What’s the latest in health policy research? The Essential Scan, produced by the Schaeffer Initiative for Health Policy, aims to help keep you informed on the latest research and what it means for policymakers. To sign up to receive the Essential Scan straight to your inbox, sign up here.
Consumer-Directed Health Plans Increase Probability of Excessive Financial Burden for Enrollees, Especially Among Low-Income and Chronic Condition Subgroups
Study by: Xinke Zhang, Erin Trish, and Neeraj Sood
Consumer-directed health plans (CDHPs), which are high-deductible plans connected to health savings accounts, have increased in popularity among employers as they look to reduce healthcare costs. Yet, a new study found CDHPs may negatively affect the financial health of enrollees. The study found enrollment in CHDPs was associated with a mean marginal increase in out-of-pocket spending of $285 after the first year of enrollment, with a larger marginal increase for the lower-income and those with chronic conditions ($306 and $387, respectively). Furthermore, the authors found that more than half of the lower-income subgroup and more than one-third of the chronic conditions subgroup faced excessive financial burden (defined as spending more than 3 percent of income on healthcare) from out-of-pocket spending after enrollment in a CDHP. These findings suggest that for certain enrollees, CDHPs may negatively affect their financial and/or physical health in the long term, even though premiums for these plans may be lower. Full study here.
Maryland’s Global Budgeting Program Failed to Decrease Hospital Use or Spending
Study by: Eric T. Roberts, Laura A. Hatfield, J. Michael McWilliams, Michael E. Chernew, et al
In 2010, the state of Maryland shifted eight of its rural hospitals to an alternative payment model (APM) known as global budgeting. Under this new payment regime, hospitals participating in the program would no longer receive fee-for-service (FFS) payments from public and private insurers but would instead receive an annual budget that specifies how much revenue that hospital can receive each year from all payers. Policymakers expected that this APM would slow hospital spending growth, limit unnecessary hospital use, and encourage hospitals to develop population health management programs that provide care outside of the hospital. A new study analyzed the effects of this shift on a subset of Maryland’s Medicare population using rural hospitals and found that the new payment model caused no statistically significant changes in acute hospital use or price-standardized hospital spending. The authors hypothesize that these null results could be attributed to the fact that Maryland’s global budgeting program does not apply to physicians practicing outside of hospitals or to the Maryland system’s lack of prospective payments. This study highlights the importance of continually evaluating and updating new APMs to ensure they are achieving the quality and spending goals set by policymakers. Full study here.
Undermining the Affordable Care Act Hurts Vulnerable Adults with Chronic Health Conditions
Study By: Michael Karpman, Sharon K. Long, and Lea Bart
The heated health care policy debates of 2017 generated a series of proposed and enacted policies — including the repeal of the individual mandate — which could seriously undermine the ACA Marketplaces and underlying risk-pooling mechanisms. A new study uses HHS survey data to compare the health status of nonelderly adults receiving insurance through the Marketplaces with those receiving coverage through their employer or on the non-Marketplace nongroup market to better understand the population that will be most affected by policies that weaken the ACA. The authors found that enrollment in the private nongroup health insurance market more than doubled between 2013 and 2015, from 3.8 percent to 7.8 percent, with enrollment growth concentrated primarily in new Marketplaces formed by the ACA. They also found that 45 percent of Markteplace enrollees were treated for chronic conditions, as compared to 35 percent of adults with non-Marketplace nongroup coverage, and 38 percent of adults with employer-sponsored insurance. The researchers argue that policies aimed at undermining the ACA will cause healthy individuals to leave their Marketplace plans, which would lead to higher premiums or even loss of coverage for many of the chronically ill adults insured through the Marketplaces. Full study here.
Misuse of Limited Distribution Networks Encourages Anticompetitive Behavior Among Drug Companies
Study by: Laura Karas, Kenneth M. Shermock, Celia Proctor, Mariana Socal, and Gerard F. Anderson
Limited distribution networks (LDNs) are established when a drug manufacturer contracts with one or a limited number of drug distributors, supposedly to promote more effective allocation of drugs in shortage and ensure the safe distribution of high-risk drugs to small populations. However, there has been evidence that some pharmaceutical companies have used them monopolistically to obstruct access to drug samples sought by competitors to conduct the testing necessary to submit a generic or biosimilar drug application to the FDA. A new paper reviews the existing knowledge about the misuse of LDNs and discusses potential policy options that might remedy the situation. It finds that the delay in market entry for generic or biosimilar drugs results in substantial lost savings for both payers and patients. The article suggests several policy proposals to extend the scope of the FDA’s regulatory abilities, including: requiring the sale of drug samples to generic and biosimilar developers; determining which drugs can be distributed via LDNs; and mandating that drug companies disclose their intention to use LDNs. Full article here
Multimarket Contact in the Health Insurance Industry Effects Prices, Quality of Contracts
Study by: Haizhen Lin and Ian M. McCarthy
As mergers and consolidation continue, the health insurance industry is increasingly made up of a few large companies that overlap across multiple geographic markets. Theory in other industries suggest this overlap, defined as multimarket contact (MMC), may lead to a reduction in the intensity of competition as well as tacit collusion. A new study measures the effect of MMC on health insurance prices and quality using Medicare Advantage (MA) data from 2008 through 2015, finding that insurers tend to have higher prices and offer lower quality contracts when competing against the same insurers across multiple markets. The authors argue these results have important implications for existing antitrust enforcement procedures which tend to overlook anticompetitive effects of MMC on local markets. If cross-market mergers increase it could affect the overall intensity of competition even if the merger has no impact on local market concentration. Full study here.
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The Essential Scan is produced by the USC-Brookings Schaeffer Initiative for Health Policy, a collaboration between the Center for Health Policy at the Brookings Institution and the USC Schaeffer Center for Health Policy & Economics.