USC Price School of Public Policy

Health Policy

Critical Research Questions and Findings

Price School health policy research works to improve healthcare value, health system performance, and the effective management of health service delivery. Our research also encompasses consideration of health financing policies that align incentives to support positive change on behalf of patients and their families.

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Should we rethink aging and how it affects us?

The research of Professor Dana Goldman and his colleagues at the USC Schaeffer Center for Health Policy & Economics suggests that chronological age is not a relevant marker for understanding, measuring, or experiencing healthy aging. They find that many older Americans in all age brackets are quite healthy, including those over 85. Nearly half of those aged 51–54 and 28 percent of those aged 85+ have an excellent or very good self-reported health status. Further, including the positive aspects of health into studies reveals a relatively large proportion of the population that is functionally indistinguishable from people 20 or 30 years their junior.

How does the “donut hole” in Medicare affect seniors’ prescription drug usage?

More than two million Americans fall into Medicare’s “donut hole,” a gap in coverage for prescription drugs. Professor Dana Goldman, Assistant Professor Julie Zissimopoulos, and colleagues demonstrated that this disrupts prescription drug use among seniors with diabetes. The declines in usage are most pronounced among high-cost medications. The reduction in statin use by five percentage points translates into statin users taking their medications as prescribed 78 percent of the time after reaching the coverage gap, compared to 83 percent of time before the gap. Demand for brand-name, expensive medications to treat other, non-diabetes-related conditions — such as antipsychotics, anti-asthmatics, and drugs of the central nervous system — also decline, and by some 8 to 18 percent. Use of lower-cost medications with generic alternatives to brand-name drugs such as beta blockers, ACE inhibitors, and antidepressants decline by only 2 to 5 percent. This lower drug use came with no apparent increase in other medical services.

Are specialty drugs worth covering by Medicare?

Expensive specialty drugs, like those for hepatitis C or cancer, have long been the target of calls to exclude them from Medicare coverage. Professor Dana Goldman and colleagues at the USC Schaeffer Center for Health Policy & Economics analyzed the spending on such drugs among Medicare beneficiaries, finding that annual costs more than tripled between 2007 and 2010. However, specialty drugs accounted for only 6.7 percent of total drug spending per beneficiary in 2007 and 9.1 percent in 2011. In addition, cost-sharing reductions under the Affordable Care Act significantly reduced specialty-drug users’ out-of-pocket burden, which decreased 26 percent from 2010. Goldman and his team found that limiting coverage of specialty drugs would render treatment options unavailable to those seniors who significantly benefit from their use.

What are the cost savings of delaying onset of Alzheimer’s disease?

Assistant Professor Julie Zissimopoulos and her team found that delaying the onset of Alzheimer’s even slightly yields major benefits in quality of life and reduced healthcare expenditures. Medical advances that stall the disease’s onset by five years add about 2.7 years of life for patients. By 2050, that five-year delay would result in a 41 percent lower prevalence of Alzheimer’s while lowering its overall costs to society by 40 percent. In addition to saving and improving lives, the anticipated cost savings would be $640 billion. Therefore, more support for research on Alzheimer’s disease treatment and prevention is crucial, as by 2050, Alzheimer’s rates are expected to triple — creating an economic and a public health crisis.

Does a viable alternative exist to the Affordable Care Act?

Professor Darius Lakdawalla served as lead author of a report proposing a healthcare system in which the government provides basic coverage but private insurers are able to set prices covering their costs. The proposal charts a path to universal coverage without mandates. It removes the income-tax exemption for employer-based health insurance, which would unbundle health insurance from employment. It also would remove barriers to long-term insurance contracts to protect Americans from rate increases that could occur after a major illness. Only those who use the most health services and have the highest incomes would pay more than they do now.

How do physicians respond to Medicaid incentives when providing care?

Assistant Professor Alice Chen’s research found that when Medicaid payments to providers increased, physicians increased the hours of care spent with Medicaid patients — but that their hours spent caring for the uninsured fell significantly. However, when Medicaid payments to providers increased simultaneously with an increase in program eligibility, it causes a smaller reduction in overall hours of care to low-income populations.

Can comparison pricing information lead to informed healthcare decisions and lower costs?

Vice Dean and USC Schaeffer Center Director of Research Neeraj Sood and his team examined a software platform designed by Castlight Health Inc. that allows consumers to easily search and compare prices and information on health services, like MRIs and lab tests. They analyzed three years of medical claims for more than half-a-million employees who had access to the Castlight software platform through 18 different employers. Compared to those who hadn’t used the software, claims payments were 14 percent lower for laboratory tests, 13 percent lower for advanced imaging services, and 1 percent lower for primary care office visits.

Should the United States increase subsidies for prescription drugs to help drive innovation?

