Posts Tagged ‘healthcare costs’

Healthcare’s Early Hope?

Tuesday, June 25th, 2013

We have a couple of promising trends emerging from the recent reports. Consumers saved $3.9 billion in premiums last year, according to an analysis released today from the CMS. Why? Because Obamacare stipulates that insurers must spend at least 80% of their premium dollars on medical expenses.

Called the MLR provision or the “80/20” rule, it forces insurers to lower their rates or improve coverage to meet the standard.  And, if they don’t comply, a rebate is issued to the patients. This year, 8.5 million Americans will receive $500 million in rebates. On top of this, they saved more than $3.4 billion from lower premiums in 2012.

All of this comes a t a time when spending in general is trending down. PricewaterhouseCoopers’ Healthcare Research Institute (HRI) now predicts that U.S. medical costs in 2014 will spike by 6.5 percent, a full percentage point lower than the organization’s estimate of 7.5 percent for 2013. The net growth rate in healthcare costs, after accounting for benefit design changes such as higher deductibles, will be about 4.5 percent. The truth is that this is part of a longer-term trend. Between 2009 and 2011, total health spending grew at the lowest annual pace in the last five decades, at just 3.9 percent a year. In contrast, between 2000 and 2007, those annual growth figures ranged between 6.2 and 9.7 percent.

The reasons are familiar: the move to less costly outpatient settings to deliver care; the sluggish recovery which has tempered healthcare spending (the Kaiser Family Foundation thinks this is three-quarters of the reason for lower spending); new models for delivering care; and aspects of Obamacare (like the 80/20 rule for example). Then there’s all the waste that reform has gone after.  According to government data, hospital readmissions dropped by nearly 70,000 in 2012, and this trend is expected to accelerate through 2014.

Still, we have a long way to go and a few years of bending the cost curve don’t make up for decades of exorbitant increases. According to the Kaiser Family Foundation, the average American’s cost of care has gone up 140 percent over the past 10 years, while wages only went up 40 percent.  Still, the numbers offers hope that we are starting to gain some ground.

ACOs Double in Size

Tuesday, July 17th, 2012

While the fate of Obama Care hung in the balance, the ACO became the voluntary dance that nobody wanted to show up to too early. Defined by the Centers for Medicare and Medicaid Services (CMS) as “an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it,” ACOs (Accountable Care Organizations) were promoted as a bigger, better model that allowed providers to get paid in a number of ways (capitation, fee-for-service, shared savings) in return for managing health at the population level across a broader swathe of the healthcare spectrum. But ACOs were tough, requiring greater accountability with providers having to report on 33 different performance measures to ensure they’re not skimping on care.  And then there was the little issue of whether reform would be repealed and make it all null and void. Well, a mere week and a half after John Roberts cast the tiebreaker to make the individual mandate — and essentially, Obama Care — a reality, the ACO program has doubled in size.  Eighty-nine participants joined 27 existing ACOs in the program. “The Medicare ACO program opened for business in January, and already, more than 2.4 million beneficiaries are receiving care from providers participating in these important initiatives,” acting CMS Administrator Marilyn Tavenner said in a statement.

According to the CMS, the selected ACO programs operate in a range of areas nationwide and nearly half are physician-led organizations that serve fewer than 10,000 beneficiaries, which indicates smaller organizations are interested in participating. Four hundred more organizations have already submitted a notice of intent to apply next month, according to the CMS. The application period is Aug. 1-Sept. 6, 2012 for organizations that want to participate in the Medicare shared-savings program starting in January 2013.

Now that reform has the imprimatur of the Supreme Court judges, the next court that the Administration will have to focus its efforts on is the court of provider and public opinion. According to a survey of 24,000 U.S. physicians by Medscape, WebMD’s flagship site for medical professionals, only about 3% of physicians participate with ACOs ; only another 5% say that they plan to become involved in the coming year.  52% percent of physicians believe that ACOs will cause a decline in income, while 12% say they will have little or no effect.  Overcoming that natural resistance to change may be the toughest part of putting the ACO in place.

