Comparative financing analysis and political economy of noncommunicable diseases.

The pandemic of chronic non-communicable diseases (NCDs) poses substantial challenges to the health financing sustainability in high-income and low/middle income countries (LMICs). The aim of this review is to identify the bottle neck inefficiencies in NCDs attributable spending and propose sustainable health financing solutions. The World Health Organization (WHO) introduced the "best buy" concept to scale up the core intervention package against NCDs targeted for LMICs. Population- and individual-based NCD best buy interventions are projected at US$170 billion over 2011-2025. Appropriately designed health financing arrangements can be powerful enablers to scale up the NCD best buys. Rapidly developing emerging nations dominate the landscape of LMICs. Their capability and willingness to invest resources for eradicating NCDs could strengthen WHO outreach efforts in Asia, Africa, and Latin America, much beyond current capacities. There has been a declining trend in international donor aid intended to cope with NCDs over the past decade. There is also a serious misalignment of these resources with the actual needs of recipient countries. Globally, the momentum towards the financing of intersectoral actions is growing, and this presents a cost-effective solution. A budget discrepancy of 10:1 in WHO and multilateral agencies remains in donor aid in favour of communicable diseases compared to NCDs. LMICs are likely to remain a bottleneck of NCDs imposed financing sustainability challenge in the long-run. Catastrophic household health expenditure from out of pocket spending on NCDs could plunge almost 150 million people into poverty worldwide. This epidemiological burden coupled with population ageing presents an exceptionally serious sustainability challenge, even among the richest countries which are members of the Organization for Economic Co-operation and Development (OECD). Strategic and political leadership of WHO and multilateral agencies would likely play essential roles in the struggle that has just begun.

Symposium Introduction: Papers on 'Modeling National Health Expenditures'.

Significant contributions have been made since the World Health Organization published Brian Abel-Smith's pioneering comparative study of national health expenditures more than 50 years ago. There have been major advances in theories, model specifications, methodological approaches, and data structures. This introductory essay provides a historical context for this line of work, highlights four newly published studies that move health economics research forward, and indicates several important areas of challenging but potentially fruitful research to strengthen future contributions to the literature and make empirical findings more useful for evaluating health policy decisions. Copyright © 2016 John Wiley & Sons, Ltd.

Evolving Health Expenditure Landscape of the BRICS Nations and Projections to 2025.

Global health spending share of low/middle income countries continues its long-term growth. BRICS nations remain to be major drivers of such change since 1990s. Governmental, private and out-of-pocket health expenditures were analyzed based on WHO sources. Medium-term projections of national health spending to 2025 were provided based on macroeconomic budgetary excess growth model. In terms of per capita spending Russia was highest in 2013. India's health expenditure did not match overall economic growth and fell to slightly less than 4% of GDP. Up to 2025 China will achieve highest excess growth rate of 2% and increase its GDP% spent on health care from 5.4% in 2012 to 6.6% in 2025. Russia's spending will remain highest among BRICS in absolute per capita terms reaching net gain from $1523 PPP in 2012 to $2214 PPP in 2025. In spite of BRICS' diversity, all countries were able to significantly increase their investments in health care. The major setback was bold rise in out-of-pocket spending. Most of BRICS' growing share of global medical spending was heavily attributable to the overachievement of People's Republic of China. Such trend is highly likely to continue beyond 2025. Copyright © 2016 John Wiley & Sons, Ltd.

The Hungarian Care Managing Organization Pilot Program.

