Publications by Year: 2010

2010
Cutler, David M, and Edward L Glaeser. 2010. “Social Interactions and Smoking.” Research Findings in the Economics of Aging, edited by Davis Wise, 123-141. Chicago: University of Chicago Press, 123-141. Website
Cutler, David M, and Adriana Lleras-Muney. 2010. “The Education Gradient in Old Age Disability.” Research Findings in the Economics of Aging, edited by David Wise, 101-120. Chicago: University of Chicago, 101-120. Publisher's Version
Cutler, David M, and Adriana Lleras-Muney. 2010. “Understanding Differences in Health Behavior by Education.” Journal of Health Economics 29 (1): 1-28. Website
Cutler, David M, Katherine Baicker, and Zirui Song. 2010. “Workplace Wellness Programs Can Generate Savings.” Health Affairs 29 (2): 1-8. Website
Cutler, David M, Robert Huckman, and Jonathan Kolstad. 2010. “Input Constraints and the Efficiency of Entry: Lessons from Cardiac Surgery.” American Economic Journal: Economic Policy 2 (1): 51-76. Publisher's VersionAbstract

Prior studies suggest that, with elastically supplied inputs, free entry may lead to an inefficiently high number of firms in equilibrium. Under input scarcity, however, the welfare loss from free entry is reduced. Further, free entry may increase use of high-quality inputs, as oligopolistic firms underuse these inputs when entry is constrained. We assess these predictions by examining how the 1996 repeal of certificate-of-need (CON) legislation in Pennsylvania affected the market for cardiac surgery in the state. We show that entry led to a redistribution of surgeries to higher-quality surgeons and that this entry was approximately welfare neutral.

Cutler, David M, David C Chan, William H Shrank, Saira Jan, Michael A Fischer, Jun Liu, Jerry Avorn, Daniel Solomon, Alan M Brookhart, and Niteesh K Choudhry. 2010. “Patient, Physician, and Payment Predictors of Statin Adherence.” Medical Care 48 (3): 196-202. WebsiteAbstract

Background: Although many patient, physician, and payment predictors of adherence have been described, knowledge of their relative strength and overall ability to explain adherence is limited.

Objectives: To measure the contributions of patient, physician, and payment predictors in explaining adherence to statins.

Research Design: Retrospective cohort study using administrative data.

Subjects: A total of 14,257 patients insured by Horizon Blue Cross Blue Shield of New Jersey who were newly prescribed a statin cholesterol-lowering medication.

Measures: Adherence to statin medication was measured during the year after the initial prescription, based on proportion of days covered. The impact of patient, physician, and payment predictors of adherence were evaluated using multivariate logistic regression. The explanatory power of these models was evaluated with C statistics, a measure of the goodness of fit.

Results: Overall, 36.4% of patients were fully adherent. Older patient age, male gender, lower neighborhood percent black composition, higher median income, and fewer number of emergency department visits were significant patient predictors of adherence. Having a statin prescribed by a cardiologist, a patient's primary care physician, or a US medical graduate were significant physician predictors of adherence. Lower copayments also predicted adherence. All of our models had low explanatory power. Multivariate models including patient covariates only had greater explanatory power (C = 0.613) than models with physician variables only (C = 0.566) or copayments only (C = 0.543). A fully specified model had only slightly more explanatory power (C = 0.633) than the model with patient characteristics alone.

Conclusions: Despite relatively comprehensive claims data on patients, physicians, and out-of-pocket costs, our overall ability to explain adherence remains poor. Administrative data likely do not capture many complex mechanisms underlying adherence.

Cutler, David M, Winnie Fung, Michael Kremer, Monica Singhal, and Tom Vogl. 2010. “Early Life Malaria Exposure and Adult Outcomes: Evidence from Malaria Eradication in India.” American Economic Journal: Applied Economics 2 (2): 196-202. Publisher's VersionAbstract

We examine the effects of exposure to malaria in early childhood on educational attainment and economic status in adulthood by exploiting geographic variation in malaria prevalence in India prior to a nationwide eradication program in the 1950s. We find that the program led to modest increases in household per capita consumption for prime age men, and the effects for men are larger than those for women in most specifications. We find no evidence of increased educational attainment for men and mixed evidence for women.

Cutler, David M, and Wendy Everett. 2010. “Thinking Outside the Pillbox -- Medication Adherence as a Priority for Healthcare Reform.” New England Journal of Medicine 10 (1056). Website
Cutler, David M, Karen Davis, and Kristof Stremikis. 2010. The Impact of Health Reform on Health System Spending. Commonwealth Fund Issue Brief. Commonwealth Fund Issue Brief. Publisher's VersionAbstract

The health reform legislation passed in March 2010 will introduce a range of payment and delivery system changes designed to achieve a significant slowing of health care cost growth. Most assessments of the new reform law have focused only on the federal budgetary impact. This updated analysis projects the effect of national reform on total national health expenditures and the insurance premiums that American families would likely pay. We estimate that, on net, the combination of provisions in the new law will reduce health care spending by $590 billion over 2010–2019 and lower premiums by nearly $2,000 per family. Moreover, the annual growth rate in national health expenditures could be slowed from 6.3 percent to 5.7 percent.

