The Quality Of Care Delivered To Patients Within The Same Hospital Varies By Insurance Type

That is the new paper by Christine S. Spencer, Darrell J. Gaskin, and Eric T. Roberts.  Let me excerpt the three most important sentences from the abstract:

We found that privately insured patients had lower risk-adjusted mortality rates than did Medicare enrollees for twelve out of fifteen quality measures examined. To a lesser extent, privately insured patients also had lower risk-adjusted mortality rates than those in other payer groups. Medicare patients appeared particularly vulnerable to receiving inferior care.

I don’t have a great deal of confidence in our ability to estimate the size of that effect, but keep that difference in mind next time someone tells you that Medicare is so much more efficient than private health insurance in this country.


Wait, I thought Medicare already is so much more efficient that private health insurance. Paul Krugman has said so.

Do people claim that Medicare is more efficient that private health insurance? The argument in favor of Medicare that I've seen has been that being covered by an inefficient system is better than no coverage at all. Should we really be surprised that private insurance gives better service than a government service that is essentially welfare-health-care?

Should we really be surprised that private insurance gives better service than a government service

No, we shouldn't, but pretty much the entirety of the Democratic party (including, and especially, their self-described "wonks") has departed from the realm of rational thought.

Yeah that's right the entire Democrat Party is not rational! The existence of Medicare is predicated on the notion that otherwise most seniors wouldn't be covered at all. You know like before there was Medicare!

Should we really be surprised that private insurance gives better service than a government service that is essentially welfare-health-care?

Gee. I thought it was the doctors and other hospital staff who gave the service, not the insurance company.

A distinction I'm sure you'll remember the next time someone equates health insurance with healthcare.

Well. One thing's for damn sure - private insurance is *way* more efficient for people who can't get it because of preexisting conditions.

So we're talking about like 5 people? The same people who flocked to the high-risk exchanges?

Do people claim that Medicare is more efficient that private health insurance?

Yes, they do, because the overhead is smaller.

This is a very very different question of how it delivers QALY per dollar, which is also very different from whether we are talking about the marginal dollar or the average dollar.

Actually, the supposed efficiency of Medicare is completely misleading. For example, fraud is not counted. Private companies spend a great deal of effort and money to avoid fraud. Medicare does not and is subject to a vast amount of fraud, some estimates as high as 20% of expenditures. This dwarfs any comparison of efficiency between the private insurance and Medicare. Ostensibly, private companies spend on marketing, Medicare doesn't have to. Also, a lot of what is attributed to overhead is management in the form of negotiating contracts with various doctors and hospitals, and compliance costs with federal regulations. Medicare does have comparable costs. But it's fraud losses appear to be so vast that the private companies come out way ahead in efficiency.

Another point entirely is that the risk adjustment, as noted in other posts, is likely to be impossible. Privately insured patients are likely to be much younger, and when they are not, likely to be working still as compared to age matched Medicare beneficiaries, thus likely to be healthy enough to work and have coverage privately. There is likely to be an inherent health difference between these populations, and it may be impossible to adjust for risk between a cohort that is all young and one that is all much older.

Private companies spend a great deal of effort and money to avoid fraud. Medicare does not and is subject to a vast amount of fraud, some estimates as high as 20% of expenditures.

And private companies also spend a great deal of money and effort trying not to pay claims. I'm far from convinced that either the private insurers or Medicare exercises the optimum degree of care in trying to identify and pay legitimate claims while rejecting bad ones. Even if you think insurers are closer to the mark, you have to count their false negatives as a cost as surely as you count Medicare's false positives.

This, of course, assumes that they have actually been able to adjust for risk. I am not convinced.

Yeah, that was my first thought as well. One group is all elderly.

Seems a tall order to me as well.

I was going to say... I'm astonished that Cowen would title this piece so confidently.

Right. Also, it's possible that patients whose insurance pays less well will get worse care, but that of EVERYONE had Medicare, then there wouldn't be much of a discrepancy.

In other words, patients over 65 and disabled patients have worse outcomes than middle class worker or wealthy patients.

I'm guessing that the poor, ie, those on Medicaid, fared worse than middle class workers.

