Going Bankrupt Over Illness

A central aspect of health care reform is expanding access to care by requiring individuals to obtain health insurance coverage. Of course, this presupposes that having health insurance matters. There is a large body of literature in this area showing that it does matter for health outcomes, but the most recent study doesn’t look at that. It focuses instead on financial outcomes. The study by Keziah Cook, David Dranove, and Andrew Sfekas appears in the latest issue of Health Services Research. It asks the question: When serious illness strikes, how does it impact a family’s finances, and does that effect depend on whether or not the family has insurance?

As usual, I will spare you most of the methodological details, but I will say that the investigators went to great lengths to match households on the basis of health status, baseline wealth, and other demographic and health characteristics. This is important, because it is a good way of creating controls in a non-experimental context. It is also important to note, however, that the insured households used in this study resembled uninsured households in other ways–perhaps more so than they resembled other insured households. Therefore, the findings are more generalizable if we ask what would happen to the uninsured if they gained insurance coverage, rather than the other way around.

All of that being said, here is the startling conclusion: Consider a healthy and insured family, a healthy but uninsured family, a newly ill but insured family and a newly ill AND uninsured family. If each of 4 groups had baseline assets of $20,000, the healthy and insured family would still have $20,000 two years later. The healthy but uninsured family and the newly ill but insured family would also have $20,000 two years later. The newly ill but uninsured family would have only $15,600 in assets. And for more major illnesses, that figure drops to $9,740.

This all makes sense. The healthy families don’t lose assets–whether or not they have insurance. The newly ill families don’t lose assets either, provided that they have insurance coverage to protect them. But the remaining group–those families who illness strikes and who have no insurance coverage to protect them–take a major hit, losing anywhere from 22% to 51% of their total household assets in just two years. That’s a big blow even if the fallout stops there, but it most likely doesn’t. People may lose their jobs and they very well may remain ill for many more years to come.

So, if anyone says that people don’t really need insurance–or claims that they can just go to the emergency room for care–they need to think again. Falling ill, which can happen to any of us at any time, has the potential to destroy our lives. The wealth we have worked so hard to amass over the years can be wiped out in no time at all without the safety net insurance coverage provides. This is why it is so important to regulate and strengthen the insurance industry. This is why everyone needs to have insurance coverage. Because when disaster strikes, we can’t afford not to.

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Could House Health Care Votes Be Predicted?

A few days ago, I wrote a post that included a link to some data on the health care vote assembled by the Washington Post. Wonk and researcher that I am, I decided to crunch some numbers to find out if the data could be used to predict how House members voted on the bill and to predict which members changed their vote between the original House bill and the House’s vote on the Senate bill.

The variables available to me in this limited dataset were: the two votes on health care reform, the state the member represents, the member’s political party, financial contributions the member received from health care lobbyists, and the percent of persons uninsured in the member’s Congressional district.

A quick look at the descriptive statistics finds that 41.3% of members are Republicans, while 58.7% are Democrats. The average House member comes from a district in which 16.9% of persons are uninsured (the median was 15.8%). The average amount of total contributions from health care lobbyists received by a House member was $487,800, although this figure was pulled upwards by a handful of members–the median for total contributions was quite a bit lower at $334,733. Only 14 members changed their position on the issue between the first and second House votes: 8 switched from “No” to “Yes” and 6 switched from “Yes” to “No.”

Now for the more interesting stuff: predicting votes. In most cases with a dichotomous (i.e., 0/1) outcome, it is appropriate to use what is known as a logistic regression model (which is non-linear). However, because all Republicans voted against the bill, being Republican is a “perfect predictor” of the outcome and the model drops all the Republicans from the analysis. Because I didn’t want that to happen, I decided to run instead what is called a linear probability model. There are some drawbacks to using an LPM (e.g., such models can predict impossible outcomes that fall outside of the 0/1 range) but for this type of back-of-the-envelope analysis, it’s an acceptable way to go.

First, I tried to predict the outcome of the vote using party affiliation, monetary contributions, and proportion of uninsured constituents as explanatory variables. I found that we have explained nearly 73% of the variation in the voting outcomes using just these few variables. The catch is that it looks like party affiliation (as indicated by “rep”) is doing all the explaining. Neither the percent uninsured or the financial contributions are significant. So, in this first model, how a House member voted was not influenced by the money they received from lobbyists or the needs of their constituents, it was purely political.

