Abstract The empirical association between high hospital procedure volume and lower mortality rates has led to recommendations for the centralization of complex surgical procedures. Yet redirecting patients to a select number of high-volume hospitals creates potential negative consequences for market competition. We use patient-level data to estimate the association between hospital procedure volume and patient mortality and costs. We also estimate the association between hospital market concentration and mortality, cost, and prices. We use our estimates to simulate the change in social welfare resulting from redirecting patients at low-volume hospitals to high-volume facilities. We find that a higher procedure volume leads to significant reductions in mortality for patients undergoing surgery for pancreatic cancer, but not colon cancer. Procedure volume also influences costs for both surgeries, but in a nonlinear fashion. Increased market concentration is associated with higher costs and prices for colon cancer, but not pancreatic cancer patients. Simulations indicated that centralizing pancreatic cancer surgery is unambiguously welfare enhancing. In contrast, there is less evidence to suggest that centralizing colon cancer surgery would be welfare improving.
{"title":"Can Centralization of Cancer Surgery Improve Social Welfare?","authors":"V. Ho, Marah Short, Meei-Hsiang Ku-Goto","doi":"10.1515/FHEP-2012-0016","DOIUrl":"https://doi.org/10.1515/FHEP-2012-0016","url":null,"abstract":"Abstract The empirical association between high hospital procedure volume and lower mortality rates has led to recommendations for the centralization of complex surgical procedures. Yet redirecting patients to a select number of high-volume hospitals creates potential negative consequences for market competition. We use patient-level data to estimate the association between hospital procedure volume and patient mortality and costs. We also estimate the association between hospital market concentration and mortality, cost, and prices. We use our estimates to simulate the change in social welfare resulting from redirecting patients at low-volume hospitals to high-volume facilities. We find that a higher procedure volume leads to significant reductions in mortality for patients undergoing surgery for pancreatic cancer, but not colon cancer. Procedure volume also influences costs for both surgeries, but in a nonlinear fashion. Increased market concentration is associated with higher costs and prices for colon cancer, but not pancreatic cancer patients. Simulations indicated that centralizing pancreatic cancer surgery is unambiguously welfare enhancing. In contrast, there is less evidence to suggest that centralizing colon cancer surgery would be welfare improving.","PeriodicalId":38039,"journal":{"name":"Forum for Health Economics and Policy","volume":"34 1","pages":"1 - 25"},"PeriodicalIF":0.0,"publicationDate":"2012-10-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80282086","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
George L Wehby, Ann Marie McCarthy, Eduardo E Castilla, Jeffrey C Murray
Abstract This paper assesses the effects of household investments through child educating activities on child neurodevelopment between the ages of 3 and 24 months, and evaluates whether investments explain racial and socioeconomic developmental gaps in South America. Quantile regression is used to evaluate the heterogeneity in investment effects by unobserved developmental endowments. The study finds large positive investment effects on early child neurodevelopment, with generally larger effects among children with low developmental endowments (children at the left margin of the development distribution). Investments explain part of the observed racial gaps and the whole socioeconomic developmental gap. Investments may compensate for low endowments and policy interventions to increase investments may reduce early development gaps and result in high social and economic returns.