OBJECTIVES: The aim of this article was to provide a description of the Hungarian care managing organization (CMO) pilot program and its environment, incentive structure, and preliminary outcomes. The need to change the behavior of doctors to increase the effectiveness and cost-effectiveness of the system was the key rationale for the Hungarian CMO pilot program. METHODS: After an application process, nine CMOs were entitled to enter into the system in July 1999. By 2006, there were 14 CMOs covering 2.1 million people. The Hungarian CMO program tried to combine the advantages of both the US managed care programs and the UK general practitioner fundholding system, within the constraints and opportunities of a Central-European country committed to a single-payer health insurance system. RESULTS: The revenue of CMOs derived from a risk-adjusted capitation. The capitation formula was weighted only by age and sex. The expenditures of the CMOs included all the health expenditures on their patients that occurred in any part of the health care system. The average savings rate for all CMOs for the fiscal years 1999 to 2007 was 4.94%. The highest rates of savings were realized in chronic and acute inpatient care and medical devices. The pilot was discontinued in 2008 without a comprehensive evaluation of the experience. CONCLUSIONS: We can conclude that this pilot had a significant contribution to the modernization of the Hungarian health care system.

10th World IHEA and ECHE Joint Congress: health economics in the age of longevity.

The 10th consecutive World Health Economics conference was organized jointly by International Health Economics Association and European Conference on Health Economics Association and took place at The Trinity College, Dublin, Ireland in July 2014. It has attracted broad participation from the global professional community devoted to health economics teaching,research and policy applications. It has provided a forum for lively discussion on hot contemporary issues such as health expenditure projections, reimbursement regulations,health technology assessment, universal insurance coverage, demand and supply of hospital services, prosperity diseases, population aging and many others. The high-profile debate fostered by this meeting is likely to inspire further methodological advances worldwide and spreading of evidence-based policy practice from OECD towards emerging markets.

Can a violation of investor trust lead to financial contagion in the market for tax-exempt hospital bonds?

Not-for-profit hospitals rely heavily on tax-exempt debt. Investor confidence in such instruments was shaken by the 1998 bankruptcy of the Allegheny Health and Education Research Foundation (AHERF), which was the largest U.S. not-for-profit failure up to that date and whose default was accompanied by claims of accounting irregularities. Such shocks can result in contagion whereby all hospitals are viewed as riskier. We test for the significance and duration of resulting contagion using an industry-specific model of interest cost determinants. Empirical tests indicate that contagion does occur, resulting in higher interest on new debt issues from other hospitals.

Public goods and externalities: a research agenda for public health economics.

Among the many roles a government plays in our daily lives, protecting the public's health is one of the most conspicuous. The government provides goods and services such as registration of births and deaths, public health surveillance of disease and injury, outbreak investigations, research and education, health insurance for the poor and elderly, enforcement of laws and regulations, evaluation of health promotion programs, and assurance of a competent healthy workforce. In the past, economics in public health has almost exclusively focused on efficiency of programs through the use of cost-effectiveness or net present value measures clustered under the rubric of "economic evaluation." Efficiency measures are useful at the programmatic level. However, lack of full employment and market failures including public goods and the impact of consumers and producers actions not reflected in the markets (externalities) not only compromise efficiency but also generate health inequities. We propose an expansion of the scope of existing health economics research in an area characterized as public health economics--the study of the economic role of government in public health, particularly, but not exclusively, in supplying public goods and addressing externalities.

The company you keep: spreading effects of financial fraud on investor trust.

Investor trust is valuable to health care organizations. Without it, they may face higher capital costs. This study explores recent cases of fraud and the appearance of impropriety by health care organizations, focusing on the manners in which trust was violated, the systems that allowed those violations, and the effects on financial markets. Increases in the incidence and scale of such transgressions may be harbingers of worse times ahead. This article examines how recent events have affected the cost of capital, and what health care organizations can do to avoid being judged by the company they keep.

Aggregation and the measurement of health care costs.

