Posts Tagged ‘Obamacare’

D-Day For Obamacare Means Big Changes For Healthcare

Tuesday, May 27th, 2014

MOBs are getting ready to take center stage as healthcare moves into more of a localized, outpatient setting.

By John Driscoll, President, Alter+Care

The first of this year was to be Obamacare’s D-Day. Though some changes kicked in earlier — the right to keep kids on your health plan until they turn 26, for example — the big provisions like the individual mandate became law this year. The ramifications from a medical and economic standpoint have been written about amply. In regards to the healthcare real estate industry, there are two very large trends: the consolidation of providers and the move to outpatient as the new center of healthcare delivery.

THE CONSOLIDATION WAVE
Part of the Obamacare plan to improve outcomes is the concept of the Accountable Care Organization. ACOs are essentially consortiums promoted as bigger, better models that manage health at the population level across a broader swathe of the healthcare specialties.  An ACO might include a hospital, various specialty groups, a  surgery center, imaging, emergency department and even nursing homes, with all payments made to the head of the ACO – usually the hospital – and then distributed to the rest of the group.

It’s now all about the team. As a result, the ACO has caused the biggest wave of consolidation I’ve ever seen in the sector. Consider that a quarter of specialty physicians and 40 percent of primary care physicians are already employed by hospitals. This number is up from 5 percent and 20 percent, respectively, in 2000. Some larger specialty practices are combatting this trend by merging with other practices to avoid being purchased by healthcare systems or hospitals.

Some independent practices are moving out of condominium office buildings and joining together to acquire office buildings. The costs of maintaining small independent space can become burdensome, especially as the technological pressures on integration and connectivity are imposed. Chances are, information technology financing will become an ever-increasing part of medical office loan commitments. Some IT expenditures are in the $30,000 to $50,000 range, while multi-specialty groups have larger expenditures to fund.

THE NEW CENTER OF HEALTHCARE
In order to lower costs and operate more efficiently, hospitals have migrated services from expensive acute-care environments to technologically enabled outpatient facilities. The hospital-centric model of the past has already given way to a hub-and-spoke network in most markets, where outpatient centers provide convenient and accessible care to patients and refer volumes to affiliated inpatient facilities. So what’s next? As it develops, hub and spoke will become a distributed model of care. It will result in providers who are physically dispersed, yet highly integrated through technology. Electronic medical records and advances in medical information technology will allow discrete providers to operate as a team. Primary care doctors will act as gatekeepers, coordinating and overseeing care regimens across this broad network.

The presence of this “patient-centered medical home” model means large MOBs (rather than hospitals) will become the hubs, while smaller specialty sites have become the spokes.  Think of the last time you visited a hospital for a procedure as opposed to a medical office building located in your community. Some systems are even leasing space in retail malls. As a result, the MOB is the definitive center not only of care, but also of healthcare real estate.

Last year was a banner year for outpatient services, and the investment community jockeyed to scoop up prized MOBs. There was a total of $4.98 billion-worth of MOB sales through the third quarter of 2013. This is compared to MOB sales of $5.21 billion for all of 2012. This has resulted in an average sales price of $231 per square foot, which is very strong with cap rates in the 6 percent range. If you extend the numbers out to sales of all buildings leased by healthcare providers, including doctors’ offices, urgent care clinics, diagnostic labs, imaging centers, the total reached $6.67 billion last year.  This was the second-highest number we’ve experienced in 13 years with a sales price of $270 per square foot. When you consider that 90 percent of the $1 trillion of healthcare property overall is still owned by hospitals, it is certain we are only at the beginning of this shift toward third-party real estate ownership.

To meet the challenges of distributed care and cost reduction, developers and operators of healthcare assets will need to think about the particular mix of services and programming in every building. This will result in the consolidation of redundant and inefficient facilities, while in other cases it will mean extending into preventive health and wellness to achieve population health management goals.

This article first appeared in Western Real Estate Business.

