Competitive pricing and the challenge of cost control in medicare.

The Medicare program faces a serious challenge: it must find ways to control costs but must do so through a system of congressional oversight that necessarily limits its choices. We look at one approach to prudent purchasing - competitive pricing - that Medicare has attempted many times and in various ways since the beginning of the program, and in all but one case unsuccessfully due to the politics of provider opposition working through Congress and the courts. We look at some related efforts to change Medicare pricing to explore when the program has been successful in making dramatic changes in how it pays for health care. A set of recommendations emerges for ways to respond to the impediments of law and politics that have obstructed change to more efficient payment methods. Except in unusual cases, competitive pricing threatens too many stakeholders in too many ways for key political actors to support it. But an unusual case may arise in the coming Medicare fiscal crisis, a crisis related in part to the prices Medicare pays. At that point, competitive pricing may look less like a problem and more like a solution coming at a time when the system badly needs one.

Geographic variation in minority participation in hospital management in the United States.

Minority participation in hospital management is, by all estimates, lower than almost anyone is prepared to accept. However, to date, there has been no published study of hospital management diversity using comprehensive national data. In the present study, the authors used data from the U.S. Equal Employment Opportunity Commission to estimate more directly and comprehensively how management diversity in private U.S. hospitals varies by geographic area. Although minorities constitute over 33% of the U.S. population, they constitute only 14% of all top-level managers and officials in private U.S. hospitals. There is enormous geographic variation in this average across cities and regions. The authors found that minority management participation is systematically related to market factors, including demographic and education variables. These systematic patterns explain about 90% of the Metropolitan Statistical Area differences in minority manager percentage. However, even after adjusting observed variations for these differences, the authors found important unexplained geographic variations in minority managerial employment in hospitals across U.S. cities.

Fee-for-service Medicare in a competitive market environment.

Since its inception, the Medicare Program has allowed for the participation of private health plans, but the relationship of private plans to the government-sponsored fee-for-service (FFS) plan has been the subject of debate. Increased payments to private plans, the introduction of regional preferred provider organizations (PPOs), and a mandated demonstration of price competition that includes FFS Medicare reflect an ongoing attempt to define the role of private plans. The purpose of this article is to explore the roles of private plans and FFS Medicare and to attempt to identify the advantages and disadvantages of each.

Medicare's prospective payment system: A critical appraisal.

Implementation of the Medicare prospective payment system (PPS) for hospital payment has produced major changes in the hospital industry and in the way hospital services are used by physicians and their patients. The substantial published literature that examines these changes is reviewed in this article. This literature suggests that most of the intended effects of PPS on costs and intensity of care have been realized. But the literature fails to answer fundamental questions about the effectiveness and equity of administered pricing as a policy tool for cost containment. The literature offers some hope that the worst fears about the effects of PPS on quality of care and the health of the hospital industry have not materialized. But because of data lags, the studies done to date seem to tell us more about the effects of the early, more generous period of PPS than about the opportunity costs of reducing hospital cost inflation.

The effect of HIFA waiver expansions on uninsurance rates in adult populations.

RESEARCH OBJECTIVE: To evaluate the effect of the Health Insurance Flexibility and Accountability (HIFA) demonstrations on the rate of uninsured. The policy purpose of the HIFA demonstrations is to encourage "new comprehensive state approaches" that will increase the number of insured. HIFA interventions include changes in benefit packages, eligibility rules for public programs, and state subsidization of private health insurance premiums. Some states emphasized private insurance (premium assistance), whereas others placed greater emphasis on expanded eligibility for public insurance. DATA SOURCES/STUDY SETTING: Data were drawn from the Current Population Survey from 2000 to 2007. The target populations for the HIFA waiver demonstrations consisted of individuals who were eligible for the HIFA waiver demonstrations in demonstration states. STUDY DESIGN: The estimation approach was a probit model using a difference-in-differences approach. PRINCIPAL FINDINGS: In states that fully implemented their HIFA waiver, HIFA increased the rate of insurance coverage by 6.4 percentage points on average in the targeted adult population, suggesting that approximately 118,848 adults gained health insurance due to HIFA. Total HIFA adult enrollment in the six states studied was 280,739. The effect size varied by state, with Maine having the largest effect and Illinois the smallest. The results were robust to different specifications of the control group. CONCLUSIONS: Our findings suggest that public insurance initiatives that provide states with flexibility regarding eligibility and plan design are a viable policy approach to reducing uninsurance rates.

The effect of adult HIFA waiver expansions on insurance coverage of children.

This article evaluates the effect of the Health Insurance Flexibility and Accountability (HIFA) demonstrations on uninsurance rates among children. HIFA could increase the probability that children would have health insurance either by directly enrolling a child into a HIFA program or by creating a "spillover" effect from adults onto children by making parents of children already eligible for public programs eligible for HIFA. Data were drawn from the Current Population Survey from 2000 to 2007. The estimation approach was a probit model using a difference-in-differences approach. The authors find that the HIFA wavier demonstrations had no measureable effect on the uninsurance rate among children, either through direct eligibility or through a "spillover" effect from parental eligibility. This suggests that public programs that integrate family insurance coverage into a single structure are likely to be more effective at reducing the rate of uninsurance than different programs for different members of the same family.