Randy Ellis has been making fundamental contributions to the economics of healthcare for decades -- and not just academic contributions. Almost half of Medicare participants are enrolled in Medicare Advantage (Part C). This alternative to traditional Medicare, which is almost three decades old, pays healthcare plans a fixed amount based on each participant’s pre-existing conditions. Fixed payment is crucial to prevent providers from directly gaming the system. Randy co-developed the payment formula, still used today, without which Part C would not exist. As Randy points out, the formula desperately needs updating. And Part C needs much stricter regulation to end providers’ primary focus -- cheery picking clients, not providing care. Indeed, essential and radical reforms of Medicare Advantage can provide the basis for universal healthcare, specificially competitive Medicare Advantage for All.
Do watch/hear this fascinating podcast about US healthcare. By the end, you will understand the differences between our system and those in Europe -- systems that are dramatically cheaper and deliver far better average outcomes. We’re at a crossroads. Our country is spending 18 percent of GDP -- and rising. The system is not just driving our country broke. It’s collapsing before our eyes as insurance and Medicare Part B premiums soar, the rich abandon ship to concierge medicine, “insurers” routinely deny coverage and/or claims, healthcare providers specialize in cherry-picking the healthy over the poor, and as Trump’s policies eliminate coverage for millions.
Randy’s Bio
Randall P. Ellis, Ph.D., is a professor in the Department of Economics at Boston University, where he has been on the faculty since 1981. He earned his Ph.D. in economics from MIT after attending Yale University and the London School of Economics and Political Science. His research has focused on health economics, spanning both US and international economics topics. In 2024 he received the Victor Fuchs Lifetime Achievement Award in the Field of Health Economics from the American Society of Health Economists.
Dr. Ellis is Past President of the American Society of Health Economists and served as an associate editor of the Journal of Health Economics and American Journal of Health Economics. Dr. Ellis was one of three original architects of the Diagnostic Cost Group (DCG) and Hierarchical Condition Category (HCC) models, with funding from the Centers for Medicare & Medicaid Services (CMS), and others. HCC models are used to risk adjust payments to Medicare Advantage (Part C) health plans, Part D prescription drug plans and the ACA (Obamacare) Health Insurance Exchanges. This body of risk adjustment work received the AcademyHealth 2008 Health Services Research Impact Award.
Since 2018 Dr. Ellis lead the creation of an all-new Diagnostic Items (DXI) classification and predictive system that incorporates extensive clinical input, rich disease hierarchies, economic concern about gaming and incentives, and trained machine learning methods to automate the creation of policy relevant payment and performance target formulas that could replace the existing HCC system. He has also collaborated with Dr. Arlene Ash on the incorporation of Social Determinants of Health variables in Medicaid capitation and primary care payment formulas that have been adapted for use in Massachusetts.
Dr. Ellis has written and coauthored over 140 articles, reports and papers. Many have focused on risk adjustment, but others explore provider response to reimbursement systems; optimal insurance; health plan competition; the economics of mental health; health demand modeling in developing countries; and the cost-effectiveness of cancer screening. His recent research funding has been from the Agency for HealthCare Research and Quality (AHRQ) and the Social Science Research Council (SSRC).
Economic Matters - The podcast is hosted by Laurence Kotlikoff, a Boston University Economist, a NY Times Best Selling Author, President of maxifi.com, and Author of Money Magic.
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