Variations in health care expenditure in the Alice Springs Rural District in 1993-94.
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Costs and Cost Analysis↗
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Redistributional consequences of community rating.
OBJECTIVE: To predict the geographical effects of community rating of health insurance premiums on the amount individuals pay for insurance. DATA SOURCES: We estimate premiums and health expenditures for a 5 percent sample of Californians from the 1990 U.S. Census (the Public Use Microdata Sample) and use data from Blue Cross of California to adjust for regional price differences in services. STUDY DESIGN: We use an episodic health simulation model to estimate health expenditures for 975,074 Californians. Because the simulations do not reflect expenditure differences due to price variation in cost of services, we adjust these data for relative price differences by county. This leaves us with a sample of Californians for whom we have estimated health expenditures. We then compute average expenditures within areas of different sizes (all California, two regions, within counties) to estimate community-rated premiums. We then compare these premiums with actual expenditures on a county-by-county basis. PRINCIPAL FINDINGS: With a single California-wide premium, rural residents pay premiums that exceed their use of care, while urban residents pay premiums that are less than their use of care. These transfers are substantial. Dividing California into regional risk pools at the county level still results in poorer communities providing substantial subsidies to their more wealthy counterparts. CONCLUSIONS: Mandated community rating of premiums in a heterogeneous state such as California results in large unintended transfers of wealth from poorer, rural communities to urban, wealthier communities. Allowing premiums to vary with the regional cost of medical care would eliminate some of the transfers without sacrificing the benefits of community rating. Subsidies to low-income families could also effectively mitigate this redistribution. UTILITY: This article points out some potentially regressive consequences of geographic community rating and suggests ways to mitigate them.
California↗
International health care expenditure trends: 1987.
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Australia↗
Deductibles and health care expenditures: empirical estimates of price sensitivity based on administrative data.
OBJECTIVE: To estimate the price sensitivity of demand for health care by analysing the relation between deductibles and expenditures found in an administrative database. DATA: Data are from 100,048 privately insured in the Netherlands. Information is available on expenditures in 1996, demographic variables, deductibles, and both diagnoses from hospitalisations and pharmacy costs for the years 1993-1995. The data are unique because prior pharmacy costs are good predictors of future expenditures while in the three years concerned these costs were covered by a separate national, mandatory insurance scheme. Therefore, these costs are not affected by deductibles and can be seen as excellent proxies for health status, which this study uses to correct for the existing adverse selection with respect to the choice of deductible. METHODS: For the group of insured without deductibles an expenditure model is estimated which is subsequently used to estimate expected expenditures for insurance policies with various levels of deductible. From the difference between actual and expected expenditures the impact of deductibles on expenditures is estimated, and from this price sensitivity. RESULTS: The principal finding is an estimated price elasticity of -0.14. The highest price sensitivity is found for GP care (-0.40) and physiotherapy (-0.32), and the lowest for specialist care (-0.12) and prescription drugs (-0.08); hospital care was hardly affected.
Adult↗
[The health costs of alcoholism].
OBJECTIVE: To evaluate the economic effect in terms of health costs of alcohol abuse in Spain. DESIGN: The most up-to-date available, secondary sources of information were used. The period for the costs calculation was a natural year, with the prices adjusted to pesetas in 1996. The focus was based on the prevalence of cases per period. All the information referred to the whole of Spain. SETTING: Health costs were broken down into out-patient attendance, hospital emergencies, admissions, treatment at special centres and other health expenditure. MEASUREMENTS AND MAIN RESULTS: The total health cost attributable to alcoholism was 177,084 million pesetas, broken down as follows: a) cost of hospital admissions: 93,644 million pesetas (52.88%); b) cost of out-patient attendance: 34,600 million (19.53%); c) cost of treatment at special centres: 18,029 million (10.18%); d) cost of hospital emergencies: 10,481 million (5.91%); and e) other health expenditure: 20,330 million pesetas (11.48%). CONCLUSIONS: The figures arrived at do not cover the total cost of alcohol abuse, since a conservative approach was adopted. They stand as a minimum of the expenditure in our country. Some are direct costs on health authorities, whereas others can be managed as a cost-opportunity problem.