Bad News for Jobs Due to ObamaCare? Take the Long View.

Wednesday, February 12th, 2014

So, it’s been a rough January — a second month of anemic job creation, a new CBO report saying that ObamaCare could cost 250,000 jobs and continuing blasts of arctic froideur that have shut down even the redoubtable Alter Group offices for days.

This is when perspective matters: Cassidy Turley takes a 6-month long view in the US Employment Tracker to find good news:

Taking this approach, the U.S. economy is creating a monthly average of 178,000 net new jobs, consumer spending is growing at an annual rate of 3.1% and the ISM manufacturing index has been a robust 60.6.” Also, after the usual revisions in the economic data, we found that “real GDP grew at an annualized rate of 3.2% in the final quarter of 2013, driven by the largest increase in consumer spending in three years. Business confidence is now at an 11-year high; consumer confidence has held up; fiscal policy is less of a drag; and the Fed is now tapering because it generally likes what it sees. Commercial real estate fundamentals have been consistently tightening for three straight years. Although the past few weeks have allowed some doubt to resurface, the outlook remains upbeat.

Then there’s the matter of looking at the right statistics for you. Such as the fact that office-using jobs that drive so much of commercial real estate have been on a tear recently — 34,000 in January. Overall office-using jobs have surpassed pre-recession levels (after bottoming out in 2009).

We can’t take a long view on bone-chilling temperatures but let’s look at the Obamacare costing a quarter million jobs. Here’s portion of the CBO report, “The Budget and Economic Outlook: 2014 to 2024.”:

The ACA’s largest impact on labor markets will probably occur after 2016, once its major provisions have taken full effect and overall economic output nears its maximum sustainable level. CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor —given the new taxes and other incentives they will face and the financial benefits some will receive.

And therein lies the key phrase — “choose”. In other words, it is not jobs that will be eliminated but workers who will elect to retire, stay at home to raise the kids or go to a 3-day schedule so they have time to get another degree. They won’t feel tethered to their current employment because of the fear of not having health coverage.

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.

ObamaCare: Shambolic or Shining?

Thursday, May 2nd, 2013

The word of the week, courtesy of NY Times columnist, David Brooks, is “shambolic” which he uses to describe ObamaCare as it becomes implemented. As the overhaul of the US health system becomes a reality, the critics on both sides of the political aisle are joining Brooks to carp on what seems like a bureaucratic nightmare.

Even Max Baucaus, Democrat from Montana, has called the rollout of the healthcare exchanges a potential “train wreck” (the Obama team expects to spend $4 billion this year on setting up the 50 state-based exchanges and $1.5 billion next year running several of them).

Then there’s the application to apply for insurance from an exchange which started out as a 21 page booklet.  Following criticism, the Health and Human Services Department announced that they’ve cut the application from 21 pages down to three pages.

The issue seems to be that ObamaCare is creeping along without many of its details worked out or workable. While any sweeping institutional reform will have its shambolic elements, it’s useful to realize that Medicare did not arrive in 1965 as a fait accompli; It’s actually been a 48-year work in progress.  Today, beneficiaries get coverage through Original Medicare and the newer model, Medicare Advantage (also known as Parts A and B); then we had Disability and end-stage renal benefits in 1972; then the Medicare and Medicaid Program Protection Act of 1987 to fight all the fraud; then the prescription drug benefits for the Medicare population, which went into effect in 2006 (maybe the Bush Administration’s singular achievement if you listen to former administration official like Karen Hughes).

Lastly, people say that the administration is force feeding us a rewriting of healthcare law that the country doesn’t want. According to the Kaiser Health Tracking Poll for March 2013, only 37 percent of Americans like Obamacare. Looking at Medicare, we see the same parallels. In July of 1962 when President Kennedy first proposed it, a Gallup poll found 28% in favor, 24% viewing it unfavorably, and 33% with no opinion. A month later, 54% said it was a serious problem that “government medical insurance for the aged would be a big step toward socialized medicine.” After Lyndon Johnson was elected, a Harris poll found only a minority, 46%, supported a Federal plan to extend health care to the aged. Today, of course, Medicare is overwhelmingly popular.