Dying for Coverage

Tuesday, July 10th, 2012

More than 26,000 working-age adults die prematurely in the United States every year because they lack health insurance, according to a study published by Families USA.  The consumer advocacy group study, estimates that a record high of 26,100 people aged 25 to 64 died for lack of health coverage in 2010, up from 20,350 in 2005 and 18,000 in 2000.  That adds up to a rate of approximately 72 deaths per day, or three per hour.

The non-profit group based its report on data from the U.S. Census Bureau, the Centers for Disease Control and Prevention (CDC), and a 2002 Institute of Medicine (IOM) study that showed that Americans who lack insurance face a 25 percent higher risk of death than those with coverage.  The findings are in line with a study by the Urban Institute think tank that estimated 22,000 deaths nationwide in 2006.

“Lives are truly on the line,” said Ron Pollack, Executive Director of Families USA, who supports the Patient Protection and Affordable Care Act (ACA).  “If the Affordable Care Act moves forward and we expand coverage for tens of millions of people, the number of avoidable deaths due to being uninsured will decrease significantly.”  Pollack is not the only healthcare advocate to predict that the number of uninsured will continue to rise without reform as healthcare costs accelerate, employers cut benefits, and the social safety net unravels because of fiscal pressures.

The Affordable Care Act was passed by Congress to address an American tragedy and an American shame,” Pollack said.  “The fact remains that for the millions of Americans without health coverage, only the Affordable Care offers the promise of access to affordable coverage and to a longer and healthier life.”

According to the report, the reasons for being uninsured differ, but many without health insurance were denied coverage because of a pre-existing condition.  Others have been priced out of the market at a time when keeping their homes and feeding their families take priority over holding on to insurance in the face of rising premiums.  Some lost their benefits when employers stopped providing coverage.

Census Bureau data show that 50 million Americans lack healthcare coverage, and experts say that these people do without medical care, physician visits and preventive tests including cancer and blood pressure screenings.  “The uninsured get healthcare about half as often as insured Americans, on average,” said Dr. Arthur Kellermann, director of the think tank RAND Health and co-chairman of the committee that wrote the 2002 IOM study.  “There is an overwhelming body of evidence that they get less preventive care, less chronic disease care and poorer quality hospital in-patient care,” he said.

The $2.6 trillion American healthcare system, which totals nearly 18 percent of the economy, is accessible to a majority of working-age Americans only through private health insurance.  But insurance costs – premiums, deductibles, co-pays and co-insurance – are unaffordable for many.

Robert Zirkelbach, spokesman for America’s Health Insurance Plans, the national trade association that represents the insurance industry said the rising cost of care must be addressed.  “Health plans have long supported reforms to give all Americans the peace of mind and financial security that healthcare coverage provides.  The nation must also address the soaring cost of medical care that is adding a financial burden on families and employers and threatening the long-term sustainability of our vital safety net programs.”

Families USA counters that the current delivery system is stacked against Americans who lack insurance.  They pay more for care because they lack the ability to negotiate discounted prices on physician and hospital charges like insurance companies can.

Writing in Forbes, Matthew Herper points out that “This estimate is 19 years old, and this number doesn’t tell us much that’s new about what is wrong with our healthcare system.  If anything, it emphasizes how our total lack of information about what works and what doesn’t is trapping us in an economic and social death spiral around health costs.  If anything, available data seem to point to this estimate being low.  The real story is that we care so little about how much insurance matters to people’s life spans that we haven’t really bothered to find out.  It’s possible that the number is actually higher.  A 2009 article in the American Journal of Public Health actually found a 40 percent increase in the risk of death for those who lack insurance.  The IOM notes this finding, and that using it would have substantially increased the 26,000 number.  So how many people do die from lack of health insurance?  The short answer is that we don’t know, because we don’t look.  We should have data collection systems in place to answer questions about how healthcare is performing.  This should translate into more transparency, so that voters and consumers can find out how well the system is doing.  Instead, we tend not to track data about the healthcare system, and to keep it completely siloed.  And then we wonder why the system doesn’t work.”