But what if party affiliation is overshadowing these other important factors. For example, what if the percent uninsured in the community matters, but it only matters for Democrats? I assessed this by running a model interacting both percent uninsured and contribution amount with party affiliation, but neither interaction was significant (results not shown).

It’s possible, however, that there may be a number of unobserved factors that affect the outcome of the vote that are not captured by these very few variables. Many of these things may exist at the level of the state. For example, members from Nebraska might have been more likely to vote for the bill if it still contained the “Cornhusker Kickback” but less likely given the removal of that provision promised by reconciliation. For this reason, I ran a model with state-level fixed effects that controls for anything and everything at the state level that doesn’t change over time but may effect the outcome of the vote. I found that such state level factors do seem to exist, but controlling for them hasn’t changed the original conclusion that party affiliation is the only thing that matters.

Next, I turned my attention to trying to predict who changed their votes. I ran models to predict any change as well as specific changes from “No” to “Yes” and from “Yes” to “No.” Again, I found that only party affiliation was significant, with Republicans less likely to have changed their vote. That’s pretty understandable when you consider that none of them changed their vote, having consistently voted against the bill.

So what can one take away from this rather simplistic analysis? I think there are two conclusions: First, either money doesn’t matter at all, or it matters equally and the enormous sums spent on both sides of the aisle offset each other at the end of the day. Second, our elected officials did not vote for health care reform because a large number of their constituents are uninsured, nor did they vote against health care reform because most of their constituents are already insured. While one might expect that the greater the need for reform as observed on the ground in a member’s district the greater the likelihood that he or she would have voted for reform, this just isn’t borne out by the data. Actually, I don’t think that’s too surprising. After all, how likely is it that the uninsured will be turning out in droves this November?

So the optimists would like to think that our representatives represent the needs of their constituents–but that doesn’t seem to include the uninsured here. And the pessimists would like to think that our representatives represent the wishes of the wealthy organized interests, but that didn’t seem to matter here, either. At the end of the day, it came down to politics. Of course, that captures a lot of things–beliefs, philosophies, world views, values–but that appears to have made all the difference…..this time.

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Paths to Reform and Beyond

Now that the President has signed health reform into law, let’s take a look at how the process actually happened in Congress. Actually, why don’t you look here? Okay, so that’s clear. But the real question becomes what happens next? Matthew Holt takes a crack at answering that. Maggie Mahar addresses two concerns: First, the legal pushback from the states and second, the immediate implementation of health reform. Michael Turpin goes even farther–envisioning what our health care system will look like in 2015. Good or bad, he says, we’re all in this together.

What’s quite obvious is that passing the health care reform legislation and signing the bill into law wasn’t the end of this. In fact, it’s really the end of one chapter and the beginning of the next. There will be a period of writing regulations, a period of legal challenges from the states, possible attempts by the GOP to repeal all or some aspects of the legislation, and general challenges with implementation. Only one thing is certain: We health policy analysts and health services researchers are going to be very, very busy for the foreseeable future.

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Why I Do What I Do…

The President gets letters. He often reads from them as a way of connecting with the public and helping the American people see the immense weight that rests on his shoulders because he holds himself accountable to the people. Sure, there’s a political motivation behind it, but it humanizes the man and the office either way, and I think that’s important.

I am not the President, but I get letters, too. The author of this particular letter has given me permission to quote it to you anonymously. I’m sharing it with you so that you can get a little bit of a sense of why I do what I do, by which I mean study in the field of health policy and health services research as well as write a less academic, much more mainstream, blog on the stuff. The reason is simple, really: I like striving to make people’s lives a little better–and this is one way in which I’m able to do that. I’ll call this woman Angela. Here’s what Angela recently wrote to me:

Dear Brad,

I’m in the midst of some lab testing for my son and I found your article in a google search “Why are laboratory tests so expensive?” Nice article. I was wondering if you can find out the reason for the expense. Is there so much that goes into testing that it amounts to such an expense? For example, how much work goes into testing samples? Is the equipment so expensive that they have to regain what they paid for the equipment and testing supplies, training the staff? Our insurance covers most common tests but will only pay half or less of what they’re asking. Because they’re in network they agreed to accept what the insurance pays them, but what about labs out of network, they throw the fee back at the patient, or reponsible party and expect the full cost. There’s times when people have to send to certain labs for specific testing and usually these labs are not in insurance networks. Is this issue covered in the healthcare reform? I haven’t seen the reform, I’ve only heard bits and pieces. If you are interested in digging for the reason for the expensive, I’d be interested in your findings.