{"title":"The Impact of Household Investments on Early Child Neurodevelopment and on Racial and Socioeconomic Developmental Gaps - Evidence from South America.","authors":"George L Wehby, Ann Marie McCarthy, Eduardo E Castilla, Jeffrey C Murray","doi":"10.2202/1558-9544.1237","DOIUrl":"https://doi.org/10.2202/1558-9544.1237","url":null,"abstract":"Abstract This paper assesses the effects of household investments through child educating activities on child neurodevelopment between the ages of 3 and 24 months, and evaluates whether investments explain racial and socioeconomic developmental gaps in South America. Quantile regression is used to evaluate the heterogeneity in investment effects by unobserved developmental endowments. The study finds large positive investment effects on early child neurodevelopment, with generally larger effects among children with low developmental endowments (children at the left margin of the development distribution). Investments explain part of the observed racial gaps and the whole socioeconomic developmental gap. Investments may compensate for low endowments and policy interventions to increase investments may reduce early development gaps and result in high social and economic returns.","PeriodicalId":38039,"journal":{"name":"Forum for Health Economics and Policy","volume":"14 2","pages":""},"PeriodicalIF":0.0,"publicationDate":"2012-10-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2202/1558-9544.1237","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"30649100","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract The ultimate aim of health care policy is good care at good prices. Managed care failed to achieve this goal through influencing providers, so health policy has turned to the only market-based option left: treating patients like consumers. Health insurance and tax policy now pressure patients to spend their own money when they select health plans, providers, and treatments. Expecting patients to choose what they need at the price they want, consumerists believe that market competition will constrain costs while optimizing quality. This classic form of consumerism is today’s health policy watchword. This article evaluates consumerism and the regulatory mechanism of which it is essentially an example – legally mandated disclosure of information. We do so by assessing the crucial assumptions about human nature on which consumerism and mandated disclosure depend. Consumerism operates in a variety of contexts in a variety of ways with a variety of aims. To assess so protean a thing, we ask what a patient’s life would really be like in a consumerist world. The literature abounds in theories about how medical consumers should behave. We look for empirical evidence about how real people actually buy health plans, choose providers, and select treatments. We conclude that consumerism is unlikely to accomplish its goals. Consumerism’s prerequisites are too many and too demanding. First, consumers must have choices that include the coverage, care-takers, and care they want. Second, reliable information about those choices must be available. Third, information must be put before consumers in helpful ways, especially by doctors. Fourth, the information must be complete and comprehensible enough for consumers to use it. Fifth, consumers must understand what they are told. Sixth, consumers must actually analyze the information and do so well enough to make good choices. Our review of the empirical evidence concludes that these prerequisites cannot be met reliably most of the time. At every stage people encounter daunting hurdles. Like so many other dreams of controlling costs and giving patients control, consumerism is doomed to disappoint. This does not mean that consumerist tools should never be used. If all that consumerism accomplished is to raise general cost-consciousness among patients, still, it could make a substantial contribution to the larger cost-control efforts by insurers and the government. Once patients bear responsibility for much day-to-day spending on their health needs, they should be increasingly sensitized to the difficult trade-offs that abound in medical care and might even begin to understand that public and private health insurers have a legitimate interest in controlling medical spending.
{"title":"Can Consumers Control Health-Care Costs?","authors":"M. Hall, C. Schneider","doi":"10.1515/FHEP-2012-0008","DOIUrl":"https://doi.org/10.1515/FHEP-2012-0008","url":null,"abstract":"Abstract The ultimate aim of health care policy is good care at good prices. Managed care failed to achieve this goal through influencing providers, so health policy has turned to the only market-based option left: treating patients like consumers. Health insurance and tax policy now pressure patients to spend their own money when they select health plans, providers, and treatments. Expecting patients to choose what they need at the price they want, consumerists believe that market competition will constrain costs while optimizing quality. This classic form of consumerism is today’s health policy watchword. This article evaluates consumerism and the regulatory mechanism of which it is essentially an example – legally mandated disclosure of information. We do so by assessing the crucial assumptions about human nature on which consumerism and mandated disclosure depend. Consumerism operates in a variety of contexts in a variety of ways with a variety of aims. To assess so protean a thing, we ask what a patient’s life would really be like in a consumerist world. The literature abounds in theories about how medical consumers should behave. We look for empirical evidence about how real people actually buy health plans, choose providers, and select treatments. We conclude that consumerism is unlikely to accomplish its goals. Consumerism’s prerequisites are too many and too demanding. First, consumers must have choices that include the coverage, care-takers, and care they want. Second, reliable information about those choices must be available. Third, information must be put before consumers in helpful ways, especially by doctors. Fourth, the information must be complete and comprehensible enough for consumers to use it. Fifth, consumers must understand what they are told. Sixth, consumers must actually analyze the information and do so well enough to make good choices. Our review of the empirical evidence concludes that these prerequisites cannot be met reliably most of the time. At every stage people encounter daunting hurdles. Like so many other dreams of controlling costs and giving patients control, consumerism is doomed to disappoint. This does not mean that consumerist tools should never be used. If all that consumerism accomplished is to raise general cost-consciousness among patients, still, it could make a substantial contribution to the larger cost-control efforts by insurers and the government. Once patients bear responsibility for much day-to-day spending on their health needs, they should be increasingly sensitized to the difficult trade-offs that abound in medical care and might even begin to understand that public and private health insurers have a legitimate interest in controlling medical spending.","PeriodicalId":38039,"journal":{"name":"Forum for Health Economics and Policy","volume":"128 1","pages":"23 - 52"},"PeriodicalIF":0.0,"publicationDate":"2012-09-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88089268","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract We compare health care spending in the USA to other industrialized countries and find that payment rates for hospitals, physicians, and drugs are generally much higher in the USA than they are in other industrialized countries while the quantity of services – as measured by the number of physician visits, hospital days and prescriptions filled per capita – is relatively similar across countries. We then explore policy initiatives designed to control payment rates and volume of services and review the success and failures of these initiatives. Within the USA, the private sector pays significantly higher rates for hospital and physician services and drugs than the public sector. Thus, if the USA is going to reduce health care spending, it may be necessary to begin by reducing payment rates in the private sector. Options to achieve this goal are presented.
