Proposal to Use Three Initiatives to Lower Healthcare Spending and Finance Universal Health Insurance Coverage in California
By Richard M. Scheffler, Brent D. Fulton, Donald D. Hoang, and Stephen M. Shortell | Published March 28, 2018 | Link to Full Report
Health expenditures in California continue to grow with respect to the state’s gross domestic product, resulting in healthcare becoming more unaffordable to the state, employers, and individuals. In this report, we project health spending in the California from 2015 to 2022. We then estimate potential reductions in spending from the Berkeley Forum for Improving California’s Healthcare Delivery System’s initiatives to increase the use of global budgets/integrated care systems, patient-centered medical homes, and palliative care. By 2022, these initiatives generate an estimated $15.4 billion in health spending reductions, an amount sufficient to provide universal health insurance coverage in the state at a cost of $7.2 billion. The State of California, the federal government, and the private sector should consider accelerating their programs related to these initiatives to help achieve these health expenditure reductions. A companion article “Financing Universal Coverage in California: A Berkeley Forum Roadmap” to this report was published on the Health Affairs Blog on March 29, 2018.
Consolidation in California’s Health Care Market 2010-2016: Impact on Prices and ACA Premiums
A Report by the Petris Center | Published March 26, 2018 | Link to Full Report
This report details the rapid consolidation of the hospital, physician, and insurance markets in California from 2010 to 2016. It finds that the vast majority of counties in California warrant concern and scrutiny according to the DOJ/FTC Guidelines. It also finds that consumers are paying higher health care prices and ACA premiums as a result of market consolidation. The significant variation in prices and ACA premiums across the state – particularly the large discrepancy between Northern and Southern California – suggests regulatory and legislative solutions need to be implemented to address health care market concentration in California.
Insurer Market Power Lowers Prices In Numerous Concentrated Provider Markets
By Richard M. Scheffler and Daniel R. Arnold | Published September 2017 in Health Affairs | Link to Full Article
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 | Published September 2017 in Health Affairs | Link to Full Article
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 | Published January 2017 in Health Affairs | Link to Full Article
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 | Published September 2016 by the Word Bank Group | Link to Full Book
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: A New York Times Op-Ed
By Richard M. Scheffler and Sherry A. Glied | Published May 2016 in the New York Times | Link to Op-Ed
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 | Published May 2016 in Health Affairs | Link to Full Article
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 | Published January 2016 by World Scientific | Link to Full Book
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. Kessell, Richard M. Scheffler, and Stephen M. Shortell | Published in November 2015 in the Journal of Palliative Medicine | Link to Full Article
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 | Published in October 2015 in the Journal of Health Politics, Policy, and Law | Link to Full Article
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 | Published May 2015 by the Millbank Memorial Fund | Link to Full Report
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 | Published March 2014 by Oxford University Press | Link to Purchase Book
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 | Published January 31, 2014 by the Petris Center | Link to Full Report
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: A New Look at the Crisis
Edited by Agnes Soucat, Richard M. Scheffler, with Tedros Adhanom Ghebreyesus | Published April 2013 by the World Bank Group | Link to Full Book
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, and Gail R. Wilensky | Published April 2012 in JAMA | Link to Full Article
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. On the same day, the Federal Trade Commission and Department of Justice provided guidelines addressing antitrust issues involving the formation of ACOs. The concern is that ACOs can result in a reduced number of competitors in health care markets, which could potentially increase prices and have negative consequences for consumers and purchasers of care. The CMS, the Federal Trade Commission, and the Department of Justice are seeking balance between integration efficiencies and market power in ACOs. This piece examines the 5 major issues physician leaders and policy makers will need to consider in the creation of ACOs. These include the following: market definition and power, efficiency and quality metrics, physician and hospital exclusivity, public-private cost shifting, and monitoring
CPAC Health Insurance Premium Rate Review Regulation: Case Studies to Inform California
by Brent D. Fulton, Richard M. Scheffler | Published April 2012 by the Petris Center and the California Program on Access to Care | Link to Full Report
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 | Published November 2011 by the Petris Center | Link to Full Briefing Document
This briefing paper serves as a background for the discussion that took place during the “Accountable Care Organizations and Antitrust Conference” 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 | Published in 2008 by Stanford University Press | Link to Book Website
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 | Published in 2008 by Karolinum Press | Link to Book Website
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 | Published November 2007 by the Petris Center | Link to Full Report
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. These findings are intended to provide stakeholders, policymakers, researchers and others with a snapshot of county and system characteristics prior to the implementation of the Mental Health Services Act (MHSA) of 2004, which was created by the passage of Proposition 63. Much of the report’s findings, on topics such as financing, organizational structure, staffing patterns, information technology and mental health boards, cannot be found elsewhere. Key findings indicate that California’s counties, while highly diverse, share some common features and strengths. These include: 1) high participation in innovative demonstration programs, 2) minimal spending on institutional care, 3) low administrative overhead, and 4) provision of care in languages beyond the state requirements. This report can provide information on where counties are beginning their transformation process. While each county is different, the similarities between counties may be useful in providing lessons for improving the system as a whole.
