Thesis Thursday: Mathilde Péron

On the third Thursday of every month, we speak to a recent graduate about their thesis and their studies. This month’s guest is Dr Mathilde Péron who graduated with a PhD from Université Paris Dauphine. If you would like to suggest a candidate for an upcoming Thesis Thursday, get in touch.

Title
Three essays on supplementary health insurance
Supervisors
Brigitte Dormont
Repository link
https://basepub.dauphine.fr/handle/123456789/16695

How important is supplementary health insurance in France, compared with other countries?

In France in 2016, Supplementary Health Insurance (SHI) financed 13.3% of total health care expenditure. SHI supplements a partial mandatory coverage by covering co-payments as well as medical goods and services outside the public benefit package, such as dental and optical care or balance billing. SHI is not a French singularity. Canada, Austria, Switzerland, the US (with Medicare / Medigap) or the UK do offer voluntary SHI contracts. A remarkable fact, however, is that 95% of the French population is covered by a SHI contract. In comparison, although the extent of public coverage is very similar in France and in the UK, the percentage of British patients enrolled in a private medical insurance is below 15%.

The large SHI enrolment and the subsequent limited out-of-pocket payments – €230 per year on average, the lowest among EU countries – should not hide important inequalities in the extent of coverage and premiums paid. SHI coverage is now mandatory for employees of the private sector. They benefit from subsidized contracts and uniform premiums. Individuals with an annual income below €8,700 benefit from free basic SHI coverage which covers copayments, essentially. However, the rest of the population (students, temporary workers, unemployed, retirees, independent, and civil servants) buy SHI in a competitive market where premiums generally increase with age.

Can supplementary health insurance markets lead to an adverse selection death spiral?

Competitive health insurance markets are subject to asymmetric information that prevent the existence of pooling contracts (Rothschild and Stiglitz, 1976Cutler and Zeckhauser, 1998). The US market is a good example; in the 1950s not-for-profit insurance companies (Blue Cross, Blue Shields) – which offered pooled contracts – almost all disappeared (Thomasson, 2002). And, despite a notably higher public coverage that could limit adverse selection effects, the French SHI market is not an exception.

Historically, SHI coverage was provided by not-for-profit insurers, the Mutuelles, who relied on solidarity principles. But as the competition becomes more intense, the Mutuelles experience the adverse selection death spiral; they lose their low-risk clients attracted by lower premiums. To survive, they have to give up on uniform premiums and standardized coverage. Today 90% of SHI contracts in the individual market have premiums that increase with age. It is worth noting that in France insurers have strong fiscal incentives to avoid medical underwriting, so age remains the only predictor for individual risk. Still, premiums can vary with a ratio of 1 to 3, which raises legitimate concerns about the affordability of insurance and access to health care for patients with increasing medical needs.

How does supplementary health insurance influence prices in health care, and how did you measure this in your research?

A real policy concern is that SHI might have an inflationary effect by allowing patients to consume more at higher prices. Access to specialists who balance bill (i.e. charge more than the regulated fee) – a signal for higher quality and reduced waiting times – is a good example (Dormont and Peron, 2016).

To measure the causal impact of SHI on balance billing consumption we use original individual-level data, collected from the administrative claims of a French insurer. We observe balance billing consumption and both mandatory and SHI reimbursements for 43,111 individuals from 2010 to 2012. In 2010, the whole sample was covered by the same SHI contract, which does not cover balance billing. We observe the sample again in 2012 after that 3,819 among them decided to switch to other supplementary insurers, which we assume covers balance billing. We deal with the endogeneity of the decision to switch by introducing individual effects into the specifications and by using instrumental variables for the estimation.

We find that individuals respond to better coverage by increasing their proportion of visits to a specialist who balance bills by 9%, resulting in a 32% increase in the amount of balance billing per visit. This substitution to more expensive care is likely to encourage the rise in medical prices.

Does the effect of supplementary insurance on health care consumption differ according to people’s characteristics?

An important result is that the magnitude of the impact of SHI on balance billing strongly depends on the availability of specialists. We find no evidence of moral hazard in areas where specialists who do not charge balance billing are readily accessible. On the contrary, in areas where they are scarce, better coverage is associated with a 47% increase in the average amount of balance billing per consultation. This result suggests that the most appropriate policy to contain medical prices is not necessarily to limit SHI coverage but to monitor the supply of care in order to guarantee patients a genuine choice of their physicians.

We further investigate the heterogeneous impact of SHI in a model where we specify individual heterogeneity in moral hazard and consider its possible correlation with coverage choices (Peron and Dormont, 2017 [PDF]). We find evidence of selection on moral hazard: individuals with unobserved characteristics that make them more likely to ask for comprehensive SHI show a larger increase in balance billing per visit. This selection effect is likely to worsen the inflationary impact of SHI. On the other hand, we also find that the impact of a better coverage is larger for low-income people, suggesting that SHI plays a role in access to care.

