Selected Publications

Publications

Insurer Market Power Lowers Prices In Numerous Concentrated Provider Markets

by Richard M. Scheffler and Daniel R. Arnold, September 2017 (Health Affairs)

Consolidation of health systems has rapidly increased in the last two decades: from 1998 to 2015, there were 1412 hospital mergers in the United States; 40% of those came after 2009. The paper uses prices of hospital admissions and visits to five types of physicians to analyze how this growing provider and insurer market concentration—as measured by the Herfindahl-Hirschman Index (HHI)—interact and are correlated with prices. The paper finds that insurers have the bargaining power to reduce provider prices in highly concentrated provider markets for cardiologist, radiologist, and hematologist/oncologist visit prices. This leads to a policy dilemma: there are no insurer market mechanisms that will pass a portion of these price reductions on to consumers in the form of lower premiums. The study concludes by discussing how large purchasers of health insurance, such as state and federal governments, as well as the use of regulatory approaches, could provide a solution.

Health Care Market Concentration Trends In The United States: Evidence And Policy Responses

by Brent D. Fulton, September 2017 (Health Affairs)

This paper analyzes market concentration trends in the United States from 2010 to 2016 for hospitals, physician organizations, and health insurers, finding that hospital and physician organization markets became increasingly concentrated over this time period. Concentration among primary care physicians increased the most, partially because hospitals and health care systems acquired primary care physician organizations. The paper finds that a large number of Metropolitan Statistical Areas (MSAs) are highly concentrated – in 2016, reaching 91% for hospitals, 65% for specialist physicians, 39% for primary care physicians, and 57% for insurers. The paper concludes that public policies that enhance competition are needed, such as stricter enforcement of antitrust laws, reducing barriers to entry, and restricting anticompetitive behaviors.

Consumers Buy Lower-Cost Plans on Covered California Suggesting Premium Increases Are Less than Commonly Reported

by Jon R. Gabel, Daniel R. Arnold, Brent D. Fulton, Sam T. Stromberg, Matthew Green, Heidi Whitmore, and Richard M. Scheffler, January 2017 (Health Affairs)

With the notable exception of California, states have not made enrollment data for their Affordable Care Act (ACA) Marketplace plans publicly available. Researchers thus have tracked premium trends by calculating changes in the average price for plans offered (a straight average across plans) rather than for plans purchased (a weighted average). Using publicly available enrollment data for Covered California, we found that the average purchased price for all plans was 11.6 percent less than the average offered price in 2014, 13.2 percent less in 2015, and 15.2 percent less in 2016. Premium growth measured by plans purchased was roughly 2 percentage points less than when measured by plans offered in 2014–15 and 2015–16. We observed shifts in consumer choices toward less costly plans, both between and within tiers, and we estimate that a $100 increase in a plan’s net annual premium reduces its probability of selection. These findings suggest that the Marketplaces are helping consumers moderate premium cost growth.

 

Health Labor Market Analyses in Low- and Middle-Income Countries: An Evidence-Based Approach

edited by Richard M. Scheffler, Christopher H. Herbst, Christophe Lemiere, and Jim Campbell, September 2016

The health workforce has received major policy attention over the past decade, driven in part by the need to achieve the Millennium Development Goals (MDGs), the Sustainable Development Goals (SDGs), and universal health coverage (UHC). There is wide acceptance that a health workforce sufficient in numbers, adequately distributed, and well performing is a central health systems input, and critical for the achievements of these goals. This book, produced by the World Bank in collaboration with the University of California, Berkeley and the World Health Organization (WHO), aims to provide decision makers at subnational, national, regional, and global levels with additional insights into how to better understand and address their health workforce challenges rather than just describe them.

States Can Contain Healthcare Costs. Here’s How

by Richard M. Scheffler and Sherry A. Glied, May 2016 (New York Times)

In this op-ed, Sheffler and Glied discuss the increasing concentrated health insurance market in the wake of the Affordable Health Care Act, and the need for competition and regulation to work together to benefit consumers. The two report on research comparing how the states of California and New York designed their healthcare marketplaces in response to the law, and the flexibility states have in designing their marketplaces.