Perhaps, the experience of Medicare counsels us to be aware that history has a way of confounding growing pains and poll numbers.

What Would Repeal Look Like?

Wednesday, July 18th, 2012

The nonpartisan Congressional Budget Office (CBO) has issued a report that the House Republicans’ bill to repeal President Obama’s health care reform legislation would increase the deficit by roughly $230 billion through 2021.   According to the CBO statement, “The March health care legislation would have a net cost of about $780 billion over the 2012-2019 period. Repealing that legislation would eliminate such costs. But [the health care legislation] also included a number of provisions to reduce federal outlays (primarily for Medicare) and to increase federal revenues (mostly by increasing the Hospital Insurance payroll tax and imposing fees on certain manufacturers and insurers); in March, CBO and JCT estimated that those provisions unrelated to insurance coverage would, on balance, reduce direct spending by about $500 billion and increase revenues by about $410 billion over the 2012-2019 period. If that legislation was repealed, such reductions in spending and increases in revenues would not occur. Thus, H.R. 2 would, on net, increase federal deficits over that period.”

Undeterred, Sen. Orrin Hatch (R-Utah), ranking member on the Finance Committee, said if Republicans gain control of the chamber next year, their efforts to replace the healthcare overhaul will focus on cost control, instead of coverage expansions. Hatch was the author (along with Ted Kennedy) of SCHIP, the largest expansion of taxpayer-funded health insurance coverage for children in the U.S. since Medicaid began in the 1960s. Hatch is in position to lead the committee with primary jurisdiction over federal health policy if Republicans retake the Senate, which Republicans would do if they net only four Democratic-held seats.

As evidence of ObamaCare’s inability to reduce overall healthcare costs, Hatch cited the 9.5% increase in the cost of an average family health plan to $15,073 last year over its cost when the law was enacted.

The first cost-control efforts he would undertake would come in Medicare and Medicaid, he said. Those steps include increasing physician pay and removing “government-dictated prices” in Medicare that increases costs for the privately insured when providers pass along the cost of caring for Medicare and Medicaid patients.

GOP Proposes Putting Seniors on Congressional Healthcare Plan

Tuesday, July 3rd, 2012

In a highly controversial move, Republicans critical of Medicare have proposed opening up the Federal Employee Health Benefits Plan (FEHBP) to Medicare patients.  “We are going to offer a plan that would give all senior citizens in the country the same congressional healthcare plan that we have,” said Senator Rand Paul (R-KY).  “We are not willing to wait until after the next election to fix the entitlements.”

The National Active and Retired Federal Employees Association (NARFE) warned that the plan could shake the federal program, while asking seniors to pay more for healthcare.  “This is a kill-two-birds-with-one-stone kind of proposal that would both bring down Medicare as we know it and threaten the stability of the FEHBP,” Joseph A. Beaudoin, NARFE president, said.  Beaudoin said seniors should examine the proposal closely, because it throws open the doors of a stable healthcare program to millions of seniors currently enrolled in Medicare.  “Given the current environment of budget attacks on federal employees, retirees and Medicare, the federal workforce and all Americans should be wary of plans like the one proposed today,” he said.

Called the Congressional Health Care for Seniors Act (CHCSA), the plan’s supporters claim that it would save taxpayers $1 trillion in the first 10 years as well as provide enhanced healthcare benefits, choice, quality and outcomes by moving seniors into the FEHBP.

How would it work?  Federal employees can now choose from approximately 250 plans participating in FEHBP, including 20 nationwide plans.  The large selection provides access to better doctors, better quality healthcare, and the ability to pick plans that best suit the person’s individual needs.  The rationale also is that because Congress uses the plan, it must be the best in the country.  Additionally, the legislation would set up a “high risk pool” for the costliest patients within the FEHBP.  The federal government will directly reimburse healthcare plans for enrolling the most expensive five percent of patients, which keeps premiums low while allowing high-risk patients to get the same quality healthcare as every other enrollee – federal employees and seniors alike.  If the legislation is passed, seniors could enroll in FEHBP starting in 2014.

