Americans are confused about the relationship between cost and quality in health care.
When the Associated Press-NORC Center for Public Affairs Research asked Americans about the relationship between the cost and quality of health care, it found that nearly half of Americans think that higher-quality care comes at a higher cost:
Intuitively, this makes since, but there is actually little evidence that more expensive care produces better patient outcomes.
This perception is problematic because some Americans may be likely to elect the most expensive providers or overpay for care because they believe they are getting a better product, playing a role in the rapid growth of health care spending. Normally we wouldn’t worry if people want to pay more for something of dubiously higher quality, this isn’t normal consumption: Health resources are limited, and, most important, most health costs are highly subsidized by third parties, especially taxpayers.
A new NBER working paper looks at a federal program to offer free breakfast to students of all incomes in public schools, and finds it doesn’t achieve much compared with normal school-breakfast programs:
Despite the increase in breakfast consumption under BIC, we find no positive impact on most other outcomes. In contrast to the earlier, quasi-experimental literature, we find no positive impact on test scores and some evidence of negative impacts. Similarly, there appears to be no overall positive impact on attendance rates or child health. There is suggestive evidence that BIC may improve behavior and health in some highly disadvantaged subgroups, though.
More kids participated in the free-breakfast program, but most students either replaced breakfast at home with breakfast at school or ate two breakfasts, resulting in a neutral (or sometimes even negative) impact on their overall nutrition and caloric intake, and on other indicators like grades, attendance, and behavior.
Does this mean we should get rid of free breakfast in schools? Probably not. The study didn’t examine what would happen if free breakfast were eliminated, but rather the impact of expanding it to all students regardless of income with the intent of trying to boost participation — this doesn’t appear to have worked.
What happened to Obamacare’s “death panels”?
In Morning Consult, Jonathon Easley explains that the Independent Payment Advisory Board, the bureaucratic ”death panel” that’s supposed to make certain decisions in the future about Medicare spending, isn’t going away even though it currently has no appointees and no immediate purpose. The controversial board was created in the ACA to adjust Medicare spending if it rises above a certain threshold, which it was projected to do within the decade.
But now, CBO projections indicate that Medicare spending will be 35 percent lower 20 years from now than previously predicted:
Since the trigger for IPAB was based on 2009-era projections, Medicare spending isn’t going to get there nearly as quickly as expected. So what will IPAB’s role be going forward? For one, it’s possible spending will pick up again quickly and IPAB comes into play.
But assuming it doesn’t, IPAB could still matter: The White House budget includes a proposal to lower the spending threshold that will trigger IPAB intervention in order to restrain spending. But, even if this would mean savings, the administration should be wary of further empowering a panel to make decisions that should be left to Congress. Medicare spending growth will still need to be restrained because of the surge of enrollees over the next couple decades, but we’re lucky it may not have to come from IPAB.