October – 2013 – Baker Institute Blog

A math problem for accountable care organizations

October 31, 2013admin

By federal rules, an organization must serve at least 5,000 beneficiaries to be a Medicare ACO. Why? One reason is that the bonuses for which cost-saving ACOs would be eligible are contingent on meeting quality benchmarks. For example, there are quality targets relating to appropriate care for patients with diabetes, hypertension, coronary artery disease, etc. However, as is true for any measurement, an ACO’s quality metrics will be, statistically speaking, relatively imprecise if they are only computed for a small number of patients. The more patients, the lower the standard error of a mean value. Continue Reading →

Vertical agreements in health care can be pro- or anti-competitive

October 30, 2013admin

Vertical restraints are agreements between firms at different stages of a production and distribution process. Vertical restraints can take many forms, as Morton reviews, one of which is the most favored nation (MFN) agreement. An example in health care comes from the case of Blue Cross Blue Shield (BCBS) of Michigan. In October 2010, the U.S. Justice Department filed suit against BCBS because the insurer required that hospitals with which it contracted charge rival insurers higher prices than they charged BCBS. This requirement favors BCBS — an example of an MFN agreement in health care. Continue Reading →

Dual roles of individual and benefits mandates

October 29, 2013admin

The American Enterprise Institute-sponsored health reform proposal offered by Jay Bhattacharya and colleagues is interesting and challenging for many reasons. One of them is the authors’ endorsement of risk rating by insurers — the antithesis of the community rating that is current practice among employer-sponsored plans and fundamental to the design of the Affordable Care Act. Continue Reading →

How health care reform changes employers’ incentives to offer coverage

October 28, 2013admin

The extent to which employers will stop offering health insurance in and after 2014 is an important issue that has been a common topic of debate among academics and pundits. The Affordable Care Act’s individual mandate and exchange-coverage premium tax credits (subsidies) will go into effect in 2014. The employer mandate has been delayed until 2015. Meanwhile, it’s true now and it will remain true that employer-sponsored insurance (ESI) is exempt from taxation. Continue Reading →

Mexico must address violence and profitability

October 25, 2013admin

Supporting change in the drug prohibition regime could significantly reduce drug cartel profits. As Mexico attempts to improve institutional frameworks to reduce violence, it suffers from the scourge of corruption that in turn hinders these reforms. In this sense, institutional strengthening and drug policy reform cannot be divorced. Peña Nieto has said that he is open to a debate on marijuana legalization, but that he is personally against it. Hopefully he will listen to the numerous voices of leaders in Mexico — such as former President Vicente Fox and Ernesto Zedillo — who are calling for graduated drug policy reforms in Mexico, including decriminalization policies. Continue Reading →

Count me an unhappy camper

October 25, 2013admin

The Affordable Care Act — Obamacare — was never my idea of the perfect health care reform package, but after it passed into law, I got on board because it offered the opportunity to put a brake on the trajectory of decreasing access to increasingly expensive health care and health insurance. Continue Reading →

Snowden, electronic Pearl Harbor and the future of Internet governance

October 25, 2013admin

For more than a decade, parties interested in the problem of computer, information or cyber security have warned of a digital doomsday, the electronic Pearl Harbor event. The general prognostication around such event, most recently invoked at the highest levels of the U.S. government at a speech by departing defense secretary Leon Panetta last year, is that society should be concerned by mass disruption of the communications infrastructure and all of the other infrastructure pieces connected to it. If Pearl Harbor was the greatest intelligence failure in U.S. history, then allow us to offer that the Snowden leaks are the greatest intelligence failure our country has seen in the digital age. Continue Reading →