News

Debate on Patients' Rights Emits More Heat Than Light

In the recent congressional debate over one of the most controversial aspects of the patients' bill of rights--whether to allow lawsuits against managed care organizations for delay or denial of benefits--both sides of the argument have relied on assumptions for which there is little hard evidence, according to a new RAND study.

Proponents have argued that the threat of litigation would significantly deter wrongful behavior and induce health plans to improve quality of care. However, a substantial body of evidence indicates that lawsuits are, at best, an imperfect deterrence to wrongful behavior. And increased liability might also induce health plans to approve unnecessary care. The net effect is uncertain.

Opponents have argued that expanded liability would produce a flood of costly lawsuits, generating higher costs to consumers. However, no one can predict the magnitude and cost of such litigation, because the data are not available, leaving researchers to estimate that new lawsuits could range from as few as 1,000 to more than 150,000 a year.

"We don't know enough about how health care consumers and lawyers may respond to a new liability environment to project litigation rates with any degree of confidence," concluded the team of researchers, led by Carole Roan Gresenz. Details of the study are explained further in A Flood of Litigation? (RAND/IP-184).

Insuring Children Can Help Mend Frayed Safety Nets

These are among the findings of a RAND study reported in the June 2 issue of the Journal of the American Medical Association (also available as RAND/RP-798). Economists Stephen H. Long and M. Susan Marquis collected family insurance data and health safety net information for Colorado, Florida, Minnesota, New Mexico, New York, North Dakota, Oklahoma, Oregon, Vermont, and Washington.

The results showed that CHIP could increase the average frequency of physician visits by low-income, formerly uninsured children from 2.3 to 4.6 visits per year--or a 105 percent increase on average. However, the increase would range from 41 percent in Minnesota to 189 percent in Oregon, which currently provides relatively few health safety net resources.

"These are encouraging results," said the researchers. "They show the promise of CHIP to significantly increase insurance coverage of low-income children and improve their access to physician services throughout the nation."

Care for Chronic Illnesses: Is There a Better Way?

The study will examine how health care organizations could change the way they deliver care for chronic illnesses, what organizational and personnel adjustments might be required, and whether these new methods to deliver care improve patient health at a reasonable cost. The study will compare the progress of patients receiving new methods of care with the progress of patients in a control group, whose care will not be affected initially.

The Institute for Healthcare Improvement, based in Boston, and the W. A. (Sandy) MacColl Institute for Health Care Innovation, based in Seattle, are cooperating on the study, which is being directed by Emmett Keeler of RAND. The Robert Wood Johnson Foundation is funding the research, which will conclude in May 2003.

If Wealth Is the Chicken, Health Is the Egg

Few would argue that health has no effect on wealth. In fact, health shocks can deplete savings and drain resources long after the onset of illness, even if someone has health insurance, according to a RAND study that appeared in the Spring 1999 issue of the Journal of Economic Perspectives. The study, also available as RAND/ RP-802, investigates the relationship between childhood health and subsequent health--and wealth--throughout life.

In "Healthy Bodies and Thick Wallets: The Dual Relation Between Health and Economic Status," RAND economist James P. Smith quantifies the effect of poor health on wealth. Matching the wealth of U.S. households from 1984-1994 to the health status of the heads of those households, Smith shows that--across all age groups--those who reported excellent health in 1984 had 74 percent more wealth than those who reported poor health (see figure).

Household wealth includes net home equity, business equity, real estate, cars, and a wide variety of financial assets, such as checking and savings accounts, individual retirement accounts, Keogh accounts, stocks, and bonds.

For Americans aged 51 to 61, a severe illness reduces household wealth by an average of about $17,000, or 7 percent. Some of the loss stems from the inability to work and from out-of-pocket medical expenses, with health insurance not insuring against these losses. For Americans aged 70 and over, a mild or severe illness reduces wealth by an average of about $10,000.

"When the health condition is severe, financial wealth is unable to absorb the full brunt," notes Smith. "Families dip into some of their other assets, including taking new loans on their homes."

Smith also examines newer theories of why lower economic status leads to poor health. The old standbys--that poor people have bad health habits and less access to quality medical care--offer only a partial explanation, he argues. Rather, there appear to be long-term health effects of early childhood--and even intrauterine--environmental factors and of prolonged exposure to stressful events.

"A growing number of impressive studies demonstrate that health at middle and older ages reflects health at earlier life," he points out. "This research also suggests that either direct provision of health care early in life or improvements in household living standards for families with younger children may have a long-run return on lifetime health."