The Individual Mandate Passes: ObamaCare Survives Supreme Court

Monday, July 2nd, 2012

In one of the most significant rulings in recent memory (perhaps since the awarding of the Presidency to George W. Bush in 2000), the Supreme Court upheld President Obama‘s health care law  in a nuanced interpretation of Federal versus states’ rights. The historic 5-4 decision will affect the way 30 million uninsured Americans receive and pay for their personal medical care.   Chief Justice John Roberts cast the deciding vote (another surprise since most expected it to be Justice Kennedy if the law passed) and wrote the opinion. The key factor was classifying the penalty for not abiding by the individual mandate — the requirement that most Americans buy health insurance or pay a fine — as a tax and therefore constitutional. “Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness,” wrote Roberts. The court’s four liberal justices, Stephen Breyer, Ruth Bader Ginsburg, Elena Kagan and Sonia Sotomayor, joined Roberts in the outcome; Conservative Justices Samuel Alito, Anthony Kennedy, Antonin Scalia and Clarence Thomas dissented.

The Obama Administration had taken a different approach in its argument, saying that Congress had the authority to pass the individual mandate as part of its power to regulate interstate commerce; the court struck this down, but preserved the mandate as within Congress’ constitutional taxing powers. As Roberts put it, a person who does not wish to carry health insurance is left with a “lawful choice to do or not do a certain act, so long as he is willing to pay a tax levied on that choice.”

The Republican-controlled House will vote July 11 for a full repeal of the health care law. It is a symbolic move that stands little chance of passage in the Democratic controlled Senate. Republican presidential candidate Mitt Romney and GOP congressional leaders have pledged to repeal the law if they take control of Congress and the White House in November elections. The decision may silence critics who have claimed that the Roberts Court has been one of the more partisan in recent memory, particularly with its decision in the 2010 Citizens United case which took the cap off independent political expenditures by corporations and unions. The ACA drew the Supreme Court into the election-year crossfire over the role of government and the concerns about deficit spending,

The court did find one part of the law unconstitutional, saying its expansion of the federal-state Medicaid program threatened states’ existing funding. According to the Wall Street Journal, “the court ruled that the federal government can’t put sanctions on states’ existing Medicaid funding if the states decline to go along with the Medicaid expansion.”

Some reactions:

House Budget Chairman Paul Ryan, R-Wis.: “It’s up to the American people in the next election and their representatives to determine the fate of this law.”

House Speaker John Boehner, R-Ohio: “The president’s health care law is hurting our economy by driving up health costs and making it harder for small businesses to hire. Today’s ruling underscores the urgency of repealing this harmful law in its entirety.”

Senate Minority Leader Mitch McConnell, Republican of Kentucky: “Today’s decision makes one thing clear: Congress must act to repeal this misguided law.”

The full  impact of the ruling politically remains to be seen. The Wall Street Journal reflected the uncertainty: “The court’s decision, while a relief to Democrats, could further energize voters who dislike the law to back Republicans in November. And it forces the Obama administration to continue defending the unpopular insurance mandate, which the court has now made clear is legally equivalent to a tax on those who refuse to carry health insurance. On the other hand, the court’s blessing could itself shape public opinion of the law, particularly among independents and undecided voters who view the justices as relatively free of the partisan agendas of the government’s elected branches. Polls consistently show that the public places greater confidence in the Supreme Court than either Congress or the presidency, although the justices’ approval ratings have slipped somewhat over the past year.”

90-Year-Olds Growing in Numbers

Tuesday, November 29th, 2011

Is 90 the new 85? The number of Americans over the age of 90 has skyrocketed from 720,000 in the year 1980 to more than 1.9 million in 2010, according to the Census Bureau, which notes that “over the next four decades, this population is projected to more than quadruple.”  Driven by improvements in healthcare, the trend presents challenges.  The Census Bureau notes that “a nation’s oldest-old population consumes resources disproportionately to its overall population size, and its growth has a significant impact on societal and family resources, including pension and retirement income, healthcare costs, and intergenerational relationships.”