Alcoholism↗
Environmental influences on healthcare expenditures: an exploratory analysis from Ontario, Canada.
STUDY OBJECTIVE: This paper explores the relation between healthcare expenditures (HCEs) and environmental variables in Ontario, Canada. DESIGN: The authors used a sequential two stage regression model to control for variables that may influence HCEs and for the possibility of endogenous relations. The analysis relies on cross sectional ecological data from the 49 counties of Ontario. MAIN RESULTS: The results show that, after control for other variables that may influence health expenditures, both total toxic pollution output and per capita municipal environmental expenditures have significant associations with health expenditures. Counties with higher pollution output tend to have higher per capita HCEs, while those that spend more on defending environmental quality have lower expenditures on health care. CONCLUSIONS: The implications of our findings are twofold. Firstly, sound investments in public health and environmental protection have external benefits in the form of reduced HCEs. Combined with the other benefits such as recreational values, investments in environmental protection probably yield net social benefits. Secondly, health policy that excludes consideration of environmental quality may eventually result in increased expenditures. These results suggest a need to broaden the cost containment debate to ensure environmental determinants of health receive attention as potential complements to conventional cost control policies.
Air Pollution↗
Where there is a doctor: strategies to increase productivity at lower costs. The economics of rural health care in the Dominican Republic.
The study of a rural health district in the Dominican Republic found relatively high levels of public and out-of-pocket primary health expenditures and poor quality of care. The inefficient use of public resources and low efficacy were attributed to: (1) underutilization of health services, (2) low productivity of human and physical resources, which in turn were caused by poor managerial practices, shortages of medicines, dispersion of the population and the compulsory 1-year rural social service required from all graduating physicians (known as pasantía in some Latin American countries and medicatura rural in others). Out-of-pocket health expenditures responded to unnecessary self-referrals and excessive self-medications. The findings suggest that the quality of care can be improved and the public and out-of-pocket expenditures reduced by: (1) the replacement of the social service (pasantía) by permanent physicians, (2) the organization of communal pharmacies and (3) the establishment of outreach health posts. It is argued that today in the Dominican Republic as in many other Latin American countries unemployed or underemployed physicians are willing to take permanent positions in rural areas. The study suggests that rural physicians need and will be willing to accept the fact that much of their medical training has no applicability to the rural setting. The retraining or recycling of rural physicians for their new health roles is discussed also.
Community Health Services↗
From profession-based leadership to service line management in the Veterans Health Administration: impact on mental health care.
OBJECTIVES: To investigate the impact of implementing service line organization on the delivery of mental health services. METHODS: Survey data on the implementation of service lines and facility-level administrative data on the delivery of mental health services at 139 Department of Veterans Affairs medical centers (VAMCs), over a 6-year period, were used to examine the relationship between service line implementation and subsequent performance in 4 areas: 1) continuity of care (COC), 2) readmission after inpatient discharge, 3) emphasis on community-based mental health care (as contrasted with inpatient care), and 4) maintenance of proportionate funding for mental health care. Models were analyzed using hierarchical linear modeling techniques to control for potential autocorrelation. RESULTS: Of 6 COC measures, 1 strongly improved in all years following service line implementation, and 3 of the 5 other measures demonstrated improvement in the first year. One of 2 readmission measures showed a decline in the first year after service line implementation. Service line implementation was associated with only 1 indicator of increased emphasis on community-based mental health care (and only in the first year), whereas 3 of the 4 other measures suggested a decline in such emphasis. Lastly, although there were increases in per capita mental health expenditures 3 or more years after service line implementation, 2 related measures indicated that service line implementation was associated with a decline in mental health expenditures relative to nonmental health services. CONCLUSION: Service line implementation was associated with significant, although predominantly short-term, improvement in patient level variables such as continuity of care and hospital readmission, but less so with regard to institutional measures addressing emphasis on outpatient care and maintaining proportionate funding of mental health services.
Community Mental Health Services↗
Expenditures for mental health services in the Utah Prepaid Mental Health Plan.