OBJECTIVE: This study evaluated the extent to which the causes of variation in health care costs differ by the level at which observations are made. METHODS: More than 40 U.S. and international studies providing empirical estimates of the sources of variation in health care costs were reviewed and arrayed by size of observational units. A simplified graphical analysis demonstrating how estimated correlation coefficients change with the level and type of aggregation is presented. RESULTS: As the unit of observation becomes larger, association between health care costs and health status/morbidity becomes weaker and smaller in magnitude, while correlation with income (per capita GDP) becomes stronger and larger. Individual expenditure variation within a particular health care system is largely due to differences in health status, but across systems, morbidity has almost no effect on costs. For nations, differences in per capita income explain over 90 percent of the variation in both time series and cross section. CONCLUSIONS: Units of observation used for analysis of health care costs must be matched to the units at which decision making occurs. The observed pattern of empirical results is consistent with a multilevel allocative model incorporating aggregate capacity constraints. To the extent that macro constraints determine total budgets at the national level, policy interventions at the micro level (substitution of generic pharmaceuticals, use of CEA for allocation of treatments, controls on construction and technology, etc.) can act to improve efficiency, equity and average health status, but will not usually reduce aggregate average per capita costs of medical care.

On the money: making forecasts what they should be.

A forecast is an extrapolation from data describing what has happened in the past. Most healthcare organizations can perform all of the forecasting they require on a spread-sheet without use of special software. To ensure objectivity, managers should create the forecasts, and executives should evaluate them.

Bariatric surgery and the financial reimbursement cycle.

Financial reimbursement for new health care services tends to progress through a predictable cycle. Initially, requests for payment are often honored in full based on the assumption that generous reimbursement is necessary to bring about an expansion of supply, and that pioneering providers have incurred losses while the technology was developed and disseminated. As total third-party payments escalate, concerns regarding the relationship between costs and price are pushed to the fore. Allegations of profiteering, overuse, and abuse spread. These concerns often lead to a set of externally imposed restrictions on payment, with limits placed first on prices, and then usually on quantities and/or aggregate totals as well. In this article, we examine how one new technology, bariatric surgery, is progressing through the reimbursement cycle. Key words: bariatric surgery, obesity, reimbursement.

Economic expansion is a major determinant of physician supply and utilization.

OBJECTIVE: To assess the relationship between levels of economic development and the supply and utilization of physicians. DATA SOURCES: Data were obtained from the American Medical Association, American Osteopathic Assocation, Organization for Economic Cooperation and Development (OECD), Bureau of Health Professions, Bureau of Labor Statistics, Bureau of Economic Analysis, Census Bureau, Health Care Financing Administration, and historical sources. STUDY DESIGN: Economic development, expressed as real per capita gross domestic product (GDP) or personal income, was correlated with per capita health care labor and physician supply within countries and states over periods of time spanning 25-70 years and across countries, states, and metropolitan statistical areas (MSAs) at multiple points in time over periods of up to 30 years. Longitudinal data were analyzed in four complementary ways: (1) simple univariate regressions; (2) regressions in which temporal trends were partialled out; (3) time series comparing percentage differences across segments of time; and (4) a bivariate Granger causality test. Cross-sectional data were assessed at multiple time points by means of univariate regression analyses. PRINCIPAL FINDINGS: Under each analytic scenario, physician supply correlated with differences in GDP or personal income. Longitudinal correlations were associated with temporal lags of approximately 5 years for health employment and 10 years for changes in physician supply. The magnitude of changes in per capita physician supply in the United States was equivalent to differences of approximately 0.75 percent for each 1.0 percent difference in GDP. The greatest effects of economic expansion were on the medical specialties, whereas the surgical and hospital-based specialties were affected to a lesser degree, and levels of economic expansion had little influence on family/general practice. CONCLUSIONS: Economic expansion has a strong, lagged relationship with changes in physician supply. This suggests that economic projections could serve as a gauge for projecting the future utilization of physician services.

Economic and demographic trends signal an impending physician shortage.

It is widely believed that the United States is producing too many physicians. We have approached this issue by developing a new model for workforce planning based on assessments of the macrotrends that underlie the supply and use of physician services. These trends include economic expansion, population growth, physicians' work effort, and the provision of services by nonphysician clinicians. Contrary to earlier predictions, this model projects that the United States soon will have a shortage of physicians and that if the pace of medical education remains unchanged, the shortage will become more severe. A dialogue focused on that eventuality is imperative.