The real question is how do the working poor patient fare - those without any insurance with care paid by hospital charity arrangements.

We all know I don't say this often: I agree with mulp.

I hate Medicare and socialized medicine as much as anyone. No, I hate it more than anyone. But all these results tell us is that the sample of people on Medicare are less healthy than the sample of people who are not on Medicare. Who didn't already know that? They're on Medicare because they are poor and sick already.

You really don't think the study was designed to control for that? It would be an obviously complete garbage study, if so. We should be talking about whatever they did to control for it.


The Oregon Medicaid study gave an answer: almost exactly the same. .

Which isn't surprising because the hospital doctors and nurses caring for you don't even know what your insurance is and cannot really care less about it. It's all two degrees removed and only has a chance to play when a tiny hospitals where doctors are intimately involved in making financial decisions are concerned. Meaning no more than 1% of hospitals nationwide. The paper is obvious crap.

I have not yet read the paper. Is it reasonable to think those groups are comparable and differ only in insurance status? Is it even reasonable to think we can knowingly make adjustments?

We cannot make appropriate risk adjustments. There are many tools out there, none of which has much precision, and all of which depend to a ridiculous degree on the specific words doctors use in their progress notes. You can say that you have risk-adjusted the difference between the 45 y.o. pneumonia patient and the 75 y.o. pneumonia patient, but saying it doesn't mean it's done.

About 18 years ago, around 1995 using a different name, I started an internet meme that claimed you should indicate being an organ donor on your driver's license since it would give incentive, perversely but not intentionally ("perverse incentives" but without the mens rea) for caregivers to make sure you died so they could harvest your organs. I had no evidence save intuition for my claim, and of course being the internet I claimed I was an ER doctor. Years later I saw a study that confirmed, at the margin, my suspicion, though like gun control I'm sure the evidence is not that strong either way. This study is similar to that finding.

In absence of strong evidence, I generally err on the side of paranoia. No organ donor status for me.

Poor people use Medicare, Wealthy people use private insurance. Wealthy people have a lot more resources for medical care in their neighobrhoods than poor people

Medicare = Primary payer for over 65 y All incomes and Under 65 y Disabled
Medicaid = Primary payer for under 65 y Poor; Secondary payer for over 65 y Poor

This studied MediCARE v. private insurance.

I think you may have confused Medicare - health care for the elderly - with Medicaid - health care for the poor. Scrolling through the comments, you do not seem to be alone.

A common misconception is that Medicaid dollars don't benefit the elderly. In fact 2/3 of Medicaid dollars go to the elderly and disabled, with almost half of all Medicaid dollars going to seniors.

Your link says that the Aged receive 20% of Medicaid spending.

Medicaid dollars going to seniors is essentially Medicaid paying for nursing home care for seniors that can not pay for it themselves. Medicare does not usually pay for nursing home care.

wealthy elderly people have private insurance though. so it's still largely a poor vs. not poor issue.

what that has to do with efficiency, I can't even imagine. seems that either people perceived as poor are getting worse care, or if we're just going with mortality, the issue is that privately insured patients have more resources outside of the hospital.

"wealthy elderly people have private insurance though. so it’s still largely a poor vs. not poor issue"

Um, no. They don't. Medicare is mandatory, at least the part that covers hospitalization.

Basically, this study is comparing young apples to old oranges. Using mortality as a risk adjustment tool is like looking at the world from 30000 feet. You can see big trends, but that's about it. It fails to reflect the differences in physiologic reserve between young and old. A 70 year old undergoing elective surgery has a very different level of risk than a 50 year old, even when oyu adjust for co-morbidities.

To me, this study says nothing about the varying quality of treatment a patient receives based on his/her insurance type. Rather, it tells me that AHQR's Inpatient Quality Indicator suffers significant omitted variable bias and produces inaccurate expected mortality rates. There are significant differences between people using private insurance vs Medicare that have been shown to strongly impact mortality rates for diseases. For example, education levels have been shown to be correlated with mortality rates for specific diseases.

If we did this study controlling for doctors rather than hospitals, I would expect that we would still see varying outcomes based on insurance type. And I highly doubt doctors are acting significantly differently based on their patient's insurance type.

