Understanding the value of chronic disease care is critical to confronting the challenges of aging societies. In a new ebook published by the Centre for Economic Policy Research, APARC Deputy Director and Asia Health Policy Program Director Karen Eggleston provides a framework for assessing the social value of health spending.

The world population is aging faster than ever before and governments must confront the increasing burden of healthcare spending on their economies. At a time when the economics of aging is inseparable from the economics of healthcare, successful adaptations to older population age structures necessitate better understanding of the value of medical care. Policymakers, in particular, must incorporate value into considerations of healthcare cost growth, so they can determine the extent to which average health improvements offset added cost, reduce cases in which health spending rises without sufficient corresponding health outcomes, and reward those in which “we are getting what we pay for.”

A new book chapter, authored by APARC Deputy Director and Asia Health Policy Program Director Karen Eggleston, provides a framework for assessing the social value of health spending. Titled “Understanding ‘value for money’ in healthy aging,” the chapter is part of an ebook, Live Long and Prosper? The Economics of Ageing, published by the Centre for Economic Policy Research (CEPR).

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Quality-Adjusted Cost of Care

How do health economists incorporate value into measurements of health spending and how do they measure the social value of medical care? First they assume each additional year of life brings a given monetary value. Then they measure the growth in value to patients as monetized gains in “quality-adjusted life-years,” a metric that includes increases in life expectancy and quality of life. The difference between the change in health spending and the change in monetized gains on improved survival is the net change in quality-adjusted health spending or the net value of medical care.

Understanding the value of chronic disease care is especially critical in aging societies, as governments must transform their health systems to support patients who will live with chronic diseases for decades. Health benefits of medical care, however, are difficult to aggregate across disparate services and diseases, and hence focusing on management of a single important chronic disease allows researchers to develop metrics of quality improvement and value that are linked to rigorous clinical studies. Eggleston describes a recent international research collaboration, which she was part of, that did just that. The researchers studied quality adjustment for one disease of growing global prevalence, type 2 diabetes, in four different health systems: one in Europe (the Netherlands) and three in East Asia (Japan, Hong Kong, and Taiwan).

Results of the study suggest that, in each health system, the value of improved survival outweighs the increase in health spending. For example, in the case of Japan, Eggleston and her colleagues found a positive value net of $2,595 for $100,000 value of a life-year. They also compared net value across the four health systems and different patient samples, finding mean net value that ranged between $600 and $10,000 for a $100,000 value of a life-year. Moreover, net value was positive for all age groups and remains positive and significant for individuals well beyond traditional retirement ages. These results, says Eggleston, indicate “the importance of continuing investments in medical treatments and services that deliver health outcomes of commensurate or higher value.”

Policy Implications

Confronting the challenges of aging societies requires careful thinking about the value of investments in new technologies for managing chronic conditions. To promote healthy aging governments must be “resiliently persistent in measuring the value of innovations for healthy aging and rewarding those that deliver high net value,” argues Eggleston. The goal should be improving the “value for money” of medical care rather than applying largescale cost controls that might stifle important breakthroughs.

The four-system study by Eggleston and her colleagues provides a framework for developing methods for assessing quality improvement and the net value of chronic disease spending and, more broadly, for measuring the value of healthy aging.

Download Eggleston’s chapter as part of the entire ebook >>

Learn more about Dr. Karen Eggleston’s research agenda seeking to assess net value in diabetes management and to identify and analyze innovation for healthy aging.

In a new article published by the Milken Institute Review, APARC Deputy Director and Asia Health Policy Program Director Karen Eggleston offers an overview of the successes of China’s health reforms and the challenges ahead if the country is to increase the efficiency of health care delivery as it expands quality and usage.

Creating a high-quality universal health care system is an immense challenge anywhere, let alone in a country as large and diverse as China. But equal access to care will become ever more important as China converges on higher incomes, slower economic growth, population aging, and dependence on a skilled workforce to approach OECD living standards. With its health reforms over the past two decades, its growing technological prowess, and its application of innovative business models, China has made significant progress towards supporting higher-quality and more convenient health care for its 1.4 billion people. However, it is yet to deal with a host of challenges.

