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Expanding insurance coverage: Financial and quality spillovers in local health care markets

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Title: Expanding insurance coverage: Financial and quality spillovers in local health care markets


1
Expanding insurance coverage Financial and
quality spillovers in local health care markets
  • JA Pagán
  • 9/15/2009

2
Acknowledgment
  • AHRQs Minority Research Infrastructure Support
    Program.
  • AHRQs M-RISP Program funded the Health Services
    Research Initiative at The University of
    Texas-Pan American.
  • Grant Number R24HS017003.

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5
Issues
  • Health care reform debate is confusing.
  • Everyone wants to know Whats in for me?
  • Understanding potential spillovers of insurance/
    uninsurance on local health care markets is key.
  • Empirical analyses based on data from the
    Community Tracking Study ? Potential/realized
    access and assessment of health care providers.
  • Policy modeling and implications.

6
The uninsured population
  • 45 million nonelderly uninsured in 2009.
  • 54 million nonelderly uninsured by 2019.
  • 65 are from low-income families (lt200 FPL).
  • 35 of Latinos, 29 of Native Americans and 20
    of African Americans are uninsured compared to
    12 of whites.
  • Sources Congressional Budget Office, 2009
    Kaiser Family Foundation (2006) The Uninsured, A
    Primer.

7
Rationale for providing access
  • Good but not fully convincing argument
  • It is the right thing to do
  • Enlightened self-interest argument
  • It makes you and me better off

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9
Local communities and uninsurance
Increased public/ Private spending
Public health services
Lower revenue for healthcare providers
Economic effects
Population health
Financial instability of Providers/institutions
Reduce charity/ uncompensated care
Access to care
10
Unmet medical needs by community ranking and
insurance status
Pagán JA, Pauly MV. (2006). Community-level
uninsurance and the unmet medical needs of
insured and uninsured adults, Health Services
Research, 41(3) 788-803.
11
Spillovers and vulnerability the case of
community uninsurance (Pauly and Pagán, Health
Affairs 2007)
  • IOM framework High uninsurance results in higher
    uncompensated care (bad debt and charity care).
  • End result Insured people pay for this (10
    higher premiums higher prices cost-shifting).
  • This is a pecuniary community spillover (that is,
    a financial spillover that works its way through
    prices).
  • Local pecuniary spillovers on the insured are
    likely to be small when money flows from the
    outside (e.g., Medicare DSP, state funds).

12
Non-pecuniary or real spillovers
  • Occur when the uninsured demand a lower quality
    and quantity of health care than the insured.
  • Preference externalities distinct groups of
    consumers who have substantially different
    preferences from others bring forth products
    with more appeal to themselves but less appeal to
    others (Waldfogel, 2003).
  • Caveat Local health care markets must not be
    perfectly segmented.

13
Non-pecuniary, real spillovers in partially
insured markets
  • Uninsured demand lower quality care.
  • Even if the insured have differential access to
    health care (e.g., better facilities to go to),
    there are high fixed costs for quality
    differentiation.

14
Example Two communities of same size and number
of uninsured
  • Community 1 Uninsured never use charity care and
    can only pay for low quality care.
  • ? Only quality spillover.
  • Community 2 Uninsured get charity care and do
    not skimp on quality.
  • ? Only pecuniary spillover.

15
How can the insured reduce these negative
effects?
  • By patronizing health care suppliers that do not
    provide care to the uninsured or who do not
    engage in cost shifting.
  • This can only happen in large enough markets that
    can be segmented (e.g., in certain regions and
    for low-fixed-cost services).
  • Quality spillovers are more likely in specialty
    care, care requiring expensive equipment (e.g.,
    scanning), etc.

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17
Community uninsurance and mammography (J of
Clinical Oncology April 2008)
  • Women ages 40-69 from 2000-2001 CTS HS
    (n12,595).
  • Prob of mammography screening falls by 1.3 for
    every 10 increase in community uninsurance.

