SLIDE 1
Congressional Budget Office Eighth Annual Marshall J. Seidman Lecture, Harvard Medical School
New Ideas About Human Behavior in Economics and Medicine
Peter Orszag Director October 16, 2008
SLIDE 2 Federal Spending Under CBO’s Alternative Fiscal Scenario
Percentage of Gross Domestic Product
1962 1972 1982 1992 2002 2012 2022 2032 2042 2052 2062 2072 2082 10 20 30 40 Medicare and Medicaid Actual Projected Social Security Other Spending (Excluding debt service)
SLIDE 3
Learning from Our Mistakes
As we seek to improve the efficiency of the health sector, let’s learn some lessons from economics.
SLIDE 4
Saving for Retirement, Econ 101
Retirement saving depends on projected income, projected rate of return, tax preferences, and the company’s matching contribution.
SLIDE 5 The Effect of Automatic Enrollment on Initial Participation Rates in Companies with 401(k) Plans
45 25 77 86
20 40 60 80 100 All Workers Income Less Than $30,000 Without Automatic Enrollment With Automatic Enrollment
Percent Source: Nesmith, Utkus, and Young.
SLIDE 6 Share of 401(k) Plans Featuring Automatic Enrollment
Source: Data from Profit Sharing/401k Council of America.
Percent
1999 2000 2001 2002 2003 2004 2005 2006 2007 10 20 30 40 50 60
Companies with 5,000 or More Eligible Employees All Companies
SLIDE 7
Behavioral Economics and Medicine
Are we ignoring the same lessons in health care and medical science?
SLIDE 8 The Placebo Effect: Mean Improvement on Hamilton Depression Scale, vs. Common Antidepressants
Source: Kirsch (2002). Fluoxetine (Prozac) Paroxetine (Paxil) Sertraline (Zoloft) Venlafaxine (Effexor) Nefazodone (Serzone) Citalopram (Celexa) 2 4 6 8 10 12 14 Drug Placebo
SLIDE 9 The Placebo Effect: Angina Pectoris Treatment, vs. Surgery
Source: Cobb and others (1959).
Patients Reporting Significant Improvement in Chest Pain Decrease in Nitroglycerin Use 10 20 30 40 50 60 70 Internal Mammary Artery Ligation Skin Incision Only
SLIDE 10 The Placebo Effect: Reduction of Pain After Knee Surgery
Source: Moseley and others (2002).
Mean Knee-Specific Pain Scale Score
SLIDE 11 The Placebo Effect: Fitness Outcomes from “Perceived” Exercise
Source: Crum and Langer (2007).
142 144 146 148 0.25 0.26 0.27 0.28 Mean Weight BMI 33 34 35 36 37 Percentage Body Fat Waist-to-Hip Ratio 0.81 0.82 0.83 0.84 0.85 0.86 0.87 115 120 125 130 135 Systolic Blood Pressure Diastolic Blood Pressure 70 75 80 85 Control Informed
SLIDE 12 The Placebo Effect: The Effect of Price on Effectiveness
Source: Waber and others (2008).
Mean Difference
SLIDE 13 Shifting Professional Norms: Catheter Infections in Michigan ICUs After Instituting a Checklist
Mean Rate of Infection per 1,000 Catheter Days
Source: Provonost and others (2006).
At Baseline After 3 Months After 18 Months 1 2 3 4 5 6 7 8
SLIDE 14 Adherence to Medication Schedule According to Frequency of Dose
Source: Osterberg and Blaschke (2005). Percentage of Patients Adhering
Once Daily Twice a Day Three Times a Day Four Times a Day 10 20 30 40 50 60 70 80 90 100 Medication Schedule
SLIDE 15
Adherence to Treatment: Nature and Scope of the Problem Average adherence to medication recommendations for nonacute disorders among both pediatric and adult populations: 50% Nonadherence is pervasive even under high stakes:
– 25% of renal transplant recipients regularly miss doses of antirejection medications – 42% of glaucoma patients persisted in not adhering to treatment—even after losing sight in one eye
Doctors are no more accurate than relying on a coin flip in determining who will adhere to treatment and who won’t (even among patients they know well)
SLIDE 16
Adherence to Treatment: Bedside Manner Two-year study on influence of doctors’ behavior on adherence to treatment showed that patients were more likely to adhere if:
– Their doctor scheduled definite future appointments – Their doctor answered all of their questions – Their doctor enjoyed his/her job
SLIDE 17
Adherence to Treatment: Setting Better Defaults Dosing: Simplicity promotes, while complexity undermines, adherence: e.g., once-a-day dosing. Drug Choice: Choosing more “forgiving” drugs promotes adherence: e.g., antihypertensive drugs with longer halflives. Bedside Manner: Seeing patients more often and answering all their questions promotes adherence: e.g., definite follow-up appointments.
SLIDE 18 Bottomless Soup Bowls: The Premise
Source: Wansink (2004).