Sincerely,
Angela

Here’s a woman whose child needs a lot of medical care–especially lab tests. Fortunately, her family is insured, but that doesn’t stop her from asking lots of great questions. She asks the million dollar question, which is: Yes, prices are higher here in the U.S., but why? In a nutshell, I would respond by saying that it has a lot to do with the lack of price transparency in the market, which stems largely from the fact that most people have insurance.

Let me use my own example. About four years ago, I was prescribed a medication that required me to have regular blood work to monitor liver function and the like. The first time I had my blood drawn at the lab located in the same medical complex where my primary care physician was located. I had high deductible insurance at the time, and ended up paying about $400 for a couple of very basic tests. To add insult to injury, I had worked as a phlebotomist for several years prior to that, so I knew that what I was being charged had no basis in terms of actual expense.

That actually leads to a secondary point, and another of Angela’s questions: Does the high price have to do with paying off expensive equipment, expensive reagents and the like? The answer to that is pretty much no. Most of the chemical analyzers run anywhere from $500,000 to $1 million or more to purchase outright. Most hospitals don’t buy the machines. Instead, they lease them–typically at no cost–in exchange for contracting to purchase the particular chemical reagents required for their use. Again, these deals are not transparent to consumers of services.

Back to my point about insurance. When I got the $400 bill, I freaked. After I got done hyperventilating, I got out the phone book and started calling around to independent labs. How much would a comprehensive metabolic panel cost? I asked. Imagine my pleasant surprise when I heard $35. Suffice it to say I took my business there from then on.

But that only worked because I knew enough about what my insurance did and did not cover, knew what “CMP” meant on the doctor’s order, and knew enough to call around to several places to check prices. I daresay that most people don’t do that sort of thing, and just end up paying whatever the statement from their insurer says.

I hope that this post has shown you why I do what I do, and I hope it answers some of Angela’s questions. As to her big one about health reform, well, I’m still too giddy to get into what reform does and doesn’t do just yet.

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Nicknaming Health Care Reform

The new health care law (I still want to call it a bill) is titled the “Patient Protection and Affordable Care Act.” That’s pretty descriptive, but it doesn’t exactly roll off the tongue, which is a problem considering that the Democrats are going to have to continue going out and explaining the legislation and combating the misinformation that some very disgruntled Republicans are already peddling in the wake of the law’s enactment. Make no mistake about it, messaging is hugely important. So, given that opponents have so cleverly labeled the thing ObamaCare, how should proponents refer to it? I’m curious to hear your suggestions, and to start you off, here are some from some colleagues of mine:

• Simply shorten it to “Affordable Care Act” — who would oppose affordable care?
• ObamaCare — the Dems should just own this historic legislative victory
• The “Affordable-Health-Care-For-You-That-Republicans-Tried-To-Block-Act”
• The “I Can’t Believe It’s Not The National Health Service Act” (an homage to I Can’t Believe It’s Not Butter)
• The “Boehner Armageddon Act”
• The “What Jesus Would Do Act”
• The “Ronald Reagan Act” — just fun to make Republicans have to oppose it vehemently
• The “This is a Big F—ing Deal Act of 2010” — thanks, Joe Biden

Of course, this is just a start, and obviously, most of these are meant to be humorous. But it’s worth thinking about. The official name of the act isn’t likely to be changed, but a more catchy name in common usage wouldn’t hurt. So, what do you people think? Let’s hear your suggestions.

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Pragmatic Libertarians Unite For Individualism!

