Managed Mental Health Care: Stakeholder Effects and Policy Implications

ABSTRACT: During the past several years, healthcare delivery in the United States has shifted from a primarily fee-for-service system toward managed care. Mental health care has been affected disproportionately by this trend. The existing literature on managed mental health care is abundant, but narrowly focused. The purpose of this study is to take a broader public-policy approach, considering simultaneously the effects on system stakeholders: patients, providers, employers, insurers, and society.     

Public sector borrowing requirement: A plain man's guide

With the implementation of an internal market in the UK National Health Service (NHS), interest in marketing NHS services is growing. Yet marketing practice in other sectors of the economy, and the experience of other markets in health care, raise doubts and objections as to whether marketing should be introduced in the NHS at all. Some of these objections have force, and there are important structural differences between the NHS internal market and conventional markets. Simply copying conventional marketing methods is therefore unlikely to be an effective, or even a desirable, approach to marketing in the NHS. Specific forms of marketing are required for the NHS and these forms differ for purchasing organizations, for commercialized health care providers (including NHS trusts), and for directly‐managed NHS services. Differences between these variants can be illustrated by considering the different ways in which a generic model of marketing would have to be amended for each case. The differences also suggest some policy and managerial parameters for the future development of NHS marketing.     

Optimal Risk Classification with an Application to Substandard Annuities

Abstract

Substandard annuities pay higher pensions to individuals with impaired health and thus require special underwriting of applicants. Although such risk classification can substantially increase a company's profitability, these products are uncommon except for the well-established U.K. market. In this paper we comprehensively analyze this issue and make several contributions to the literature. First, we describe enhanced, impaired life, and care annuities, and then we discuss the underwriting process and underwriting risk related thereto. Second, we propose a theoretical model to determine the optimal profit-maximizing risk classification system for substandard annuities. Based on the model framework and for given price-demand dependencies, we formally show the effect of classification costs and costs of underwriting risk on profitability for insurers. Risk classes are distinguished by the average mortality of contained insureds, whereby mortality heterogeneity is included by means of a frailty model. Third, we discuss key aspects regarding a practical implementation of our model as well as possible market entry barriers for substandard annuity providers.     

Managed care, consolidation among health care providers, and health care: evidence from mammography

We discuss the effects of managed care on the structure of the health care delivery system, focusing on managed-care-induced consolidation among health care providers. We empirically investigate the relationship between HMO market share and mammography providers. We find evidence of consolidation: increases in HMO activity are associated with reductions in the number of mammography providers and with increases in the number of services produced by remaining providers. We also find that increases in HMO market share are associated with reductions in costs for mammography and with increases in waiting times for appointments, but not with worse health outcomes.     

“Bounds for Ruin Probabilities in the Presence of Large Claims and their Comparison”, Vladimir Kalashnikov,April, 1999

Abstract

Performance measurement systems and report cards which attempt to measure and report the quality of care provided by managed health-care organizations, have become mainstream in health insurance markets as managed care penetration continues to increase. However, little is known about the impact formal plan evaluations have on the contracting and enrollment decisions made by health insurance purchasers and consumers. Information regarding the link between performance evaluations and enrollment is crucial for those charged with projecting future enrollments in and risk profiles of managed care organizations. This paper describes the performance measurement systems currently being used to evaluate managed care plans and reviews the empirical literature for evidence regarding the impact of measures on plan enrollments.     

A Comparison of HMO Efficiencies as a Function of Provider Autonomy

Current debates in the insurance and public policy literatures over health care financing and cost control measures continue to focus on managed care and HMOs. The lower utilization rates found in HMOs (compared to traditional fee‐for‐service indemnity plans) have generally been attributed to the organization's incentive to eliminate all unnecessary medical services. As a consequence HMOs are often considered to be a more efficient arrangement for delivering health care. However, it is important to make a distinction between utilization and efficiency (the ratio of outcomes to resources). Few studies have investigated the effect that HMO arrangements would have on the actual efficiency of health care delivery. Because greater control over provider autonomy appears to be a recurrent theme in the literature on reform, it is important to investigate the effects these restrictions have already had within the HMO market. In this article, the efficiencies of two major classes of HMO arrangements are compared using “game‐theoretic” data envelopment analysis (DEA) models. While other studies confirm that absolute costs to insurance firms and sponsoring companies are lowered using HMOs, our empirical findings suggest that, within this framework, efficiency generally becomes worse when provider autonomy is restricted. This should give new fuel to the insurance companies providing fee‐for‐service (FFS) indemnification plans in their marketplace contentions.     