 

Differing Impacts Of Market Concentration On Affordable Care Act Marketplace Premiums

by Richard M. Scheffler, Daniel R. Arnold, Brent D. Fulton, and Sherry A. Glied, May 2016 (Health Affairs)

Recent increases in market concentration among health plans, hospitals, and medical groups raise questions about what impact such mergers are having on costs to consumers. We examined the impact of market concentration on the growth of health insurance premiums between 2014 and 2015 in two Affordable Care Act state-based Marketplaces: Covered California and NY State of Health. We measured health plan, hospital, and medical group market concentration using the well-known Herfindahl-Hirschman Index (HHI) and used a multivariate regression model to relate these measures to premium growth. Both states exhibited a positive association between hospital concentration and premium growth and a positive (but not statistically significant) association between medical group concentration and premium growth. Our results for health plan concentration differed between the two states: it was positively associated with premium growth in New York but negatively associated with premium growth in California. The health plan concentration finding in Covered California may be the result of its selectively contracting with health plans.

 

World Scientific Handbook of Global Health Economics and Public Policy

edited by Richard M. Scheffler, January 2016

This Handbook covers major topics in global health economics and public policy and provides a timely, systematic review of the field, featuring academics and practitioners from more than a dozen countries. The Handbook spans across three volumes: Volume 1 – The Economics of Health and Health Systems, Volume 2 – Health Determinants and Outcomes, Volume 3 – Health System Characteristics and Performance. Chapters deal with key global issues in health economics, are evidence-based, and offer innovative policy alternatives and solutions, making the Handbook’s approach toward global health economics and public policy a useful resource for health economists, policymakers, private sector companies, NGOs, government decision-makers and those who manage healthcare systems.

 

Avoiding Spending While Meeting Patients’ Wishes: A Model of Community-Based Palliative Care Uptake in California from 2014-2022

by Eric R. KessellRichard M. Schefflerand Stephen M. Shortell, November 2015 (Journal of Palliative Medicine)

Community-based palliative care can improve outcomes and avoid unnecessary spending, but the effects of its widespread adoption on health care spending in California is unknown. To estimate the spending avoided if, by 2022, more than 100,000 Californians received community-based palliative care (CBPC) per year. We estimated the 6-month per-patient spending avoided through three mature CBPC programs in California and extrapolated data to predict the total avoided spending statewide over 8 years if enrollment in the three programs proceeded according to our model. If Californians participated in CBPC in the numbers envisioned, in 2014 there would have been a $72 million reduction in intensive hospital based care, while still respecting patients’ wishes, and nearly $1.1 billion in spending could be avoided in 2022. Overall hospital spending would be reduced by more than $5.5 billion through 2022. The paper concludes that existing CBPC programs have the potential to provide care that is both in alignment with patients’ wishes and avoids substantial amounts of unnecessary hospital-based spending.

 

Covered California: The Impact of Provider and Health Plan Market Power on Premiums

By Richard M. Scheffler, Eric R. Kessell and Margareta Brandt, October 2015 (Journal of Health Politics, Policy, and Law)

We explain the establishment of Covered California, California’s health insurance marketplace. We describe the market shares of health plans in California and in each of the nineteen rating regions. We examine the empirical relationships among measures of provider market concentration, health plans, and the variation in premiums across the rating regions. We found that the concentration of medical groups and hospitals was positively associated with the variation in Covered California premium rates in the rating regions while the concentration of health plans is not statistically significant. We estimate the impact of reducing hospital concentration to levels that would exist in moderately competitive markets. This produces a predicted overall premium reduction of more than 2 percent. However, in three of the nineteen rating regions, the predicted premium reduction was more than 10 percent. These results suggest the importance of provider market concentration on premiums.

 

State Actions to Promote and Restrain Commercial Accountable Care Organizations

by Ann Hollingshead, Jaime King, Brent D. Fulton, Joshua Rushakoff, Richard M. Scheffler, May 2015 (Millbank Memorial Fund)

Accountable Care Organizations (ACOs), originally developed as part of the Affordable Care Act (ACA), are growing—and serve both public and private sector payers. They have the potential to improve health care quality and patient outcomes while achieving cost savings. However, they may also present risks—including those related to solvency, consumer protection, and anti-competitive pricing—to providers, patients, and payers. This report draws on evidence from the literature and four case studies to outline tools that state governments can use to promote the potential benefits of ACOs while mitigating their potential risks.

 

The ADHD Explosion: Myths, Medication, Money, and Today’s Push for Performance

by Stephen P. Hinshaw and Richard M. Scheffler, March 2014

Attention-deficit/hyperactivity disorder (ADHD) is one of the most controversial and misunderstood medical conditions today. With skyrocketing rates of diagnosis and medication treatment, it has generated a firestorm of controversy. Hinshaw and Scheffler uniquely blend clinical wisdom, current science, medical and school policy, and global trends to debunk myths and set the record straight in The ADHD Explosion. They describe the origins of ADHD and its huge costs to society; the science behind its causes as well as medication and behavioral treatment; and the variation in diagnosis and treatment across the U.S. Dealing directly with stimulants as “smart pills,” they describe the epidemic of medicalization, arguing that accurate diagnosis and well-monitored care could ease the staggering economic burden linked to ADHD.

