette advertising and magazine coverage of the hazards of smoking. A statistical analysis.

BACKGROUND: Health professionals have charged that magazines that depend on revenues from cigarette advertising are less likely to publish articles on the dangers of smoking for fear of offending cigarette manufacturers. Special concern has focused on magazines directed to women. Restricted coverage of smoking hazards could lead readers to underestimate the risks of smoking in relation to other health risks. METHODS: Using logistic-regression analysis of a sample of 99 U.S. magazines published during 25 years (1959 through 1969 and 1973 through 1986), we analyzed the probability that the magazines would publish articles on the risks of smoking in relation to whether they carried advertisements for cigarettes and in relation to the proportion of their advertising revenues derived from cigarette advertisements. We controlled for other factors that might influence coverage. RESULTS: The probability of publishing an article on the risks of smoking in a given year was 11.9 percent for magazines that did not carry cigarette advertisements, as compared with 8.3 percent for those that did publish such advertisements (adjusted odds ratio, 0.73; 95 percent confidence interval, 0.42 to 1.30). For women's magazines alone, the probabilities were 11.7 percent and 5.0 percent, respectively (adjusted odds ratio, 0.13; 95 percent confidence interval, 0.02 to 0.69). When the proportion of revenues derived from cigarette advertising was the independent variable, the probability of publishing an article on the risks of smoking in a given year was reduced by 38 percent (95 percent confidence interval, 18 percent to 55 percent) for magazines with the average proportion of total advertising revenues derived from cigarette advertising for the entire sample of magazines (6 percent) as compared with magazines with no cigarette advertising. This relation was particularly strong in the case of women's magazines. An increase of 1 percent in the share of advertising revenue derived from cigarette advertisements decreased the probability of covering the risks of smoking by three times as much as in other magazines. CONCLUSIONS: This study provides strong statistical evidence that cigarette advertising in magazines is associated with diminished coverage of the hazards of smoking. This is particularly true for magazines directed to women.

Empirical evaluation of statistical models for counts or rates.

We consider methods for selecting the joint specification of the mean and variance functions in statistical models for rates or counts. Based on analyses of diagnosis-specific hospital discharge rates in Michigan, we show that a Poisson model with an extra variance component for the systematic variation is superior to several other probability models with regard to specification of the error structure. Further, the deviance residual appears superior to the Pearson residual. The proper specification of such variation is crucial for many types of analyses, such as identification of outliers and regression analyses designed to explain the systematic component of the variation.

Small area analysis of hospital discharges for musculoskeletal diseases in Michigan: the influence of socioeconomic factors.

PURPOSE: The rise in health care costs has occasioned a number of initiatives in an attempt to reduce the rate of increase. Despite the growth of health maintenance organizations and preferred provider organizations and the introduction of Medicare's prospective payment system, health care costs have continued to increase. Coincident with these efforts, a number of researchers have shown that there exists wide variation in age-adjusted hospital discharge rates, which translate into significant variation in per capita expenditures. Much of the focus on the reasons for hospital admission variability has been on physician practice variation. If most of the variation in hospital discharge rates is due to physician practice style, then payment systems can be developed (e.g., capitation) that limit physician practice variation without harming patients. We examined socioeconomic factors in Michigan communities to assess their association with hospital discharge rates for patients with musculoskeletal diseases. PATIENTS AND METHODS: Data on hospital discharges from 1980 and 1987 were taken from the Michigan Inpatient Data Base. All admissions from the major diagnostic category 8, diagnosis-related group (DRG) 209-256 were included. Zip code-specific hospitalization data were grouped into small geographic areas or hospital market communities (HMCs). Discharge rates were calculated, and profiles of the socioeconomic characteristics of each of the HMCs were developed. A Poisson regression model with an extrasystematic component of variance was used to analyze the association of HMC socioeconomic characteristics with age-adjusted hospital use. RESULTS: We found that four socioeconomic variables, average annual income per capita, percent of the population with four years of college, percent of the population living in an urban area, and percent of families with incomes below the poverty line, explained 26.6% (R2) of the variation in overall hospital discharge rates (p less than 0.001). Moreover, we found that the ability of the model to explain variability was influenced by the type of disease, and that these socioeconomic variables had a consistent effect across the range of DRGs. Finally, we noted that, over the period of 1980 to 1987, socioeconomic factors remained important in explaining hospital use despite the dramatic changes in the delivery of care over this period. CONCLUSION: Socioeconomic factors play a significant role in explaining the observed variation in hospital discharge rates for musculoskeletal diseases. Models utilizing only physician practice variation to account for the population-based differences in discharge rates are overly simplistic. In order to ensure that vulnerable subsets of the population are not harmed by the introduction of cost-containment strategies based on simplistic models, more attention must be paid to the socioeconomic and epidemiologic factors related to hospital use.

Small-area analysis of gastrointestinal disease hospital discharge variation: are the poor at risk?

