The rising cost of health care: Students examine policy solutions

With health care costs soaring, opinions abound on the best way to control costs without sacrificing patient outcomes. This past academic year, as part of their senior thesis research, several top students from the Department of Economics took a closer look at the link between health care costs and quality of life.

Merger fever

Jio Park examined the impact of hospital mergers on the quality of medical care. “Much of the existing literature focuses on the effects of mergers on costs and prices,” Park said. “I wanted to explore whether or not they affect patient outcomes.”

Park examined mergers that took place in California between 1996 and 2010. She found that mergers are associated with higher mortality rates, reflecting a reduction in quality. She concluded that the adverse effects of mergers are especially strong for patients with high-risk medical conditions such as congestive heart failure and pneumonia.

Park’s adviser, Nancy Reichman, a visiting professor in the economics department and the Woodrow Wilson School of Public and International Affairs, and a professor of pediatrics at Robert Wood Johnson Medical School, praised the research, which earned the Department of Economics’ highest honor for a senior thesis, the Wolf Balleisen Memorial Prize. “Jio used many types of statistical techniques to look from all angles at hospital mergers and their effect on mortality,” Reichman said. “This is an exceptional piece of work.”

Hospice versus hospitals

Ameer Elbuluk examined how patients decide between aggressive hospital-based treatments versus palliative hospice care.According to Elbuluk’s research, most patients with serious illness would prefer to die in the company of family and loved ones. He also found that even with aggressive treatment, people were not living longer. Yet the cost of aggressive treatment was significant, according to the studies that Elbuluk found. For example, a 2011 study found that Medicare, the government program that serves the elderly, spends about one-third of its total budget on patients with chronic illness in their last two years of life.

To study the factors associated with increased hospice use, Elbuluk used data from the National Home and Hospice Care Survey (NHHCS). Elbuluk found that hospice use was more likely among patients who had a living will or advance care directive. Patients were more likely to choose hospice if regular doctor visits were provided.

The largest barrier to hospice use, Elbuluk found, stemmed from Medicare policies. Elbuluk noted that before approving hospice care, Medicare requires a physician’s diagnosis that the patient has less than six months to live if the illness were to run its natural course. In his research, however, Elbuluk found that physicians are reluctant to make such a diagnosis.

Elbuluk’s thesis yields policy suggestions that could help increase the use of hospice care and reduce unnecessary expenditures, according to his adviser, Elizabeth Bogan, a senior lecturer in economics. “It is wonderful that we have students who are excellent scholars,” she said.

Park and Elbuluk presented their findings with three other seniors, Maeve Drablos, Samuel Dresner and Shirley Lee, at the annual undergraduate student research forum hosted by the Benjamin H. Griswold III, Class of 1933, Center for Economic Policy Studies.

“Each of these students has conducted a sophisticated work of analysis,” said Uwe Reinhardt, a leading authority on health care economics and the James Madison Professor of Political Economy, and professor of economics and public affairs at the Wilson School. Reinhardt is a co-director of the Griswold Center with Hyun Song Shin, the Hughes-Rogers Professor of Economics.

–By Catherine Zandonella