Summary: To many people's surprise, few studies have reviewed health care affordability. Most analyze cost of health care, not affordability of health care. The AHP HCAI™ is one approach to analyze health care affordability.
Variation in Health Care Affordability
To many people's surprise, few studies have reviewed health care affordability. Most analyze cost of health care, not affordability of health care. The AHP HCAI™ is one approach to analyze health care affordability. Table 1 presents information from the 2008 AHP HCAI™.
2008 AHP Health Care Affordability Index
|Alphabetical State||HCAI™||Ranked State||HCAI™|
|New York||0.97||North Dakota||1.13|
|South Dakota||1.20||Rhode Island||1.19|
The above indices are the combined index reflecting the average of the employer index, the employee index and the government index. Table 1 shows that overall affordability varies widely from state to state. Table 2 compares 2008 results with those in the 2004 version. The ratios shown in the far right column show significant change over this time period.
Comparison of 2008 AHP Health Care Affordability Index with the 2004 version
|Alphabetical State||2008 HCAI™||2004 HCAI™||Ratio|
Sorting the ratios in affordability from smallest to largest we find 20 states with an improved affordability index and 30 with a worsened one. Of the 20 improved states they average a 5% improvement. The 30 worsened states averaged a 6.5% decline.
For illustrative purposes, we will highlight three particular states through this series — California, Minnesota and Washington. All three states have a long history of favorable health care affordability, strong managed care presence and health care policy and thought leadership. Table 2 shows:
Any area with an affordability index change over a period of years is significant. This shows meaningful change and it needs to be monitored. As has been discussed in prior affordability analyses, the major factors correlated with levels of individual state indices are:
High correlation factors continue for these factors in the 2008 AHP HCAI™. The high correlation with these factors is interesting. Local hospital utilization rates have a direct impact on the affordability of health care. Regions with higher than average inpatient utilization rates have demonstrated less affordable health care. The regions with more health care providers are correlated with less affordable health care. Regions where employees consistently have to pay more for their health care have less affordable health care. Regions where the government funds a greater proportion of its taxes towards health care have less affordable health care.
In response to this one might ask these questions:
David Axene collaborated with Nicholas Yphantides in writing this series of articles. Dr. Nicholas Yphantides serves as the Consulting Chief Medical Officer for San Diego County and is the National Director for Health & Wellness with Axene Health Partners. He is a cancer survivor and is an advocate for those in his community who need it the most. For nine years, Dr. Nick served as Chief Medical Officer of one the largest network of Community Clinics in San Diego County.
David Axene started Axene Health Partners in 2003 after a successful career at Ernst & Young and Milliman & Robertson. He is an internationally recognized health consultant and is recognized as a strategist and thought leader in the insurance industry. He earned an MS Degree in Applied Mathematics from the University of Washington and a BS degree in Physics and Engineering from Seattle Pacific University.
More articles, videos, and podcasts by David Axene:
Unintended Consequences Of Exchange Rate Filings
19 Specific Taxes Directly Related To Healthcare Reform
So What Is the Actuarial Value Of My Health Benefit Plan?
Medicare Implements Value-Based Purchasing
The Insurance Rate Public Justification & Accountability Act - Does It Get To The Real Problem?
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