In a new article, Healing One-Fifth of Humanity, published in fall quarter 2019 of the Milken Institute Review, APARC Deputy Director and Asia Health Policy Program Director Karen Eggleston offers a progress report on China’s efforts to provide decent health care to all of its citizens, detailing how the reforms are working and what is left to do.

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A Tale of Two Chinas

One complex challenge China faces is addressing the gap in living standards between its rising middle class and its poorest citizens. Eggleston’s research shows stark gaps between urban and rural China in multiple measures, including life expectancy (almost 10 years differences as of 2013), infant mortality, and under-age-5 mortality. Health outcomes differ along other dimensions, too — between urban regions with higher and lower per capita income and among individuals with more or fewer years of schooling.

There are also striking inequalities in the burden of chronic disease and in health care and risk protection. For example, diabetes is associated with greater excess mortality in rural China, although prevalence is higher in urban areas. Moreover, although China has attained universal health coverage and put in place policies to enhance access while decreasing households’ out-of-pocket spending burden, the coverage of rural insurance is less generous than coverage for urbanites. Therefore, the prospect of catastrophic medical spending on delayed care remains substantially higher for rural than urban residents.

Additional challenges abound in multiple other areas, from addressing patient-provider tensions and trust, to changing provider incentives to promote value rather than volume, to deciding which new medical therapies qualify as basic. In broad terms, argues Eggleston, “China must build an infrastructure that increases the efficiency of health care delivery as it expands quality and usage.”

An important issue is the extent to which leveling public policy will ameliorate disparities, even as an array of social and economic forces push to widen disparities in health, health care use and burden of medical spending over a lifetime. The good news, says Eggleston, is that the process of catching up on one critical component of social justice, that is, universal health care, has begun, and there is evidence suggesting “that health investments can narrow the gaps in outcomes by compensating for health disadvantages.” There is also good reason to believe that policies that go beyond direct medical intervention – notably, investments in the quantity and quality of schooling – can have even greater influence on health and survival than access to medical care.

“The challenge now,” concludes Eggleston, “is to persist in an endeavor that requires flexibility, sensitivity to competing interests — and lots and lots of money.”

When it comes to rooting out wasteful spending in federal entitlement programs, attention has long focused on preventing beneficiaries from gaming the system.

A new Stanford study identifies a fresh cause for concern: the for-profit companies that the U.S. government increasingly tasks with providing benefits to Americans who are often poor, elderly or both.

In a new working paper, Maria Polyakova, an assistant professor of medicine, finds that outsourcing public assistance services to third parties can lead to unanticipated effects on prices as well as on which beneficiaries gain the most from public dollars.

That’s because companies are in the business of making money. And when they know which of their consumers are likely to get certain levels of public support, they will try to use this information to maximize their profits, according to the research published this week by the National Bureau of Economic Research.

Polyakova shows that when companies act in their self-interest, unforeseen inequities and inefficiencies can arise that may hurt some consumers while helping others. At a time when governments in the United States and around the world are increasingly turning to the private sector to provide public benefits — namely in health care and in education — Polyakova says policymakers need to better understand how these intermediaries are affecting welfare programs.

“Policymakers have to be more careful about introducing intermediaries into public services,” says Polyakova, who is a faculty fellow at the Stanford Institute for Economic Policy Research (SIEPR), and teaches at the Stanford School of Medicine. She is also a core faculty member of Stanford Health Policy. “They may want to revisit how they think about outsourcing when research is showing that there are unintended consequences that may be positive or negative.”

Health Insurance Pricing under the Microscope

Intermediaries are central to a number of public services where the U.S. government provides subsidies to consumers, often based on income, age or employment status. Prominent examples include privately-managed Medicare Advantage Plans, drug benefits under Medicare Plan D, and charter schools in secondary education.

According to Polyakova, most research into wasteful spending within government subsidies has focused on consumers and how they try to trick the system by, for example, hiding income to qualify for a tax credit or cash assistance. Governments, though imperfect, have long been seen as benign players.

The increasing involvement of for-profit companies, she says, shows there’s a need to closely examine what’s happening on the supply side of public welfare.

To do that, Polyakova found an ideal setting: the federal health insurance marketplace created by the Affordable Care Act of 2010. Most consumers who shop for coverage through www.healthcare.gov receive a subsidy in the form of a tax credit that covers all or part of their insurance premium. The amount of their tax credit is tied to their household income.

