Healthcare cost differences in the 1990s the influence of metropolitan area marketplace dynamics
This presentation is the property of its rightful owner.
Sponsored Links
1 / 24

Healthcare Cost Differences in the 1990s: The Influence of Metropolitan Area Marketplace Dynamics PowerPoint PPT Presentation


  • 56 Views
  • Uploaded on
  • Presentation posted in: General

Healthcare Cost Differences in the 1990s: The Influence of Metropolitan Area Marketplace Dynamics. Merton D. Finkler Lawrence University August 14, 2003. Scope of Study. How much variation in healthcare cost levels and growth rates exists across MSAs?

Download Presentation

Healthcare Cost Differences in the 1990s: The Influence of Metropolitan Area Marketplace Dynamics

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Healthcare cost differences in the 1990s the influence of metropolitan area marketplace dynamics

Healthcare Cost Differences in the 1990s: The Influence of Metropolitan Area Marketplace Dynamics

Merton D. Finkler

Lawrence University

August 14, 2003


Scope of study

Scope of Study

  • How much variation in healthcare cost levels and growth rates exists across MSAs?

  • Are Medicare payments to providers cost-shifted onto private payers?

  • Do differences in demographic structure help explain differences in cost?

  • Do differences in purchaser and provider market power help explain differences in cost?

    Sponsor: Cobalt Corporation – Milwaukee, WI


Motivation

Motivation

  • Proprietary reports suggest significant differences in cost across MSAs

  • Local policy makers suggest low Medicare payments drive higher commercial payment

  • Payment for health care features different national and local incidence implications


Cost indicators

Cost Indicators

  • No comprehensive cost indicator at MSA level – Evidence: proprietary claims data and Medicare

  • Comprehensive indicators exist for Medicare recipients and HMO enrollees

  • Hospital indicators can be compared by MSA

  • Cost of serving FEHBP enrollees can be compared

  • Focus on expenditures –limited attempts to separate P from Q


Cost shifting

Cost Shifting

  • Focus of Nov 2002 – HCFO Conference

  • Common Claim: Low Medicare pay implies high private pay

  • Morrissey: No shifting unless relative bargaining power change exists or unexploited power exists

  • Cutler – Evidence of cost shift in the 1980s and reduced resource use in the 1990s


Who bears the burden

Who Bears the Burden?

  • Argument parallels the incidence of the property tax (except as tax on labor)

  • National Level – Cost of health care is part of labor compensation, and labor bears most of the burden

  • Local Level – Cost of health care distinguishes MSA’s ability to attract and retain labor; thus, borne locally


Healthcare cost differences in the 1990s the influence of metropolitan area marketplace dynamics

Data

  • 20 large MSAs in the Central USA

    • Initial focus on Milwaukee (and 5 close MSAs)

    • Add 14 other MSAs – Madison,WI + 13 with population greater than 600K and within 750 miles

  • HMO data – InterStudy + U of MN

  • Hospitals – American Hospital Association

  • Demographics – Area Resource File, Census

  • Physicians – Area Resource File

  • FEHBP – Blue Cross Blue Shield Intermediary


Key variables

Key Variables

  • HMO Premium PMPM

  • Non-Governmental Payments to Hospitals per Non-Elder

  • Medicare Payments (A and B) per Enrollee

    • AAPCC through 1997

  • Old to Young Working Age Population

    • Population 45- 64 / Population 20-34

  • Competitiveness – Herfindahl for hospitals; #of HMOs*HMO Penetration


Health care costs

Health Care Costs

  • HMO premium PMPM

    • 2000 range - $123 (DES) to $178 (MSP)

    • 1990 – 2000 growth – 33% (MEM) to 97% (MKE)

  • Non-Governmental Payment per Non-Elder

    • 2000 range - $587 (KC) -$1,165 (IND)

    • 1990 – 2000 growth - 18% (DAY) to 161% (LOU)

  • FEHBP – PPO - $PMPM

    • 2000 range - $114 (DAY) - $228 (MKE)


