Health Care Markets, Regulators, and Certifiers

Dranove, David

doi:10.1016/b978-0-444-53592-4.00010-4

Cited by 47 publications

(62 citation statements)

References 133 publications

(151 reference statements)

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“…The provider market, however, is becoming increasingly concentrated in many localities as well. 62,63 Because the benchmark is public information, a provider with market power that is negotiating its reimbursement rate with a plan should be able to extract some of any increase in the benchmark.…”

Section: Cost In Ma and Tmmentioning

confidence: 99%

How Successful Is Medicare Advantage?

2014

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Context: Medicare Part C, or Medicare Advantage (MA), now almost 30 years old, has generally been viewed as a policy disappointment. Enrollment has vacillated but has never come close to the penetration of managed care plans in the commercial insurance market or in Medicaid, and because of payment policy decisions and selection, the MA program is viewed as having added to cost rather than saving funds for the Medicare program. Recent changes in Medicare policy, including improved risk adjustment, however, may have changed this picture.Methods: This article summarizes findings from our group's work evaluating MA's recent performance and investigating payment options for improving its performance even more. We studied the behavior of both beneficiaries and plans, as well as the effects of Medicare policy. Findings:Beneficiaries make "mistakes" in their choice of MA plan options that can be explained by behavioral economics. Few beneficiaries make an active choice after they enroll in Medicare. The high prevalence of "zero-premium" plans signals inefficiency in plan design and in the market's functioning. That is, Medicare premium policies interfere with economically efficient choices. The adverse selection problem, in which healthier, lower-cost beneficiaries tend to join MA, appears much diminished. The available measures, while limited, suggest that, on average, MA plans offer care of equal or higher quality and for less cost than traditional Medicare (TM). In counties, greater MA penetration appears to improve TM's performance. Conclusions:Medicare policies regarding lock-in provisions and risk adjustment that were adopted in the mid-2000s have mitigated the adverse selection problem previously plaguing MA. On average, MA plans appear to offer higher value than TM, and positive spillovers from MA into TM imply that reimbursement should not necessarily be neutral. Policy changes in Medicare that reform

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Section: Cost In Ma and Tmmentioning

confidence: 99%

How Successful Is Medicare Advantage?

2014

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“…25 On these paradigms, see, for example, Berry and Reiss [2007], Reiss [1988, 1991], Dafny, Duggan and Ramanarayanan [2012], Dranove [2012], ch. 29 in Scherer [1990], and Scott Morton and Kyle [2012].…”

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confidence: 99%

The Landscape of US Generic Prescription Drug Markets, 2004-2016

Berndt¹,

Conti²,

Murphy³

2017

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Since the 1984 passage of the Waxman-Hatch Act, generic prescription drugs have become central to disease treatment and generic drug entry and price competition has been vigorous in the U.S. Nonetheless, recent policy concern has focused on potential supply inadequacy and price increases among selected generic drugs. Details regarding the supply of generic drugs throughout the product life cycle are surprisingly unstudied. Here, we examine manufacturer entry, exit, the extent of competition and the relationship between supply structure and inflation adjusted prices among generic drugs. Our empirical approach is descriptive and reduced form, following recent innovations on the older structure-conduct-performance tradition. We employ quarterly national data on quantities, wholesale dollar sales and manufacturers from QuintilesIMS National Sales Perspective data, 2004Q4-2016Q3. Defining a market as the molecule-dosage-form, we observe that median sizes of drug markets are predominantly small, with annual inflation adjusted sales revenues of less than $10 million but increasing over time. The median number of manufacturers in each market is about two, the mean about four. We find evidence to suggest decreasing numbers of suppliers over our study period, particularly following implementation of the Affordable Care Act in 2010 and the Generic Drug User Fee Amendments of 2012, attributable both to more exit and less entry. Approximately 40 percent of markets are supplied by one manufacturer; the share of markets supplied by one or two manufacturers is observed to increase over time and is more likely among non-oral drugs and those belonging to selected therapeutic classes. We find evidence to suggest prices of generic drugs are statistically significantly increasing over time, particularly following the implementation of the 2010 Affordable Care Act and the 2012 Generic Drug User Fee Amendments. Price increases are positively correlated with reduced manufacturer counts and alternative measures of increased supplier concentration, holding all else constant. Our results suggest the market for generic drugs is largely comprised of small revenue products the supply of which has tended towards duopoly or monopoly in recent years. Therefore, it is surprising generic drug prices have not been observed to be higher and potentially risen more over our study period. This issue merits further study; we suggest several testable hypotheses based in economic theory.

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“…However, then the "managed care backlash" happened: patients started to prefer more inclusive hospital networks. In response to this, provider networks tended to broaden again (Dranove, 2011;Lesser et al, 2003). How can we interpret this shifting between regimes in our framework?…”

Section: Insurer Competitionmentioning

confidence: 99%

Health Provider Networks, Quality and Costs

Boone

Schottmüller

2015

SSRN Journal

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We provide a modeling framework to think about selective contracting in the health care sector. Two health care providers differ in quality and costs. When buying health insurance, consumers observe neither provider quality nor costs. We derive an equilibrium where health insurers signal provider quality through their choice of provider network. Selective contracting focuses on low cost providers. Contracting both providers signals high quality. Market power tends to lower quality and lead to inefficiency. In a dynamic extension of the model, providers under-invest in quality while there can be both over and under-investment in cost reductions if there is a monopoly insurer while an efficient investment equilibrium exists with insurer competition.

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Health Care Markets, Regulators, and Certifiers

Cited by 47 publications

References 133 publications

How Successful Is Medicare Advantage?

How Successful Is Medicare Advantage?

The Landscape of US Generic Prescription Drug Markets, 2004-2016

Health Provider Networks, Quality and Costs

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