Capitation plans may place their enrollees at risk of rationed services if they do not adjust for underlying patient characteristics that dictate differing levels of care. To assess the degree to which population-based socioeconomic characteristics are associated with hospital use, this study explored small-area variation in hospital discharges for gastrointestinal and liver (GI) Diagnosis Related Groups (DRGs). Utilizing a 1980 Michigan database of 1.5 million discharges, we constructed age-adjusted, population-based discharge rates for the GI DRGs. We then evaluated the effect of poverty, defined by the percent of households in a hospital market community below the poverty line. Using regression techniques, we found that poverty explained 27.5% of the variation in GI hospital discharges, with the poor admitted more often (p less than 0.0001). Using cost weighted discharge rates as the dependent variable, we found that poverty explained 20.3% (p = 0.0003) of the variation in cost weighted discharges. These results suggest that poverty explains a significant amount of variation in hospital discharges and has a significant effect on associated small-area hospitalization costs in GI diseases. Practicing gastroenterologists and surgeons need to be aware of factors that influence patients utilizing their services in order to retain their role as patient advocates as changes in payment systems are suggested.

Regional variation in 1917 health care expenditures.

In 1917, the Bureau of Labor Statistics surveyed 11,946 white households nationwide, recording demographic variables and yearly expenses on physicians, medicines, nurses, and hospitals. There was significant variation in these medical expenses among the nine census bureau regions. Using a multivariate analysis, we demonstrated that some of the variation could be explained by household variables, such as household income and size, some of the variability could be explained by the availability of physicians and hospital beds, and some could be explained by interactions between the different types of health care. However, after accounting for these possible explanatory variables, significant regional variation remained. We conclude that regional variation in health care expenditures is not new, and that studying how regional variation has changed during the twentieth century is likely to help explain why that variation exists today.

Small-area variation in hospital discharge rates. Do socioeconomic variables matter?

Although numerous studies have been made of the determinants of small-area variation in hospital discharge rates, there is still disagreement about the role of socioeconomic factors. The lack of consensus stems, in part, from the difficulty in comparing results across studies that use different units and methods of analysis. Many of the studies using well-defined hospital service areas did not have the data needed to conduct a controlled analysis of the determinants of hospital utilization. Most of the studies that have performed controlled analyses have relied on larger geopolitical areas, which are not believed to capture self-contained health care systems. The study described here used a consistent set of data, three methods of analysis, and two units of analysis to test the importance of socioeconomic characteristics in explaining the variation in medical and surgical discharge rates in Michigan. Socioeconomic factors are found to be statistically significant determinants of the variation in both medical and surgical discharge rates, whether the method of analysis is simple correlations or multiple regressions, and whether the unit of analysis is the county or a well-designed hospital service area. These results suggest that previous small-area variation studies may have incorrectly concluded that socioeconomic characteristics do not explain differences in utilization rates.

Patterns of surgical and nonsurgical hospital use in Michigan communities from 1980 through 1984.

Hospital discharge rates vary substantially among 60 communities in Michigan. (R2 = 90 percent and R2 = 85 percent of the systematic variance is explained by community effects for nonsurgical and surgical discharges, respectively.) The ranking of communities by discharge rates is stable over a five-year period (Spearman rho = 0.78 for nonsurgical discharges and 0.72 for surgical discharges). Surgical discharge rates decreased substantially (4 percent per year) over this time period, while nonsurgical rates showed no consistent pattern. Communities with exceptional discharge rates showed no substantial or significant regression toward the mean through the five-year study.

Health care coalitions: characteristics, activities, and prospects.

Health care coalitions are an important element in the 1980s' emphasis on private sector cost-containment initiatives. The peak years for the formation of these coalitions were 1982 and 1983. Based on a 1986 telephone survey of 215 health care coalitions, we provide an analysis of the maturing health care coalition movement, focusing on who is in them, what they do, how they are doing, and what they have accomplished. We also propose two life-cycle models that describe most coalitions. One model fits the temporary, outcome-oriented employer-only coalitions, while the second fits the more process-oriented broad-based coalitions. Our data, along with more recent information, suggest that at present the coalition movement is in decline.

The effect of HMOs on overall hospital expenses: is anything left after correcting for simultaneity and selectivity?

Policymakers are interested in the effect health maintenance organizations (HMOs) have had not only on the hospital expenditures of their enrollees, but also on the expenditures of non-HMO consumers. Previous studies of the "HMO effect" have focused on the comparison between hospital expenditures of HMO enrollees and those of non-HMO groups within the same market area. To the extent that the expenditures of non-HMO groups are affected by the presence of HMOs, this comparison will not give an accurate measure of the change in expenditures due to HMOs for either group. Using SMSAs without any HMOs as the comparison group can provide an accurate measure of the HMO effect on overall hospital expenses, if any nonrandom selection process of HMOs into SMSAs is controlled. In this article, the effect of prepaid group practices (PGPs) on overall hospital expenses is estimated using a simultaneous-equation model and all 283 standard metropolitan statistical areas (SMSAs) in 1980, controlling for any nonrandom selection process. The results indicate that while a significant selectivity bias exists that must be corrected, there is no significant PGP effect on hospital expenses. Controlling for other factors, hospital expenses per capita, per admission, and per day do not change as the PGP market share increases. While hospital expenses per capita for PGP enrollees may be falling, those of non-PGP groups in those SMSAs must be increasing by offsetting amounts.