SLIDE 19 Bottomless Soup Bowls: Actual and Perceived Intake
Source: Wansink, Painter, and North (2005). Accurate Visual Cue (Normal Soup Bowls) Biased Visual Cue (Self-Refilling Soup Bowls) 50 100 150 200 250 300 Actual Calories Consumed Estimated Calories Consumed
SLIDE 20 Influence of Container Size on the Consumption of Stale Popcorn
Source: Wansink and Kim (2005). Medium Container (120 grams) Large Container (240 grams) 20 40 60 80 100
SLIDE 21 Some Behavioral Avenues for Reform in Federal Nutrition Programs 20 percent of Americans participate in a federal nutrition program Supplemental Nutrition Assistance Program
– Disbursing benefits more frequently could reduce stockpiling and bingeing
School Lunch Program
– Placing healthier foods at the front of cafeteria lines could increase their prominence and consumption – Decreasing the size of tables could reduce distraction-driven
Source: Just, Mancino, and Wansink (USDA, 2007).
SLIDE 22 Increase in Life Expectancy, and Increase in Difference in Life Expectancy by Economic Status
Source: Data from Singh and Siahpush (2006) and CDC.
Years
At Birth At Age 65 1 2 3 4
Increase in Average Life Expectancy, 1980–2000 Increase in Difference in Average Life Expectancy Between Lowest and Highest Decile, 1980–2000
SLIDE 23 Sources of Growth in Projected Federal Spending on Medicare and Medicaid
Percentage of GDP
2007 2022 2037 2052 2067 2082 5 10 15 20
Effect of Aging Alone Interaction Effect of Excess Cost Growth Alone
SLIDE 24 Estimated Contributions of Selected Factors to Long-Term Growth in Real Health Care Spending per Capita, 1940 to 1990
Smith, Heffler, and Freeland (2000) Cutler (1995) Newhouse (1992) Aging of the Population 2 2 2 Changes in Third-Party Payment 10 13 10 Personal Income Growth 11-18 5 <23 Prices in the Health Care Sector 11-22 19 Not Estimated Administrative Costs 3-10 13 Not Estimated Defensive Medicine and Supplier-Induced Demand Not Estimated Technology-Related Changes in Medical Practice 38-62 49 >65
Percent
SLIDE 25 Excess Cost Growth in Medicare, Medicaid, and All Other Spending on Health Care
Medicare Medicaid All Other Total
1975 to 1990 2.9 2.9 2.4 2.6 1990 to 2005 1.8 1.3 1.4 1.5 1975 to 2005 2.4 2.2 2.0 2.1 Percentage Points
SLIDE 26 Before We All Get Too Depressed…
Embedded in the nation’s central long-term fiscal challenge appears to be a substantial
Can we reduce health care costs without impairing health outcomes?
SLIDE 27
Medicare Spending per Beneficiary in the United States, by Hospital Referral Region, 2005
SLIDE 28 Variation in State-Level Medicare and Overall Health Care Spending per Capita
Source: Based on data from CMS. Coefficient of Variation
1974 1979 1984 1989 1994 1999 2004 0.05 0.10 0.15 0.20 0.25
Variation in Medicare Spending per Beneficiary Variation in Total Health Spending per Capita
SLIDE 29 Contributions of Major Service Categories to State- Level Variation in Medicare Spending per Beneficiary
Source: Based on data from CMS. Coefficient of Variation 1974 1979 1984 1989 1994 1999 2004 0.05 0.10 0.15 0.20 0.25 Outpatient Post-Acute Care Physician and Laboratory Hospital
SLIDE 30 Geographic Variation in Health Care Spending per Capita in Selected Countries
Source: Based on data from CMS, HM Treasury (U.K.), and the Canadian Institute for Health Information. Coefficient of Variation
1975 1980 1985 1990 1995 2000 2005 0.02 0.04 0.06 0.08 0.10 0.12 0.14
United States United Kingdom Canada
SLIDE 31 Variations Among Academic Medical Centers
UCLA Medical Center Massachusetts General Hospital Mayo Clinic (St. Mary’s Hospital) Biologically Targeted Interventions: Acute Inpatient Care Care Delivery―and Spending―Among Medicare Patients in Last Six Months of Life CMS composite quality score 81.5 85.9 90.4 Total Medicare spending 50,522 40,181 26,330 Hospital days 19.2 17.7 12.9 Physician visits 52.1 42.2 23.9 Ratio, medical specialist / primary care 2.9 1.0 1.1
Use of Biologically Targeted Interventions and Care-Delivery Methods Among Three of U.S. News and World Report’s “Honor Roll” AMCs
Source: Elliot Fisher, Dartmouth Medical School.
SLIDE 32 Variations Among Academic Medical Centers
Supply-Sensitive Care: Days in the Hospital for Patients During the Last Six Months of Life
Source: John Wennberg, Dartmouth Medical School.
SLIDE 33 The Relationship Between Quality of Care and Medicare Spending, by State, 2004
75 80 85 90 5 6 7 8 9 10
Annual Spending per Beneficiary (Thousands of dollars)
Composite Measure of Quality of Care, 100 = Maximum
SLIDE 34 What Additional Services Are Provided in High-Spending Regions?
Source: Elliot Fisher, Dartmouth Medical School.
SLIDE 35
CBO’s Activities in Analyzing Health Care
New Hires and Expanded Staffing
– New deputy assistant director in the Budget Analysis Division – Increase in health staff agencywide from 30 FTEs to 50 FTEs
Reports and Analysis in 2008
– Critical Topics in Health Reform – Health Options