The dollars at stake are significant. The Congressional Budget Office estimates that in 2019 the federal government will pay $560 billion in subsidies for privately-provided health insurance, including the spending on the Affordable Care Act marketplaces as well as other similarly designed programs. That figure is expected to hit $1.2 trillion over the next decade.

The Neighborhood Effect

Polyakova and her co-author — Stephen Ryan of Washington University’s Olin Business School — analyzed data from 2017 covering more than 9 million enrollees across some 2,570 counties around the country. They find that the presence of an intermediary significantly impacts insurance prices and key measures economists use to calculate the effects of a policy beyond a given benefit’s face value.

Specifically, they show that health insurance companies will have an incentive to raise premiums in markets where more consumers receive the higher tax credit because their incomes are low and the government is required to subsidize them.

On the flip side, insurers will charge lower prices in places where such subsidized consumers are less willing to buy coverage if they think it costs too much.

To illustrate the unintended consequences of the insurers’ actions, the researchers point out that, in the first instance where prices increase, consumers with incomes that are slightly higher than other community members will end up paying more for the same coverage. Under the second scenario, consumers who don’t qualify for the tax credit because their incomes are too high benefit from the lower premiums aimed at nearby residents.

“The price you pay for insurance will depend on who your neighbors are,” says Polyakova. “If you live near people who are poorer than you, you will be affected differently than if you live near people who are richer than you.”

Change the subsidy, change the calculation

Like with financial aid, tax credits for insurance coverage are calculated based on consumer income. But there is another type of subsidy that policymakers could use — flat vouchers, in which all members of a market receive the same benefit regardless of income, age or some other characteristic. For their research, Polyakova and Ryan also analyze how flat vouchers that only vary by age, but not by income, would hypothetically alter private health insurance prices in the federal Affordable Care Act marketplace.

Here, too, the scholars find different impacts on different types of consumers whether the subsidy is based on income or delivered as a flat voucher.

The analyses, says Polyakova, drive home the point that policymakers need to understand that there are trade-offs to relying on for-profit companies to provide government services and that the type of subsidy offered can alter how they calculate prices in disparate ways.

“There’s nothing wrong with companies trying to maximize their profits,” says Polyakova. “But sophisticated policymakers need to understand what happens when private markets get involved.”

I always find it hard to believe so many people are living in poverty: some 39.7 million Americans, or 12.3% of the population. It’s such a wealthy country, yet so many are poor.

In a twist that could be interpreted as good news — it doesn’t seem fair to say there is anything positive about living in poverty — I recently learned that older, low-income Americans tend to be healthier if they live in more affluent areas of the country.

Not only are they healthier, but their physical well-being is better across the board with a lower prevalence of dozens of chronic conditions, particularly if they live in rural communities. This, despite their income having less purchasing power in those better-resourced neighborhoods.

This was the key finding in new research published by Stanford Health Policy’s Maria Polyakova in the Annals of Internal Medicine.

While recent studies have reported that low-income adults living in more affluent areas of the United States have longer life expectancies, less has been known about the relationship between the affluence of a geographic area and morbidity of the low-income population.

“I was interested in figuring out whether the same relationship holds for morbidity: Are poorer people less sick in richer areas?” Polyakova told me. “And if so, are there any specific conditions that drive these differences that could be the target for policy-making?”

So Polyakova, a faculty fellow at the Stanford Institute for Economic Policy Research, and her co-author, Lynn M. Hua at the University of Pennsylvania, set out to evaluate the association between chronic conditions among low-income, older adults and the economic affluence of a local area. 

They focused on nearly 6.4 million Medicare beneficiaries in 2015 aged 66 to 100 years old who received low-income support under Medicare Part D, a prescription drug program for Medicare enrollees. They investigated the prevalence of 48 chronic conditions among these patients, including common chronic conditions such as hypertension, depression, diabetes and Alzheimer’s disease. They found the presence of all conditions is highly correlated: places, where the poor tend to have a high prevalence of one disease, are likely to have a high prevalence of all 48 conditions.

“While we cannot ascertain a causal relationship, our results clearly point towards the importance of further understanding why the socioeconomic environment of low-income, older adults is so tightly linked to such a broad measure of health,” the researchers wrote. 