New approaches to the finance and delivery of health care

Radical reform of the financing of health care has emerged onto the political agenda in recent months. Any new proposals must, however, be judged in terms of their impact on the fundamental public policy objectives of efficiency, equity and choice. How do the new proposals measure up?     

The Actuary’s Role in Managed Care

Abstract

Financial risk is moving to center stage in the $1-trillion U.S. health-care market. The growth of managed care has created new forms of risk and has shifted this risk from insurance companies, which have long dealt with it successfully, to health-care providers and other organizations that have not traditionally accepted the same type and amount of risk. Health-care actuaries have the expertise to help these institutions, and the nation, protect their financial well-being.

Actuaries specialize in the evaluation, quantification, and management of risk. Actuarial models of health-care costs, which help evaluate risk, offer management a window to the managed care world. With these models and other tools, health-care actuaries help organizations succeed in today’s health-care environment by showing how the financial and functional elements of an organization relate to risk.

This report discusses the evolution of the health-care industry and the role that the healthcare actuary has played in that evolution. Eight case studies outline actuarial approaches to assessing risk in the era of managed care by discussing situations affecting five groups: providers, employers, regulators, public policy organizations, and HMOs. Built on experience gained in hundreds of cases, these studies show the range of tasks encountered by managed care actuaries and outline approaches that can help balance risks in today’s health-care system.     

Single-payer health care systems: the roles and responsibilities of the public and private sectors

Health care systems all over the world are experiencing some change as they look for a new balance between supply and demand. This article provides context for the U.S. health care financing debate by examining the health care systems of five other countries: Canada, the United Kingdom, Australia, China and India. The authors show that, with few exceptions, countries around the world have seen an increase in both government and private health care spending between 1998 and 2002. The authors also demonstrate that employers throughout most of the world are becoming more, rather than less, involved in the funding and delivery of health care to employees and their dependents-even among nations with so-called single-payer health systems.     

Direct provider contracting: one employer's experience.

Employers and unions typically offer an array of health care options to their plan participants including many managed care options. However, until recently, few have considered contracting directly with an integrated delivery system (IDS), therefore circumventing health plans altogether. This article offers a case study of one employer's experience with direct IDS contracting, including employee contribution strategy, benefits design and evaluation of the delivery system.     

The financial manager's role in the Voluntary Effort

"Voluntary Effort" hopes to duplicate its first year success by further reducing the annual rate of increase of hospital costs by another two percent. The financial manager will play a key role in the achievement of this goal. Mr. Shelton views the financial manager as part of the hospital management team with the responsibility to review the operating goals and management effectiveness of the institution. The Hospital Financial Management Association has developed a Code of Action to assist the financial manager in dealing with his/her assignments and goals. Ultimately, "Voluntary Effort" is striving to establish a cost-effective health care financing and delivery system. The financial manager is encouraged to initiate in-service training programs for support staff to develop a management team capable of creating such a system. The success of the "Voluntary Effort" is dependent upon the effectiveness of hospital managers in dealing with the 1979 minimum wage and social security tax increases, cost containment and inflation. The financial manager can help by determining the financial feasibility of institutional decisions, interpreting government regulations and supplying written facts and figures to the rest of the hospital management team and community.     

Working for patients: Making the internal market effective

To be effective, the internal market for health care involves a recognition that there are different types of market, each with its own characteristics. Written contracts can only go so far. There is also a need to create administrative infrastructures which will ensure that the different markets function effectively.     

The systematic pricing of market sentiment shock

ABSTRACT

We show that market sentiment shocks create demand shocks for risky assets and a systematic risk for assets. We measure a market sentiment shock as the unexpected portion of the University of Michigan Consumer Sentiment Index’s growth. This shock prices stock returns in arbitrage pricing theory framework at 1% after controlling for market, size, value, momentum, and liquidity risk factors. Its premium lowered the implied risk aversion by 97.9% to 11.46 between 1978 and 2009 in our sentiment consumption-based capital-asset-pricing model. Merton’s [1973. “An Intertemporal Capital Asset Pricing Model.” Econometrica 41: 867–887]. intertemporal capital-asset-pricing model reconfirms our finding that this market sentiment shock is a systematic risk factor that provides investment opportunities.     

Innovation, public choice and public control in the market for health insurance.