There is some bipartisan support for this proposal.  In 2004, Senator John Kerry (D-MA) proposed allowing uninsured people, not seniors, to enroll in FEHBP.  “Entitlements are broken,” said Paul.  “It’s not Republicans’ fault; it’s not Democrats fault.  I tell people, ‘It’s your grandparents’ fault for having too many kids and then your fault for not having enough kids.’  It’s a demographic problem.”

Paul said the plan “means-tests the benefits and gradually allows the age of eligibility to go up.”  Currently, Medicare eligibility age is 65; Paul’s plan would gradually increase it to 70 by 2034.  “There is means-testing in this — and the reason you have to do that is: we’re spending more on Medicare than is coming in.”  According to Senator Lindsey Graham, (R-SC), “What I would tell the person near retirement is don’t fear change, embrace it, because you’ll have more doctors available to treat you and your family.  “Think about not just what happens to you…think about where we’ll be as a nation if something doesn’t change pretty quickly with these big programs.”

Virtually everyone in Washington agrees that the federal government must control its deficits and rising debt by finding a way to reduce entitlement spending.  President Bill Clinton’s former budget director, Leon Panetta, now defense secretary, who reproached the Senate Budget Committee: “You can’t meet the challenge that you’re facing in this country” by only cutting discretionary spending, which is less than a third of all spending.  “If you’re not dealing with the two-thirds that is entitlement spending, if you’re not dealing with revenues, and you keep going back to the same place, frankly you’re not going to make it, and you’re going to hurt this country’s security.”

Paul acknowledges that adding seniors to the federal program would drive costs up for its current 8.5 million enrollees by approximately 24 percent.  “Federal employees are the one group of people who may have a legitimate argument with the Congressional Health Care Plan for Seniors,” according to Paul’s synopsis.  “Asking them to share their healthcare with the elderly will cause their premiums to increase.”  Not surprisingly, as soon as the legislation was announced, the National Active and Retired Federal Employees Association expressed concerns that the bill would destabilize the federal workers’ program.

Beaudoin notes that “As for the senators’ notion that America’s seniors should be in the same healthcare system as America’s elected officials, they seem to have forgotten that starting in 2014, members of Congress will no longer be covered by the FEHBP but will be in state-based healthcare exchanges.”

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.”

Health Insurer OKs Reform No Matter What the Supreme Court Does

Monday, June 18th, 2012

Even if the Supreme Court declares the Patient Protection and Affordable Care Act (ACA) unconstitutional, UnitedHealth, the nation’s largest health insurer will still cover certain types of preventive care. The extensions will apply primarily to its customers who have individual policies or small-group health insurance through their employer, a minority of its 35 million total members.  The ACA, whose goal is to provide coverage for millions of uninsured people, started unfolding in 2010 after health insurers fought to block its passage.  Challenges to the law from states and other groups opposed to it wound their way to the Supreme Court.  Bob Laszewski, a consultant and former insurance executive, UnitedHealth’s move a “very smart business decision.”  The provisions are relatively inexpensive and are already factored into the coverage price.  If insurers cut these benefits, customers probably will expect a corresponding premium drop, he noted.  “It would probably be more trouble to roll these things back than go ahead with them,” Laszewski said.  “It just makes common sense to leave these things in there and not take these benefits away since they’re already priced in.”  Laszewski expects other insurers and large employers to take a similar approach.

The provisions UnitedHealth will maintain include providing coverage for dependents up to age 26 under their parents’ plan.  The company will still offer certain preventive healthcare services without requiring a co-payment.  These include yearly check-ups, screening for high-blood pressure and diabetes, and immunizations.  Additionally, UnitedHealth will continue to forgo lifetime dollar coverage limits on policies.  “The protections we are voluntarily extending are good for people’s health, promote broader access to quality care and contribute to helping control rising healthcare costs,” UnitedHealth Chief Executive Officer Stephen Hemsley said.  “These provisions make sense for the people we serve and it is important to ensure they know these provisions will continue.”