My first thought on this is how did they possibly adjust these results for age and/or disability. Well, I just picked up the latest health affairs to check this out - and they didn't. See, Exhibit 1: Characteristics of Hospital Discharges by Primary Payer, 54.7% of the Medicare patients were OVER 75. Only 4.4% of patients with primary private insurance were over 75 years old. (Presumably, these would be 75 year olds still working.) And 89,8% of the privately insured were between 18 and 64. Furthermore, the 17.9% of Medicare beneficiaries between the ages of 18-64 all would be determined disabled by Social Security - that's the way to get Medicare before 65 (or Lou Gehrig's disease). The results show that mortality is higher for Medicare recipients, who are all old or disabled. So, old people and disabled people have higher mortality in the same hospitals when they have the same procedures as young non-disabled people. Well isn't that ground breaking? Sorry, I'm not surprised that an 80 year old with CHF, osteoporosis, and diabetes who falls and breaks her hip would be more likely to die than the 30 year old who breaks her hip in a ski accident. And yet, without discussing this problem, the study concludes that private insurance has better outcomes at the same hospital.

I don't really want to read the paper, but I will point out a few things:

1. Even if only 4.4% of the discharges had primary private insurance, as long as the count was high enough, it is possible to control for risk. Your assertion is incorrect about the nature of people over 75 who are not on Medicare- it really has nothing to do with whether or not someone is still working or not. You are eligible for Part A if you or your spouse worked at least 10 years in Medicare eligible employment and you are a US citizen or legal permanent resident. This will not include a lot of foreigners who have moved to the US late in life, and will not even include all native-born US citizens either.

2. For those under 65, not all the disabled are on disability, even those functionally disabled in the same manner. Again, it will be important what the absolute numbers of such patients is and how the authors of the paper grouped them into cohorts for analysis.

1. It wasn't controlled for risk. I don't have the time to pull up the numbers, but I think you are grossly overestimating the number of seniors who move to the US later in life and aren't Medicare eligible. I can't imagine what their insurance premiums would be on the private market. Clearly it happens, but it can't be that many. This says there is no market at all: Further, there are very few over 65s who have not reached 10 years of work. 10 years of work isn't a full time job for 10 years, it is making ~$5k a year. And if someone has made it to 65, without working and without a spouse who worked, and was not disabled, then chances are they are very, very poor (or alternatively very, very rich) and would depending on the state be medicaid eligible - or would just pay out of pocket.

2. No, not all the SS disabled are on Medicare, but after ~26 months of disability, they are eligible. I cannot think of a way that someone who is neither disabled nor has Lou Gehrig's and is under 65 could get Medicare - but please correct me if I'm wrong. Even, I believe, in the super rare cases where someone under 17 has Medicare - they are disabled.

Anne, your own first comment said 4.4% of the discharges were over 75 and not on Medicare, you then basically assert this means those 4.4% are healthier than the rest of the >75 year old patients absent any evidence whatsoever. All the rest of your second comment is thus pointless. Those 4.4% must come from group of seniors not eligible for Medicare for the most part.

My first post said that for 4.4% of people over 75, the primary payer was private insurance. You are wrong to conclude that the 4.4% must not be eligible for Medicare. A person can be Medicare eligible and not have Medicare as their primary insurance. For instance, if a person is over 65, but is still working and has employer based coverage through their own work, or that of their spouse, that employer based coverage is primary insurance. Medicare would be secondary. There are also some older retirement plans where after retirement, the employer continues to offer coverage.

2. No, not all the SS disabled are on Medicare, but after ~26 months of disability, they are eligible.

This is painful. It is perfectly possible for two people in the US, who are basically identical in all health parameters, but one is on Social Security Disability and one who is not. Not everyone with a disability even applies for SSD, and not everyone who is accepted for SSD is even disabled by Social Security's own guidelines.

I am not saying the paper was successful in controlling for age and other health factors, only that isn't a prima facie case that the paper couldn't control for these because it is obviously true that Medicare recipients are not as healthy as the patients they are being compared against.

And more generally the only kind of "risk-correction" I would accept is sub-sampling the data so the distributions of all these relevant variables are the same. I have zero interest in anyone's pet statistical model or the famed and magical "regressing away" such enormous population differences. I bet they'll take me up on that suggestion, right? Absurd.

