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Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care (2012)

Chapter:6 Implementing Measures of Medical Care Economic Burden and Risk

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Suggested Citation:"6 Implementing Measures of Medical Care Economic Burden and Risk." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
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6

Implementing Measures of Medical Care Economic Burden and Risk

In the preceding chapters, the panel has aimed to develop rigorous yet practical approaches to defining and measuring the experienced financial burden and the prospective financial risk associated with premiums and other out-of-pocket medical care costs. Specifically, we focused on how exposure to medical care expenses can threaten families and individuals with being driven into poverty. Through commissioned papers, workshop presentations and discussions, and deliberations by our panel representing expertise from economics, actuarial science, health care financing, poverty research, and statistics, we have brought to bear the latest research and data and considered the most rigorous methods. We have also kept in mind what actually can be done by government agencies without major infusions of additional staff or funding. This concluding chapter sustains that practical perspective by outlining how a new measure of medical care economic risk (MCER), as well as a measure of burden, might be implemented.

RESPONSIBILITY FOR DEVELOPING AND MAINTAINING THE MEASURES

For the introduction of measures of burden and risk, particularly a new measure of MCER, to be successful, clear lines of responsibility for its implementation must be established. The two federal agencies with the greatest expertise in the development and implementation of such a measure are the U.S. Department of Health and Human Services (HHS) and the U.S. Department of Commerce. The former has responsibilities for health policy and deep understanding of health insurance coverage,

Suggested Citation:"6 Implementing Measures of Medical Care Economic Burden and Risk." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
×

and the latter in measuring income and poverty. More specifically, within HHS, several agencies would be important to successful implementation: the Office of the Assistant Secretary for Planning and Evaluation, given its current work on poverty thresholds and history of working closely with the U.S. Census Bureau on poverty measures; the Agency for Healthcare Research and Quality, given its expertise and responsibility for the Medical Expenditure Panel Survey; and the National Center for Health Statistics, as the federal government’s principal agency for health statistics. Within the Commerce Department, the Census Bureau, because it conducts the Current Population Survey (CPS) and has accomplished extensive work on poverty measures, should clearly be involved.

The Office of Management and Budget (OMB), specifically its Statistical Policy Office, also needs to be involved, given that its predecessor issued the directive in 1969 establishing the official poverty measure, as well as the major role played by the chief statistician in the development of the Supplemental Poverty Measure (SPM), including co-chairing the Interagency Technical Working Group.

As explained in the report, the U.S. poverty measure is an important indicator of economic well-being that influences public opinion and public policies. Looking at its history, the current official poverty measure, developed in the early 1960s, is long outdated. Over the years, social and economic conditions changed along with changes in public policies and an overall increase in the standard of living, making the measure less adequate for its intended uses. The measure no longer provides an accurate picture of the extent of economic poverty, the differences among population groups and geographic areas, or the differences over time. The measure has weaknesses both in the definition of family resources and in the concepts of the thresholds. In particular, it does not take into account dramatic increases and variations in medical care spending, out-of-pocket costs, and health insurance coverage.

A congressionally mandated panel of the National Research Council (NRC) issued a report in 1995 that proposed a revised measure of poverty and recommended that the federal government develop a separate measure of medical care risk that would measure the economic risk to families and individuals of lacking adequate health insurance coverage (National Research Council, 1995). Much research has been conducted on different elements of the NRC-proposed poverty measure, leading, after many years, to the release of the new SPM in 2011. Much less work has been done on a potential measure of medical care economic risk. The passage of the Affordable Care Act and changes in other health care programs have made it important to revisit the conceptual and measurement issues for assessing medical care economic risk (a prospective measure) and medical care economic burden and to develop a useful measure for policy analysis and

Suggested Citation:"6 Implementing Measures of Medical Care Economic Burden and Risk." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
×

public understanding. Our panel thinks that a subcabinet-level coordinating group would help to ensure that a measure of MCER does not flounder in its development and launch.

Recommendation 6-1: Because technical and cross-departmental efforts such as the construction and maintenance of a measure of medical care economic risk (MCER) require both political and resource support, the panel recommends that the secretaries at the U.S. Departments of Health and Human Services and Commerce be jointly responsible for developing and reporting measures of MCER (and burden) on an annual basis with involvement of the Office of Management and Budget chief statistician. This effort should coincide with the production and release schedule for the Supplemental Poverty Measure.

Recommendation 6-2: The panel further recommends the creation of a medical care economic risk coordinating group composed of senior officials from the U.S. Department of Health and Human Services, the U.S. Census Bureau, and the U.S. Office of Management and Budget to provide oversight and make suggestions for needed improvements.

The coordinating group would provide guidance to the agencies producing the measure and suggest changes in methodology and appropriate data sets as required. The leadership of agencies with contributions to make to the construction and implementation of the measure could constitute such a group. For example, the coordinating group might include the assistant secretary for planning and evaluation in HHS, who plays a comparable role in the development of the Annual Trustees Reports for both Medicare and Social Security and on the 5-year technical review panel of the Medicare Trustees modeling and methodology; the director of the Census Bureau, given that the Census Bureau would presumably play the primary role in producing the MCER, as it does for the official poverty measure and the SPM; and the chief statistician from OMB, given OMB’s role in coordinating statistical and data policy across the entire federal government. OMB would also be in a position to take a policy lead in dealing with other offices within the White House if changes need to be made in the MCER in years to come.