 

Covered California: A Progress Report

by Richard M. Scheffler and Jessica Foster, January 31, 2014

In its first several months of open enrollment, Covered California despite its challenges has been a bright spot among state health insurance Exchanges created under the Affordable Care Act. About 23% of national enrollments in 2013 came from California. More than 1.4 million California residents have completed Covered California applications, more than 625,000 people have enrolled in subsidized or unsubsidized health plans, and more than 1.2 million are expected to be newly enrolled in Medi-Cal. Though it experienced a slow start in October, Covered California by the end of the year had surpassed its enrollment goal for the first half of open enrollment. This report provides a summary of the Covered California rollout, including a breakdown of application and enrollment trends, plan affordability and cost estimations, and questions and concerns for future analysis.

 

The Labor Market for Health Workers in Africa

by Agnes Soucat, Richard M. Scheffler, with Tedros Adhanom Ghebreyesus, Editors April 2013

Addressing the challenge of decent healthcare and education for lowincome families is critical to building the human capital that African countries need to sustain economic growth in the years ahead. Within this broad goal, specific challenges linked to Human Resources for Health (HRH) in Africa must be addressed to achieve stronger health systems, universal access to health services, and greater improvements in actual health outcomes. Today, it is widely recognized among Ministries of Health and development partners that the overall availability, distribution, and performance of health workers in Africa must be rapidly improved.

 

Accountable Care Organizations and Antitrust: Restructuring the Health Care Market

by Richard M. Scheffler, Stephen M. Shortell, Gail R. Wilensky, April 2012

On October 20, 2011, The Centers for Medicare & Medicaid Services (CMS) released the final rules for accountable care organizations (ACOs), a highly publicized initiative of the Affordable Care Act. Accountable care organizations are part of the Medicare Shared Savings Program, which is charged with improving quality of care for Medicare patients. The CMS provided incentives for ACOs to deliver high-quality care at reduced rates of spending by providing a more coordinated team approach to health care delivery.

 

CPAC Health Insurance Premium Rate Review Regulation: Case Studies to Inform California

by Brent D. Fulton, Richard M. Scheffler, April 2012

The objective of this study is to examine health insurance rate review regulation in Minnesota and Massachusetts, to inform California policy-makers regarding evidence on prior approval authority. This evidence is intended to inform California’s proposed change from file-and-use to prior-approval authority, based on AB 52 “Health Care Coverage: Rate Approval.” The methods included reviewing the literature on rate review regulation, interviewing officials from state agencies that approve rates, and interviewing senior actuaries and executives from health insurance carriers. Three interviews were conducted on Minnesota, three interviews were conducted on Massachusetts, and two interviews were conducted on California. Minnesota was selected because it has exercised its prior approval authority for at least 15 years, which provides a long period of time to analyze. Massachusetts was selected because it only began exercising its prior approval authority—technically prior review and disapproval authority—in April 2010, providing an example of a state just starting prior approval rate review

 

Accountable Care Organizations and Antitrust Conference Briefing Document

by Liora Bowers, Benjamin Handel, Emilio Varanini, Richard Scheffler, November 2011

This briefing paper serves as a background for the discussion that will take place during the “Accountable Care Organizations and Antitrust Conference” to be held on November 11, 2011 at UC Berkeley. With the October 20, 2011 release of the final rule creating the Medicare Shared Savings Program (MSSP), the Center for Medicare & Medicaid Services has paved the way for a national move towards coordinated delivery systems known as Accountable Care Organizations (ACOs). This paper provides background on government policy towards an accountable care delivery system, the balance between integration efficiencies and market power, and the goals and methods of antitrust analysis within healthcare delivery. It provides context for the issues of market definition, anticompetitive effects, antitrust evaluations, and contracting practices among healthcare providers. The paper concludes with a brief discussion of the California ban on the corporate practice of medicine.