According to the study, “People at very old ages are also expected to live longer.  Today a person 90 years of age is expected to live on average another 4.6 years (versus 3.2 years in 1929–1931), and those who pass the century mark are projected to live another 2.3 years.  Women aged 90+ outnumber 90+ men nearly 3 to 1.”

The downside is that people aged 90-plus are more likely to live in poverty or have disabilities, creating a new challenge to already strained retiree income and healthcare programs.

Richard Suzman, director of behavioral and social research at the National Institute on Aging, said “A key issue for this population will be whether disability rates can be reduced.  We’ve seen to some extent that disabilities can be reduced with lifestyle improvements, diet and exercise.  But it becomes more important to find ways to delay, prevent or treat conditions such as Alzheimer’s disease.”

“Given its rapid growth, the 90-and-older population merits a closer look,” said Wan He, a Census Bureau demographer and one of the report’s authors.  “The older people get, the more resources they consume because of healthcare, and disability rates significantly increase.  This creates demands for daily care, and for families the care burden increases dramatically.”

People in this demographic are more likely to have at least one disability, live alone or live in a nursing home.  They’re also more likely to be female, because women typically are longer-lived than men, and are likely to be poor.  “But increasingly people are living longer and the older population itself is getting older.  Given its rapid growth, the 90-and-older population merits a closer look.  The implications for the family and our society of this growing population are likely to be significant,” according to the authors.

The poverty issue cannot be understated because it becomes more likely as a person ages.  From 2006 to 2008, 14.5 percent of people 90 and older lived in poverty, drastically more than the 9.6 percent of those 65 to 89 who were considered poor.  The annual median income for people aged 90 and older was $14,760, as measured in inflation adjusted dollars.  Nearly half of that income — 47.9 percent — came from Social Security, and 18.3 percent came from retirement pensions.  Fully 92.3 percent of those 90 and older received Social Security income.

And where do these nonagenarians live? According to Census figures, smaller states had the highest shares of their older Americans who were at least 90.  North Dakota had approximately seven percent of its 65-plus population older than 90.  It was followed by Connecticut, Iowa and South Dakota.  When considering absolute numbers, the retirement havens of California, Florida and Texas led the nation in the 90-plus population, each with more than 130,000.

By 2050 – just 39 years from now – the number of Americans 90 or older could total nine million. “I think it’s going to grow even faster than predicted in the report,” Suzman said.  Someone who lives to 90 today is likely to live almost another five years, the study noted.  Additionally, a person who lives to celebrate a 100th birthday is likely to live another 2.3 years.  Women aged 90 and older outnumbered men by 3 to 1, according to the study.  Nearly 80 percent of those women are widows, while more than 40 percent of the men are married.

Edmund H. Duthie, a professor of medicine and chief of the division of geriatrics and gerontology at the Medical College of Wisconsin, said the census numbers point to a sobering fact: Retirement may be longer than people expect.  “Are you going to outlive whatever you put aside?”  Duthie said.  “Most people wouldn’t think that if you retired at 60, you may have a third of your life to live.”  Duthie said it was unclear how the nation’s obesity epidemic might affect longevity as well as chronic illness.  America, he said, remains concerned with rates of dementia and how society will cope with the problem.  “The science base of what we do with the oldest old is something that we’re lacking,” he said.  “We can measure cholesterol and blood pressure, but what does it mean in a 90-year-old?  We need to be enrolling these oldest old in studies to understand more about what to do.”