This study also doesn't make sense for two other reasons.

First, hospitals want their overall statistics to be good. If one, and it's a large part, of the hospitals population gets treated poorly, this means the hospitals overall statistics are worse.

Second, ask how you quality discriminate among populations and convey that desire to nurses etc and not appear on the evening news.

What plan of care is chosen at the start before hospitalization? Is that affected by who is paying the bills? I don't think it even has to go to the level of telling a nurse to give different treatment to patient A because he is on Medicare.

This study says nothing at all about the "efficiency" of Medicare. Assuming its empirical results hold up, it says hospitals provide worse care when they get paid less. But paying less and getting a worse product is not inefficient, it's just cheap.

Looks we're we're moving toward a two-tier system from the opposite direction as the UK and Canada.

If you've spent much time in or around hospitals you are well aware that the type of care you receive is quite frequently related to the type of care you (or someone assisting you) demands. As everywhere else, in hospitals, the squeaky wheels get the grease, irrespective of coverage.

Without adjusting for how motivated (and skilled) patients are at demanding certain assistance- an adjustment that is practically impossible- I don't think this type of study can prove all that much that isn't already known.

Is this "study" a joke or just dumb? I certainly agree with the above comments that would appear to demolish its credibility. Another factor to consider: I recall seeing studies showing that patients who are subjected to fewer procedures have better outcomes than patients who get more procedures. It couldn't be that doctors are milking medicare patients by adding procedures, could it?

Elderly patients are routinely undertreated. It's an open and obvious fact to anyone over the age of 70 or so. As one said to my mom as she called for treatment of her ill husband, "He's just going to die anyway."

I think it would be better to compare outcomes and survival rates for Medicare Advantage patients vs. traditional Medicare and Medicaid vs. private insurance.

Seems Tyler might be suffering from some confirmation bias here. Can't get behind paywall to see the risk-adjustment but it seems to beg the question of whether, if we had some sort of compulsory single payer system at Medicare-level rates, a la the NHS, whether the overall level of care fall or would the adverse effects disappear as the financial incentives for dispensing superior care to some were eliminated? The bibimbap review was more discerning.

Next up-- "We compared a group of 25-35 year old marathon runners with a group of 65-75 year old runners and conclude the 25-35 year old group received better coaching based upon their superior results"

Anecdotally-- I have spent a lot of time in hospitals in the past few years with my elderly parents and in my experience their coverage never entered into the quality of their care. If anything it seemed to me that Medicare covered care is too indiscriminate.

Isn't that what "risk adjusted mortality rates" adjust for in the section quoted in the original post?

This can't be true. Your typical nurse or doctor isn't going to have any idea who the insurance provider is. They could look at the DOB and make a guess, but without looking for it pretty hard they aren't going to know.

When I broke my finger last year, I went to an orthopedist. On the top of the diagnosis sheet, he wrote: "Smashed finger, BC BS." That doctor, at least, most certainly did know who my insurer was.

A number of these comments seem to think it literally impossible to compare similar populations of patients who have Medicare and who do not because Medicare patients are older. This is a nonsense argument. Not everyone over 65 in the US have Medicare Part A as their primary insurance, nor is it true that all patients under 65 who could be eligible for Medicare actually take it. The paper may or may not control well for factors other than insurance payer, but it isn't impossible for them to have done so. One commentator above quotes from the paper evidence that supports me in this in that 4.4% of the hospital discharges were older than 75 and not on Medicare. Now, how many individuals is that 4.4%, and how do they compare demographically and healthwise to Medicare recipients of the same age? I don't know without reading the paper, but it is just silly to assume the authors are so stupid as to not try to do this sort of risk adjustment.

I think most people are aware of the "risk adjustment," they're just skeptical that it works. And I think some people are wondering about the causal mechanism for the difference in outcomes if the risk adjustments are actually working properly. Are hospitals actually (unethically) withholding care from Medicare patients? Maybe I'm naive, but to me that seems unlikely to be the case on a systematic basis, so it seems more probable that confounding demographic factors explain the observed effect.