Table 1

Table 1


Medicare payment levels

Medicare Payment Levels

  • Total Medicare Payments – 2000 PEPM

    • $347 (FTW) to $559 (PIT) ; $464 (USA)

    • 1990 – 2000 Growth: 23% (DET) to 58% (FTW) ; 69% - (USA)

  • Medicare Part A – 2000

    • $195 (FTW) to $353 (PIT); $263 (USA)

    • 1990 – 2000 Growth: 24% (DES) to 57% (COL)

      66% - USA

  • Medicare Part B – 2000

    • $140 (MAD) to $206 (PIT); $200.87 (USA)

    • 1990 – 2000 Growth: 11% (DET) to 96% (MEM)

    • 74% - USA


Table 2

Table 2


Metropolitan demographics

Metropolitan Demographics

  • Per Capita Income

    • 2000 - $26,877 (FTW) to $32,540 (CHI) $28,738(USA)

    • 1990 – 2000 growth – all but St. Louis (45%-56%) – USA – 50%

  • Old/Young Ratio

    • 2000 – 84% (MEM) to 135% (PIT); 105% (USA)

    • 1990 – 2000 Growth - 23% (MEM) to 81% (MAD)

      USA – 44%


Table 3

Table 3


Medical care providers

Medical Care Providers

  • The # of Hospitals declined – 14 out of 20

  • Commercial Admissions Share 2000

    • 37% (PIT) to 58% (MAD)

  • Herfindahl Index for Commercial Admits

    • 2000: 416 (CHI) to 4265 (FTW)

    • Growth 1990 – 2000: -4% (GRA) to 288% (CLE)

  • Physicians per 1,000 residents

    • 2000:1.6 (FTW,GRA) to 3.9 (MAD)

    • Growth 1990 – 2000: 0% (CIN) to 24% (DAY)

    • Specialists 2000: 1.0 (FTW) to 2.6 (MAD)


Table 4

Table 4


Hmo characteristics

HMO Characteristics

  • HMO Penetration Rate

    • 2000: 11% (MEM) to 61% (MAD)

    • 1990 – 2000 Growth: 50% (MSP) to 705% (IND)

  • HMO Competitiveness

    • 2000:1.03 (OMA) to 7.27 (MAD)

    • 1990 – 2000 Growth: 50% (MSP) to 1992% (IND)

  • Capitation % - Specialist Revenue 2000

    • 20000% (OMA,DAY) to 67% (MAD)


Table 5

Table 5


Table 6 non governmental payments to hospitals

Table 6Non-Governmental Payments to Hospitals


Implications of regression

Implications of Regression

  • Commercial payments per NE increased $51/year

  • HMO competition reduced hospital payment

  • Hospital payments related to MDs/1000

  • Medicare payments do not influence commercial payments

  • Age structure of population negatively influences commercial payment level

  • Hospital concentration is negatively but insignificantly related to commercial payment

  • Practice style (admissions/1000) matters


Table 7 hmo premium per member per month

Table 7HMO Premium per Member per Month


Implications of regression1

Implications of Regression

  • HMO PMPM rose $6.13 per year

  • PMPM negatively related to hospital concentration level

  • HMO penetration rate positively influences PMPM (possible reverse causality)

  • HMO competitiveness measure does not influence PMPM

  • Medicare payment levels do not affect PMPM

  • Old/Young ratio does not affect PMPM


Conclusions

Conclusions

  • Indianapolis, Madison, Milwaukee, and Omaha deliver relatively expensive commercial healthcare

  • Akron, Cincinnati, Grand Rapids, and Pittsburgh deliver relatively cheap commercial healthcare

  • Medicare cost shifting non-existent in the aggregate for either specification

  • Age structure plays a limited role in explaining hospital payments or HMO premiums

  • Relative bargaining power seems to matter for hospital payments


Future directions

Future Directions

  • Increase the number of MSAs analyzed

  • Investigate bargaining power e.g., MD group practices membership

  • Investigate reverse causality (HMO PMPM) through evaluation of enrollee age structure

  • Differentiate effects of hospital concentration: scale and contracting economies vs. bargaining power


  • Login