MIT Technology Review has an interesting profile of Amy Finkelstein, an MIT professor and one of my favorite health economists. [Full disclosure: I’ve never met Amy Finkelstein, I just enjoy her research]. The article is interesting throughout, but below I excerpt a sidebar showing 8 things that we know about health economics due to Finkelstein’s research.
The postwar spread of health insurance—especially Medicare—greatly spurred use of medical care.
From 1950 to 1990, US spending on health care increased sixfold. Scholars once thought the growth of health insurance had little to do with this. But Finkelstein found that the spread of health insurance—especially the advent of Medicare in 1965—accounts for half the increase in medical spending. When people have coverage, they use it.
Medicare saved patients a bundle.
Health insurance reduces financial strain. Finkelstein has documented that Medicare reduced out-of-pocket medical spending and unpaid medical debt. For example, the quarter of the elderly population that had faced the largest out-of-pocket expenses saw their medical spending decline by 40%.
Insurers make a bundle on long-term-care insurance.
Long-term-care insurance covers the costs of managing chronic medical conditions, helping to pay for such things as nursing-home care and home health care. Finkelstein studied it extensively early in her career, concluding that people purchasing policies get back only 49 cents on the dollar.
Medicaid changes the way people use health care.
Finkelstein found that contrary to expectations, Medicaid enrollees increase ER visits after joining the program. Patient visits to both an ER and a primary-care doctor go up 13 percentage points with Medicaid, which also increases overall doctor visits, prescription drug use, and hospital admissions, and decreases patients’ out-of-pocket expenses and unpaid medical debt.
Doctors and patients are both behind the geographic differences in health-care costs.
Finkelstein has examined the geographic price disparities for health care in the US, finding that about half the cost differences are due to the characteristics of patients and about half are due to the differences among providers. She also uncovered significant variation in “diagnostic intensity”—the propensity of providers to offer tests and treatment—in different regions of the US. Miami, the Detroit area, and Long Island are especially test-heavy areas.
Bankruptcies directly caused by medical expenses have been overestimated, but decreased earnings and increased unemployment following hospitalization have been overlooked.
When presidential candidates argue about medical bankruptcies, Finkelstein’s numbers are seen as the best available. While it’s often reported that 60% of bankruptcy filings are directly attributable to medical costs, she found that it’s closer to 4%—but the financial hit from poor health is still significant in terms of reduced earnings and employment.
Being hospitalized after age 50 can damage your longterm earning potential.
Finkelstein found that even seemingly routine hospitalizations have punishing long-term effects. Among people aged 50 to 59, for instance, being hospitalized lowers employment by 11% and earnings by 20% over the next four years.
Hospitals’ proactive care teams don’t appear to help.
A study coauthored by Finkelstein and released in early 2020 showed that “hotspotting”—an attempt to reduce hospitalizations and costs for vulnerable high-use populations through the use of proactive care teams—appears to have no effect at all on patients’ rate of readmission
Do read the whole article.