Oregon Medicaid Program and the Rand Experiment

Many of us are currently in Health Economics and just learned about the famous Rand Health Insurance Experiment of the 1970s which found that people with health insurance coverage used it--they spent approximately 50% more on health care than those without it. The study also found that copayments reduced the use of services. This famous experiment was a classic demonstration of moral hazard at work: the concept that when people are detached from the costs of behavior, they are more willing to take risks.

I came across this article this summer discussing Medicaid in my home state of Oregon. This “experiment” by the Oregon government essentially turned the Rand study into reality: Medicaid coverage was randomly assigned to certain individuals and not to others through a lottery system. One of the original Rand researchers, Joseph Newhouse, is watching this scenario unfold carefully with a group of researchers to determine the effect this lottery has on health care costs and health outcomes. The results essentially show exactly what the Rand study did: those with coverage spend more than those without. Moreover, those with coverage had better health outcomes.

What is striking however, from the story, is the level of impact that coverage really has on those in poverty. This article really gets to the heart of a question posed to us in class: what should we be spending on health care? We focus so much in this country on how much health care costs us, but perhaps this article is highlighting that for many, these costs are worth it. Quality of life improves to such a degree with insurance coverage that maybe health care is worth spending approximately one fifth of our GDP. I just thought I’d share it.

Medicaid Block Grants: Theory vs. Reality

Although the debate about converting Medicaid into a block grant program has been lingering on partisan lines for decades, the Paul Ryan budget proposal is again bringing the debate to the forefront. Under Ryan’s proposal, states would receive a set amount of federal funds to sustain their Medicaid programs, but then bear the financial risks should their programs exceed their grant allotments.  While Ryan believes this will curb federal Medicaid spending and give states increased “flexibility” in running their programs, the reality of this drastic change at the state level is proving to be a contentious issue.

In the worst case scenario, it seems like converting Medicaid into a block grant program could inevitably lead to rationing care. Conservative state leaders believe block grants will allow states to run their own programs without government intervention and tailor their programs to their own populations. However, I seriously doubt states will welcome this freedom at the cost of bearing the risks once their funds are depleted. If states already want to cut Medicaid spending under the current system, what would prevent them from making dangerous cuts to Medicaid beneficiaries without guaranteed federal assistance in the horizon? Another shortcoming of this system is the fact the block grants may not be adjusted for inflation and in the event of another recession, low-income families may be worse off.  For example, lessons learned from the TANF program, another block grant program for needy families, shows that states may be able to funnel block grant funds to free up state funds that may not directly benefit low-income families and children.

All in all, I think the block grant debate if more an issue of political ideology. I understand that states want flexibility to run their programs, but this should not be done at the expense of limiting access and care to those that need it most. I would hope that if Medicaid does become a block grant program in the future, states would develop ways to limit the impact of budget shortfalls on Medicaid budgets. But perhaps this is why entitlement programs have been left to the federal government: to ensure equitable access and guaranteed financial support for those eligible in all states, not just those that can afford to do so.  

Iran vs. Mississippi

Not sure how many of you read this New York Times Magazine article from a few months back but it has stuck with me and I have been reminded of it several times since starting school.  SO, I thought I would share it with you.
One way in which I found this article interesting was the way it addressed the issue of community health workers and ancillary providers, and how in developing countries they are relied upon to bridge the gap between the abundance of patients and the few doctors often available to care for lage populations.  It is a way to address the issues of cost and access, among others.
In the US we also have a great need for this sort of "gap" care which for many people could be in place of the majority of their primary care and if provided in a proactive way, could not only eliminate unnecessary hospitalizations and reduce healthcare costs, but could improve the quality of life for many people.  I think Americans tend to be very closed minded to the idea of someone other than a doctor providing medical care, exhibited by many peoples' reluctance to see nurse practitioners, etc.  Our healthcare system doesn't put enough emphasis on the "medical team" approach, although there have been several attempts to bring this to the forefront with managed care, etc.  I think more people would get the care they need if more resources were put into programs like the one profiled in this article.

Details, or rather the lack of them

It is interesting to see the lengths at which the Romney/Ryan campaign has gone to avoid any specifics on nearly all of their platforms.  Their campaign strategy seems to be to ride out the distaste for Obama and hope to reveal everything once elected.  The Kaiser Family Foundation Health Tracking poll from August 2012 found that although people see Obama and Romney's plans for health care as different, 51% are unsure how Romney's plan is different.

As if this is all an intentional game of confusion, Romney said over the weekend that he would keep some parts of the ACA, like the no pre-existing conditions clause.  From Romneycare to repeal the ACA to keeping parts of it?  What's really going on here?

As always, John Stewart says it best:

NY Times "quiz" on the Institute of Medicine's recent report

I ran across this little quiz in the NY Times and thought I'd share it as a relatively fun intro to their article covering the Institute of Medicine's recent report "Best Care at Lower Cost: The Path to Continuously Learning Healthcare in America".  

http://well.blogs.nytimes.com/2012/09/12/the-well-quiz-cutting-health-costs/?smid=tw-nytimeshealth&seid=auto

I thought as a break from heavier reading, the quiz was fantastic!  On the more serious side, I have not read the IOM's report but it seems like the NY Times coverage is pulling out some of the more sensationalist and optimistic findings, without including many of the caveats that I'm sure are in the report.  For instance, they report that the IOM has calculated that the American healthcare system wastes $750 billion per year, but don't include any of the myriad of reasons that it's challenging to even begin to figure out how to cut down on that overspend.

On the other hand, I love that the NY Times is trying to make healthcare issues a little more fun for readers and pull them in - hopefully this will help people sit up and really think about healthcare in the coming election.

Hi everyone - glad to see many of you were able to get/accept the invite to be blog authors. Been a busy week with the DNC and the platform back and forth. This IOM report about waste also caught my eye as something we hear about all the time. Thoughts? http://www.kaiserhealthnews.org/Daily-Reports/2012/September/07/iom-report.aspx

Welcome to the Fall 2012 run of the Foundations of HPM course and its blog. I hope you will find the practice of starting threads, posting reactions, etc engaging! I thought this was an interesting article in the Times by Eduardo Porter Thoughts on how we should come to grips with the need to find a place in the health care system to say NO? http://www.nytimes.com/2012/08/22/business/economy/rationing-health-care-more-fairly.html?_r=1&ref=policy