Cutler, David M. 2010. “Where Are the Health Care Entrepreneurs?.” Issues in Science and Technology 27 (1): 49-56. Website
Pozen, Alexis, and David M Cutler. 2010. “Medical Spending Differences in the United States and Canada: The Role of Prices, Procedures, and Administrative Costs.” Inquiry 47 (2): 124-134. WebsiteAbstract

The United States far outspends Canada on health care, but the sources of additional spending are unclear. We evaluated the importance of incomes, administration, and medical interventions in this difference. Pooling various sources, we calculated medical personnel incomes, administrative expenses, and procedure volume and intensity for the United States and Canada. We found that Canada spent $1589 per capita less on physicians and hospitals in 2002. Administration accounted for the largest share of this difference (39%), followed by incomes (31%), and more intensive provision of medical services (14%). Whether this additional spending is wasteful or warranted is unknown.

Cutler, David M, Bryan Lincoln, and Richard Zeckhauser. 2010. “Selection Stories: Understanding Movement Across Health Plans.” Journal of Health Economics 29 (5). Publisher's Version
Fang, Margaret, David M Cutler, and Allison Rosen. 2010. “Trends in Thrombolytic Use for Ischemic Stroke in the United States.” Journal of Hospital Medicine 5 (7): 406-409. WebsiteAbstract

BACKGROUND: Although recombinant tissue plasminogen activator (tPA) improves outcomes from ischemic stroke, prior studies have found low rates of administration. Recent guidelines and regulatory agencies have advocated for increased tPA administration in appropriate patients, but it is unclear how many patients actually receive tPA.

OBJECTIVE: To determine whether national rates of tPA use for ischemic stroke have increased over time.

METHODS: We identified all patients with a primary diagnosis of ischemic stroke from years 2001 to 2006 in the National Hospital Discharge Survey (NHDS), a nationally representative sample of inpatient hospitalizations, and searched for procedure codes for intravenous thrombolytic administration. Clinical and demographic factors were obtained from the survey and multivariable logistic regression used to identify independent predictors associated with thrombolytic use.

RESULTS: Among the 22,842 patients hospitalized with ischemic stroke, tPA administration rates increased from 0.87% in 2001 to 2.40% in 2006 (P < 0.001 for trend). Older patients were less likely to receive tPA (adjusted odds ratio [OR] and 95% confidence interval [CI]; 0.4 [0.3-0.6] for patients ≥80 years vs. <60 years), as were African American patients (0.4 [0.3-0.7]). Larger hospitals were more likely to administer tPA (3.3 [2.0-5.6] in hospitals with at least 300 beds compared to those with 6-99 beds).

CONCLUSIONS: Although tPA administration for ischemic stroke has increased nationally in recent years, the overall rate of use remains very low. Larger hospitals were more likely to administer tPA. Further efforts to improve appropriate administration of tPA should be encouraged, particularly as the acceptable time-window for using tPA widens.

Cutler, David M, and Keith Ericson. 2010. “Cost-Effectiveness Analysis in Markets With High Fixed Costs.” Pharmacoeconomics 26 (10): 867-875. Publisher's VersionAbstract

We consider how to conduct cost-effectiveness analysis when the social cost of a resource differs from the posted price. From the social perspective, the true cost of a medical intervention is the marginal cost of delivering another unit of a treatment, plus the social cost (deadweight loss) of raising the revenue to fund the treatment. We focus on pharmaceutical prices, which have high markups over marginal cost due to the monopoly power granted to pharmaceutical companies when drugs are under patent. We find that the social cost of a branded drug is approximately one-half the market price when the treatment is paid for by a public insurance plan and one-third the market price for mandated coverage by private insurance. We illustrate the importance of correctly accounting for social costs using two examples: coverage for statin drugs and approval for a drug to treat kidney cancer (sorafenib). In each case, we show that the correct social perspective for cost-effectiveness analysis would be more lenient than researcher recommendations.

Ruhnke, Greg, Marcelo Coca-Perraillon, Barrett T Kitch, and David M Cutler. 2010. “Trends in mortality and medical spending in patients hospitalized for community-acquired pneumonia: 1993-2005.” Medical Care 48 (12). WebsiteAbstract

BACKGROUND: Community-acquired pneumonia (CAP) is the most common infectious cause of death in the United States. To understand the effect of efforts to improve quality and efficiency of care in CAP, we examined the trends in mortality and costs among hospitalized CAP patients.

METHODS: Using the National Inpatient Sample between 1993 and 2005, we studied 569,524 CAP admissions. The primary outcome was mortality at discharge. We used logistic regression to evaluate the mortality trend, adjusting for age, gender, and comorbidities. To account for the effect of early discharge practices, we also compared daily mortality rates and performed a Cox proportional hazards model. We used a generalized linear model to analyze trends in hospitalization costs, which were derived using cost-to-charge ratios.

RESULTS: Over time, length of stay declined, while more patients were discharged to other facilities. The frequency of many comorbidities increased. Age/gender-adjusted mortality decreased from 8.9% to 4.1% (P < 0.001). In multivariable analysis, the mortality risk declined through 2005 (odds ratio, 0.50; 95% confidence interval, 0.48-0.53), compared with the reference year 1993. The daily mortality rates demonstrated that most of the mortality reduction occurred early during hospitalization. After adjusting for early discharge practices, the risk of mortality still declined through 2005 (hazard ratio, 0.74; 95% confidence interval, 0.70-0.78). Median hospitalization costs exhibited a moderate reduction over time, mostly because of reduced length of stay.

CONCLUSIONS: Mortality among patients hospitalized for CAP has declined. Lower in-hospital mortality at a reduced cost suggests that pneumonia is a case of improved productivity in health care.

Cutler, David M. 2010. “Health Reform Passes the Cost Test.” Wall Street Journal.