No abstract

We combine household surveys and total spending data to analyze trends in medical spending from 1963 to 2000. During this nearly forty-year period, spending grew fastest among the elderly. Per person spending among the elderly grew rapidly from 1963 to 1987, but this trend then reversed during the next decade, reflecting reforms to Medicare's physician and hospital payment systems. Prescription drug spending growth accelerated throughout the time period; it grew fastest among the nonelderly, for whom prescription drug insurance coverage is most extensive.

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In 1998 the Centers for Medicare and Medicaid Services (CMS) began phasing in a new prospective payment system (PPS) for Medicare payments to skilled nursing facilities (SNFs). I examine the effects of the new PPS on the level of rehabilitation therapy provided in SNFs. The percentage of residents of freestanding SNFs receiving extremely high levels of rehabilitation therapy dropped significantly, and the percentage receiving moderate levels increased. Freestanding SNFs, particularly for-profits, dramatically altered the services they provided in response to new financial incentives. This responsiveness underscores the importance of efforts now under way to refine the SNF PPS.

The difference between private and public (Medicare and Medicaid) payment rates for inpatient hospital stays widened between 1996 and 2012. Medical Expenditure Panel Survey data reveal that standardized private insurer payment rates in 2012 were approximately 75 percent greater than Medicare's-a sharp increase from the differential of approximately 10 percent in the period 1996-2001. Expenditures for hospital care in the United States are projected to exceed $1 trillion for the first time in 2015, 1 and debate is intensifying over pricing transparency, provider and insurer competition, and differences between private and public payment rates. The stakes involved are high, and there are stark examples of variations in payment rates across hospitals and geographic areas. 2-6 However, there is limited evidence on how payment rates for privately insured patients compare to those for patients covered by Medicare and Medicaid, or on how payment rate differences have changed over time.We examined amounts paid per inpatient hospital stay in the period 1996-2012 for patients whose primary payer was private insurance, Medicare, or Medicaid. Payment rates were adjusted for inflation and standardized across patient and stay characteristics.We found that payment rates for privately insured patients exceeded those for Medicare and Medicaid beneficiaries throughout the study period, but the difference widened rapidly in the latter half of the period (Exhibit 1). In 2012 private insurers' payment rates for inpatient hospital stays were approximately 75 percent greater than Medicare's payment rates-a sharp increase from the approximately 10 percent differential in the period 1996-2001.

Many policy makers believe that when Medicare constrains its payment rates for hospital inpatient care, private insurers end up paying higher rates as a result. I tested this "cost-shifting" theory using a unique new data set that combines MarketScan private claims data with Medicare hospital cost reports. Contrary to the theory, I found that hospital markets with relatively slow growth in Medicare inpatient hospital payment rates also had relatively slow growth in private hospital payment rates during 1995-2009. Using regression analyses, I found that a 10 percent reduction in Medicare payment rates led to an estimated reduction in private payment rates of 3 percent or 8 percent, depending on the statistical model used. These payment rate spillovers may reflect an effort by hospitals to rein in their operating costs in the face of lower Medicare payment rates. Alternatively, hospitals facing cuts in Medicare payment rates may also cut the payment rates they seek from private payers to attract more privately insured patients. My findings indicate that repealing cuts in Medicare payment rates would not slow the growth in spending on hospital care by private insurers and would in fact be likely to accelerate the growth in private insurers' costs and premiums.

U.S. state and local governments have increasingly adopted restrictions on smoking in public places. This paper analyzes nationally representative databases, including the Nationwide Inpatient Sample, to compare short‐term changes in mortality and hospitalization rates in smoking‐restricted regions with control regions. In contrast with smaller regional studies, we find that smoking bans are not associated with statistically significant short‐term declines in mortality or hospital admissions for myocardial infarction or other diseases. An analysis simulating smaller studies using subsamples reveals that large short‐term increases in myocardial infarction incidence following a smoking ban are as common as the large decreases reported in the published literature. © 2010 by the Association for Public Policy Analysis and Management.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited. Permission is given to duplicate this document for personal use only, as long as it is unaltered and complete. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial use. For information on reprint and linking permissions, please visit www.rand.org/pubs/permissions.html. The RAND Corporation is a research organization that develops solutions to public policy challenges to help make communities throughout the world safer and more secure, healthier and more prosperous. RAND is nonprofit, nonpartisan, and committed to the public interest. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.