Harvard economics professor Edward Glaeser wrote a very intriguing piece recently in The New York Times. In it, he examines the pure philosophy of the libertarian and confronts that way of thinking with the harsh realities of political feasibility. He makes some rather good points, and it’s quite clear that many libertarian principles are noble ones that have been grossly distorted by the less reasoned, more emotionally reactive likes of the Tea Party movement.

Smaller government–and more importantly less government involvement in the lives of citizens–is not likely to be achieved by the ranting of some man with a mullet haircut who brings a gun and a misspelled sign with him from Tennessee to Capitol Hill. That is not the face of a movement with widespread appeal–as large and as vocal as the public displays may appear.

What this group needs, if they are to be successful, is less of Sarah Palin’s Obama-bashing “hopey-changey” rhetoric or even Ron Paul’s well-reasoned but rather radical ideas, and more small steps in the direction they favor. As Glaeser so nicely outlines, political fights are never won by appealing to the extremes. Victories come from appealing to the middle.

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Signing Health Reform Into Law

Here’s the video. The President sure does use a lot of pens to sign. Wonder how much one of those will cost on Ebay? Also, I have to point out for my wife’s benefit that Rep. Dingell–who winked at her in the Senate gallery on Christmas Eve–was right there “desk side” for the signing. Makes for an enjoyable twist on “Six Degrees of Kevin Bacon.” If you want to know more about Dingell, check this out.

http://i.cdn.turner.com/cnn/.element/apps/cvp/3.0/swf/cnn_416x234_embed.swf?context=embed&videoId=politics/2010/03/23/sotvo.obama.signs.bill.cnn

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CER vs. CEA

When President Obama and others have gone before the American people to promote their health reform agenda, they’ve often over-simplified an important set of tools available to us in health services research. The President has said things like “If you just bought a new car, and then find out that your neighbor bought the exact same car for $5,000 less, you’d want to know how he did it.” and “If there’s a blue pill and a red pill, and both work about the same, but the blue pill costs half as much as the red pill, which one should we be paying for?”

Critics have jumped on these scenarios and talk of comparative effectiveness panels have been overshadowed by talk of death panels that want to pull the plug on Grandma. Neither side has it quite right. In fact, there are two ways to make comparisons between two treatments: One is as if only effectiveness matters and the other is as if both effectiveness and cost matter.

The first approach is comparative effectiveness research (CER). If there are two treatments for a particular condition, which one works best? CER is designed to answer that question. After all, if the purpose of health care is to restore health, we certainly want to be using the most effective treatments. This is equally true if we’re talking about a 50% efficacy rate compared to an 80% efficacy rate or if we’re talking about a 90% efficacy rate compared to a 90.5% efficacy rate. Why settle for less than the best?

Well, economists have the answer to that question: Because the gains in efficacy may cost too much. If the procedure with 50% efficacy costs $1,500 we might well be willing to pay $6,000 for the procedure with 80% efficacy. However, if the procedure with 90% efficacy cost $1,500 it is doubtful that we’d be willing to pay another $4,500 for the 0.5% bump in efficacy. When the calculations include not only efficacy but also cost, we are no longer conducting CER but cost effectiveness analysis (CEA). It’s a way of calculating a unit-price–kind of like when you’re at the grocery store and see two differently-sized boxes of the same cereal. Obviously, the larger box costs more, but often, the price per ounce has decreased, making it the better deal.

Of course, we as patients–especially with most of us insulated from costs by insurance–seldom make such calculations. We are much more concerned with getting the most efficacious treatment available that is also covered by our insurance. We don’t comparison shop for health care. Sometimes–like in an emergency–we can’t. Other times–like for an annual physical–we don’t have access to the data.

Moreover, a number of questions are raised by CEA that don’t arise with CER. How much are we willing to pay for an additional gain in efficacy? For an additional year of life? For an additional year of high-quality life? There are estimates of this sort of thing, but the problem is that the “price points” surely vary for everyone depending on how they perceive their current quality of life, how old they are, how much money they have, and so on. But, at some point, all the care you can get stops being worth the money you’re having to throw at it. This isn’t rationing any more than you are rationing when you decide which brand of beer to buy at the store. Both sides owe it to us to paint a clear picture of CER and CEA and the roles of both going forward, with or without health reform.