The ACA is the largest overhaul of the $2.6 trillion American healthcare system in nearly a half century.  It is designed to ultimately expand coverage to more than 30 million uninsured Americans, by setting up insurance exchanges and opening Medicaid for low-income Americans.

According to estimates, the ACA let approximately 6.6 million young adults remain on their parents’ health insurance plans last year, according to a report from The Commonwealth Fund. If the law is declared unconstitutional, Republican lawmakers may reinstate the extension of young adults dependent coverage.  Other provisions that UnitedHealth plans to maintain include providing easily understandable ways for members to appeal coverage claim decisions; and eliminating rescissions, which are considered to be retroactive policy cancellations, except in the case of fraud.  DeAnn Friedholm, director for health reform at the Consumers Union, called UnitedHealth’s actions “a positive step” and said she hopes other companies follow suit should the law be struck down.

Ronald Pollack, executive director of the consumer advocacy group Families USA and a supporter of the law, applauded UnitedHealth’s move.  “It would make a huge difference for a great number of people who would otherwise be left out in the cold in terms of getting coverage,” he said. “And hopefully, given UnitedHealthcare’s market share, this would have tremendous influence on other companies.”  Even if other large insurers follow suit, Pollack said, it would hardly make up for the loss of other provisions in the law that are set to take effect in 2014 — including subsidies to help low-income Americans buy insurance and bans against discriminating against adults with preexisting conditions.

Writing for CBS News, Stephanie Condon says that UnitedHealth’s decision “Could also alter the political fallout from the high court’s decision.  Should the Supreme Court reject President Barack Obama’s law, he could point to UnitedHealthcare’s announcement to validate his policy agenda.”

The Associated Press’ Ricardo Alonso-Zaldivar points out that dismantling the ACA could be messy.  “It sounds like a silver lining.  Even if the Supreme Court overturns President Barack Obama’s healthcare law, employers can keep offering popular coverage for the young adult children of their workers.  But here’s the catch: The parents’ taxes would go up.  That’s only one of the messy potential ripple effects when the Supreme Court delivers its verdict on the Affordable Care Act this month.  The law affects most major components of the U.S. healthcare system in its effort to extend coverage to millions of uninsured people.  Because the legislation is so complicated, an orderly unwinding would prove difficult if it were overturned entirely or in part.  Better Medicare prescription benefits, currently saving hundreds of dollars for older people with high drug costs, would be suspended.  Partially overturning the law could leave hospitals, insurers and other service providers on the hook for tax increases and spending cuts without the law’s promise of paying more to offset losses.”

Is Medicare in Peril if the Supreme Court Rules Against the ACA

Monday, April 30th, 2012

Could there be collateral damage if the Supreme Court rules to overturn the Patient Protection and Affordable Care Act (ACA)? Some healthcare experts are warning of potential collateral damage if the Supreme Court strikes down the entire ACA: potential chaos for Medicare.  “The Affordable Care Act has become part and parcel of the Medicare system, encouraging providers to deliver better, more integrated, better coordinated care, at lower cost,” said Judy Feder, a public policy professor at Georgetown University and former Clinton administration health official.  “To all of a sudden eliminate that would be highly disruptive.”

Sara Rosenbaum, a professor of health law and policy at George Washington University, is more blunt: “We could find ourselves at kind of a grand stopping point for the entire healthcare system.”  It’s not only Democrats warning of potential problems.  Gail Wilensky, who ran Medicare and Medicaid during President George H.W. Bush’s administration, doesn’t think it’s likely that the court will strike down the entire health law.  But if it does, she warns, “it seems like it takes everything with it, including those aspects that are only very peripherally related to the expansion of coverage.”