Why should the private financial interests of the private health insurance boffins determine the level and quality of care available to all citizens? A citizen should not have to mortgage their house, lose everything to access the care, treatment or drugs available to preserve their health or life! Lose the fear! It's worked very well in Australia and as an Australian I have no fear utilising the public health care system. And that's because the system here is accountable. Every case, every life, the well being of individuals that can't afford health care is considered. There exists a level of elitism in the private health sector here also, and treatments such as visiting a GP are becoming increasingly privatised - and that scares me! At the end of the day though, I know I could go to hospital and have a triple bypass operation in the public hospital and would not have to pay a cent. I find it incredible that some Americans would allow the complete financial destruction of families whilst Drs and those benefiting financially from the health care system enjoy obscene wealth. You guys need to stand up for your rights a little more.

No, because socialism! USA USA USA

You have a mortgage? Here everyone just gets a house when they want.

Well-identified studies find the exact opposite effect. For example, this one ( compares individuals just below and just above the age 65 threshold for Medicare eligibility and finds that having Medicare reduces mortality risk.

Most people who post here are aware that, in most measurable outcomes, good looking people do better than non-good looking people.
Most Americans are vaguely aware that people who qualify for government aid of any kind are significantly less good looking, on average, than those who do not so qualify.
Those who are unaware of these two facts will probably have a less nuanced view of this matter than those who do.
I sincerely hope that no medical professional, with hypocrisy in his or her heart, would disagree that these are two current unfortunate and sadly morality-free facts of the world we live in. Not all doctors and nurses model their behavior and expenditures of energy on Louis Pasteur.

People whose insurance has higher reimbursement rates and less bureaucratic costs than Medicare -- i.e. people who pay more -- get better quality of care. This is a fantastic argument for a nationwide single payer health system. "Incentives matter" and health care providers shouldn't be incentivized to provide better care to some patients than others. The entire situation is a moral travesty.

You're scared.

Heart surgery doesn't cost money.

Private boffins are bad. Government boffins are good.

I'm sold!

Finally got a chance to read the paper and look at the 15 procedures/diagnoses they compared. On the surgical side, which I know best, I have no idea how they control for the differences between a 75 y/o having an esophagectomy, AAA, CABG or pancreatic resection and a 55 y/o having the same procedure. There is absolutely no comparison between the two groups when you treat them for these major procedures. I would say, and the research guys I talked with today agree, that there is about zero chance that you could successfully control for all of the differences between these two groups. Their chosen method of comparing expected mortality with observed mortality is especially problematic. The reality is that the huge majority of patients of Medicare age have Medicare as their insurance. So, this study is saying that compared to a national reference level of mortality among Medicare patients, this group of Medicare patients had higher than expected mortality.

The real take home here is that Medicare patients appear to get below average care compared with other Medicare patients. Just as or more likely, they didnt control very well for differences.


Agree with the above comments regarding the efficiency of Medicare. It's in the administrative costs, not the quality of care. That's what happens when you don't have a bazillion different payment schedules and coverage rules to administer.

Nothing quite like "sound bytes" being used to push an ideology.

"“We found that privately insured patients had lower risk-adjusted mortality rates than did Medicare enrollees for 12 out of 15 quality measures examined,” wrote the researchers, led by Christine Spencer, associate professor and executive director of the School of Health and Human Services at the University of Baltimore in Maryland.

However, there were several indicators for which patients with private insurance fared worse than patients in Medicare, Medicaid and other payer groups, the researchers said. Privately insured patients had higher mortality rates for congestive heart failure, stroke and pneumonia.

Mortality rates for Medicare patients ranged from 104 percent higher than private insurance for hip replacement to about 3 percent lower for congestive heart failure, stroke and pneumonia. Nevertheless, in many of the cases where the outcomes of private payers’ patients were better, the differences were larger.

So while there is some indication that quality efforts have improved mortality rates for certain conditions, there doesn’t seem to be “spillover across payers within a hospital for these targeted conditions,” the researchers said in their report."

Wow, the omitted variables here are out of control. Maybe true, but this study should lead to no conclusions drawn.

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One wonders if Krugman's definition of efficiency has anything to do with getting rid of the worthless people.

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