The results, they said, were broadly consistent with the extensive literature on the social determinants of health. But their work takes that literature even further.

“Our study extends this research by providing measures of the prevalence of chronic conditions among low-income, older adults for a large national sample of the U.S. population,” Polyakova said. 

The researchers used clinical, rather than self-reported measures of diagnoses and reported this group’s variation in morbidity across local areas of the country, rather than nationally. 

“Our results raise the bar for researchers who are trying to find out what factors drive health disparities in the U.S.; these factors would have to be able to explain the differences in nearly 50 condition,” Polyakova said.

The study supported by the National Institute on Aging came to three key conclusions:

1. The health of low-income, older adults in the United States varies substantially across local geographic regions, and this variation cannot be attributed to one specific disease or a narrow set of conditions. 
2. Consistent with their original hypothesis, they found that more affluent local areas of the country have a lower prevalence of chronic conditions in the low-income, older adult population.
3. The researchers found that low-income, older adults have better health in rural areas of the country.

I wondered why these poor, older adults do particularly well in rural communities, as those regions often lack easy access to high-quality health care and state-of-the-art hospitals.

“We don’t know the exact answer, but there is a general sense that differences in the social fabric and lifestyle in rural areas — could contribute to this pattern,” Polyakova told me. “It appears that better health in these areas persists, despite challenges of accessing formal care.”

On August 26, Judge Thad Balkman delivered a $572 million judgment against pharmaceutical giant Johnson & Johnson for the company’s role in fueling the opioid epidemic in Oklahoma. In the discussion that follows, Stanford Law Professors Michelle Mello and Nora Freeman Engstrom discuss the decision and how other cases tied to the national opioid crisis are developing.

The Oklahoma decision took many onlookers by surprise. How did the case unfold? And what did Judge Balkman find? On Monday, Cleveland County District Judge Thad Balkman of Oklahoma issued a judgment that capped off a long and closely-scrutinized trial wherein the Oklahoma Attorney General faced off against Johnson & Johnson (J&J), claiming that J&J contributed to the opioid epidemic that has devastated the state of Oklahoma.

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Stanford Law Professors Michelle Mello and Nora Freeman Engstrom

To understand the verdict, a bit of background is helpful. When Oklahoma initially sued, it cast the net broadly, asserting claims against several defendants under several causes of action.  Certain defendants (namely, Purdue and Teva) chose to settle rather than roll the dice at trial. (Purdue, the maker of OxyContin, agreed to pay Oklahoma $270 million and Teva, one of the world’s leading providers of generic drugs, $85 million; neither admitted wrongdoing.)  Further, over time, Oklahoma’s various causes of action got winnowed down to the singular claim that J&J had created a public nuisance by aggressively and deceptively marketing opioid products to Oklahoma’s doctors and patients.  This posture meant that Oklahoma’s victory at trial was far from a foregone conclusion, as public nuisance claims can be very hard to prove, particularly in cases that relate to dangerous products.

With that table set, the trial began on May 28, 2019.  In a crowded courtroom in Cleveland County, it stretched on for nearly seven weeks and featured dozens of witnesses and more than 800 exhibits. The trial was a bench trial, meaning there was no jury, but there was a written opinion explaining the judge’s decision.  Judge Balkman’s 42-page opinion offers a cogent summary of the evidence and governing law and, broadly, vindicates Oklahoma’s litigation strategy. The opinion finds that J&J engaged in a deceptive marketing campaign designed to convince Oklahoma doctors and the public that opioids were safe and effective for the long-term treatment of chronic, non-malignant pain. Further, this “false, misleading, and dangerous marketing” caused “exponentially increasing rates of addiction [and] overdose death,” which ravaged the Sooner State. The picture Judge Balkman draws is stark and, for J&J, devastating.

Are individuals suing drug companies too? Are there class action cases that are relevant?

There are some suits by individuals, but we don’t believe that’s where the big money damages—and the real social impact of the litigation—will be.  More important is the pending federal multi-district litigation (MDL), which consolidates nearly 2,000 individual federal lawsuits brought by cities, counties, municipalities, and tribal governments in a single action before Judge Dan Polster in Cleveland, Ohio. Additionally, 48 states have initiated separate litigation, with a lineup of claims and defendants similar to the MDL.

