A new NBER paper just came out that looks at school choice. The researchers want to know if differential enrollment patterns among SES and behavioral needs between default public schools and either selective public schools or charter schools is a matter of preference or a matter of schools engaging in differential friction setting to screen the potential applicant pool out.
New RCT w/ Isaac McFarlin Jr shows schools of choice–trad'l public & charter–less responsive to application inquiries from students w/ behavior problems, low grades or a particular special need. Lower response to sp. need is driven by charters. Results hold for range of schools pic.twitter.com/Kdsy7iJE3w
— Peter Bergman (@peterbergman_) December 20, 2018
I am not an education researcher. However I am familiar with insurance and risk adjustment. This research sounds amazingly like insurance mandates and risk adjustment problems.
The Affordable Care Act mandates insurers pay for certain services with no cost sharing. Vaccines and contraception are some of the better known recommended services. Most of these services will not have a positive return on payment for the insurer in six to eighteen months. People leave their individual market insurer fairly quickly. Most of the gain for these preventive care services accrue to either the patient, society in general or future insurers.
Insurers have to pay for the claim once it is submitted for the service rendered. They don’t have to be enthusiastic about it. They don’t have to send a reminder e-mail and a follow-up call to everyone who is missing a recommended HPV vaccine dose. They don’t have to remind every eligible patient to get a colonoscopy or a FIT screen . Some insurers will because they believe it is the right thing to do. Some insurers will because outside accrediting entities prioritize and reward preventive care services being performed on schedule for a large proportion of the population. Some insurers will because they think that they will capture significant downstream benefits because they are a dominant local monopoly. Other insurers won’t.
Little frictions matter. Adding lubrication to a bumpy process matters too.
Insurers that face mandates that could negatively impact their desired performance metrics will find ways to increase friction. Anything and anyone who makes it through the obstacle course for an undesired treatment will see the claim paid, but the frictions will deter some utilization.
Conversely, mandates that positively impact desired performance metrics will see the insurers spray oil on squeaky gears and smooth out the process.
The second insurance isomorph in this paper is the a risk adjustment problem for kids with disabilities.
A key question is whether these results differ between traditional public schools in areas with school choice and
charter schools. Charter schools represent the fastest growing form of school choice in the country.
To explore this question, our sample includes charter schools matched to nearby traditional public schools of choice with the same entry grade level. We find that, overall, traditional public schools’ response rates are similar to the response rates from charter schools across treatment messages. However, there is a different response rate to messages that signal a child has a significant special need.
Traditional public schools exhibit no differential response rate to these messages, but charter schools are 7 percentage points less likely to respond to them than to the baseline message. This result is important because students with disabilities are twice as expensive to educate than the typical student without a disability (Moore et al., 1988; Chambers, 1998; Collins and Zirkel, 1992), and students with the severe disabilities can cost 8-to-14 times to educate compared to the typical non-disabled student (Griffith, 2008)
If we can assume that charter schools are paid a capitated amount for each kid in a non-individualized risk cell and there is non-zero variance in costs to educate all members of any given risk cell, we can say that some kids in a given risk cell are lower cost than the capitated payment and some kids are higher cost than the capitated payment.
This is similar to insurance risk adjustment. Some diseases have tight spreads with little variance while other diseases like hemophilia have both very high average costs and incredible right hand skew in the cost distribution. In 2018, a hemophilia diagnosis had a risk adjusted transfer value of roughly $450,000 on the ACA exchanges. An individual with hemophilia that is well controlled could have a yearly claims cost of $200,000-300,000. They are a very profitable patient for the insurer due to the large risk adjustment revenue inflow. At the same time, an individual with hemophilia who has either a severe bleed or inhibitor resistance to the common treatments could easily have a $1,000,000 month. They are extremely unprofitable.
Any single insurer that operates in a risk adjusted environment would love to be able to perfectly detect and cover the cohort of individuals with hemophilia who won’t have any unusual months or inhibitor resistance. However if there is any imperfection in the detection/recruitment methods and a single individual who was thought to be a $300,000 case with a $450,000 risk adjustment payment has a $5,000,000 claim year, the entire model blows up. In a competitive insurer market, insurers will look at the variance and then look at their ability to buy reinsurnace or eat the risk in a half million person risk pool before they decide if they want to throw up frictions such as not covering the three doctors in the region who treat 90% of the individuals with hemophilia.
If kids with disabilities are in risk adjusted cells and there is high variance within this particular cell, unless the school can perfectly detect which kids are still profitable to enroll, adding friction can make business sense. As policy makers, we need to recognize that tables can be tilted and frictions can be created when private entities are ordered to do things that they would prefer not to do (or at least not do at the current offered reimbursement).