This article examines the effect of a mental health carve-out, the Utah Prepaid Mental Health Plan (UPMHP), on expenditures for mental health treatment and utilization of mental health services for Medicaid beneficiaries from July 1991 through December 1994. Three Community Mental Health Centers (CMHCs) provided mental health services to Medicaid beneficiaries in their catchment areas in return for capitated payments. The analysis uses data from Medicaid claims as well as "shadow claims" for UPMHP contracting sites. The analysis is a pre/post comparison of expenditures and utilization rates, with a contemporaneous control group in the Utah catchment areas not in the UPMHP. The results indicate that the UPMHP reduced acute inpatient mental health expenditures and admissions for Medicaid beneficiaries during the first 2 1/2 years of the UPMHP. In contrast, the UPMHP had no statistically significant effect on outpatient mental health expenditures or visits. There was no significant effect of the UPMHP on overall mental health expenditures.
Capitation Fee↗
National health care expenditures: Where do the dollars go?
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Dentists↗
Is health care a luxury? New evidence from OECD data.
Most research using cross-country data find income elasticities equal to or exceeding unity with respect to health expenditure. These conclusions might be confounded due to omitted variables bias and the presence of unobserved country and year specific determinants of per capita health expenditures. I obtain results supporting these hypotheses using recent (1990-98) data from fifteen OECD countries. Specifically, OLS coefficient estimates drop by more than 50% with the use of two-way fixed effects models and the inclusion of various demand and supply based determinants of per capita health expenditures, implying income elasticities of between 0.21 and 0.51. Weighted Least Squares (WLS), Generalized Least Squares (GLS) and Instrumental Variables (IV) estimation yield similar results.
Delivery of Health Care↗
Financial Burden and Out-of-Pocket Expenditures for Mental Health Across Different Socioeconomic Groups: Results from HealthCare for Communities.
BACKGROUND: Mental health benefits have traditionally been much less generous than benefits for physical health care, with separate deductibles, higher copayments or coinsurance, and lower limits on covered services, a trend that continues despite a recent wave of 'parity' legislation. In spite of the current policy debates on mental health insurance reforms, little is known about the burden of mental health out-of-pocket expenditures. AIMS OF THE STUDY: This study examines differences in out-of-pocket expenditures and their burden across different populations, stratified by insurance status, age, ethnicity, and socioeconomic groups. METHODS: This study uses the 1998 HealthCare for Communities household survey, the latest national survey data that are currently available, to measure the burden of out-of-pocket mental health expenditures. We use several measures of burden such as total out-of-pocket expenditures, their share of total treatment costs, and their share of family income. To address the methodological issues that arise in the calculation of the relative measures of burden (e.g. outliers, measurement error, systematic underreporting) we consider three different approaches that have been suggested in the literature and discuss their relative advantages given the type of data typically available. RESULTS: Although there is a common perception that out-of-pocket expenditures for mental health services represent a significant burden for service users, the estimates suggest that this is not the case. In fact, across the three measures of out-of-pocket expenditures as a share of income the estimates are under 10 percent for most groups. However, there is some variation in burden across groups with people who are older, uninsured, or minority spending a larger share of their income out-of-pocket. Since many insurance plans have limits on the number of visits covered and on the total amount that the insurer will pay for mental health services, the share of total mental health expenditures that are paid by individuals is another important measure of the burden faced by people with mental health service needs. We estimate that the mean out-of-pocket share of total expenditures for the group as a whole is 25 percent. In addition, we find that the burden varies across groups with older, more educated, or privately insured individuals paying a larger share of expenditures out-of-pocket. DISCUSSION: Although the overall picture regarding the burden of out-of-pocket costs relative to income is encouraging, it is also important to keep in mind that individuals make treatment decisions based on their available income. The fact that the burden of actual out-of-pocket payments is relatively low may also reflect decisions to forego potentially valuable care. Nevertheless, the results for mental health do not suggest that out-of-pocket costs are currently a major burden for most users. This situation may reflect a major change from the past given the recent shifts towards managed care, however there are no comparable data available to test this hypothesis empirically. IMPLICATIONS FOR HEALTH POLICY FORMULATION AND FURTHER RESEARCH: It may be tempting to attribute the low estimates of out-of-pocket expenditures as a share of income in this paper to recent parity legislation. However, recent research shows that parity legislation has not led to significant changes in benefit design. In fact the high ratio of out-of-pocket payments relative to total mental health care expenditures presented in this paper are consistent with a limited role of parity legislation. Another possible explanation for the observed results is the growth of managed care and the shift in treatment style towards greater use of medications, which are comprehensively covered in most private insurance plans, has reduced total treatment costs and consequently the size of out-of-pocket payments.