{"title":"High US Health-Care Spending and the Importance of Provider Payment Rates","authors":"G. Anderson, K. Chalkidou, B. Herring","doi":"10.1515/FHEP-2012-0007","DOIUrl":"https://doi.org/10.1515/FHEP-2012-0007","url":null,"abstract":"Abstract We compare health care spending in the USA to other industrialized countries and find that payment rates for hospitals, physicians, and drugs are generally much higher in the USA than they are in other industrialized countries while the quantity of services – as measured by the number of physician visits, hospital days and prescriptions filled per capita – is relatively similar across countries. We then explore policy initiatives designed to control payment rates and volume of services and review the success and failures of these initiatives. Within the USA, the private sector pays significantly higher rates for hospital and physician services and drugs than the public sector. Thus, if the USA is going to reduce health care spending, it may be necessary to begin by reducing payment rates in the private sector. Options to achieve this goal are presented.","PeriodicalId":38039,"journal":{"name":"Forum for Health Economics and Policy","volume":"51 1","pages":"1 - 22"},"PeriodicalIF":0.0,"publicationDate":"2012-09-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83770198","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract This chapter traces the history of attempts at cost control in the United States from the origins of our modern health care financing system in the 1930s and 1940s, through health care cost regulation in the 1970s, and the deregulatory 1980s and 1990s, to the Affordable Care Act.
{"title":"Eight Decades of Discouragement: The History of Health Care Cost Containment in the USA","authors":"T. Jost","doi":"10.1515/FHEP-2012-0009","DOIUrl":"https://doi.org/10.1515/FHEP-2012-0009","url":null,"abstract":"Abstract This chapter traces the history of attempts at cost control in the United States from the origins of our modern health care financing system in the 1930s and 1940s, through health care cost regulation in the 1970s, and the deregulatory 1980s and 1990s, to the Affordable Care Act.","PeriodicalId":38039,"journal":{"name":"Forum for Health Economics and Policy","volume":"28 1","pages":"53 - 82"},"PeriodicalIF":0.0,"publicationDate":"2012-09-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84863742","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Tort reformers blame the high cost of American health care on defensive responses to rampant medical malpractice litigation. Defenders of the tort system counter that holding health care providers liable for negligence improves safety and ensures compensation for injury. The relationship between medical malpractice and health care expenditures is more complex than either of these positions reflects. The existing medical malpractice system increases medical spending mainly because it has evolved in tandem with other inflationary features of the health care system and may make those features even more difficult to change. In other words, medical malpractice is both a symptom of a costly health care system and a costly disease in its own right.