Does this win for Oklahoma mean these other plaintiffs have an easy road ahead?

Not easy, but potentially easier. The Oklahoma case is what we call a bellwether. Like the ram that leads the other sheep this way or that, the bellwether trial doesn’t control the path of future litigation. But it does go first, and it helps to indicate trends.

As a bellwether, the big verdict here is very reassuring to the many states, counties, municipalities, and tribes suing opioid makers, distributors, and retailers, and it is, correspondingly, very disturbing for those who made and sold opioids to the American public.  The verdict suggests that this litigation has legs, and that judges and juries may be willing to pin blame not just on Purdue, the maker of OxyContin, but on others who played an arguably less central role in fueling this public health crisis.

What is striking is how damning Judge Balkman’s factual conclusions about J&J’s conduct are, and how similar they are to the allegations made against other opioid manufacturers in other cases.  All the things he objected to regarding J&J’s marketing practices are things that others, too, allegedly have done. Some of them are things that multiple companies banded together to do. Plaintiffs’ attorneys should be feeling pretty confident about their chances of persuading other courts that those practices are problematic.

Is Oklahoma free to use the award as it wishes? Will the state share some of the award with the people who died or suffered in the opioid crisis (if the decision is upheld on appeal)?

The damages, in this case, are intended to fund Oklahoma’s “nuisance abatement plan.”  That’s the remedy in a public nuisance case: The defendant has to pay to clean up the mess it made. In this case, Oklahoma provided a detailed plan laying out what would be needed to abate the opioid problem in the state. The costs added up to $572 million for the first year, and that’s what the judge awarded—not the $17 billion Oklahoma sought for a multi-year abatement effort.

The plan specifies that the money will be used for opioid use disorder screening, prevention and treatment ($292 million), housing and other services for those in recovery ($32 million), continuing medical education programs ($108 million), a pain management benefit program ($103 million), treatment of neonatal abstinence syndrome ($21 million), and other services.  Individuals won’t be direct recipients of the funds, though they may receive the services funded.

Legally, what happens next?

J&J has vowed to appeal the “flawed” Oklahoma judgment, and we expect that the judgment will be appealed, first to Oklahoma’s intermediate, and then, likely, to its supreme, court.  More immediately, though, attention will turn from Oklahoma to Ohio.  The first bellwether trial in the MDL, involving claims from Ohio’s Cuyahoga and Summit counties, is scheduled to begin on October 21.

Even as they prepare for trial, however, lawyers for both plaintiffs and defendants are also, no doubt, continuing to work toward reaching a broad and encompassing settlement.  When Judge Polster was first assigned the MDL back in January 2018, he made no bones about his desire to do “something meaningful to abate this crisis”—and to do it quickly.  It hasn’t been easy to execute on that, which isn’t surprising given the unprecedented magnitude and complexity of the litigation.

Still, we expect that, sooner or later, the opioid litigation will settle.  Indeed, even as we write, news is breaking that Purdue and the Sacklers may be in the midst of a negotiation whereby Purdue would declare bankruptcy and the Sacklers would contribute a cash payment of roughly $4.5 billion-plus relinquish ownership of the company, in return for peace with plaintiffs.

But even forging a settlement involving just those two entities is tricky—and forging a broader settlement will be exponentially harder for a number of reasons.  One is that any truly global agreement needs to pass muster with a range of defendants, some of whom have comparatively shallow pockets, and all of whom sold (or made or distributed) different products, at different times, in different quantities, in different states.  And, on the other side of the table, any settlement agreement needs to get buy-in from both those plaintiffs in the MDL and also state attorneys’ general, who have their own distinct set of priorities and interests relating to their separate lawsuits.  Further, because only a small proportion of eligible cities and counties have joined the MDL to date, any global settlement needs to somehow—equitably but firmly—close the courthouse door on those potential future plaintiffs.  None of this will be easy to accomplish.  But whenever new information reduces uncertainty about how courts would resolve a legal dispute, settlement becomes more likely—and, here, the Oklahoma verdict makes a significant contribution.

