Switching Costs in Medicare Advantage.

This paper estimates the magnitude of switching costs in the Medicare Advantage program. Consumers are generally assumed to pick plans that provide the combination of benefits and premiums that maximize their individual utility. However, the plan choice literature has generally omitted prior choices from choice models. The analysis is based on five years of the Medicare Current Beneficiary Survey, a nationally representative longitudinal dataset. The MCBS data were combined with data on Medicare Advantage Part C plan benefits and premiums. Individual choices are modeled as a function of individual characteristics, plan characteristics and prior year plan choices using a mixed logit model. We found relatively high rates of switching between plans within insurer (20%), although less switching between insurers. Prior year plan choices were highly significant at both the contract and plan level. Premium was negative and significant. Loyalty (contract and plan), premium and plan structure were found to be heterogeneous in preferences. We found a statistically significant willingness to pay for a lower prescription drug deductible and lower copays. Switching costs were higher for sicker individuals. Switching costs between plans offered by the same insurer are far lower than switching costs between insurers; beneficiaries will switch plans if an alternative is perceived as $233 a month better than the current choice and switch insurers if the alternative is perceived as $944 better than the current plan/contract, on average. Premium elasticities would be 34% greater in magnitude if prior choices were irrelevant. We provide evidence that the state dependence is structural rather than spurious.

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.

A matter of race: early-versus late-stage cancer diagnosis.

We compared the stage at which cancer is diagnosed and survival rates between African Americans and whites, for thirty-four solid tumors, using the population-based Surveillance Epidemiology and End Results (SEER) database. Whites were diagnosed at earlier stages than African Americans for thirty-one of the thirty-four tumor sites. Whites were significantly more likely than blacks to survive five years for twenty-six tumor sites; no cancer site had significantly superior survival among African Americans. These differences cannot be explained by screening behavior or risk factors; they point instead to the need for broad-based strategies to remedy racial inequality in cancer survival.

Cost-effectiveness of HPV vaccination compared with Pap smear screening on a national scale: a literature review.

Recommendations for worldwide use of human papillomavirus (HPV) vaccine are increasing. This study conducted a systematic review of articles related to cost-effectiveness analysis of wide-range HPV vaccination programs compared with Pap smear screening published before August 2007. Eight articles were identified using predefined inclusion and exclusion criteria. After excluding two outliers, the range of incremental cost-effectiveness ratios (ICERs) from six articles is between $16,600 and $27,231 per quality-adjusted life year (QALY) gained. The World Health Organization's guideline that compares incremental cost-effectiveness ratios (ICERs) with per capita Gross Domestic Product (GDP) was used to determine whether nation-wide application of HPV vaccine would be cost-effective. The HPV vaccination program is cost-effective in only 46 countries where per capita GDP is high. Further cost-effectiveness studies in developing and third-world countries are needed for making policy decisions.

Hospital consolidation and racial/income disparities in health insurance coverage.

Non-Hispanic whites are significantly more likely to have health insurance coverage than most racial/ethnic minorities, and this differential grew during the 1990s. Similarly, wealthier Americans are more likely to have health insurance than the poor, and this difference also grew over the 1990s. This paper examines the role of provider competition in increasing these disparities in insurance coverage. Over the 1990s, the hospital industry consolidated; we analyze the impact of this consolidation on health insurance take-up for different racial/ethnic minorities and income groups. We found that the hospital consolidation wave increased health insurance disparities along racial and income dimensions.