Person:

Frank, Richard

Estimation of the effect of one treatment compared to another in the absence of randomization is a common problem in biostatistics. An increasingly popular approach involves instrumental variables—variables that are predictive of who received a treatment yet not directly predictive of the outcome. When treatment is binary, many estimators have been proposed: method-of-moments estimators using a two-stage least-squares procedure, generalized-method-of-moments estimators using two-stage predictor substitution or two-stage residual inclusion procedures, and likelihood-based latent variable approaches. The critical assumptions to the consistency of two-stage procedures and of the likelihood-based procedures differ. Because neither set of assumptions can be completely tested from the observed data alone, comparing the results from the different approaches is an important sensitivity analysis. We provide a general statistical framework for estimation of the casual effect of a binary treatment on a continuous outcome using simultaneous equations to specify models. A comparison of health care costs for adults with schizophrenia treated with newer atypical antipsychotics and those treated with conventional antipsychotic medications illustrates our methods. Surprisingly large differences in the results among the methods are investigated using a simulation study. Several new findings concerning the performance in terms of precision and robustness of each approach in different situations are obtained. We illustrate that in general supplemental information is needed to determine which analysis, if any, is trustworthy and reaffirm that comparing results from different approaches is a valuable sensitivity analysis.

Americans purchase health insurance in various ways. Some buy individual policies. For them, medical underwriting is common, and preexisting conditions can preclude, limit, or dramatically increase the cost of coverage. Many buy insurance through small employers, which typically offer little or no choice of plan. Their premiums tend to be higher than those of consumers purchasing through large employers, which can bargain effectively on prices. Large employers usually offer a modest selection of high-quality plans at competitive prices. Medicare recipients can join traditional Medicare and then choose drug coverage from any of dozens of stand-alone prescription-drug plans (PDPs) or join MedicareAdvantage and choose among numerous private health plans. Given that plan choices are difficult to make and that large purchasers can whittle down prices, a reformed health care system is likely to employ health insurance exchanges to stand between consumers and insurers. The Massachusetts Health Insurance Connector, in operation since 2007, runs the best-known such organization.