Unequal Treatment Confronting Racial and Ethnic Disparities in Health Care (2003) / Chapter Skim
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The Impact of Cost Containment Efforts on Racial and Ethnic Disparities in Healthcare: A Conceptualization Thomas Rice, Ph.D. Department of Health Services UCLA School of Public Health INTRODUCTION Like all developed countries, the United States continues to battle high and rising health care costs.
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700 UNEQUAL TREATMENT spend more on health care and consequently, less on other things, why should they be stopped -- particularly when it seems increasingly clear that certain new medical devices, products, and procedures can improve the quality and length of life? There are several reasons why.
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701 IMPACT OF COST CONTAINMENT EFFORTS from Ellis and McGuire (1993) , who distinguish between "supply-side" and "demand-side" cost sharing.
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702 UNEQUAL TREATMENT fewer services, a finding almost always supported in the health care literature. There are, in turn, two ways in which cost sharing is traditionally applied to consumers: by paying for insurance premiums, and by paying coinsurance, co-payments, and/or deductibles when they receive services.
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703 IMPACT OF COST CONTAINMENT EFFORTS Supply-Side Approaches Most tools that have been used to control health care costs focus on the supply side. These approaches, in general, are aimed at getting providers such as hospitals and physicians to change their behavior, rather than focusing on the patient's behavior.
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704 UNEQUAL TREATMENT TABLE 1. How Health Plans Pay Primary Care Physicians Northeast/ Southeast/ Mid- South All California Midwest Atlantic Central Plans Markets Markets Markets Markets Predominant payment method for primary care physicians Fee-for-service 24.7% 1.2% 23.2% 29.6% 50.9% Without witholds or bonuses 15.1% 1.2% 2.3% 10.5% 50.9% With witholds or bonuses 9.7 0.0 20.9 19.1 0.0 Capitation 61.2% 59.5% 74.3% 69.2% 41.0% Without witholds or bonuses 29.2% 30.7% 36.5% 31.6% 17.8% With witholds or bonuses 32.0 28.8 37.8 37.6 23.2 Salary 14.1% 39.4% 2.5% 1.2% 8.0% Without witholds or bonuses 13.3% 39.4% 0.0% 0.0% 8.0% With witholds or bonuses 0.8 0.0 2.5 1.2 0.0 Capitation is by far the most common method used in paying primary care physicians (Table 1)
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705 IMPACT OF COST CONTAINMENT EFFORTS area. California, for example, is far more likely to use salary to pay primary care physicians, mainly due to the presence of Kaiser Permanente, a large group model HMO.
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706 UNEQUAL TREATMENT money. One problem, however, is that health plans that rely on fee-forservice medicine may obtain a sicker group of enrollees, which eventually may lead to these types of plans being priced out of the market (Buchmueller, 1998)
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707 IMPACT OF COST CONTAINMENT EFFORTS in part, in the RAND Health Insurance Study, a vast social science experiment conducted between 1974 to 1982, and described in Newhouse (1993)
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708 UNEQUAL TREATMENT This theory has two key implications: society will be better off if people pay higher cost sharing amounts4 and cost sharing requirements should be highest for services that are more price sensitive. The latter argument is a bit more complicated.
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709 IMPACT OF COST CONTAINMENT EFFORTS constitutes a much higher average burden. In 1998, median household income for whites was a about $41,000, compared with $25,000 for blacks and $28,000 for Hispanics (U.S.
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710 UNEQUAL TREATMENT It is not possible to know how many of these disparities are due to price; indeed, there are racial and ethnic disparities in health care utilization, as well as differences by social class in countries that have comprehensive health insurance. In the case of Medicare, though, the evidence of a price effect is strong.
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711 IMPACT OF COST CONTAINMENT EFFORTS health insurance policies offered by their employers (Cooper and Schone, 1997; Kronick and Gilmer, 1999)
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712 UNEQUAL TREATMENT leagues (2001) shows a strong relationship between more education and understanding comparative information about health plans up until age 80.
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713 IMPACT OF COST CONTAINMENT EFFORTS emergency room than whites because it is less likely that their regular place of care is a physician office (U.S. National Center for Health Statistics, 2000, pp.
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714 UNEQUAL TREATMENT care. However, this does not provide direct evidence, because here we are specifically considering the impact of capitating the physician.
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715 IMPACT OF COST CONTAINMENT EFFORTS sistent with dominant biases.
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716 UNEQUAL TREATMENT Utilization Review and Practice Guidelines Utilization review is a practice engaged in, usually but not always by health care payers, to monitor whether a particular service is appropriate for a patient in a specific instance. It can be done prospectively (requiring that a hospital admission be approved in advance)
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717 IMPACT OF COST CONTAINMENT EFFORTS in identical manners. In addition, each of these "patients" was identified as having the same occupation and health history.
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718 UNEQUAL TREATMENT quirements have been unable to equalize access to care. To give some hypothetical examples consistent with the literature cited earlier: • If the number of specialists are controlled, as is the case in many countries, then those that are in practice will experience excess demand for their services and may ration according to race and ethnicity.
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719 IMPACT OF COST CONTAINMENT EFFORTS other countries. Managed competition relies on nearly all of the problematic cost-containment strategies outlined in this paper: • Allocating services on the basis of ability to pay.
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720 UNEQUAL TREATMENT Cooper, B.F., Schone, B.S.
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721 IMPACT OF COST CONTAINMENT EFFORTS Schulman, K.A., Berlin, J.A., Harless, W., et al.
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