The panel also suggests that one or two members of the coordinating group be chosen from outside government. These outside members would have a role similar to the public trustees who serve on both the Medicare and Social Security Board of Trustees. Having one or more outside members would enhance the transparency and credibility of the process as well as provide the government with the latest thinking from the scholarly community outside the government. The outside members should possess relevant

Suggested Citation:"6 Implementing Measures of Medical Care Economic Burden and Risk." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
×

expertise in the measurement of poverty and the financial burden of health care. One responsibility of the coordinating group could be to produce a report accompanying the release of the annual MCER measure that raises any data, methodological, or policy issues relevant to the measure.

DATA ISSUES

The panel has made specific recommendations regarding which data sets should be used for measures of medical care economic burden and risk. These recommendations address data sets currently collected by either HHS or the Census Bureau.

Recommendation 6-3: The panel recommends that funding for the current data collection efforts be maintained at a level to ensure that rigorous, accurate calculations of measures of medical care economic burden and risk can be made.

As pointed out in Chapter 1, one substantial deficiency in the calculation of a measure of medical care economic risk is the lack of information available about people who enter institutional care, such as nursing homes. Because the CPS does not collect data on these populations, they are excluded from the universe for both the official poverty measure and the SPM. This presents a particularly significant limitation for the measurement of prospective risk in that one must exclude what is, for many elderly, their biggest health-related economic risk. This problem may have a solution in the future given ongoing advances in data collection, adoption of electronic medical records, and the linking of surveys with administrative data. The panel’s recommendations are based on the current collection of available federal data sources. However, new and better data will become available in future years. The panel urges that these new data sources be evaluated as they become available to determine if their use would produce a more accurate measure. An appropriate role for the interagency coordinating group could be the assessment of these new data sources.

METHODOLOGICAL ISSUES

The panel has proposed a methodological approach to calculating a measure of MCER (as well as the more easily calculated measure of burden), that we think will provide the most accurate information available. However, we are not so presumptuous as to assume that we have answered every design question correctly. Further methodological work will be necessary. In many ways, the deliberations of this panel have raised as many questions as they have answered. For example, the use of assets to offset

Suggested Citation:"6 Implementing Measures of Medical Care Economic Burden and Risk." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
×

health care spending and the dynamics of cross-subsidies of medical care costs in a nontraditional family have not been fully specified in our recommended approach. Much more research is necessary to inform the complete specification of the measure.

Future improvements in the data available will also require reexamination of the MCER methodology. We think that both HHS and the Census Bureau, under the guidance of the interagency coordinating group, should make the appropriate investments to ensure that this research be done to improve the measurement of medical care economic risk and burden in the future.

REPORTING

The introduction of a new measure of medical care economic risk will require thoughtful exposition and communication if the estimates are to be generally understood and accepted by policy makers, the media, and the public. It would be a disservice to simply release a new measure without a well-constructed explanation of what the measure does and does not represent. The panel envisions an analytic report produced by HHS and Commerce, which, following external review, would accompany the annual release of the MCER. This analytic report should provide policy makers, the media, and the public with an explanation of the measure and what it shows in a rigorous but nontechnical manner.

Suggested Citation:"6 Implementing Measures of Medical Care Economic Burden and Risk." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
×

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Suggested Citation:"6 Implementing Measures of Medical Care Economic Burden and Risk." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
×
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Suggested Citation:"6 Implementing Measures of Medical Care Economic Burden and Risk." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
×
Page102
Suggested Citation:"6 Implementing Measures of Medical Care Economic Burden and Risk." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
×
Page103
Suggested Citation:"6 Implementing Measures of Medical Care Economic Burden and Risk." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
×
Page104
Suggested Citation:"6 Implementing Measures of Medical Care Economic Burden and Risk." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
×
Page105
Suggested Citation:"6 Implementing Measures of Medical Care Economic Burden and Risk." Institute of Medicine and National Research Council. 2012. Medical Care Economic Risk: Measuring Financial Vulnerability from Spending on Medical Care. Washington, DC: The National Academies Press. doi: 10.17226/13525.
×
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The United States has seen major advances in medical care during the past decades, but access to care at an affordable cost is not universal. Many Americans lack health care insurance of any kind, and many others with insurance are nonetheless exposed to financial risk because of high premiums, deductibles, co-pays, limits on insurance payments, and uncovered services. One might expect that the U.S. poverty measure would capture these financial effects and trends in them over time. Yet the current official poverty measure developed in the early 1960s does not take into account significant increases and variations in medical care costs, insurance coverage, out-of-pocket spending, and the financial burden imposed on families and individuals. Although medical costs consume a growing share of family and national income and studies regularly document high rates of medical financial stress and debt, the current poverty measure does not capture the consequences for families' economic security or their income available for other basic needs.

In 1995, a panel of the National Research Council (NRC) recommended a new poverty measure, which compares families' disposable income to poverty thresholds based on current spending for food, clothing, shelter, utilities, and a little more. The panel's recommendations stimulated extensive collaborative research involving several government agencies on experimental poverty measures that led to a new research Supplemental Poverty Measure (SPM), which the U.S. Census Bureau first published in November 2011 and will update annually. Analyses of the effects of including and excluding certain factors from the new SPM showed that, were it not for the cost that families incurred for premiums and other medical expenses not covered by health insurance, 10 million fewer people would have been poor according to the SPM.

The implementation of the patient Protection and Affordable Care Act (ACA) provides a strong impetus to think rigorously about ways to measure medical care economic burden and risk, which is the basis for Medical Care Economic Risk. As new policies - whether part of the ACA or other policies - are implemented that seek to expand and improve health insurance coverage and to protect against the high costs of medical care relative to income, such measures will be important to assess the effects of policy changes in both the short and long term on the extent of financial burden and risk for the population, which are explained in this report.

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