Projecting long term medical spending growth

Borger, Christine; Rutherford, Thomas F.; Won, Gregory Y.

doi:10.1016/j.jhealeco.2007.03.003

Cited by 22 publications

(18 citation statements)

References 21 publications

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“…Several models have documented efforts to test the sensitivity of model outputs to changes in the values of key drivers [15,18,21,22,25,26,57]. A few have documented efforts to compare outputs to observed estimates or other forecasts [51,55].…”

Section: Criteria To Assess the Performance Of Forecasting Methodsmentioning

confidence: 99%

“…They allow assessing the implications of higher levels of medical-care spending and higher governmental health expenditures on economic growth; and identify what are the long-run determinants of medical spending growth. For example, the CMS Dynamic Computable General Equilibrium Model [15] represents the US economy as being composed of two markets, health and non-health products, for which aggregate demand and supply are modelled. From the demand side, individuals are assumed to maximise their welfare through consumption of both products, subject to their income and savings.…”

Section: Macro-level Modelsmentioning

confidence: 99%

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Informing policy makers about future health spending: A comparative analysis of forecasting methods in OECD countries

2012

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Section: Criteria To Assess the Performance Of Forecasting Methodsmentioning

confidence: 99%

Section: Macro-level Modelsmentioning

confidence: 99%

Informing policy makers about future health spending: A comparative analysis of forecasting methods in OECD countries

2012

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“…We can then express social welfare as the sum of three integrals, and the efficient outcome is given by the solution to the following problem: (8) Three first-order conditions (FOC) define the solution, (θ 1 *, θ 2 *, x*), to (8). Consider the FOC with respect to x MA describing the x* best for the beneficiaries in MA: (9) Condition (9) is a public good-like condition stating that at x*, the sum of the marginal valuations of x less marginal cost, weighted by the frequency of θ in MA, equals zero. x* is the efficient care for just one value of θ (the value that solves V x (x*, θ) =1)), but the efficient sorting puts beneficiaries with θ in a range above and below this value into MA (because of the overconsumption for all beneficiaries in TM).…”

Section: The First-best Level Of Managed Carementioning

confidence: 99%

Making Medicare Advantage a Middle-Class Program

Glazer

McGuire²

2016

Models of Health Plan Payment and Quality Reporting

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This paper studies the role of Medicare's premium policy in sorting beneficiaries between traditional Medicare (TM) and managed care plans in the Medicare Advantage (MA) program. Beneficiaries vary in their demand for care. TM fully accommodates demand but creates a moral hazard inefficiency. MA rations care but disregards some elements of the demand. We describe an efficient assignment of beneficiaries to these two options, and argue that efficiency requires an MA program oriented to serve the large middle part of the distribution of demand: the "middle class." Current Medicare policy of a "single premium" for MA plans cannot achieve efficient sorting. We characterize the demand-based premium policy that can implement the efficient assignment of enrollees to plans. If only a single premium is feasible, the second-best policy involves too many of the low-demand individuals in MA and a too low level of services relative to the first best. We identify approaches to using premium policy to revitalize MA and improve the efficiency of Medicare.

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“…For example, GDP growth generates tax revenue growth, which allows greater expansion of existing government-financed health care systems; the long-run elasticity of health care expenditures with regard to aggregate income is estimated to be roughly one (Getzen 1992); see Borger, Rutherford, and Won 2008). 12 The short-run fall in tax revenue during the Great Recession played a key role in reducing European health care spending (OECD, 2013), but as noted earlier, similar effects were muted in the United States; Medicare was largely insulated from budgetary cuts during the recession, while Medicaid spending actually increased as enrollment surged.…”

Section: Factors That Might Have Reduced Cost Growthmentioning

confidence: 99%

Is This Time Different?: The Slowdown in Health Care Spending

Chandra¹,

Holmes²,

Skinner³

2013

eca

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Why have health care costs moderated in the last decade? Some have suggested that the Great Recession alone was the cause, but health expenditure growth in the depths of the recession was nearly identical to growth prior to the recession. Nor can the Affordable Care Act (ACA) take credit, since the slowdown began prior to its implementation. Instead, we identify three primary causes of the slowdown: the rise in high-deductible insurance plans, state-level efforts to control Medicaid costs, and a general slowdown in the diffusion of new technology, particularly for use by the Medicare population. A more difficult question is: Will this slowdown continue? On this question we are pessimistic, and not entirely because a similar (and temporary) slowdown occurred in the early 1990s. The primary determinant of long-term growth is the continued development of expensive technology, and there is little evidence of a permanent slowdown in that pipeline. Proton beam accelerators are on target to double between 2010 and 2014, while the market for heart-assist devices (costing more than $300,000 each) is projected to grow rapidly. Accountable care organizations (ACOs) and emboldened insurance companies may yet stifle health care cost growth, but our best estimate over the next two decades is that health care costs will grow at GDP plus 1.2 percent, a rate lower than previous estimates but still on track to cause serious fiscal pain for taxpayers and workers who bear the costs of higher premiums.

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Projecting long term medical spending growth

Cited by 22 publications

References 21 publications

Informing policy makers about future health spending: A comparative analysis of forecasting methods in OECD countries

Informing policy makers about future health spending: A comparative analysis of forecasting methods in OECD countries

Making Medicare Advantage a Middle-Class Program

Is This Time Different?: The Slowdown in Health Care Spending

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