This return, Smith says, may be especially high compared with that of current major public investments in Medicare and Social Security, which are not provided until the post-retirement years.

Russia at Risk of Becoming "a Failed State with Nukes"?

Speaking at a June 1999 seminar, Azrael recounted a litany of woes plaguing the world's largest country: economic "meltdown," with rising unemployment, growing inflation, a largely collapsed banking system, a wipeout of small businesses, and the obliteration of the middle class; political paralysis, with an elite "utterly lacking in coherence" or consensus about what to do; military disarray; and pandemic corruption across all strata of society.

"I don't see any hope for the midterm unless Russia is allowed to elect a new president who can capitalize on an initial credibility" and undertake "crisis management," said Azrael. The parliamentary elections in December most likely will produce no major change of direction, but the presidential election next June could be far more significant. In the meantime, Azrael said, there is not much the United States can do.

"It all depends on good leadership. If there is none, decline will continue, discontent will grow, and Russia is likely to become a 'failed state'--with nukes," warned Azrael, although he added that even Russia's nuclear weapons may no longer work.

According to Azrael, the United States needs to become prepared for even worse times ahead in Russia. Without legitimate leadership, Russia will become increasingly threatened by fragmentation of military command and control, proliferation of all sorts of weapons of mass destruction, and "lots of Kosovos in Muslim areas."

If there is a silver lining, Azrael said, "there is no Hitler or Lenin" emerging on the horizon to exploit Russian discontent. "I see no mass movement. The people are too cynical, too apathetic, and too focused on basic needs."

Burden of Indonesian Crisis Weighs Most Heavily on Poor

Before the collapse of the Indonesian rupiah in January 1998, the country had achieved nearly universal primary education and made substantial progress in health care. But the collapsing currency caused food prices to soar, putting a squeeze on education and health expenditures, especially among the poor.

Just prior to the crisis, the poorest children aged 7-12 were just as likely to be in school as their peers from the wealthiest households. In the wake of the crisis, 11.7 percent of poor children were not in school, compared with 2.5 percent of the better-off children.

Between 1997 and 1998, the proportion of all children who visited community health centers on a monthly basis for preventive services dropped from nearly 50 percent to just 25 percent. And prices of antibiotics and bandages rose faster at public facilities, which largely serve the poor, than at private facilities.

"If policies are to alleviate the impact of the crisis, they must reach the most vulnerable and those most likely to suffer grave consequences in the longer term. Policies that are not well-targeted will waste resources," concluded the research team of Elizabeth Frankenberg, Duncan Thomas, and Kathleen Beegle. To monitor the medium- and long-term effects of the Indonesian crisis, the researchers will return to the field for another round of their survey in 2000.

The analysis is described more fully in The Real Costs of Indonesia's Economic Crisis (RAND/ DRU-2064-NIA/NICHD).

Checking for Vital Signs of Cultural Life in America

The research will gather data on the performing arts--including theater, opera, music, dance, and film--as well as the visual and literary arts at a time when commercial arts appear to be flourishing, nonprofit arts appear to be suffering, and amateur arts appear to be holding their own.

"It is difficult to tell if the arts are prospering or in decline," said Kevin McCarthy, director of the new $1.25-million research project, funded by The Pew Charitable Trusts. Beyond assessing the state of the arts, the information collected should help artists and arts organizations develop strategies to survive and prosper in a changing cultural environment.

By creating a centralized database of information on the arts in America, the project will also inform policymakers about the condition of various arts sectors and how they might be strengthened. The project will continue through February 2001.

Combined with a $710,000 grant from the Lila Wallace-Reader's Digest Fund to evaluate efforts to expand arts participation and a $75,000 grant from the City of Los Angeles for a pilot study on the effect of arts participation on at-risk youth, RAND in the past year has developed a $2-million arts research program.

Looming Korean Upheaval Requires Army Flexibility

Dire economic and political conditions in North Korea could provoke an array of unpredictable outcomes for which the armies of the United States and South Korea need to prepare, according to a new RAND study.

For nearly five decades, the United States and South Korea have trained their armies to fend off an invasion from the north. Today, however, the spectrum of potential army duties could include everything from deflecting weapons of mass destruction to providing humanitarian assistance, explain Jonathan Pollack and Chung Min Lee in their new book, Preparing for Korean Unification (RAND/MR-1040-A).

The authors outline four alternative scenarios that could lead to Korean unification, each entailing very different implications for the U.S. Army: (1) peaceful integration and unification, (2) collapse and unification through absorption, (3) unification through conflict, and (4) sustained disequilibrium with potential external intervention.

