Tracing the cycle of health insurance

Malpractice crisis and reform

Medical liability coverage has become increasingly expensive and scarce since 2001, especially for obstetrics and other high-risk specialties. Physicians, whose own fees are constrained, see this as a crisis needing tort reform to cap payouts. Plaintiffs' lawyers fight caps; they blame insurance trends and call for stronger regulation of insurers and physicians. Doctors' arguments are somewhat better than lawyers' about insurance developments, but the huge tort reform battle wholly ignores the biggest problems--the medical system has too many preventable medical injuries, and the legal system fails to prevent them. It is time to try out better approaches, three of which are discussed in this paper.

As The Health Insurance Underwriting Cycle Turns: What Next?

After twenty-five years of a consistent health insurance underwriting cycle, the pattern of insurer profitability changed greatly in the 1990s, raising speculation about the future. We conclude from interviews with industry experts that health plan competition and limits on plans' ability to predict costs will continue to drive a cycle, albeit one even more muted than it was in the 1990s because of changes in industry structure and forecasting improvements. Plans will price closer to cost trends and forego the more heated price competition that drove major losses in the past, reducing premium volatility but possibly leading to higher average premiums.

Health spending projections for 2002-2012

We forecast a slowdown in national health spending growth in 2002 and 2003, reflecting slower projected Medicare and private personal health spending growth. These factors outweigh higher projected Medicaid spending growth, caused by weak labor markets, and an expectation of continued high private health insurance premium inflation related to the underwriting cycle. Over the entire projection period, national health spending growth is still expected to outpace economic growth. The result is that the health share of gross domestic product is projected to increase from 14.1 percent in 2001 to 17.7 percent in 2012.

Health care costs: on the rise again

Since 1999, health care costs have been growing faster than national income. This rapid growth has occurred as the ability of private and public purchasers to reduce service utilization and bargain for lower prices has fallen, insurers have recouped lost profits through higher premiums, and new technologies have driven up costs throughout the sector. Private insurance market responses to these rising costs may lead to reductions in the number of people with insurance and to increased fragmentation of the insurance market. Over time, technological change in medicine both increases costs and improves the quality of care. The challenge for public policy is to maintain insurance and some degree of equity in the face of these rising costs.

Managed competition and consumer price sensitivity in social health insurance

This paper examines whether the introduction of managed competition in Dutch social health insurance has resulted in effective price competition among insurance funds. We find evidence of limited price competition, which may be caused by low consumer price sensitivity. Using aggregate panel data from all insurance funds over the period 1996-1998, estimated premium elasticities of market share are -0.3 for compulsory coverage and -0.8 for supplementary coverage. These elasticities are much smaller than in managed competition settings in US group insurance. This may be explained by differences in switching experience and higher search costs associated with individual insurance.

Health spending projections for 2001-2011: the latest outlook

This paper describes the most recent ten-year projections of national health spending. projections, produced annually, are based on econometric and actuarial models of the health sector. Our current outlook includes a sharper near-term increase in the health sector's share of gross domestic product (GDP), which reaches 16.8 percent by 2010, compared with the 15.9 percent projected last year. This difference largely reflects legislation-driven increases in public spending growth combined with a weaker economic outlook. Recent acceleration in private-sector health spending is projected to peak in 2002.

Testing the HMO competitive strategy: an analysis of its impact on medical resources

Competitive approaches to health care reform, including managed competition, are hypothesized to reduce health care expenditures and the resources devoted to medical care. Empirical evidence has been limited. The short- and long-run effects of an experiment closely resembling managed competition are analyzed. We examine effects on hospitals, technology diffusion, physicians, and health insurance premiums. The strategy reduces capital in hospitals, has minor effects on physicians and technology, and has only initial effects on average premiums.

The health insurance picture in 1993: some rare good news

Based on a national survey conducted in spring 1993 of 1,953 private and public employers, this DataWatch examines the design of employer-sponsored health benefits and how they have changed during the past five years. We contrast cost of coverage, employee cost sharing, and premium increases among small, mid-size, and large firms. Premiums increased 8.5 percent from 1992 to 1993, the lowest rate of increase since 1986-1987. Future premium increases should be modest by historical standards. Small firms and conventional plans experienced larger premium increases last year. Managed care plans now constitute 51 percent of enrollment, up from 29 percent in 1988. If current trends continue, even without health care reform legislation, the health care system of the future will contrast strikingly with the system most Americans remember from past decades.

Health policy dilemmas related to high technology infertility services

As cost containment in health care becomes an important concern, the costs and benefits of specific health care services will be more closely examined. The costs and benefits of one type of health care, high technology infertility services, are explored in this paper. These services may be particularly susceptible to cost containment since they are costly, raise ethical issues, and because they currently are provided to healthy individuals not experiencing life-threatening illness who can afford them.