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,



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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, 101

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102 MEDICAL CARE ECONOMIC RISK 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 Sta- tistical 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 Inter- agency 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 pub- lic 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 weak- nesses 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 Af- fordable Care Act and changes in other health care programs have made it important to revisit the conceptual and measurement issues for assess- ing medical care economic risk (a prospective measure) and medical care economic burden and to develop a useful measure for policy analysis and

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IMPLEMENTING MEASURES 103 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 an- nual 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 pro- ducing 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 con- stitute 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 gov- ernment. 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 commu- nity outside the government. The outside members should possess relevant

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104 MEDICAL CARE ECONOMIC RISK 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 calcula- tion 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 ex- cluded 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 bur- den), 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 nec- essary. 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

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IMPLEMENTING MEASURES 105 health care spending and the dynamics of cross-subsidies of medical care costs in a nontraditional family have not been fully specified in our recom- mended approach. Much more research is necessary to inform the complete specification of the measure. Future improvements in the data available will also require reexamina- tion 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.

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