The Global Market For ADHD Medications
By Richard M. Scheffler, Stephen P. Hinshaw, Sepideh Modrek, and Peter Levine | Published April 2007 in Health Affairs | Link to Full Article
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. This article finds that 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 | Published July 2006 in Business Economics | Link to Full Article
The continued rise in U.S. healthcare spending, along with growth in the number of uninsured, has spurred the move toward consumer-driven health plans. This article reviews 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. Next, we discuss some concerns about the impact of these plans on vulnerable populations, such as the poor and sick. Finally, we suggest how consumer-driven health plans may help to improve the functioning of the healthcare market, especially by producing more transparent information on cost and quality.
Private Health Insurance in Development: Friend not Foe
Edited by Alexander S. Preker, Richard M. Scheffler, and Mark C. Bassett | Published in 2006 by the World Bank Group | Link to Full Book
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.This volume is about managing risk. Not the risk of national or man-made disasters but the risk of illness. The developing world is plagued by many of the historical scourges of poverty: infectious disease, disability, and premature death. As countries pass through demographic and epidemiological transition, they face a new wave of health challenges from chronic diseases and accidents. In this respect, illness has both a predictable and an unpredictable dimension. Contributors to this volume emphasize that the public sector has an important role to play in the health sector, but they demonstrate that the private sector also plays a role in a context in which private spending and delivery of health services often composes 80 percent of total health expenditure. The authors examine frameworks for analyzing health financing and health insurance. They conclude that most studies are hampered by lack of data on the impact of private voluntary health insurance on broad social goals, such as financial protection. They find no overall consensus on the impact of voluntary health insurance on public health activities or on the quality, innovation, and efficiency of personal health services.
Hospital Service Changes in California: Trends, Community Impacts and Implications for Policy
By the Staff of the Nicholas C. Petris Center | Published April 2005 by the Petris Center | Link to Full Report
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? This study is a systematic look at the changes in services offered by California hospitals from 1995 to the 2002. It shows that over the study period there were several significant shifts in service patterns. This report documents these changes and provides a systematic exploration of the possible explanations for what has happened in California’s hospital system.
Measuring Mental Health in California’s Counties: What Can We Learn?
By Daniel Eisenberg, Nicole Bellows, Timmothy T. Brown, Richard M. Scheffler | Published in January 2005 by the Petris Center | Link to Full Report
This report provides the first county-level comparison of a detailed set of mental health-related measures in the general California population utilizing the first California Health Interview Survey (CHIS), which took place in 2001. The main questions are how do counties differ in terms of their population’s mental health status, service utilization, insurance coverage, availability of providers, and government financial resources? 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 Janet Coffman, Brian Quinn, Timothy Brown, and Richard Scheffler | Published June 2004 by the Petris Center | Link to Full Report
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 | Published May 2004 in Pharmacoepidemiology and Drug Safety | Link to Full Article
Psychostimulants (methylphenidate and ampheta-mines) are primarily used to treat attention deficithyperactivity disorder (ADHD), which is the mostcommonly diagnosed behavioral disorder in children,making up more than 50% of all child psychiatric diagnoses. This article seeks to provide a national profile of the area variation in per-capita psychostimulant consumption in the U.S. We separated 3030 U.S. counties into two categories of ‘low’ and ‘high’ per-capita use of attention deficit hyper-activity disorder (ADHD) drugs (based on data from the Drug Enforcement Administration), and then analyzed them on the basis of their socio-demographic, economic, educational and medical characteristics. We found significant differences and similarities in the profile of counties in the U.S. that are above and below thenational median rate of per-capita psychostimulant use (defined as g/per 100K population). Compared to counties below the median level, counties above the median level have: significantly greater population, higher per-capita income, lower unem-ployment rates, greater HMO penetration, more physicians per capita, a higher ratio of young-to-old physicians and aslightly higher students-to-teacher ratio. 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.
California’s Closed Hospitals, 1995-2000
By the Nicholas C. Petris Center | Published in April 2001 by the Petris Center | Link to Full Report
In October 2000, The Petris Center on Health Care Markets and Consumer Welfare, a research organization at the University of California, Berkeley, School of Public Health, took on the job of creating a taxonomical list of all general acute care hospitals in California that closed between 1995 and 2000. Thus, we have put together the only effort that we know of to collect and synthesize standardized information about the California hospitals that closed in the second half of the 1990s. For the first time, we can now document and describe the 23 general acute care (GAC) hospitals that closed, 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.