Innovation, public choice and public control in the market for health insurance/benefits in the United States are largely dependent upon the ability of the various stakeholders to successfully argue their positions with legislators, regulators, providers, purchasers and third party beneficiaries. Given the public/private nature of health benefits, these relationships are examined in a Stigler/Posner/Peltzman public choice framework. Conflicts among various stakeholders and their ability to influence innovation in the market for health benefits are discussed.     

An Employer Analysis of Managed Care Costs and Satisfaction: Process, Effects, and Policy

ABSTRACT: Do managed care health plans truly control costs more effectively than nonmanaged care plans? Recent evidence suggests that employees are getting used to the managed care idea and that managed care is responsible for the sharp slowdown in health-care costs. This article examines recent changes in the delivery, financing, and consumption of health care from the perspective of a large multiple-site American corporation to see whether its health-care costs are controlled and whether this control occurs at the expense of employee satisfaction. A unique aspect of this study is that managed care was implemented more slowly and in phases at one of the six sites analyzed. The results suggest the following. First, the Study Corporation's health-care costs have not significantly increased four years following the change from an indemnity to a managed care plan. The authors interpret this result to mean that managed care has controlled costs because before the change, plan costs were increasing 15 percent per year. Second, the site with the underdeveloped network did not have higher costs than the other sites based on the analysis. Third, the authors show that employee satisfaction increased after implementation of the managed care plan. Moreover, satisfaction was higher at sites with more employees, higher usage, and higher health-care costs. Last, the results suggest that plan participant satisfaction increases as the managed care network becomes more developed. Policy and benefit manager recommendations are made on the basis of these reported findings.     

碎片化医保制度设计弊端与农民工医保模式路径选择

我国二元社会保障模式的构建思维一直影响我国保障制度的建设,导致我国医保制度建设呈现碎片化趋势,农民工医保制度也受这一传导机制影响。鉴于碎片化医保制度存在的诸多弊端和单独构建农民工医保模式存在的制度缺陷,农民工医保模式的路径选择应该是纳入现有保障制度框架。当前最关键和最紧迫的问题是提高现有医保制度统筹层级、解决三大医保制度接续以及加强农民工医保制度的配套建设。     

Annuity Choices in Chile: A Dynamic Approach

Abstract:

This study utilizes a variable derived from the Annuity Equivalent Wealth dynamic programming model developed by Brown (2001) and Mitchell et al. (1999). The model captures the benefits of having access to the annuity market. Using a unique data set of retirees from the Chilean labor market to analyze the empirical determinants of annuity choice, the study finds that sales agent contact, good health status, knowledge about the pension system, and greater education are associated with an increase in the probability of annuitization.     

The Employer's Role in Reforming the U.S. Health Care System

In 2005 large U.S. employers spent an average of almost $7,400 per head on health care benefits, a 73% increase in the last five years. If the current trend continues, American companies may find it difficult to compete in a global marketplace where international competitors provide labor with heath care at a fraction of U.S. costs. This article argues that effective reform of the U.S. health care system will require major efforts from all major “stakeholders,” starting with the federal government and state and local governments and including insurance companies and the “consumers” of health care services. By far the important role, however, is reserved for private‐sector employers, which have been the incubator for recent innovations in American health care and are in the best position to coordinate and drive health care reform. But incremental steps in cost‐sharing, small‐scale pilot projects of consumer‐based designs, and employee awareness campaigns will not be enough. Employers need to take radical steps to break through the inertia that has built up among all stakeholders over the past 50 years. Chief among the author's proposals for employers are the following:

• ? In choosing a health care plan for employees, use value‐based purchasing criteria that consider more than just the price and access to services.
• ? Help consumers by demanding information from providers and insurers about the cost and efficacy of health care services, and of alternative treatments, before the choices are made.
• ? Encourage “consumerism” by setting up benefit plans that have a Health Reimbursement Arrangement (HRA) or a Health Savings Account (HSA) component.

As the author states in closing, “Let these reforms begin with employers as the organizing force to drive needed change across the system. That may very well be the only way to save our employment‐based model.”     

State Price Density,Esscher Transforms,and Pricing Options on Stocks,Bonds, and Foreign Exchange Rates

Abstract

The state price density is modeled as an exponential function of the underlying state variables, and the Esscher transform is used to specify the forward-risk-adjusted measure. With the aid of state price densities, Esscher transforms, and characteristic functions, this paper provides a consistent framework for pricing options on stocks, interest rates, and foreign exchange rates. The framework discussed is quite general and is related to many popular models.