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Frontiers in Health Policy Research.

The NBER's seventh annual conference on "Frontiers in Health Policy Research," organized by David M. Cutler, NBER and Harvard University, and Alan M. Garber, NBER and Stanford University; took place on June 6 in Washington, DC. The program was:

Patricia M. Danzon, NBER and University of Pennsylvania, and Jonathan D. Ketcham, University of California, Berkeley "Reference Pricing of Pharmaceuticals: Evidence from Germany, the Netherlands, and New Zealand"

Mark V. Pauly, NBER and University of Pennsylvania, "Adverse Selection and the Challenges to Stand-Alone Prescription Drug Insurance"

Wiliam H. Crown and Jonathan Maguire, Medstat; Ernst Berndt, NBER and MIT; and Kenneth E. Haver and Whitney P. Witt, Massachusetts General Hospital, "Benefit Plan Design and Prescription Drug Utilization Among Asthmatics: Do Patient Copayments Matter?"

Jay Bhattacharya, NBER and Stanford University; David M. Cutler; Dana Goldman, Michael Hurd, and Darius Lakdawalla, NBER and Rand Corporation; and Constanjin Panis, Rand Corporation, "Disability. Forecasts and Future Medicare Costs"

Nancy Beaulieu, NBER and Harvard University, "Health Plan Conversions: Are they in the Public Interest?"

Danzon and Ketcham describe three prototypical systems of therapeutic reference pricing (RP) for pharmaceuticals--Germany, the Netherlands, and New Zealand--and examine their effects on: the availability of new drugs; manufacturer prices, reimbursement levels, and out-of-pocket surcharges to patients; and market shares of originator and generic products. The results differ across countries in predictable ways, depending on system design and other cost control policies. The most aggressive RP system has severely limited the availability of new drugs, particularly more expensive drugs, disproportionately reduced reimbursement and sales for originator products, and exposed patients to out-of-pocket costs. The authors find little evidence that therapeutic referencing has stimulated competition.

Pauly investigates a possible predictor of adverse selection problems in unsubsidized "stand-alone" prescription drug insurance: the persistence of an individual's high spending over multiple years. Using MEDSTAT claims data and data from the Medicare survey of Current Beneficiaries, he finds that persistence is much higher for outpatient drug expenses than for other categories of medical expenses. He then uses these estimates to develop a model of adverse selection in competitive insurance markets and to show that this high relative persistence makes it unlikely that unsubsidized drug insurance can be offered for sale, even with premiums partially adjusted for risk, without a probable adverse selection death spiral. This outcome can be avoided if drug coverage is bundled with other coverage, and Pauly briefly discusses the need for comprehensive coverage or generous subsidies if adverse selection is to be avoided in private and Medicare insurance markets.

The ratio of controller-to-reliever medication use has been proposed as one measure of treatment quality for asthma patients. Crown and his co-authors examine the effects of plan-level, mean, out-of-pocket patient copayments for asthma medication, and other features of benefit plan design, on the use of controller medications alone, controller and reliever medications together (combination therapy), and reliever medications alone, relative to no drug treatment. They use claims data for 1995-2000. They find that the controller-reliever ratio rose steadily over 1995-2000, along with out-of-pocket payments for asthma medications. However, after controlling for other variables, plan level mean out-of-pocket copayments were not found to have a statistically significant influence on patient-level asthma treatment patterns. On the other hand, prescribing patterns among providers did influence patient-level treatment patterns; these effects differ somewhat between fee for service versus non-fee for service plans.

The traditional focus of disability research has been on the elderly, with good reason. Chronic disability is much more prevalent among the elderly, and it has more direct impact on the demand for medical care. However, it is also important to understand trends in disability among the young, particularly if these trends diverge from those among the elderly. These trends could have serious implications for future health care spending, since more disability at younger ages almost certainly translates into more disability among tomorrow's elderly, and disability is a key predictor of health care spending. Using data from the Medicare Current Beneficiary Survey and the National Health Interview Study, Bhattacharya and his co-authors forecast that per capita Medicare costs will decline for the next 15 to 20 years; this is in accordance with recent projections of declining disability among the elderly However, by 2020, the trend reverses. Per capita costs begin to rise because of growth in disability among the younger elderly. Total costs, which are the product of per capita costs and the total Medicare-eligible elderly population, will then begin to grow at an accelerating rate. Overall, cost forecasts for the elderly that incorporate information about disability among today's younger generations yield more pessimistic scenarios than those based solely on elderly datasets; this information should be incorporated into official Medicare forecasts.

Over the last decade, managed care companies have been consolidating on a regional and a national scale. More recently, not-for-profit health plans have been converting to for-profit status; frequently, this conversion has occurred as a step toward facilitating a merger or acquisition with a for-profit company. Beaulieu exam rues certain related health policy issues through the lens of a case study of the proposed conversion of the CareFirst Blue Cross-Blue Shield Company to a for-profit public stock company and its merger with the Wellpoint Corporation. Company executives and board members argued that CareFirst lacked access to sufficient capital and faced serious threats to its viability as a financially healthy non-profit health care company. They further argued that CareFirst and its beneficiaries would benefit from merger through enhanced economies of scale and product line extensions. Critics of the proposed conversion and merger raised concerns about the adverse impacts on access to care, coverage availability, quality of cart, safety, net providers, and the cost of health insurance,

Analyses demonstrate that CareFirst wields substantial market power in its local market, that it is unlikely to realize cost savings through expanded economies of scale, and that access to capital concerns are largely driven by the perceived need for further expansion through merger and acquisition. Though it is impossible to predict future changes in quality of care for CareFirst, analyses suggest that quality appears to be somewhat lower in for-profit national managed care companies.

These papers will be published by the MIT Press in an annual conference volume. They are also available at "Books in Progress" on the NBER's website under the title Frontiers in Health Policy Research, Volume 7.
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Title Annotation:Conferences
Publication:NBER Reporter
Geographic Code:1USA
Date:Sep 22, 2003
Words:1049
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