Grantee Publication

This study estimates the impact of patient financial incentives on the use and cost of prescription drugs in the context of differing physician payment mechanisms. A large data set was developed that covers persons in managed care who pay varying levels of cost sharing and whose physicians are compensated under two different models: independent practice association (IPA)-model and network-model health maintenance organizations (HMOs).

Risk adjustment may be a sensible strategy to reduce selection bias because it links managed care payment directly to the costs of providing services. In this paper the researchers compare risk adjustment models in two populations (public employees and their dependents, and publicly-insured low income individuals with disabilities) in Washington State using two statistical approaches and three health status measures. They conclude that a two-part logistic/GLM statistical model performs better in populations with large numbers of individuals who do not use health services.

This study analyzed data from all operational health maintenance organizations (HMOs) in the United States from 1986 through 1993. Eighty HMOs disappeared through mergers and 149 failed over that period. The researchers estimated a multinomial logit model to predict whether an HMO would merge and survive, merge and disappear, or fail, relative to the probability of no event.

Traditionally, linear regression has been the technique of choice for predicting medical risk. This paper presents a new approach to modeling the second part of two-part models utilizing extensions of the generalized linear model. The primary method of estimation for this model is maximum likelihood. This method as well as the generalizations quasi-likelihood and extended quasi-likelihood are discussed. An example using medical expense data from Washington State employees is used to illustrate the methods. The model includes demographic variables as well as an Ambulatory.

This paper analyzes the process and outcomes of collective negotiations among large private employers and health maintenance organizations (HMOs) in California. In 1994, prior to collective negotiations, differences in benefit packages, risk mix, and volume of purchasing accounted for only one-third of the variance in premiums among firms and HMOs. The 1995 collective negotiations reduced the variance by 22 percent and the enrollment-weighted mean premium by approximately 9 percent, while enriching the standard benefit package.

Rising costs of prescription drugs are a concern to both private and public purchasers. Common methods of controlling or sharing costs include copayments and incentives to use generic substitutes.

A critical unresolved health policy question is whether competition stimulated by managed care organizations can slow the rate of growth in health care expenditures. The researchers analyzed the competitive effects of health maintenance organizations (HMOs) on the growth in fee-for-service indemnity insurance premiums over the period 1985—1992 using premium data on 95 groups that had policies with a single, large, private insurance carrier. The researchers used multiple regressions to estimate the effect of HMO market penetration on insurance premium growth rates.

The rate of increase in health care expenditures has been a central policy concern for well over a decade, yet little empirical research has been conducted to examine expenditure growth rates. This study analyzed health insurance premium growth rates for a selected sample of 95 insured groups over the period 1985 to 1992. During this time, premiums increased by approximately 150% in nominal terms and by 45% in real terms. The observed rate of growth was not constant over time, however.

Risk contracting by states for coverage of previously uninsured populations has been hampered by uncertainty regarding likely claims experience. This study reports on the utilization experience of two state programs offering subsidized coverage in commercial managed care organizations to low-income and previously uninsured people. Program participants used services similarly to people enrolled through large employer benefit plans. There was no evidence of pent-up demand or an unusual level of chronic illness.

The complex financing system that supports health care spending in the US makes estimation of the incidence of financing both daunting and important. A significant portion of financing is embedded in the tax system at all levels of government, while tax expenditures that subsidize private purchases implicitly transfer a large share of financing from private to public revenue sources. In this study, the researchers compute and describe the final incidence of financing health care by major component and in total.