{"title":"Both Symptom and Disease: Relating Medical Malpractice to Health-Care Costs","authors":"W. Sage","doi":"10.1515/FHEP-2012-0010","DOIUrl":"https://doi.org/10.1515/FHEP-2012-0010","url":null,"abstract":"Abstract Tort reformers blame the high cost of American health care on defensive responses to rampant medical malpractice litigation. Defenders of the tort system counter that holding health care providers liable for negligence improves safety and ensures compensation for injury. The relationship between medical malpractice and health care expenditures is more complex than either of these positions reflects. The existing medical malpractice system increases medical spending mainly because it has evolved in tandem with other inflationary features of the health care system and may make those features even more difficult to change. In other words, medical malpractice is both a symptom of a costly health care system and a costly disease in its own right.","PeriodicalId":38039,"journal":{"name":"Forum for Health Economics and Policy","volume":"206 1","pages":"83 - 106"},"PeriodicalIF":0.0,"publicationDate":"2012-09-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73136037","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Harsha Thirumurthy, Markus Goldstein, Joshua Graff Zivin, James Habyarimana, Cristian Pop-Eleches
We estimate changes in sexual behavior for HIV-positive individuals enrolled in an AIDS treatment program using longitudinal household survey data collected in western Kenya. We find that sexual activity is lowest at the time that treatment is initiated and increases significantly in the subsequent six months, consistent with the health improvements that result from ART treatment. More importantly, we find large and significant increases of 10 to 30 percentage points in the reported use of condoms during last sexual intercourse. The increases in condom use appear to be driven primarily by a program effect, applying to all HIV clinic patients regardless of treatment status.
{"title":"Behavioral Responses of Patients in AIDS Treatment Programs: Sexual Behavior in Kenya.","authors":"Harsha Thirumurthy, Markus Goldstein, Joshua Graff Zivin, James Habyarimana, Cristian Pop-Eleches","doi":"10.1515/1558-9544.1230","DOIUrl":"https://doi.org/10.1515/1558-9544.1230","url":null,"abstract":"<p><p>We estimate changes in sexual behavior for HIV-positive individuals enrolled in an AIDS treatment program using longitudinal household survey data collected in western Kenya. We find that sexual activity is lowest at the time that treatment is initiated and increases significantly in the subsequent six months, consistent with the health improvements that result from ART treatment. More importantly, we find large and significant increases of 10 to 30 percentage points in the reported use of condoms during last sexual intercourse. The increases in condom use appear to be driven primarily by a program effect, applying to all HIV clinic patients regardless of treatment status.</p>","PeriodicalId":38039,"journal":{"name":"Forum for Health Economics and Policy","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2012-04-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1515/1558-9544.1230","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"40173362","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Julia Thornton Snider, J. Romley, William B. Vogt, T. Philipson
Abstract Standard techniques of cost effectiveness analysis measure a technology’s benefits in terms of expected life years (or quality-adjusted life years) gained at today’s life expectancies. However, this approach ignores the gains which derive from the possibility that a health technology allows an individual to survive long enough to benefit from other technological innovations which raise life expectancy (and quality of life) in the future. Borrowing a term from the finance literature, we refer to this source of value as the “option value” of innovation. We explain where this value comes from and how to calculate it in a variety of standard cost effectiveness analysis contexts. We provide a proof-of-concept using the example of the drug tamoxifen, which delayed the onset of breast cancer for some patients until more effective adjuvant treatment was available. We find that incorporating option value can increase the conventionally estimated value of tamoxifen with better adjuvant treatment by nearly a quarter (from $200,000 to $248,000 for those who initiated tamoxifen in 1999). We expect similar results for other drugs in therapeutic areas of rapid technological advancement.
{"title":"The Option Value of Innovation","authors":"Julia Thornton Snider, J. Romley, William B. Vogt, T. Philipson","doi":"10.1515/1558-9544.1306","DOIUrl":"https://doi.org/10.1515/1558-9544.1306","url":null,"abstract":"Abstract Standard techniques of cost effectiveness analysis measure a technology’s benefits in terms of expected life years (or quality-adjusted life years) gained at today’s life expectancies. However, this approach ignores the gains which derive from the possibility that a health technology allows an individual to survive long enough to benefit from other technological innovations which raise life expectancy (and quality of life) in the future. Borrowing a term from the finance literature, we refer to this source of value as the “option value” of innovation. We explain where this value comes from and how to calculate it in a variety of standard cost effectiveness analysis contexts. We provide a proof-of-concept using the example of the drug tamoxifen, which delayed the onset of breast cancer for some patients until more effective adjuvant treatment was available. We find that incorporating option value can increase the conventionally estimated value of tamoxifen with better adjuvant treatment by nearly a quarter (from $200,000 to $248,000 for those who initiated tamoxifen in 1999). We expect similar results for other drugs in therapeutic areas of rapid technological advancement.","PeriodicalId":38039,"journal":{"name":"Forum for Health Economics and Policy","volume":"99 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2012-04-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85921892","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Food away from home (FAFH) and, specifically fast food, has been targeted by academics and public policy officials alike as a major contributor to the obesity epidemic. Criticized as high in energy, fat and sugars, the implication is that consumers demand the combination of nutrients in FAFH in excess. If market-based policies intended to correct the perceived market failure in nutrient demand are to be successful, information on nutrient elasticities is required. Moreover, co-dependent relationships between nutrient intake and bioeconomic outcomes – obesity, physical activity and health status – are found to be important in the public health literature, but are not typically included in econometric studies of FAFH demand. Nutrients, however, do not have market prices. This study derives a set of implicit nutrient prices and estimates the elasticities of demand for nutrients in FAFH that takes into account the endogeneity of bioeconomic outcomes. Our estimation results show that fat is the only macro-nutrient that is elastic in demand, and all cross-price elasticities are small, so nutrient-based price policies may indeed be effective in modifying FAFH choices. Simulation results confirm this hypothesis, and also support the use of policies that subsidize positive health outcomes.