18
2009 IOM Report
  • Report covers
  • Health insurance coverage trends
  • Health effects
  • Community effects

19
Pauly Pagán Spillovers of uninsurance in
communities
  • 2003 CTS Household Survey ? Participants
    clustered in 60 communities (48 large metro
    areas, 3 small metro areas and 9 non-metro
    areas).
  • Working age population (N 31,935).
  • Health care measure f(Community uninsurance,
    Charity care, X, C).

20
Dependent variables
  • Potential and realized health care access
  • (1) Respondent has a place to go when sick
  • (2) Visited doctor
  • (3) Visited doctor for routine preventive care
  • Assessment of health care providers
  • (1) Satisfaction with choice of PCP
  • (2) Satisfaction with health care received
  • (3) Trust doctor

21
Independent variables (distinguishing pecuniary
and real spillovers)
  • Community uninsurance rate ? Proportion
    uninsured.
  • Charity care ? Proportion of uninsured
    respondents in a community with no cost-related
    problems obtaining medical care.
  • Charity care proxy is correlated with different
    sources of free care (hospitals, doctors and
    FQCHCs Herring, 2005).

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25
Simulated Effects of Changes in Community
Uninsurance and Charity Care on Potential and
Realized Health Care Access
  Had a place to go when sick Had a doctors visit in the past year Had a visit for routine preventive care Has seen specialist in the last 12 months
 
Community uninsurance
Percent uninsured in community (Baseline15.15) 92.01 84.98 64.79 98.25
Percent uninsured in community (New25.15) 87.96 83.37 62.56 97.94
Percentage point change -4.05 -1.61 -2.23 -0.31
Charity care
Percent of uninsured population with no cost-related access difficulties (Baseline67.71) 92.18 85.05 64.91 98.26
Percent of uninsured population with no cost-related access difficulties (New77.71) 92.05 85.08 64.65 98.18
Percentage point change -0.13 0.03 -0.26 -0.08
26
Simulated Effects of Changes in Community
Uninsurance and Charity Care on Assessment of
Health Care System Providers
  Very satisfied with PCP choice Very satisfied with health care Trust doctors Very satisfied with choice of specialist seen
 
Community uninsurance
Percent uninsured in community (Baseline15.15) 62.68 53.73 72.14 74.54
Percent uninsured in community (New25.15) 55.62 51.03 70.76 71.82
Percentage point change -7.06 -2.70 -1.38 -2.72
Charity care
Percent of uninsured population with no cost-related access difficulties (Baseline67.71) 63.10 53.92 72.22 74.67
Percent of uninsured population with no cost-related access difficulties (New77.71) 61.34 52.68 72.05 74.59
Percentage point change -1.76 -1.24 -0.17 -0.08
27
Conclusion/caveats
  • Model predictions depend on
  • the degree of market segmentation,
  • the amount of charity care (or below cost care),
    and
  • the source of resources to cover the cost of
    charity or below cost care.
  • Empirical evidence points to both real and
    pecuniary spillovers.
  • The theory is value neutral ? Insurance-related
    quality spillovers could be good or bad.

28
Punchline
  • Different approaches to cover the uninsured will
    lead to different effects on the insured.
  • Ex 1 Increase support for safety net providers
    that cater to the uninsured (e.g., community
    health centers) ? little positive real spillover
    on the insured.
  • Ex 2 Tax credits for health insurance would have
    a positive real spillover on the insured.

29
Agent-based model (D Damianov, JA Pagán)
  • Objective Understand consequences of various
    health care reform proposals.
  • Approach Modeling incentives to purchase
    insurance and use services based on the quality
    of the service provided, price, and
    risk/preferences.
  • Model useful to understand complex social
    dynamics and learning between micro/macro-level
    processes.
  • Agents respond to their social context,
    especially to the actions of other members in
    their community (local health care market).

30
Future
  • Health care reform plans are constantly changing
    How do we muddle through and get our message
    across?
  • In making the individual, business or social case
    for reform, the answer to the Whats in for me?
    question should always consider the broader
    community/market effects.

Thanks!
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