Healthcare Costs Starting to Slow Down

Wednesday, October 26th, 2011

The increase annually in healthcare costs appears to be slowing.  According to Sandra Block of Gannett News Service, “If there’s any good news to be found, it’s that the increase in overall costs of providing healthcare to employees has slowed.  Tower projects an increase of 5.9 percent in 2012, which represents a significant change from 7.6 percent in 2011.  Mercer, another human resources consulting firm, predicts that employee healthcare costs will rise 5.4 percent in 2012.  That’s small consolation, though, to employees whose income hasn’t kept pace with the rise in healthcare costs.  In August, personal income fell 0.1 percent from July, driven by a decline in wages and salaries, according to the Bureau of Economic Analysis.”

There’s bad news for Americans whose healthcare insurance is provided by their employer.  According to Towers Watson, a human resources consultant, employers will pass on cost increases primarily through higher employee premium contributions.  Towers Watson says that 66 percent of firms will increase employees’ share of premiums for single-only coverage in 2012; 73 percent will increase the share of premiums for dependent coverage.  A survey by the National Business Group on Health (NBGH) found that 53 percent of employers intend to increase employees’ share of premiums, while 39 percent plan to increase in-network deductibles.

The yearly survey by NBGH, a not-for-profit alliance of 83 of nation’s largest companies — employing more than million workers — expect healthcare costs to continue rising significantly faster than inflation because of medical inflation and the Patient Protection and Affordable Care Act.  “This is an unsustainable model for our country,” said Helen, Darling, the NBHG’s president and CEO, referring to the financial strains caused by the ongoing increases.  Some believe that the rising healthcare costs stemmed from components of the 2010 federal healthcare law, including its mandate to cover the offspring of workers up to age 26 and its coming bans on caps for annual benefit limits.  Employers said a variety of cost-saving moves to counter the rising cost of their health coverage, including encouraging employees to use centers of excellence for transplants and other procedures.  “Even if they spend more on the initial admission, they spend less overall due to less need for readmission or re-treatments,” Darling said, in reference to incentivizing employees to seek treatment at highly rated hospitals.

At the time of year when open enrollment begins, employers want their employees to be healthier as a means of controlling costs.

Employers also will encourage their employees to choose high-deductible plans — with lower premiums – and persuade workers to be savvy healthcare shoppers.  Some employers will require significantly higher premiums for employees who do not agree to monitor their own health and address problems.  At a time when both employers and workers are weary of paying more for health coverage, experts say it’s important this year to closely study new wellness programs — as well as all the other options on the table — to take advantage of any savings.  “Healthcare costs are going to continue to grow significantly and for your own health and your own wealth and financial good, you need to get fully engaged in understanding what your choices are,” said Tony Holmes, a partner with Mercer.

Holmes said employers expect to pay 5.4 percent more for health plans in 2012 — about a half percentage point below the typical increase over the past 10 years.  Nearly one-third of employers plan to increase premiums for employees, according to Holmes.  Charges to cover a spouse or children are even more likely to climb; more than 40 percent of large employers plan to increase the costs for dependents.

Some businesses are moving away from co-pays, where employees pay a fixed dollar amount for healthcare services and the plan picks up the rest. Instead, they’re charging workers a percentage of the total costs.  That has the goal of making consumers more aware of the total cost of the healthcare they use.  “We are clearly seeing a march toward a more aggressive consumerist system,” the NBHG’s Darling.

Mercer also found that utilization of healthcare services has slowed in 2011. The difficult economy, higher deductibles and other forms of increased employee cost-sharing, may impact utilization, Mercer said.  “Because employees have less disposable income and are working longer hours, they are less likely to seek non-urgent care.”  Additionally, utilization may be slowing because of employer programs aimed at earlier detection of health problems, Mercer said.  “Earlier risk identification and health education, along with improvements in drug therapies and medical technology, are keeping people with health risks and chronic conditions away from the emergency room,” Susan Connolly, a partner in Mercer’s Boston office, said.  The findings are based on responses from almost 1,600 employers.  In the end, approximately 2,800 employers are expected to respond, with the results — including the actual average healthcare plan cost increase for 2011 — to be released this year.