"The U.S. Army needs to prepare for a much wider range of roles and missions," say the authors. The army also "needs to enhance its intelligence-collection and analysis capabilities," especially given the possibility of an abrupt collapse of the North Korean regime and potential Chinese intervention. If the current regime of Kim Jong Il is replaced by a military junta, for example, the army would need to immediately analyze the military capabilities of the new regime and the extent of central control over the military.

The armies of both the United States and South Korea also need a new set of "operational requirements" to outline respective responsibilities under various scenarios. Finally, establishing closer communication linkages with China could emerge as a pressing priority. "It seems crucial that these linkages be in place before any full-scale crisis erupts on the peninsula. Absent such means of communication, there would be incentives for unilateral action on all sides that could trigger highly adverse responses. If the risks of a larger conflict on the peninsula are to be managed, this cannot be achieved without effective ties with China, including its military leadership," the authors conclude.

Government and Industry Strive for Higher Mandates

The first report, Technology Forces at Work (RAND/MR-1068-OSTP), explains that innovative, research-intensive companies now invest in environmental technologies as part of their bottom-line business strategies rather than just to comply with regulations. The companies are interested most in technologies that increase efficiency, create environmentally preferred products, reduce emissions, and meet customer demands.

Author Susan Resetar interviewed senior environmental managers and senior research and development managers at four manufacturers recognized as among the leaders in their fields: DuPont (chemicals), Monsanto (biotechnology), Intel, and Xerox (both electronics).

DuPont is working on products and delivery systems that limit customer exposure to hazardous materials; more efficient delivery would reduce customer inventories, and new protective components would allow customers to avoid hazardous materials altogether. Monsanto seeks to develop multipurpose products--such as plants that bear fruit and also provide material for plastics--to increase market value without necessarily using more resources.

Intel invests in pollution-prevention technologies to reduce emissions below the point at which permits are required, thus eliminating permit delays and accelerating the introduction of profitable new products. Xerox saves hundreds of millions of dollars a year by reusing and recycling copiers and components; environmental costs now get factored into the company's accounting system.

Meanwhile, these companies look to the government for leadership on national environmental priorities, for more federal spending on university-based environmental research, and for help in developing markets for new environmental products.

A second report, The Machine That Could (RAND/MR-1011-DOC), discusses the Partnership for a New Generation of Vehicles, a joint effort by the U.S. government and U.S. auto industry to build an affordable, environmentally friendly, and safe family sedan that can get 80 miles per gallon of gas.

Launched in 1993 amid fears that U.S. auto manufacturers were losing ground to Japanese competitors, the effort brought the government together with the Big Three automakers--Ford, Chrysler, and General Motors--to develop a "super car" prototype by 2004. Although the effort is just halfway toward its goal, the partnership "has already succeeded, if success can be measured by the imitation among foreign competitors, some of whom are now also striving to introduce new technology to motor vehicles," concluded author Robert Chapman.

U.S. Regains Technological Edge, Say Business and Industry Leaders American business and industry leaders believe the United States has restored its technological leadership in the past decade and consider government a positive contributor to that process, signaling important shifts in the attitudes of U.S. business leaders toward government. As recently as 1990, many executives fretted about lagging U.S. competitiveness in the world and about the government's meddling in business concerns. Today, the executives point to recent changes within industry itself as one reason for renewed technological leadership and look to government to play a distinct role in developing new technologies. There is widespread agreement that the government should provide leadership, support research and higher education, and ensure an economic, legal, and regulatory environment conducive to economic activity. For many executives, government leadership means the government should act as a convenor of industry leaders and other stakeholders in the early stages of technological development. In this way, contentious issues can be ironed out and standards established before competition begins. These findings appear in New Forces at Work (RAND/MR-1008-OSTP). Authors Steven Popper, Caroline Wagner, and Eric Larson interviewed top executives at 39 firms representing the electronics and automotive industries, banking and financial services, construction, and other industrial sectors. The executives identified five technologies as critical to the future health of all sectors and of the entire U.S. economy: software, microelectronics and telecommunications, advanced manufacturing, materials, and sensors and imaging. Given these technological priorities, the executives frequently cited three common worries as leading the list of their concerns: (1) the shortage of software engineers might become a bottleneck to progress; (2) American manufacturing skills, particularly machine-building, have not kept pace with technological skills; and (3) the nation's K-12 education system is not preparing enough skilled workers. The executives also agreed that the technological priorities of the government, acting on behalf of the entire society, are broader than those of private industry. For example, energy and environmental technologies assume greater importance for government and society as a whole.