 

Nora Freeman Engstrom, Professor of Law and Deane F. Johnson Faculty Scholar, is a nationally-recognized expert in tort law, legal ethics, and complex litigation. Her work explores the day-to-day operation of the tort system—particularly its interaction with alternative compensation mechanisms. Michelle Mello, Professor of Law and Professor of Health Research and Policy (School of Medicine), is a leading empirical health scholar and the author of more than 150 book chapters and articles, including “Drug Companies’ Liability for the Opioid Epidemic,” recently published in the New England Journal of Medicine.  

A task force of national health experts has released a draft recommendation to screen all adults 18 to 79 years for the hepatitis C virus (HCV), noting the opioid epidemic has fueled what has become the most common chronic bloodborne pathogen in the United States.

Cases of acute HCV have increased 3.5-fold over the last decade, particularly among young, white, injection drug users who live in rural areas. Women aged 15 to 44 have also been hit hard by the virus that is spread through contaminated blood.

The U.S. Preventive Services Task Force, which makes recommendations followed by primary care clinicians nationwide, has until now recommended that people who are at high risk be tested for hepatitis C, as well as “baby boomers” born between 1945 and 1965.

“Unfortunately, HCV now affects a broader age range than previously with three times as many new infections per year,” said Stanford Health Policy’s Douglas K. Owens, chair of the independent, voluntary panel of national experts in prevention and evidence-based medicine.

The Task Force now recommends that clinicians encourage all their adult patients, even those with no symptoms or known liver disease, get a blood test for the virus. Pregnant women should also be screened; from 2009 to 2014, the prevalence of HCV infection among women giving birth has nearly doubled.

“The explosive growth in HCV has been fueled by the opioid epidemic, with the spread of HCV into younger populations,” said Owens, director of the Center for Health Policy and the Center for Primary Care and Outcomes Research. “HCV now kills more Americans than all other reportable infectious diseases combined, including HIV.”

An estimated 4.1 million people in the United States are carrying HCV antibodies; about 2.4 million are living with the virus, according to the Task Force. The HCV infection becomes chronic in 75% to 85% of cases and some of those people develop symptoms such as chronic fatigue and depression, and liver diseases that can range from cirrhosis to liver cancer.

Approximately one-third of people ages 18 to 30 who inject drugs are infected with the virus; 70% to 90% of older injection-drug users are infected.

There currently is no vaccine for hepatitis C although research in the development of a vaccine is underway. But there are effective oral direct-acting antiviral (DAA) medications that can clear the virus from the body, particularly if caught early.

“The good news is that treatment for HCV is far better, and far better tolerated than in the past, offering a cure to most people,” Owens said. “Early identification of HCV is important to prevent long-term complications of HCV including liver failure, liver cancer, and death.”

The Task Force said in a release that there are several key research gaps that could inform the benefit of screening for HCV infection:

1. ·     Research is needed on the yield of repeat vs. one-time screening for HCV.
2. ·     Research is needed to identify labor management practices and treatment of HCV infection prior to pregnancy to reduce the risk of mother-to-child transmission.
3. ·     Trials and cohort studies that measure effects on quality of life, function, and extrahepatic effects of HCV infection (such as renal function, cardiovascular effects or diabetes) would be helpful for evaluating the impact of DAA regimens on short-term health outcomes.
4. ·     Additional studies are needed to examine the epidemiology of HCV infection and the effectiveness of DAA regimens in adolescents.

Physician training has long been notorious for marathon shifts, sleepless nights on call, and holidays worked. But that began to change in 2003, when the medical profession placed restrictions on work hours during residency. However, experts wondered, can we train residents in fewer hours and still make good doctors?

A new study in the BMJ says yes. The researchers, led by Dr. Anupam Jena, a professor of health care policy and medicine at Harvard Medical School, and Stanford Health Policy's Jay Bhattacharya, looked at the performance of internal medicine doctors in their first year of unsupervised medical practice after completing their training. 

They compared the outcomes for patients of two groups of physicians: those trained before 2003, when the typical work week was 100 hours; and those trained later under the new rules, which capped weekly hours at a mere 80, with no individual shift exceeding 30 hours. For the three quality measures examined — mortality within 30 days of being hospitalized, readmissions, and hospital services used (a measure of efficiency) — they found no differences between the groups.

Read More from this article published in STAT News.