Journal Article↗
The demand for OTC medicines: some Australian evidence.
One of the major social goals of the government in any country is the provision of adequate health care for all its residents. This is certainly the case in Australia where total health expenditure as a proportion of gross domestic product (GDP) has risen since the early 1970s to its current level of over 7%. Well over half of this health expenditure comes from the public purse upon which increasing demands are being made. One potential means of reducing this pressure in the health area is a greater reliance on self health care which includes the use of OTC medicines. The present paper examines the economics of self health care through the specification of an economic model of the demand for self care and the empirical testing of this model using Australian data. The model is then used to calculate the consumer surplus in the market for OTC medicines as a measure of part of the benefits of self medication in the Australian health care system.
Australia↗
The systemic lupus erythematosus Tri-nation Study: absence of a link between health resource use and health outcome.
OBJECTIVE: Health consumption and health status in SLE in three countries with different health funding structures were compared. METHODS: Seven hundred and fifteen SLE patients (Canada 231, USA 269, UK 215) were surveyed semi-annually over 4 yr for health resource utilization and health status. Cross-country comparisons of (i) cumulative health expenditure (calculated by applying 2002 Canadian prices to resources in all countries) and (ii) disease damage (Systemic Lupus International Collaborating Clinics/American College of Rheumatology Damage Index, SLICC/ACR DI) at study conclusion were performed after adjustment. Missing expenditure and damage data were managed through multiple imputation using best predictive regressions with all available data from all patients as potential covariates. RESULTS: Four hundred and eighty-five patients provided data at study entry and conclusion and at least four resource questionnaires (Canada 162, USA 157, UK 166); 41 died (Canada 13, USA 18, UK 10); 189 withdrew, were lost to follow-up or provided data at entry and conclusion but fewer than four resource questionnaires (Canada 56, USA 94, UK 39). At conclusion, after imputation, in Canada, the USA and the UK respectively, mean cumulative costs per patient over 4 yr [95% confidence interval (CI)] were $15,845 (13,509, 18,182), $20,244 (17,764, 22,724) and $17,647 (15,557, 19,737) and mean changes in SLICC/ACR DI were 0.49 (0.39, 0.60), 0.63 (0.52, 0.74) and 0.48 (0.39, 0.57). After adjustment for baseline differences, on average (95% CI), Canadian and British patients utilized 20% (8%, 32%) and 13% (1%, 24%) less resources than patients in the USA respectively, but experienced similar health outcomes. CONCLUSION: Despite patients in the USA incurring higher health expenditures, they did not experience superior health outcomes.
Adult↗
Out-of-pocket health care expenditures among older Americans with dementia.
The number of older individuals with dementia will likely increase significantly in the next decades, but there is currently limited information regarding the out-of-pocket expenditures (OOPE) for medical care made by cognitively impaired individuals and their families. We used data from the 1993 and 1995 Asset and Health Dynamics Study, a nationally representative longitudinal survey of older Americans, to determine the OOPE for individuals with and without dementia. Dementia was identified in 1993 using a modified version of the Telephone Interview for Cognitive Status for self-respondents, and proxy assessment of memory and judgment for proxy respondents. In 1995, respondents reported OOPE over the prior 2 years for: 1) hospital and nursing home stays, 2) outpatient services, 3) home care, and 4) prescription medications. The adjusted mean annual OOPE was 1,350 US dollars for those without dementia, 2,150 US dollars for those with mild/moderate dementia, and 3,010 US dollars for those with severe dementia (p < 0.01). Expenditures for hospital/nursing home care (1,770 per year US dollars) and prescription medications (800 per year US dollars) were the largest OOPE components for those with severe dementia. We conclude that dementia is independently associated with significantly higher OOPE for medical care compared with those with normal cognitive function. Severe dementia is associated with a doubling of OOPE, mainly due to higher payments for long-term care. Given that the number of older Americans with dementia will likely increase significantly in the coming decades, changes in public funding aimed at reducing OOPE for both long-term care and prescription medications would have considerable impact on individuals with dementia and their families.