Have the findings from your PhD research influenced your own decision to buy supplementary health insurance?

As an economist, it’s interesting to reflect on your own decisions, isn’t it? Well, I master cost-benefit analysis, I have a good understanding of expected utility and definitely more information than the average consumer in the health insurance market. Still, my choice of SHI might appear quite irrational. I’m (reasonably) young and healthy, I could have easily switched to a contract with lower premiums and higher benefits, but I did not. I stayed with a contract where premiums mainly depend on income and benefits are standardized, an increasingly rare feature in the market. I guess that stresses out the importance of other factors in my decision to buy SHI, my inertia as a consumer, probably, but also my willingness to pay for solidarity.

Meeting round-up: Fourth EuHEA PhD Student-Supervisor and Early Career Researcher Conference

The 4th catchily-titled EuHEA PhD Student-Supervisor and Early Career Researcher (ECR) conference took place from 6th–8th September 2017 in Lausanne, Switzerland. Students and ECRs can attend alone but are encouraged to bring their supervisors or other senior colleagues with them, who are then allocated as discussants.

With a format inspired by the UK HESG meeting, papers are pre-circulated and each given an hour session. The student or ECR first presents their paper for 25 minutes, followed by a 15-minute discussion from an allocated senior delegate. The floor is then opened to the audience for a further 20 minutes of discussion. This format enables students and ECRs to gain experience in both writing and presenting their work, in addition to receiving detailed feedback and suggestions for future directions.

45 papers were presented in total, and the overall standard of the work was exceptional. Four parallel sessions ran, roughly grouped into the themes of: economic evaluation of medical technologies; economics of health system financing, regulation and delivery; determinants of health behaviours and consequences; and patient and provider decision making and incentives. So there really was something for everyone. There were also short 10-minute presentation sessions. I really enjoyed these quick overviews and felt that I learnt more about people’s research from these than a traditional poster session.

The atmosphere is purposefully relaxed and friendly, and it was great to see students and ECRs contributing to the discussions just as much as their senior supervisors. The conference also seems to attract repeat attendance and so is beginning to form a supportive network of junior health economists who now meet annually. As one of the organisers of the first conference in Manchester, a personal highlight for me was seeing delegates who had originally attended as PhD students returning this time in the role of supervisor as their careers have progressed.

Ieva Sriubaite had the rather daunting but invaluable opportunity to have her paper “Go your own way? The importance of peers in the formation of physician practice styles” discussed by Prof Amitabh Chandra from Harvard, who also gave the plenary speech. Whilst the conference programme was packed, there were still plenty of opportunities to socialise, and a cultured trip to The Hermitage Foundation.

An initiative to come out of the previous conference is the formation of a EuHEA Early Career Committee, which will represent the interests of health economists at the start of their careers within EuHEA. I had the great honour of being elected to chair this committee, and we held our first committee meeting during the conference. Watch out for updates on our best idea to come from this meeting – a conference cruise.

For now, hold 5th–7th September 2018 in your diaries and book your flights to Sicily for the 5th conference. If that location doesn’t convince you to attend I don’t know what will.

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Chris Sampson’s journal round-up for 25th September 2017

Every Monday our authors provide a round-up of some of the most recently published peer reviewed articles from the field. We don’t cover everything, or even what’s most important – just a few papers that have interested the author. Visit our Resources page for links to more journals or follow the HealthEconBot. If you’d like to write one of our weekly journal round-ups, get in touch.

Good practices for real‐world data studies of treatment and/or comparative effectiveness: recommendations from the Joint ISPOR‐ISPE Special Task Force on Real‐World Evidence in Health Care Decision Making. Value in Health Published 15th September 2017