Professor Darius Lakdawalla calculates that if out-of-pocket costs were reduced by 20 percent from expanded public subsidies for prescription drug insurance, it would not only make drugs more affordable, but also preserve revenue and profits for innovators, and ultimately continue to stimulate new discoveries.

Will the current HIV/AIDS treatment strategy remain effective in the face of growing drug resistance?

“Test and treat” is a new strategy that starts antiretroviral therapy early, even if HIV-positive individuals have no symptoms. Research has shown that early therapy boosts cell counts and can help prevent the spread of the virus to uninfected partners. However, Vice Dean and USC Schaeffer Center Director of Research Neeraj Sood and colleagues found that while the test-and-treat approach reduced the rate of new infections and the number of deaths, it had a downside. It also nearly doubled the rate of drug resistance, so physicians should proceed with caution and closely monitor the prevalence of multi-drug-resistant HIV as the test-and-treat model is scaled up.

Should more attention be focused on diabetes prevention instead of just treatment?

Dana Goldman — director of the USC Schaeffer Center for Health Policy & Economics — briefed the Congressional Diabetes Caucus on Capitol Hill with findings showing that, while prevention may ultimately be the most cost-effective diabetes treatment, it will receive insufficient focus until incentives change for healthcare payers. He discussed these misaligned incentives and their sources, including comparative effectiveness research (CER), which attempts to determine which medical treatments work best for the most people. Diabetes patients will be hurt if the ultimate effect of CER is just insurance payers steering patients to cheaper drugs, Goldman noted.

How much does your weight as a youth affect your future earnings?

Beginning with the established literature finding that those who are overweight tend to earn less than their similarly qualified counterparts, Assistant Professor Alice Chen sought to determine when such a wage penalty develops. The biggest explanatory effect on future adult earnings for women was the weight at which they first entered the labor market. For men, she found an additional wage penalty at every age at which they were overweight.

Can health disparities that result from differences in socioeconomic status be reduced?

Vice Dean and USC Schaeffer Center Director of Research Neeraj Sood conducted an extensive study of a new social health insurance program in India, Vajpayee Arogyashree Scheme (VAS), which provides poor individuals suffering from cancer, heart disease, or neurological diseases free screening and care, as well as transportation to urban hospitals for rural residents. His evaluation of the program included 82,000 households and found that mortality dropped by 64 percent and out-of-pocket expenses declined by 60 percent. Sood’s findings ultimately led Karnataka to begin expansion of the program to the entire state, with Indian officials indicating that the entire country will follow suit.

How could the nation’s healthcare act improve its establishment of Accountable Care Organizations?

Professor Paul Ginsburg analyzed the Affordable Care Act’s definition of Accountable Care Organizations (ACO), which specifies how ACOs are paid and how they relate to beneficiaries. He concluded that the legislation essentially left beneficiaries out of the equation, not offering incentives to choose an ACO or to commit to its healthcare providers. He proposed that a formal, mutually acknowledged relationship be created between ACOs and beneficiaries, a step that would make healthcare provider organizations more likely to succeed.

Do health outcomes improve if patients with complex diseases comply with their prescribed medications?

Professor Michael B. Nichol and a colleague found that more than 2,000 patients diagnosed with both hypertension and diabetes experienced relatively poor adherence to their multiple-medication regimen. Those with adherence rates of 80 percent or more showed 30 percent fewer disease complications requiring additional treatment, compared with patients who had 50 percent adherence.

How do disease and non-disease factors affect quality of life among cervical cancer survivors?

Evaluating not just the impact of cancer but social, economic, and environmental factors, Professor Howard Greenwald and colleagues studied the quality of life of more than 700 women who had survived cervical cancer. They measured physical functioning, social functioning, bodily pain, and general health status, and determined that cervical cancer does not generally reduce quality of life among long-term survivors.


Dana Goldman

“Our research provides an evidence base for thinking beyond election cycles and over lifetimes, positioning us uniquely in the policy world. As validation, this past year our work was again cited in the Economic Report of the President, influenced analyses of the Congressional Budget Office, and has been featured in over 350 media outlets and high-impact journals.”

Dana Goldman
Leonard D. Schaeffer Chair
Director of the USC Schaeffer Center for Health Policy & Economics

Price School Impact

Medical science has achieved wonders in lengthening people’s lives. With these advances, however, come challenges ranging from increasing rates of age-related diseases such as Alzheimer’s to ensuring quality care for a growing population. Price School faculty are at the forefront of addressing the policy and economic issues of healthcare systems to uncover actionable solutions to these and other pressing concerns.

Our faculty members work to advance community, organizational, and health system innovation, efficiency, and value — both domestically and internationally. We conduct leading-edge research on the macroeconomic consequences of healthcare costs, insurance design, comparative effectiveness, and outcomes research leading to evidence-based healthcare policy and health service delivery. Further, as our nation’s healthcare system exists within a global marketplace, we analyze the worldwide consequences of policy affecting pharmaceutical and medical device innovation.