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Tenacious Ds: A Health Reform Victory

I almost don’t know where to begin. Should I write about the long history of failed health reform efforts that just witnessed its streak come to an end? Should I continue trying to explain the legislation so that people will have a better understanding of what it does and does not contain? Should I focus on the legislative process, the merits of reconciliation, and the obstructionist tactics of the right on this issue? I’ve written about all of this, and I will again, but not today. No, today I just want to say one simple thing: Sometimes politicians set aside personal interests to do what is right for the country. When they do so, they ought to be applauded for it.

I watched and recorded more C-SPAN yesterday than I ever thought possible. At times it got pretty heated on the floor of the House–almost resembling the British Parliament. That’s understandable given the level of energy and resultant emotion that everyone had vested in this debate. That’s why there were angry mobs rallying outside of the Capitol. That’s why Rep. John Boehner set aside decorum repeatedly and shouted “Hell No!” during his closing remarks before the vote. That’s why the House Gallery had to be quieted on numerous occasions when applause broke out.

http://specials.washingtonpost.com/mv/embed/?title=Boehner%20raises%20voice%20in%20the%20House&stillURL=http%3A%2F%2Fwww.washingtonpost.com%2Fwp-dyn%2Fcontent%2Fphoto%2F2010%2F03%2F21%2FPH2010032103834.jpg&flvURL=%2Fmedia%2F2010%2F03212010-10v&width=480&height=270&autoStart=false&clickThru=http%3A%2F%2Fwww.washingtonpost.com%2Fwp-dyn%2Fcontent%2Fvideo%2F2010%2F03%2F21%2FVI2010032103812.html

As the President has said many times, this wasn’t good politics, it was good policy. This is a mid-term election year, and the stakes are high for many members of Congress. Yet enough of them were able to summon the courage of their convictions and do the right thing–setting aside the possibility that they may lose their bid for re-election. That selflessness is, in my opinion, one of the hallmarks of great leadership.

http://specials.washingtonpost.com/mv/embed/?title=Obama%20reacts%20to%20House%20vote&stillURL=http%3A%2F%2Fwww.washingtonpost.com%2Fwp-dyn%2Fcontent%2Fphoto%2F2010%2F03%2F22%2FPH2010032203970.jpg&flvURL=%2Fmedia%2F2010%2F03222010-1v&width=480&height=270&autoStart=false&clickThru=http%3A%2F%2Fwww.washingtonpost.com%2Fwp-dyn%2Fcontent%2Fvideo%2F2010%2F03%2F22%2FVI2010032203961.html

For the more than a year that this debate has gone on, there are any number of points in the process at which the push for reform could have died. Indeed, if health reform were your grandmother, it should be noted that special interests and the GOP were working feverishly to pull the plug on her. Many times the news was less than optimistic. In fact, it was often downright cynical. We had been down this path before, and we had gotten lost, never making it to our destination. We had become conditioned to cave in at the first sign of opposition. But not this Congress and this Administration. They pushed forward. When the media reported that health care reform was dead, when the topic took a backseat in the news to talk of the economy, our elected officials were working harder than ever to finish the race set before them. Last night, the tenacious Democrats crossed the finish line.

Now, this is but one leg of the race, one step further down the path. This legislation surely won’t fix all that ails the U.S. health care system, but it certainly moves us along in the right direction and demonstrates that it is possible to legislate improvements to our system–holding the door open for future Presidents and Congresses to pick up the torch of reform and carry it forward.

Like Congress, my work is not done. In the days, months, and years ahead I will use my blog to discuss issues surrounding implementation of these reforms, ongoing developments in the areas of health policy and health services research, and any new reform efforts that may arise. For now, though, I just want to say to Congress: “Well done.” And I want to provide you with some links to some great resources, including these on how the votes were cast and what health reform means for you (here’s a second similar resource).

Obviously, there will be much, much more to come.

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Health Care Reform and The Economy

Chris Hayes of The Nation chats with the Washington Post‘s Ezra Klein about the realities of health care reform and what it would mean for the economy. This is good stuff, as usual.

http://s3.amazonaws.com/thenation/audio/player.swf

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