Healthcare Markets

We delve into the health economics of private and public healthcare systems, analyzing the efficacy of these markets. We provide empirical, objective information to regulators on the sustainability of healthcare spending initiatives.

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.

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.

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 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 compose 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.

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.