Saving Money or Just Saving Lives? Improving the Productivity of US Health Care Spending

Baicker, Katherine; Chandra, Amitabh; Skinner, Jonathan

doi:10.1146/annurev-economics-080511-110942

Cited by 23 publications

(20 citation statements)

References 97 publications

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“…Within the US, Medicare spending varies widely across hospitals, and a natural question is whether hospitals that provide more care and accrue higher Medicare spending levels actually achieve better health outcomes or whether the additional spending at high-cost hospitals is largely unnecessary due to moral hazard concerns (Baicker et al 2012). …”

Section: Introductionmentioning

confidence: 99%

Measuring Returns to Hospital Care: Evidence from Ambulance Referral Patterns

Doyle

Graves

Gruber

et al. 2015

Journal of Political Economy

154

129

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Medicare spending exceeds 4% of GDP in the US each year, and there are concerns that moral hazard problems have led to overspending. This paper considers whether hospitals that treat patients more aggressively and receive higher payments from Medicare improve health outcomes for their patients. An innovation is a new lens to compare hospital performance for emergency patients: plausibly exogenous variation in ambulance-company assignment among patients who live near one another. Using Medicare data from 2002–2010, we show that ambulance company assignment importantly affects hospital choice for patients in the same ZIP code. Using data for New York State from 2000–2006 that matches exact patient addresses to hospital discharge records, we show that patients who live very near each other but on either side of ambulance service area boundaries go to different types of hospitals. Both identification strategies show that higher-cost hospitals achieve better patient outcomes for a variety of emergency conditions. Using our Medicare sample, the estimates imply that a one standard deviation increase in Medicare reimbursement leads to a 4 percentage point reduction in mortality (10% compared to the mean). Taking into account one-year spending after the health shock, the implied cost per at least one year of life saved is approximately $80,000. These results are found across different types of hospitals and patients, as well across both identification strategies.

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Section: Introductionmentioning

confidence: 99%

Measuring Returns to Hospital Care: Evidence from Ambulance Referral Patterns

Doyle

Graves

Gruber

et al. 2015

Journal of Political Economy

154

129

View full text Add to dashboard Cite

show abstract

“…39,40 There are, however, current legal and political restrictions on the wider use of insurance policies that restrict coverage of treatments without proven cost-effective benefits. 20,21,41–45 …”

Section: Policy Implicationsmentioning

confidence: 99%

“…21 That is, would low-income Medicare recipients be better off with a program that covered proton beam therapy for prostate cancer—costing at least $25,000 more than conventional treatment but with little evidence of better outcomes—or with equivalent financial assistance to buy food or pay the mortgage?…”

mentioning

confidence: 99%

Public Financing Of The Medicare Program Will Make Its Uniform Structure Increasingly Costly To Sustain

Baicker

Shepard²,

Skinner

2013

Health Affairs

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The US Medicare program consumes an ever-rising share of the federal budget. Although this public spending can produce health and social benefits, raising taxes to finance it comes at the cost of slower economic growth. In this article we describe a model incorporating the benefits of public programs and the cost of tax financing. The model implies that the “one-size-fits-all” Medicare program, with everyone covered by the same insurance policy, will be increasingly difficult to sustain. We show that a Medicare program with guaranteed basic benefits and the option to purchase additional coverage could lead to more unequal health spending but slower growth in taxation, greater overall well-being, and more rapid growth of gross domestic product. Our framework highlights the key trade-offs between Medicare spending and economic prosperity.

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“…There are a number of institutional details in the health care sector that create inefficiency or reduce the amount of health received per dollar spent, and society would be better off if policy action could reduce that inefficiency. 6,7 Rapid spending growth in the private sector exacerbates socioeconomic disparities in access to coverage and care because private responses to high spending often involve shifting costs to patients, and policy makers may be concerned about the resulting disparities. 8 Private-sector spending growth influences public spending growth at the system level through two mechanisms.…”

Section: Medicare Program Spending Versus Overall Spending For Benefimentioning

confidence: 99%

“…13 Of course, this does not imply that all innovations are worth the added expenditures. 7 Financial pressure associated with medical innovation can be alleviated, and perhaps health outcomes can be improved, by eliminating inefficiencies in the delivery of care, including the inefficient use of new technologies. In fact, some new technologies in the future may contribute to efficiency gains.…”

Section: Reduce the Level Of Spending Or The Rate Of Spending Growth?mentioning

confidence: 99%

Additional Reductions In Medicare Spending Growth Will Likely Require Shifting Costs To Beneficiaries

Chernew

2013

Health Affairs

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Policy makers have considerable interest in reducing Medicare spending growth. Clarity in the debate on reducing Medicare spending growth requires recognition of three important distinctions: the difference between public and total spending on health, the difference between the level of health spending and rate of health spending growth, and the difference between growth per beneficiary and growth in the number of beneficiaries in Medicare. The primary policy issue facing the US health care system is the rate of spending growth in public programs, and solving that problem will probably require reforms to the entire health care sector. The Affordable Care Act created a projected trajectory for Medicare spending per beneficiary that is lower than historical growth rates. Although opportunities for one-time savings exist, any long-term savings from Medicare, beyond those already forecast, will probably require a shift in spending from taxpayers to beneficiaries via higher beneficiary premium contributions (overall or via means testing), changes in eligibility, or greater cost sharing at the point of service.

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Saving Money or Just Saving Lives? Improving the Productivity of US Health Care Spending

Cited by 23 publications

References 97 publications

Measuring Returns to Hospital Care: Evidence from Ambulance Referral Patterns

Measuring Returns to Hospital Care: Evidence from Ambulance Referral Patterns

Public Financing Of The Medicare Program Will Make Its Uniform Structure Increasingly Costly To Sustain

Additional Reductions In Medicare Spending Growth Will Likely Require Shifting Costs To Beneficiaries

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