JULY 2009 HEALTH HOT TOPICS

Expanding Access to Care

The importance of health insurance in obtaining health care and ensuring health has been well documented, as have the negative effects of being uninsured: declines in access to care and poorer health. In addition to reviewing proposals that would extend coverage to many uninsured—which would improve access to care—Congress is considering options to address disparities in access, including tax incentives and policy options to increase the number of primary care providers. Racial and ethnic minorities face increased risks of ill health. Many health care and social factors associated with such disparities relate directly to access to care; reducing disparities in access would be an important first step in erasing racial and ethnic disparities in health. Children are another group for whom access issues are crucial. Our studies of the State Children’s Health Insurance Program (SCHIP) found that access to a regular primary care provider improved health-related quality of life for previously uninsured children.

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Increasing Coverage

Mandating insurance coverage is one approach to expanding coverage. Using RAND's microsimulation model (developed for COMPARE), we examined the likely effect of various approaches to increasing the number of insured.

An individual mandate, depending on the design of the policy, would likely increase the number of people with coverage by 9-34 million. Key features that will determine the effect on coverage and spending are the generosity of the subsidies available to purchase insurance and the size of the penalty for failure to comply with the mandate.

A stand-alone employer mandate would likely increase the number of newly insured by 1.8-3.4 million. Key design considerations are defining the types of firms that will be exempt from a mandate and the size of the penalty for firms that do not offer coverage.

A refundable tax credit for individuals and families, depending on its design, would likely increase the number of newly insured by 2.3-10 million people

Expanded eligibility for Medicaid would likely result in 6-35 million newly enrolled beneficiaries, depending on the new level for eligibility. Crowd-out of private insurance, whereby individuals switch from group or other coverage to Medicaid, may account for more than 50 percent of new Medicaid enrollees under this specific scenario.

Under all of the options, our model found no significant increases in aggregate national health spending; under three of the four options, there would likely be net increases in government spending, while effects on consumer out-of-pocket spending would vary.

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Improving Quality

RAND research has shown that adults in the United States receive about half the care recommended. The gap between the care patients should receive and what they actually get probably contributes to thousands of preventable deaths each year. RAND research has shed light on three proposed approaches to improving quality of care: improvements in health information technology, pay for performance (P4P), and pay for reporting.

Our microsimulation modeling of the impact of the widespread adoption of health information technology predicts that increased adoption and connectivity will decrease health spending in the long run. Several small studies suggest that health IT should also improve quality of care by reducing medical errors and adverse drug events, increasing the rates of recommended care, and decreasing duplication of tests. However, it is not clear whether these studies generalize to the entire U.S. health care system.

P4P uses financial incentives to stimulate improvements in quality of care and, in some cases, reductions in costs. RAND's analysis of the largest P4P experiment in the United States found that P4P has not yet produced substantial gains in quality. A few studies have found that hospital P4P programs produce modest improvements in the reliability with which appropriate care is provided. However, studies of physician P4P programs show mixed results.

A third strategy for improving quality of care is to report information about the performance of hospitals, health plans, physicians, and other care providers to the public. RAND analysis has found that publicly releasing hospital performance data stimulates quality improvement; however, the effect of public reporting on effectiveness, safety, and patient-centeredness remains unclear.

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Decreasing Health Care Spending

U.S. health care spending continues to rise rapidly and accounts for an increasing share of gross domestic product: By 2017, about 20 cents of every dollar spent in the United States will go to health care. Trends affecting health care spending include inflation, the number and mix of services used, population growth and aging, the obesity "epidemic," and new technology. RAND analysts have examined trends in health care spending and have also assessed how policy options such as high-deductible health plans and increased cost sharing affect both costs and health outcomes.

A high-deductible health plan is a fee-for-service plan with lower premiums and higher deductibles than a traditional health plan. RAND analysis suggests that such plans will reduce the use of health care services and costs; however, early evidence suggests that they have mixed effects on quality of care. In addition, they may adversely affect health because consumers responding to increased cost sharing reduce the use of both effective and less-effective care across the board.

RAND has also examined increased prescription cost sharing, another strategy for reducing spending. Studies found that for each 10-percent increase in cost sharing, prescription drug use decreases by 2 percent to 6 percent, depending on the class of drug and the health problem of the patient. However, in some cases, reducing drug co-payments for sicker patients can save money by increasing their compliance with drug regimens, thus avoiding costly emergency and hospital care.

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Promoting Wellness and Prevention

Combating the obesity epidemic and preventing and managing chronic disease are prominent in the congressional health reform debate. Obesity is one of the leading causes of preventable illness in the United States. The biggest contributors to the obesity epidemic are poor diet and reduced physical activity. RAND researchers have found that obesity in the U.S. population has been increasing steadily over the past two decades. Obesity is linked to higher rates of chronic disease than smoking, drinking, or poverty. Obese individuals also incur higher total health care costs: The obese spend 36 percent more on health care services and 77 percent more on medications. Over the long term, policies to promote weight reduction would have significant public health and fiscal benefits.

RAND has also examined the effect of disease management programs, intended to reduce the cost and burden of chronic disease over the long term. However, evidence is mixed on the effect of disease management on spending, and some evaluations suggest that disease management actually increases health care spending. Research evidence suggests that disease management may increase the delivery of appropriate health care, but the health effects are uncertain.

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