On the Road and In Your Backyard
Chris Johnson
I have a super-close friend who’s a hemophilia mom. She’s a recovery person (between us we must have more than 50 years of clean-time) and one of the most central people in my life.
She’s got a kid with hemophilia. He survived the AIDS crisis somehow while all their friends were dropping like flies, and now he’s a young man, obviously still with hemophila. He goes back and forth between being relatively OK and being a literal junkie, because he gets such pain out of bleeds from the hemophilia. We thought we’d lost him at one point as he was in Florida being a street junkie, and he came back home eventually and got on methadone. Occasionally he tried to kick heroin but he didn’t really stick in any recovery program because you ain’t gonna get through hemophilia with some ibuprofen. I’ve hugged him a bunch of times. He takes care of my friend’s elderly Mom, and she works chairing the board of a hemophilia advocacy organization.
I figure you folks are going to murder my friend one day, all talking about ‘friction’ and ‘reimbursements’ and ‘differential friction setting to screen the potential applicant pool’. And I get that he’s expensive. But I think that the more anxious and stressed-out he is, the more expensive he is. He’s a junkie. He’s just looking to survive and it’s always in question and it drives his bad behavior. Defining this guy (and he’s a decent guy) in terms of how he fits into a health care market is killing him. He’s, like, the most evil thing to hit the state of New Hampshire, this guy who’s surviving opiate addiction and helping to take care of a 90 year old grandma, this guy I’ve hugged and wished well.
The stuff you’re talking about is making people lead lives of TERROR and sickness.
Gin & Tonic
@Chris Johnson: Anderson/Mayhew posts this stuff because he works with it every day, understands it intimately, and has both a passion (and a skill, which is rarer) for explaining deeply technical stuff to a non-technical audience. It is deeply technical because that is the world as it is. I’ve been reading his stuff since he showed up here, and I’m far from alone in deep appreciation for his writing, in which I have yet to see, ever, a value judgement about sick people. Stating that health insurers have economic incentives that are sometimes at cross-purposes with patients is as factual as saying the sun rises in the East. Pointing out those incentives and dis-incentives so people here can understand them is useful to people who seldom think in those terms. He is a valuable resource to the community for that.
You, on the other hand, appear to be just an asshole.
Starfish
As David has gone on with his posts here, they have become more academic and harder engage with. It is really hard to see how these things apply to you, and there are real concerns by people with disabilities that measuring life in QALY is going to lead to their early deaths because their lives with disabilities are not seen as having enough quality.
There are many special needs being weeded out by charters because they put their money into things that may or may not have any research backing. Some of the charters eliminate libraries so they can invest more in arts. They may cap class sizes at a lower size than the school district so they are cutting costs elsewhere.
We have three types of schools, regular public schools, focus schools, and charter schools. Our friends with kids in charter schools are having to get attorneys to keep IEP services for their kids. That means the only kids who need services in this school are going to be the ones with the money to hire lawyers when the school tries to yank those services. Some of the larger public schools are better equipped for being able to address the needs of students with IEPs. They have special programs. They have staff longevity. Other schools do not have these things especially the ones that expect parents to commit early but won’t tell their teachers if they have a job next year until a couple of months before school begins.
Chris Johnson
@Gin & Tonic: I’m hating what’s become of the US health care system. Just hate it.
TomatoQueen
As a special needs child Mom, on the high physical involvement end, I am gobsmacked at this kind of thinking. In this country, after all the hard work and reform that yielded IDEA and subsequent law, we do the following: the right of each child to a FREE public education in the least restrictive environment is guaranteed; where feasible and in conformance with the right of each child language, we include each child in the school to which he or she would be assigned; we develop special needs school facilities next to or within regular public schools or we contract with other school districts who have done this already; we do not decide to offer education to this population group or that one based on cost, and we sure as hell don’t start up the bullshit argument that “it costs more to educate disabled kids and nondisabled kids together and nondisabled kids lose out” because there’s plenty of research out there that shows the opposite. So fuck charter schools and fuck all DeVossery and the Richmond newspaper which has just tried to pull this crap in the last three weeks and has had its ass handed to it thoroughly by ARC and others throughout the disability community. Fucking sick of fighting the same fight over and over again. But yet my son is 31, goes to a day support program, and still needs me to fight every day. *arms folded, eyeballs spinning, ears blowing smoke*
Redshift
@Gin & Tonic: Exactly. David’s point is that these incentives exist for insurers/schools, and if we want a different outcome, government will need to structure things or make rules to make it happen.
He’s not talking to insurers here and telling them something they don’t know, he’s giving us that knowledge. Knowledge is power.
