the relationship between health literacy and costs
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The Relationship Between Health Literacy and Costs. David H Howard Julie Gazmararian Ruth M Parker Emory University. Funding provided by Pfizer Inc. Health literacy. - PowerPoint PPT PresentationTRANSCRIPT
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The Relationship Between Health Literacy and Costs
David H HowardJulie Gazmararian
Ruth M Parker
Emory University
Funding provided by Pfizer Inc.
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“The degree to which individuals have the capacity to obtain, process, and understand basic health information” (Ratzan and Parker 2000)
About one half of the adult U.S. population has “low functional reading literacy”
Math literacy is probably low as well
Health literacy
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IOM Report: Health Literacy, A Prescription to End Confusion, 2004
New Research on Health LiteracyMonday 2:00 p.m. – 3:30 p.m.Royal Palm Four
Health Literacy, Cultural Competence & Perceived RacismTuesday 9:15 a.m. – 10:45 a.m.Royal Palm Four
More information on health literacy
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Low health literacy leads to underuse and inefficient use of outpatient care and prescription drugs
complications, progression of chronic diseases
Greater use of inpatient, emergency room care
Higher costs
Standard story: why might health literacy affect costs?
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For low health literacy patients, physicians may substitute intensive care for patient self-care (↑ costs)
Physicians may withhold care from low health literacy patients if they think that such patients are non-compliant (↓ costs)
Are patient medical knowledge and medical care substitutes or complements?
Also important to consider physician behavior
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Elderly Medicare beneficiaries newly enrolled in Prudential Medicare managed care plans
Locations: Cleveland, Ohio; Houston, Texas; South Florida, and Tampa, Florida.
Time span: December 1996 and August 1997.
Refusal rate: 44%.
N = 3,260
Data: the Prudential Survey
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Large samples are needed to compare costsF
ract
ion
total net pay of hosp adm. for m12.38 330868
0
.464657
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Large samples are needed to compare costsF
ract
ion
total net pay of hosp adm. for m12.38 330868
0
.464657
$0 values
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Large samples are needed to compare costsF
ract
ion
total net pay of hosp adm. for m12.38 330868
0
.464657
“outliers”
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Large samples are needed to compare costsF
ract
ion
total net pay of hosp adm. for m12.38 330868
0
.464657
Mean of inpatient costs = $5,321
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Large samples are needed to compare costsF
ract
ion
total net pay of hosp adm. for m12.38 330868
0
.464657
Mean of inpatient costs = $5,321
Mean of inpatient costs with four highest values (> $240,000) excluded = $4,984
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Analysis: modified 2 part model (Mullahy 1998)
First stage Model: logit Dep var: Probability of positive expendituresSample: entire sample
Second stage Model: non-linear least squares, y = exp(xB)Dep var: ExpendituresSample: those with positive expenditures
Prediction:Sample average treatment effect
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Health literacyCharacteristic Low Adequate P-value
Age 75 72 <0.01Female 57% 58% 0.44Race is white 21% 7% <0.01Income > $25K 9% 24% <0.01Education >12 years 14% 40% <0.01Never smoked 44% 38% <0.01Doesn't drink 72% 58% <0.01Chronic conditions
Angina 9% 8% 0.30Arthritis 58% 50% <0.01Cancer 5% 6% 0.26Depression 18% 12% <0.01Diabetes 18% 13% <0.01
N 1,166 2,094
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Site of care Difference P-value
Inpatient $1,042 0.150
Outpatient -$228 0.047
Emergency room $69 <0.001
Pharmacy $53 0.126
Adjusted cost differences: low versus adequate health literacy
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Site of care Difference P-value
Inpatient 0.043 0.017
Outpatient -0.020 0.108
Emergency room 0.049 0.006
Pharmacy -0.035 0.010
Adjusted use differences: low versus adequate health literacy
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Consistent with hypothesis that low health literacy is associated with higher costs
Policy implications: interventions have the scope to reduce costs, but skepticism is in order
Bottom line
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Reverse causation: to what degree does poor health result in deterioration in literacy
Need large surveys
What is the mechanism?
Caveats/future directions
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|,)0Pr($ XHLf
|,exp$ XHL
ˆ|,expˆ|,),|($ XHLXHLfXHLPRED
APPENDIX: statistical analysis
1. First stage (logit):
2. Second stage (non-linear least squares):
3. Prediction:
For more information, see Mullahy, Journal of Health Economics, 1998)
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Write cost prediction as a function of health literacy
N
HLPREDHLPRED 0|$1|$
XHLPRED |$
Sample average treatment effect
Standard error computed via Monte Carlo simulation
APPENDIX: statistical analysis
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Health literacy
Site of care Low Adequate P-value
Inpatient $6,516 $4,656 <0.01
Outpatient $1,894 $1,805 0.45
Emergency room $564 $360 <0.01
Pharmacy $663 $684 0.57
Sample mean costs