One reason that so many experts are concerned is that the ACA altered the payment rates for nearly every type of healthcare professional who treats Medicare patients.  Every time Medicare sets a payment rate, it must cite a legal authority.  Since 2010, according to Rosenbaum, that legal authority has been the ACA.  If the law is ruled unconstitutional, she said, every one of those changes “doesn’t exist anymore because the law doesn’t exist.”  The result?  “You have agencies sitting on two years of policies that are up in smoke,” she said.  “Hospitals might not get paid.  Nursing homes might not get paid.  Doctors might not get paid.  Changes in coverage that have begun to take effect for the elderly, closing the donut hole might not happen.  We don’t know.”

Writing for the Huffington Post, Ethan Rome, Executive Director, Health Care for America Now, says that “The Supreme Court will uphold the ACA not only because it’s constitutional, but because to do otherwise would impose a massive judicial intervention in one of the economy’s most complex sectors and derail a train with millions of individuals and businesses on board.  If the conservative justices disregard decades of legal precedents and strike all or part of Obamacare, they would not merely be tearing down the most sweeping piece of social legislation since Medicare and Medicaid, they would be taking away substantial consumer protections and benefits from millions of America’s seniors, families and small businesses.  The court would have to take responsibility for dismantling the law piece by piece, a task as difficult as it is unconscionable.  The law is two years old.  Implementation is moving forward, and hundreds of complicated provisions are in effect, helping millions of Americans.  States, businesses, doctors, hospitals and insurance companies have undertaken major, costly changes in anticipation of the improved insurance marketplace developing right now.  The fact is that serious wreckage would result from a bad decision.  Attempting to unscramble this omelet would be a national nightmare.”

Politico’s J. Lester Feder offers this perspective. “If America is hoping a Supreme Court ruling will end the legal uncertainty hanging over the healthcare system once and for all, there’s a chance it could be sorely disappointed.  Most legal experts are hoping the Supreme Court will give a clear thumbs up or down to the healthcare law.  But they’re worried about the possibility that, if the court strikes down just part of the health law, it could outsource the job of figuring out precisely which provisions of the gargantuan law stay or go.  That could mean at least another year of legal proceedings before the country — and the states that have to build the health exchanges — really know the rules its health system will operate under.  And that doesn’t even include the wild card of the election.  The parties challenging the law attempted to head off this scenario by specifically asking the court to consider whether the individual mandate could be severed from the rest of the law.  But if the Supreme Court decided it lacked the capacity — or the desire — to settle questions of how dependent the various parts of the law are on the individual mandate, it could remand the case to the lower courts to work through the details, legal experts say.  Another outside possibility is that the Supreme Court could appoint a ‘special master’ to sift through it under the high court’s supervision, though special masters usually oversee complex settlements or disputes among states, not dismantling politically charged legislation.”

If the unthinkable happens and the Supreme Court does strike down President Barack Obama’s signature piece of legislation, employers and insurance companies — not the government — will be the primary drivers of change over the next decade.  They’ll borrow some ideas from Obamacare, and push harder to slash costs.  Business can’t and won’t take care of America’s 50 million uninsured.  Workers will pay more of their own medical costs as job coverage changes to plans with higher deductibles.  Another part of the equation will be tax-free accounts for routine medical expenses, to which employers can contribute.  Employees and their families will be steered to hospitals and doctors that can prove to insurers and employers that they deliver quality care.  These networks of medical providers would earn part of their fees for keeping patients healthy, similar to the accountable care organizations in the ACA.

$1,000 Toothbrushes and $140 Tylenols: And You’re Footing the Bill

Thursday, March 29th, 2012

As the debate about the future of Medicare heats up, the program’s chief actuary estimates that 15 percent to 30 percent of healthcare expenditures are wasteful. Cindy Holtzman, a consumer advocate with Medical Billing Advocates of America, cited several examples, such as a Florida patient who was charged $140 for a single Tylenol.  A patient in South Carolina paid $1,000 for a toothbrush.  A patient in Georgia who used one bag of IV saline solution was billed for 41 bags for a total of $4,000.  In the case of the Georgia patient, insurance paid the entire claim.  “Usually any kind of bill under $100,000, they (insurance companies) don’t look at the details.  And that’s where something like this can be paid in error,” Holtzman said.  After Holtzman investigated, the bill was fixed, and the insurance company was refunded its money.