J R in WV
OK, folks, I have some simple questions for a simple mind:
1. what is NBER (first sentence on original post (OP) )
2. what is SES (second sentence in OP)
3. what is RCT (first block quote in OP)
4. what is QALY (3rd comment)
5. what is IEP (3rd comment)
6. what is ARC (5th comment)
Understanding what these cryptic abbreviations mean will help a little bit to understand a very complex issue.
Chris: Don’t be hostile about information being provided just because you don’t like that information. David didn’t make up the US health care system and pretty clear about believing it needs major improvement – no one here thinks it’s a good system, that’s why we’re here.
That said, your friend is a junky because he is a junky, it has nothing to do with his other illness(es) – lots of people with chronic pain issues manage to use out painkillers without becoming junkies. A good friend of mine, union electrician, hurt his elbow, took pain killers after surgery, wound up stealing tools from coworkers, junky. Not welcome here after he stole $1000 worth! A real shame, I need electrical work done and I’m really slow at it~!!~ Won’t ask Jim to do it!
You, on the other hand are acting like a second grader with a complex. Get over yourself, be polite, or go away, a long way away. Yelling at David because you are upset about your junkie buddy is as juvenile as it gets! David doesn’t run the health system and didn’t make “friend” a junkie. Junkie friend did that all by himself.
Fleeting Expletive
Thank you for insurance and education posts. My granddaughter is on the spectrum and i’m trying to figure out how badly I screwed myself with Medicare.
I opted in to part D after 6 years going bare on Rx b/c I’m not on much of anything drug wise. But at 71 things look somewhat more daunting, which paying for the odd ambulance ride ($1500) and hip replacement will clarify.
So how much will I owe in that Late Enrollment Penalty in addition to the $24/month premium?
How many people procrastinate on signing their oath to Pharma (Plan D) from the gitgo? Is this a significant source of revenue?
I realize I was a free rider for 6 years by not paying in/being in a PPO/HMo or however that works. This is a reasonable mandate, as was the mandate in the ACA. But I didn’t understand it by the rules, as in “Part D is optional…you MAY owe a penalty…1/2 of 1% of ….whatever the fuck, it lost me there.
For clarity, the plan I’m in is AARP Medicare Complete Choice (PPO)–got the wallet card in the mail today!! Laminated, yet!!
But did I fuck up by waiting, and how much is that penalty going to be, anyway?
thank you from the bottom of my cheap, social security-poor heart.
StringOnAStick
David uses technical terms and he states exactly how the insurance companies see it; knowing just how mercenary those companies are AND exactly how and why they do it is information we need in order to change this complex, multi-nodal, but most of all For Profit business. David has been more than clear that he finds this system terrible, and just because he doesn’t say that in every damned post doesn’t mean he’s suddenly gone over to the Dark Side.
This blog is my go-to place for amazingly in depth posts by people with incredible knowledge (Adam, David), incredible heart and humor (John, Betty, Annie Laurie, Tom, etc). It never ceases to shock me how a few people who come here and drop nasty criticism on PEOPLE WHO ARE DOING THIS FOR NO PAY. Seriously, WTF is up with that? Bitching at Silverman because he didn’t put a page break in a post, or at David because of suspicions of not being properly incensed at our fucked up health care system when he obviously is if you read all his work. The lack of gratitude is stunning.
Fleeting Expletive
Also, going back now and reading the previous comments, I want to add to this specific conversation. Chris, dear, et.al., nobody fucking loves talking about this crap (specifically the health care arcana). But some of us have to understand shit like this because it affects our lives and our kids. We are familiar with addiction. I want to understand how and why this shit works the way it does and David knows some things cause he’s seen some things.
Like poor Anton Yelchin (RIP) said in “Fright Night”, “I don’t want to know this shit”, but you gotta learn stuff.
And I’m with TomatoQueen above. Indeed.
Fleeting Expletive
Hmmm. I did not pay premiums, assume $24/month, for 76 months, so I saved a mere $1800 by not signing up on time. I have been a fool but not the first lousy $ decision I ever made. How the in or out of network decisions might have worked for me I’ll never know.
I guess I’d felt so ripped off by arbitrary insurance denials and all the anxiety in having to apply (and sometimes be denied) w/pre existing conditions, the health care nightmare—I was demoralized maybe.
Let the lesson be, sign up for it when you get your Medicare.
Gin & Tonic
@J R in WV: 1: National Bureau of Economic Research
2: Don’t know
3: Randomized Controlled Trial
4: Quality-adjusted Life Year
5: Independent Educational Program (or Plan) – what is developed for a special-needs kid in a regular school setting
6: Don’t know