I have an instinctive mistrust of buzzwords. They’re often used to avoid properly defining something, either because it’s too complicated or – worse – because it isn’t worth defining in the first place. For me, ‘real-world evidence’ falls foul. If your evidence isn’t from the real world, then it isn’t evidence at all. But I do like a good old ISPOR Task Force report, so let’s see where this takes us. Real-world evidence (RWE) and its sibling buzzword real-world data (RWD) relate to observational studies and other data not collected in an experimental setting. The purpose of this ISPOR task force (joint with the International Society for Pharmacoepidemiology) was to prepare some guidelines about the conduct of RWE/RWD studies, with a view to improving decision-makers’ confidence in them. Essentially, the hope is to try and create for RWE the kind of ecosystem that exists around RCTs, with procedures for study registration, protocols, and publication: a noble aim. The authors distinguish between 2 types of RWD: ‘Exploratory Treatment Effectiveness Studies’ and ‘Hypothesis Evaluating Treatment Effectiveness Studies’. The idea is that the latter test a priori hypotheses, and these are the focus of this report. Seven recommendations are presented: i) pre-specify the hypotheses, ii) publish a study protocol, iii) publish the study with reference to the protocol, iv) enable replication, v) test hypotheses on a separate dataset than the one used to generate the hypotheses, vi) publically address methodological criticisms, and vii) involve key stakeholders. Fair enough. But these are just good practices for research generally. It isn’t clear how they are in any way specific to RWE. Of course, that was always going to be the case. RWE-specific recommendations would be entirely contingent on whether or not one chose to define a study as using ‘real-world evidence’ (which you shouldn’t, because it’s meaningless). The authors are trying to fit a bag of square pegs into a hole of undefined shape. It isn’t clear to me why retrospective observational studies, prospective observational studies, registry studies, or analyses of routinely collected clinical data should all be treated the same, yet differently to randomised trials. Maybe someone can explain why I’m mistaken, but this report didn’t do it.

Are children rational decision makers when they are asked to value their own health? A contingent valuation study conducted with children and their parents. Health Economics [PubMed] [RePEc] Published 13th September 2017

Obtaining health state utility values for children presents all sorts of interesting practical and theoretical problems, especially if we want to use them in decisions about trade-offs with adults. For this study, the researchers conducted a contingent valuation exercise to elicit children’s (aged 7-19) preferences for reduced risk of asthma attacks in terms of willingness to pay. The study was informed by two preceding studies that sought to identify the best way in which to present health risk and financial information to children. The participating children (n=370) completed questionnaires at school, which asked about socio-demographics, experience of asthma, risk behaviours and altruism. They were reminded (in child-friendly language) about the idea of opportunity cost, and to consider their own budget constraint. Baseline asthma attack risk and 3 risk-reduction scenarios were presented graphically. Two weeks later, the parents completed similar questionnaires. Only 9% of children were unwilling to pay for risk reduction, and most of those said that it was the mayor’s problem! In some senses, the children did a better job than their parents. The authors conducted 3 tests for ‘incorrect’ responses – 14% of adults failed at least one, while only 4% of children did so. Older children demonstrated better scope sensitivity. Of course, children’s willingness to pay was much lower in absolute terms than their parents’, because children have a much smaller budget. As a percentage of the budget, parents were – on average – willing to pay more than children. That seems reassuringly predictable. Boys and fathers were willing to pay more than girls and mothers. Having experience of frequent asthma attacks increased willingness to pay. Interestingly, teenagers were willing to pay less (as a proportion of their budget) than younger children… and so were the teenagers’ parents! Children’s willingness to pay was correlated with that of their own parent’s at the higher risk reductions but not the lowest. This study reports lots of interesting findings and opens up plenty of avenues for future research. But the take-home message is obvious. Kids are smart. We should spend more time asking them what they think.

Journal of Patient-Reported Outcomes: aims and scope. Journal of Patient-Reported Outcomes Published 12th September 2017

Here we have a new journal that warrants a mention. The journal is sponsored by the International Society for Quality of Life Research (ISOQOL), making it a sister journal of Quality of Life Research. One of its Co-Editors-in-Chief is the venerable David Feeny, of HUI fame. They’ll be looking to publish research using PRO(M) data from trials or routine settings, studies of the determinants of PROs, qualitative studies in the development of PROs; anything PRO-related, really. This could be a good journal for more thorough reporting of PRO data that can get squeezed out of a study’s primary outcome paper. Also, “JPRO” is fun to say. The editors don’t mention that the journal is open access, but the website states that it is, so APCs at the ready. ISOQOL members get a discount.

Research and development spending to bring a single cancer drug to market and revenues after approval. JAMA Internal Medicine [PubMed] Published 11th September 2017

We often hear that new drugs are expensive because they’re really expensive to develop. Then we hear about how much money pharmaceutical companies spend on marketing, and we baulk. The problem is, pharmaceutical companies aren’t forthcoming with their accounts, so researchers have to come up with more creative ways to estimate R&D spending. Previous studies have reported divergent estimates. Whether R&D costs ‘justify’ high prices remains an open question. For this study, the authors looked at public data from the US for 10 companies that had only one cancer drug approved by the FDA between 2007 and 2016. Not very representative, perhaps, but useful because it allows for the isolation of the development costs associated with a single drug reaching the market. The median time for drug development was 7.3 years. The most generous estimate of the mean cost of development came in at under a billion dollars; substantially less than some previous estimates. This looks like a bargain; the mean revenue for the 10 companies up to December 2016 was over $6.5 billion. This study may seem a bit back-of-the-envelope in nature. But that doesn’t mean it isn’t accurate. If anything, it begs more confidence than some previous studies because the methods are entirely transparent.

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