Medicare spending exceeded $500 billion in 2010.  As much as $75 billion to $150 billion could be cut without reducing needed services.  A potential cause is that Medicare’s reimbursement procedures do not track the appropriateness of the care provided.  Medicare farms out its claims administration to private local contractors based on how quickly and cheaply they process claims.  These contractors are not given incentives to audit the taxpayer dollars they spend; even if they wanted to, they would need data that is typically not found on the claim form.

Healthcare spending is wasteful across the board, not just in Medicare.  Writing for Politico, Ralph G. Neas, CEO of the National Coalition on Health Care (NCHC), a non-profit, non-partisan organization working to improve America’s healthcare system, says that “Total expenditures on healthcare represented 17 percent of the gross national product in 2010 and are projected to reach 20 percent by the end of this decade.  The federal government already spends more for health care than for defense, Social Security or any other single spending category.  The nonpartisan Congressional Budget Office has emphatically identified rising health costs as the greatest threat to our fiscal future.  It doesn’t have to be this way.  Our current system is devastatingly inefficient.  The United States spends 141 percent more on healthcare than other economically advanced nations.  But our far higher bill is not buying us a healthier population.  Roughly 30 percent to 40 percent of medical and hospital costs can be attributed to waste and inefficiency.  That means, America is on a path to squander $10 trillion over the next decade. That hemorrhage would leave our economy — and our cities, states, small businesses and middle-class families — on life support.  Given our financial condition, preventing this kind of spending and the economic drag it represents should be the kind of urgent national problem that overrides ideological differences and encourages us to find common purpose.”

NEHI, an independent non-profit national network for health innovation, has recommended actions that would reduce wasteful healthcare spending by up to $84 billion. The plan was produced in collaboration with the National Priorities Partnership.  One major area for savings is eliminating emergency department overuse.  More than half of the 120 million annual ED visits can be avoided, representing a $38 billion opportunity for savings.  Medication errors add up to seven million inpatient admission and outpatient visits involving serious but avoidable medication errors, representing a $21 billion opportunity for savings.  Unnecessary hospital readmissions is another area where savings can be achieved.  Seven million people are readmitted to hospitals within 30 days of discharge annually but 836,000 of these cases could be avoided, representing a $25 billion opportunity.

Another study believes that healthcare spending waste is much more widespread.  As much as 50 cents of every dollar spent in healthcare is wasted, according to Pricewaterhouse Cooper’s Research Institute. The organization determined that unnecessary price gouging makes up $1.2 trillion of the $2.2 trillion spent on healthcare nationwide.  “Our best estimate is that for the country as a whole, probably half of what we’re spending on healthcare delivery today is technically waste from a patient’s perspective,” said Dr. Brent James, chief quality officer for Intermountain Healthcare in Salt Lake City.  “There are better ways of doing it.”

The Institute of Medicine (IOM), a division of the non-partisan National Academy of Sciences, reports that “excess costs” – which translates to waste — in the American healthcare system cost $810 billion every year. Their findings?  Overly-high insurance administrative costs absorbed by doctors and hospitals cost $190 billion.  Insurance company inefficiencies cost $20 billion.  Unnecessary services (brand name drugs instead of generics, repetitive tests and procedures, etc.) cost $210 billion.  Too-high prices for doctors and hospitals cost $85 billion.  High drug and device prices cost $20 billion.  Errors and avoidable complications cost $75 billion.  Inefficient delivery of services costs $ 80 billion.  Fraud costs $75 billion.  Missed disease-prevention opportunities cost $55 billion.