{"title":"Nutrient Demand in Food Away from Home","authors":"T. Richards, Lisa Mancino, W. Nganje","doi":"10.1515/1558-9544.1246","DOIUrl":"https://doi.org/10.1515/1558-9544.1246","url":null,"abstract":"Abstract Food away from home (FAFH) and, specifically fast food, has been targeted by academics and public policy officials alike as a major contributor to the obesity epidemic. Criticized as high in energy, fat and sugars, the implication is that consumers demand the combination of nutrients in FAFH in excess. If market-based policies intended to correct the perceived market failure in nutrient demand are to be successful, information on nutrient elasticities is required. Moreover, co-dependent relationships between nutrient intake and bioeconomic outcomes – obesity, physical activity and health status – are found to be important in the public health literature, but are not typically included in econometric studies of FAFH demand. Nutrients, however, do not have market prices. This study derives a set of implicit nutrient prices and estimates the elasticities of demand for nutrients in FAFH that takes into account the endogeneity of bioeconomic outcomes. Our estimation results show that fat is the only macro-nutrient that is elastic in demand, and all cross-price elasticities are small, so nutrient-based price policies may indeed be effective in modifying FAFH choices. Simulation results confirm this hypothesis, and also support the use of policies that subsidize positive health outcomes.","PeriodicalId":38039,"journal":{"name":"Forum for Health Economics and Policy","volume":"15 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2012-04-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81250253","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Existing economic approaches to the design and evaluation of health insurance do not readily apply to coverage decisions in the multi-tiered drug formularies characterizing drug coverage in private health insurance and Medicare. This paper proposes a method for evaluating a change in the value of a formulary to covered members based on the economic theory of price indexes. A formulary is cast as a set of demand-side prices, and our measure approximates the compensation (positive or negative) that would need to be paid to consumers to accept the new set of prices. The measure also incorporates any effect of the formulary change on plan drug acquisition costs and "offset effects" on non-drug services covered by the plan. Data needed to calculate formulary value are known or can be forecast by a health plan. We illustrate the method with data from a move from a two- to a three-tier formulary.
{"title":"A Prescription for Drug Formulary Evaluation: An Application of Price Indexes.","authors":"Jacob Glazer, Haiden A Huskamp, Thomas G McGuire","doi":"10.1515/1558-9544.1296","DOIUrl":"10.1515/1558-9544.1296","url":null,"abstract":"<p><p>Existing economic approaches to the design and evaluation of health insurance do not readily apply to coverage decisions in the multi-tiered drug formularies characterizing drug coverage in private health insurance and Medicare. This paper proposes a method for evaluating a change in the value of a formulary to covered members based on the economic theory of price indexes. A formulary is cast as a set of demand-side prices, and our measure approximates the compensation (positive or negative) that would need to be paid to consumers to accept the new set of prices. The measure also incorporates any effect of the formulary change on plan drug acquisition costs and \"offset effects\" on non-drug services covered by the plan. Data needed to calculate formulary value are known or can be forecast by a health plan. We illustrate the method with data from a move from a two- to a three-tier formulary.</p>","PeriodicalId":38039,"journal":{"name":"Forum for Health Economics and Policy","volume":"15 2","pages":""},"PeriodicalIF":0.0,"publicationDate":"2012-03-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3556729/pdf/nihms426801.pdf","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"31206982","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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