Budget Cuts Put Medicaid, CHIP at Risk

Tuesday, August 23rd, 2011

With Medicaid due to cover millions of uninsured Americans in just three years,  state funding cuts may undermine how much care the government-run healthcare insurance program for the poor will offer new enrollees.  As many as 24 states plan to slash a minimum of $4.7 billion from their Medicaid plans thanks to four years of budget shortfalls, according to data provided by the nonpartisan Center on Budget and Policy Priorities and Families USA, a consumer-advocacy group.  The cuts might include reductions of as much as 15 percent in reimbursement rates for physicians, hospitals and other care providers, higher co-pays for beneficiaries, including children, and the loss of optional benefits, including preventive care as well as dental and vision services.  Some states plan to restrict eligibility under enhanced Medicaid plans that offer services beyond the basics. 

“The provider rate cuts are going to mean that fewer providers will offer Medicaid services by the time we get to 2014, and that’s bad. It pulls in the opposite direction of where healthcare reform’s trying to go,” said Mike Leachman of the Center on Budget and Policy Priorities. 

As Congress works to cut the federal deficit to meet a November deadline, additional cuts to the $427 billion Medicaid program also are likely.  Medicaid is funded jointly by federal and state governments but administered by the states with federal oversight.  The growing pressures mean access to healthcare services under Medicaid may be restricted, despite its role in expanding health coverage to 32 million more people under President Barack Obama’s Patient Protection and Affordable Care Act (ACA).  Medicaid and the Children’s Health Insurance Program (CHIP) are expected to add 17 million uninsured Americans starting in 2014, when the ACA requires that a majority of people carry health insurance.  

“We do see a lot of rate cuts,” according to a senior administration official.  “Some of them are going to be more temporary, some of them are going to be more permanent.  Some of them are going to hold and some of them may not hold based on access concerns.  We ought to proceed in a thoughtful way, both we at the federal level and states at the state level,” the official said. 

Already, 10 states have passed laws that cut reimbursement rates for either inpatient or outpatient children’s services provided by Medicaid.  Another nine states have passed laws that will cut children’s access to healthcare or erect new barriers to obtaining coverage.  Illinois, for one, has a two-year moratorium on expanding Medicaid and limited eligibility for CHIP to 300 percent of the federal poverty level.  Indiana slashed its standard for CHIP to 250 percent of the poverty line.  Other state laws want agencies to seek waivers from federal eligibility requirements.

Making a bad situation even worse, Standard & Poor’s recent downgrade of American debt adds to the uncertainty about the future of Medicaid and CHIP.  A bipartisan super committee, composed of 12 Congressmen and Senators –six from each party — must recommend as much as $1.5 trillion in federal budget cuts over the next 10 years.  That is likely to put Medicaid and CHIP, which were supposed to be off the table, into play.  “They’re talking about trillions — with a ‘t’ — in cuts,” said Matt Salo, executive director of the National Association of Medicaid Directors.  “And when you’re talking about trillions in cuts, almost everything has to be on the table.” 

The American Academy of Pediatrics is concerned that some of the aspects of the debt-ceiling proposal will make it into the final cuts for this reason: “Children make up half of all Medicaid enrollees.  It is a lifeline for kids in low-income families and children with special healthcare needs, such as those with congenital heart diseases, spina bifida or cerebral palsy,” said O. Marion Burton, MD, the academy’s president. 

The upside is the fact that Medicaid, as well as Medicare and Social Security, remain popular with the public, according to a recent Pew Research Center survey.

Not surprisingly, there is also a downside.   The number of adult Americans who have health insurance declined in 2010, according to the National Center for Health Statistics, a division of the Centers for Disease Control and Prevention.  Americans of all ages who were uninsured at any point during the last year totaled 60.3 million in 2010, an increase of almost two million when compared 2009.  Private healthcare coverage declined, while public coverage rose, especially for children.  Of non-elderly adults, 61.1 percent had private coverage in 2010, a decline of 1.7 percent.  The percentage of privately covered children fell by 1.9 percent to 53.8 percent.  Fewer children in general lost coverage, because the percentage of children in Medicaid and the Children’s Health Insurance Program rose to 39.8 percent.  The uninsured rate for those earning 100 to 200 percent of the federal poverty level rose to 43 percent in 2010.