Is There a Doctor in the House? Market Signals and Tomorrow’s Supply of Doctors

by Richard M. Scheffler, 2008

This book explores American’s bedrock healthcare concern – “Will there be a doctor―a good doctor―when I need one?” In this concise and readable analysis, Scheffler goes beyond the guessing game to demonstrate that today’s health care system is the product of financial influences in both the policy realm and on the ground in the offices of medical centers, HMOs, insurers, and physicians throughout America. He shows how factors such as physician income, medical training costs, and new technologies affect the specialties and geographic distribution of doctors. As part of his vision of tomorrow’s ideal workforce, he offers a template for enhancing the efficiency and cost-effectiveness of the health care system overall. In the groundbreaking second half of the book, Scheffler tests his ideas in conversations with leading figures in health policy, medical education, health economics, and physician practice. Their unguarded give-and-take offers a window on the best thinking currently available anywhere

 

Mental Health Care Reform in the Czech and Slovak Republics, 1989 to the Present

edited by Richard M. Scheffler and Martin Potůcĕk, 2008

This book analyzes the needs, processes, and challenges of mental health care reform in the Czech Republics and Slovakia. Comparing these two countries (which used to be one state until the end of 1992), it identifies many obstacles to ongoing reforms: low funding levels distributed in inefficient ways, not always reaching those with greatest needs; the reliance on psychiatrists and reluctance to expand the role of other staff groups; and  the lack of information for appropriate decision making and poor systems of quality control.

 

California on the Eve of Mental Health Reform

by Tracy L. Finlayson, and the Nicholas C. Petris Center, November 2007

This report summarizes baseline information derived from a survey of county mental health directors about key organizational and budgetary characteristics in California’s county mental health departments.

 

The Global Market For ADHD Medications

by Richard M. Scheffler, Stephen P. Hinshaw, Sepideh Modrek, and Peter Levine, April 2007

Little is known about the global use and cost of medications for attention deficit hyperactivity disorder (ADHD). Global use of ADHD medications rose threefold from 1993 through 2003, whereas global spending (U.S. $2.4 billion in 2003) rose ninefold, adjusting for inflation. Per capita gross domestic product (GDP) robustly predicted use across countries, but the United States, Canada, and Australia showed significantly higher-than predicted use. Use and spending grew in both developed and developing countries, but spending growth was concentrated in developed countries, which adopted more costly, long-acting formulations.

 

Consumer-Driven Health Plans: New Developments and the Long Road Ahead

by Richard M. Scheffler and Mistique C. Felton, July 2006

We review new legislation covering such plans, analyze their penetration in the marketplace, and predict their growth. We also use current information about plans that are compatible with Health Savings Accounts to compare them to traditional Preferred Provider Organization plans.

Private Health Insurance in Development: Friend not Foe

edited by Alexander S. Preker, Richard M. Scheffler, and Mark C. Bassett, 2006

This volume presents findings of a World Bank review of the existing and potential role of private voluntary health insurance in low- and middle-income countries and is the third volume in a series of reviews of health care financing.

 

Hospital Service Changes in California: Trends, Community Impacts and Implications for Policy

by Nicholas C. Petris Center, April 2005

While hospital closures have generated a great deal of media attention and community concern, hospitals have other possible responses to the difficult financial environment. This report focuses on one such response. Are hospitals changing their inpatient service offerings in order to improve their financial health?

 

Measuring Mental Health in California’s Counties: What Can We Learn?

by Daniel Eisenberg, Nicole Bellows, Timmothy T. Brown, Richard M. Scheffler, January 2005

This report provides data and information on a series of mental health indicators that enable us to draw a picture of the mental health status throughout Califomia. These mental health indicators include the following: ‘doing less overall due to emotional problems,’ ‘doing one’s work less effectively due to depression or anxiety,’ ‘feeling downhearted and sad,’ ‘not feeling calm and peaceful,’ and ‘lacking energy.’

 

Is There A Doctor in the House? An Examination of the Physician Workforce in California

by Nicholas C. Petris Center, June 2004

This report presents important new findings about long-range trends in physician supply in California, as well as a snapshot of the state’s current physician workforce.

 

An analysis of the significant variation in psychostimulant use across the U.S.

by Farasat Bokhari, Rick Mayes, and Richard M. Scheffler, May 2004

Our analysis of the DEA’s ARCOS data shows that most of the significant variables correlated with ‘higher’ per-capita use of ADHD drugs serve as a proxy for county affluence. To provide a more complex, multivariate analysis of the area variation in psychostimulant use across the U.S.—which is the logical next step—requires obtaining price data to match the DEA’s quantity data.

 

California’s Closed Hospitals, 1995-2000

by Nicholas C. Petris Center, April 2001

We identified 23 closures, 11 of which took place at for-profit facilities. The vast majority took place in urban areas, and they were most often in southern California. More than half of the closed hospitals had fewer than 100 licensed beds. Ten of the closed hospitals had changed ownership within three years prior to their closure. All the closed hospitals claimed, and demonstrated, financial distress prior to closing.