Cost-Sharing: Effects on Spending and Outcomes

Reviews what is known and not known about the effects of consumer cost-sharing on distribution of and total spending, health outcomes, services, and prescription drugs and how responses to cost-sharing vary by socioeconomic factors and health status

Justifying Government as the Backstop in Health Insurance Markets

Disasters-earthquakes, floods, hurricanes, forest fires, or terrorist attacks-usually bring out selfless behavior as people band together to help those in need. Disasters and our responses to them are reminders that we are in a society together. Unfortunately, for at least the last fifty years, this image of one society has faded when we have tried to work out details for implementing universal health insurance in the United States. A large part of the disagreement about how to achieve universal coverage is over the extent to which we are willing to allow government to intervene in private markets. Yet disasters provide a blueprint for what the role of government might be to help private health insurance markets work more efficiently for everyone and to enable more people to obtain coverage. Throughout our history, philosophical arguments about the role of government in a market-oriented society have shaped many of our laws and the division of responsibilities among the federal and state governments and the private sector. In the last three decades, economists and, increasingly, politicians have argued that the free market advances economic growth and opportunity more effectively than government policies intended to achieve such goals. This view rests on the widespread belief among American economists that competitive forces yield efficiency in both the production and the allocation of goods and services. Moving from a static to a dynamic context, economists also see free market competition as a strong spur to innovation. As the view has taken hold that competition yields efficiency in markets, policy-makers have paid increasing attention to the way in which government regulation might inhibit competition and incentives for companies in a market to be efficient. There is now a widespread belief among economists, policy analysts, and policy-makers that government should intervene in a market only when conditions for competition are not in place, and the market fails to be efficient. In the case of health insurance, the absence of a competitive market can arise for a variety of reasons. Within a geographic area, there are traditional concerns about monopolies. There are also more subtle concerns involving the role of information. Perfect competition requires that all market participants have perfect information on what is being bought and sold. By contrast, health insurance markets can be plagued by adverse selection-the phenomenon in which people who anticipate high medical care costs will be most likely to purchase health insurance. One consequence of the possibility of adverse selection is the extensive use of screening mechanisms by insurers to avoid high-risk (potentially high-cost) enrollees. This results in people who are perceived to be high-risk being unable to obtain coverage at affordable premiums, or denied coverage altogether. It also results in inefficiency in the health insurance markets as insurers invest in the non-productive efforts of screening to avoid high-risk people. Such efforts increase the costs of insurance for all who obtain coverage

Maintaining Coverage, Affordability, and Shared Responsibility When Income and Employment Change

Outlines the 2010 reform's provisions for adjusting premium and cost-sharing subsidies when incomes change, coordinating eligibility for programs, facilitating continuous coverage, and minimizing transitions between exchanges. Makes recommendations

Long term care partnerships: are they 'fit for purpose'?

The risk of high costs of long-term care services and supports (LTSS) is one of the largest uninsured risks for American families and a major challenge to the sustainability of Medicaid. To address the latter, the long-term care partnership (LTCP) program was an initiative designed to encourage middle-class individuals to purchase private long-term care insurance to cover at least the non-catastrophic costs of LTSS. The goal was to defer the time when an individual would become eligible for Medicaid to pay her LTSS expenses, and thereby reduce Medicaid expenditures. This paper exploits two unique sources of variation in the effects of LTCP, (i) the long term effects in the four states that were allowed to implement partnership programs in 1993-4, and (ii) the short-term effects in the states that implemented LTCP programs after 2005. Given the progressive development of the LTCP, we identify differences in trends in insurance uptake and Medicaid long-term care expenditures and claims. Both sources of variation suggest LTCP programs modestly stimulated LTC insurance uptake and slowed Medicaid LTC expenditures and claims trends

Access to long-term care after a wealth shock: evidence from the housing bubble and burst

Home equity is the primary self-funding mechanism for long term services and supports (LTSS). Using data from the relevant waves of the Health and Retirement Study (1996-2010), we exploit the exogenous variation in the form of wealth shocks resulting from the value of housing assets, to examine the effect of wealth on use of home health, unpaid help and nursing home care by older adults. We find a significant increase in the use of paid home health care and unpaid informal care but no effect on nursing home care access. We conduct a placebo test on individuals who do not own property; their use of LTSS was not affected by the housing wealth changes. The findings suggest that a wealth shock exerts a positive and significant effect on the uptake of home health and some effect on unpaid care but no significant effect on nursing home care

Partnership program for long-term care insurance: the right model for addressing uncertainties with the future?

Public policies that provide incentives for higher middle-income people to purchase private long-term care insurance (LTCI) have been proposed as a way to shield large numbers of middle-income people from the risk of needing costly long-term care. A proposal to promote purchases of private LTCI that has gained modest traction in the United States of America is the Partnership Program. The structure and public–private nature of the Partnership Programs are reviewed along with the trends in sales of both regular private LTCI policies and Partnership LTCI policies to show that both experienced low purchase rates. Implementation efforts for the Partnership Programs were very modest, in part because many were launched when the Affordable Care Act was passed. At the same time, several well-known insurers withdrew from selling private LTCI. Understanding why the Partnership Program is not a success provides lessons for other counties interested in creating similar public–private ventures