Medicare Changes Would Hit Lower-Income Seniors Hard

Tuesday, August 2nd, 2011

At a time when concern about federal deficits and the national debt are growing,  few quarrel with the need to reform Medicare.  The health insurance program for seniors and people with certain disabilities accounts for 15 percent of the federal budget – in third place behind Social Security and defense spending.  That share is rising as healthcare costs continue to rise and more baby boomers retire, threatening the program’s long-term solvency.

Several of the most prominent solutions under discussion largely derive their savings by shifting a greater share of the cost onto beneficiaries.  The plan sponsored by Representative Paul Ryan (R-WI) and passed by the House of Representatives would significantly cut Medicare spending by capping the government’s contribution to the program and transforming it into a system of “premium supports” given to seniors to help subsidize their purchase of private insurance plans, with seniors paying additional costs.  This would double out-of-pocket spending by the average senior to $12,500 each year, according to Congressional Budget Office estimates.

The ability of a majority of seniors to shoulder that burden appears dubious.  Just five percent of Medicare beneficiaries make $80,000 or more, a figure that includes any income from a spouse. For the 47 percent of seniors who are at or close to poverty, on average they are already spending nearly 25 percent of their budgets on healthcare, according to an analysis by the Kaiser Family Foundation.

“There’s this impression that there’s a great deal of wealth among the Medicare population, this image of wealthy seniors playing golf and enjoying their retirement years,” said Tricia Neuman, director of the Kaiser Family Foundation’s Medicare Policy Project.“But while some are lucky to do so, many are living on a fixed income, struggling to make ends meet…with really limited capacity to absorb rising costs.”

According to the Kaiser Family Foundation’s report, raising Medicare’s eligibility to 67 in 2014 would generate an estimated $5.7 billion in net savings to the federal government, but also result in an estimated net increase of $3.7 billion in out-of-pocket costs for 65- and 66-year-olds, and $4.5 billion in employer retiree healthcare costs.  In addition, the study projects that the change would raise premiums by about three percent both for those who remain on Medicare and for those who obtain coverage through health reform’s new insurance exchanges.  The study assumes both full implementation of the health reform law and the higher eligibility age in 2014 in order to estimate the full effect of both the law and the policy proposal.  In the absence of the health reform law, raising Medicare’s age of eligibility would result in an increase in the uninsured, according to other studies, as many older Americans would have difficulty finding affordable coverage in the individual market in the absence of Medicare.  With health reform, virtually all 65- and 66-year-olds would be expected to obtain alternative sources of coverage.”

Healthcare remains a major focus of budget talks on Capitol Hill,Senator Mark Kirk (R-IL) recently told the American College of Surgeons (ACS).  Every group that relies on federal funding should expect a 10 to 20 percent drop in that funding.  When Dr. L.D. Britt, president of the ACS, warned that such cuts could send some healthcare providers into a “tailspin,” Kirk responded that “the tailspin is the U.S. economy.  There is a new audience at play,” Kirk said, referring to U.S. creditors.  “The judgments they render, they are swift and severe.”  Kirk is optimistic that a solution to the country’s debt-ceiling dilemma “will have a way of concluding itself one day before the August 2 deadline.”

Healthcare Costs Have Doubled in Just Nine Years

Wednesday, June 1st, 2011

"Where does it hurt?"

American families have seen their healthcare costs rise by more than 50 percent over the last nine years, a trend that shows no sign of reversing, according to a report from the actuarial consulting firm Milliman, Inc.