Aged↗
A macroeconomic review of dentistry in Canada in the 1990s.
OBJECTIVES: To document the trends in expenditures on dental health care services and the number of dental health care professionals in Canada from 1990 to 1999. METHODS: Information on dental and health expenditures, numbers of dentists, hygienists and dental therapists, and the population of Canada and the provinces were obtained from the Canadian Institute for Health Information; data on numbers of denturists were obtained from regional bodies and from Health Canada. Information on the costs of other disease categories was taken from studies by Health Canada (1993 and 1998). International comparisons were made on the basis of data published by the Organisation for Economic Co-operation and Development (OECD). Indices of change over the decade (in which the 1990 value served as the baseline [100]) were calculated. RESULTS: By 1999, the supply of all types of dental care providers had increased to 1 for every 904 people. Dental expenditures during the 1990s increased by 64% overall and by 49% per capita, a rate of increase that exceeded both inflation and costs of health care. Although the public share of dental costs decreased from 9.2% to 5.8%, the direct costs of dental care increased to rank second (6.30 billion dollars) after those for cardiovascular diseases (6.82 billion dollars). Among the OECD nations, Canada had the fourth highest per capita dental expenditures and the second lowest per capita public dental expenditures. CONCLUSIONS: The direct economic costs of dental conditions increased during the 1990s from 4.13 billion dollars to 6.77 billion dollars. Over the same period, the public share for expenditures on dental health care services declined.
Canada↗
Trends in medical care cost--revisited.
Market forces have had a greater influence on the health care sector than anticipated. The increased use of managed care, particularly HMOs, has been largely responsible for a sharp deceleration in the rise of medical care costs. After recording double-digit growth for much of the post-Medicare/Medicaid period, national health expenditures rose just 5.1 percent and 5.5 percent in 1994 and 1995, respectively. The medical care Consumer Price Index (CPI) rose 3.5 percent in 1996-just 0.5 percent above the overall CPI. The delivery and financing of health care continues to evolve within a framework of cost constraints. As such, mergers, acquisitions and provider alliance groups will remain an integral part of the health industry landscape. However, cost savings are likely to become more difficult to achieve, especially if the "quality of care" issue becomes more pronounced. National health expenditures, which surpassed the $1 trillion mark in 1996, are projected to rise to $1.4 trillion by the year 2000--representing a 7.2 percent growth rate from 1995. In any event, demographics and technological advances suggest that the health sector will demand a rising share of economic resources. The ratio of health care expenditures to gross domestic product is forecast to rise from 13.6 percent in 1995 to 15 percent by the year 2000.
Economic Competition↗
Testing the limits of deinstitutionalization.
OBJECTIVE: From 1978 to 1993, under favorable administrative and political conditions and protected by a court-ordered consent decree, a comprehensive community-based mental health system was established in western Massachusetts that entirely replaced Northampton State Hospital. This paper examines that experience to describe the characteristics and comparative department of mental health expenditures on alternative treatment settings and to explore whether the need for state hospitals can be eliminated. METHODS: Data on distribution and department of mental health funding of services in western Massachusetts were compared with similar data from the rest of the state, where state hospital utilization remained relatively high. RESULTS: Between 1978 and 1992, department of mental health expenditures on noninpatient community services in western Massachusetts increased from 15 percent to 74 percent of total expenditures on adult mental health services. In 1992 per capita expenditures on such services in western Massachusetts and the rest of the state were similar. However, per capita expenditures for inpatient services constituted 27 percent of total expenditures in western Massachusetts, compared with 53 percent in the rest of the state. Western Massachusetts spent approximately twice as much per capita on residential and emergency services and one and a half times as much on case management services and support. Very few Northampton patients were transferred to nursing homes, and the inpatient census per 100,000 population supported by the department of mental health in western Massachusetts was one-third of that in the rest of the state. CONCLUSION: Under certain conditions, the role and functions of state hospitals can be completely replaced by a system of comprehensive community services.
Adult↗