Healthcare show few signs of dropping, according to a report released Wednesday by the actuarial consulting firm.  When you add in employers’ contributions, this year’s total healthcare cost for a family of four more than doubled to $19,393 from the $9,235 reported in 2002.  The 2011 figure represents a seven percent increase compared with 2010.  The primary reason for the rising costs are primarily due to price increases in categories like pharmacy, inpatient or outpatient hospital care and doctors’ office visits.  Lorraine Mayne, one of the report’s authors, said these charge increases are a bigger factor than changes in how Americans use healthcare.  Even the passage of the Patient Protection and Affordable Care Act, which started phasing in during 2010 and aims to eventually cover millions of uninsured people, had virtually no impact on healthcare costs in 2011, Mayne said.  She doesn’t believe that new law will have any “direct, immediate impact” on the trend.

In an important finding, the study found that employers are making workers shoulder an even bigger share of total health care expenses.   The employee portion of costs paid for a family of four covered by employer-sponsored health insurance will rise to approximately $8,008 this year from $3,634 in 2002.  That is an additional $84 a week from household budgets for healthcare.  Of the $1,319 yearly increase, workers’ out-of-pocket costs rose 9.2 percent in 2011.  That outpaced the 6.6 percent increase in 2010.  Payroll deductions for insurance coverage climbed 9.3 percent this year, an increase over the previous year.  Adding insult to injury, employers’ share of their workers’ healthcare costs fell six percent in 2010, compared with eight percent the previous year.  Of the $19,393 annual cost, employees’ share is moving closer to 50 percent, according to Mayne.  “Employees are paying $8,000 of the $19,000.  That’s a decent amount much larger than other areas of consumer spending.  What we’ve observed in the past few years is employers have increasingly been offering health plans with higher deductibles and co-insurance, co-payment limits,” she said.

The rise in outpatient care is making the difference. For three consecutive years, outpatient care has led all other categories in cost increases – as high as 90 percent.  “Unit costs are increasing both because the same services have increased in price and also because new, more expensive services continue to emerge,” the report says.  Hospital costs represent the second reason for last year’s increase (for the most part because acute care is so expensive), followed by physician care, drug costs, and other types of care, such as durable medical equipment and home healthcare.  People can rein in some costs by moving to a different part of the country, according to Milliman.

Healthcare was costliest in Miami,  where spending averaged $23,362.  New York came in second at $22,785 and Chicago third at $21,996  The three lowest-cost cities were Phoenix, which averaged $17,336; Atlanta, which averaged $18,292; and Seattle, which averaged $18,536.  “These cost differences result from variation in local practice patterns and from differing costs for health care goods and services,” said Chris Girod, a Milliman principal and consulting actuary.

Healthcare Spending Slowed in 2009

Tuesday, January 25th, 2011

Americans’ healthcare spending grew by just four percent in 2009 (the last year for which statistics are available), the smallest annual increase in 50 years. This suggests that Americans did not seek healthcare because of lost jobs and a lack of healthcare insurance due to the recession.  At the same time, healthcare insurance premiums increased at a faster pace than in 2008.  Additionally ,the number of Americans with coverage fell by 6.3 million.  Out-of-pocket spending on healthcare showed a slight increase.  Medicaid spending rose sharply by nine percent, compared with less than five percent in 2008.  This is a result of more people qualifying for Medicaid, again because of the recession.

The statistics, released by the Department of Health and Human Services (HHS), are a sign that the recession left a deep imprint on healthcare in America – far worse than other recent recessions.  “Job losses caused many people to lose employer-sponsored health insurance and, in some cases, to forgo health-care services they could not afford,” according to economists and statisticians at HHS’s Centers for Medicare and Medicaid Services.  The report, which has been compiled by the government annually since 1960, is the most recent snapshot of spending across the healthcare system.

Healthcare spending in the United States totaled $2.5 trillion in 2009, adding up to an average of $8,068 per person.  The four percent rise recorded in 2009 compares with more than six percent in 2007, eight percent in 2005 and double-digit increases in 1990 and 1980.  Even with the slowdown in spending, healthcare spending still comprised 17.6 percent of the GDP in 2009.