Posts Tagged ‘Co-payments’

Income Disparities Impact Healthcare Availability

Monday, April 2nd, 2012

There are limited affordable choices for Americans who do not have health insurance through their jobs, especially for those with low and moderate incomes.  Few are Medicaid-eligible, and locating a plan on the individual market equals paying high premiums.  According to the Commonwealth Fund Health Insurance Tracking Survey of U.S. Adults, 2011, nearly 57 percent of adults aged 19 to 64 in families earning less than 133 percent of the federal poverty level ($29,726 for a family of four) were uninsured for a time in 2011 and 41 percent) were uninsured for a year or longer.  In contrast, only 12 percent of adults earning 400 percent of poverty or more ($89,400 for a family of four) were uninsured during the year, with four percent having no healthcare insurance for one year or longer.

The lack of health insurance significantly makes it difficult to get needed healthcare.  Low- and moderate-income adults who were uninsured in 2011 were much less likely to have a regular source of healthcare than those who did have insurance.  Additionally, uninsured low- and moderate-income adults were more likely to cite factors other than medical emergencies as reasons for going to the emergency room.  These included needing a prescription drug or lacking a regular primary-care physician.

The survey also demonstrates how vital Medicaid and the Children’s Health Insurance Program (CHIP) are in providing health insurance to children in low- and moderate-income families.  More than 63 percent of adults with children under 133 percent of the poverty level and nearly 38 percent with incomes between 133 percent and 249 percent of poverty said that some or all of their children were covered by either program.  The Patient Protection and Affordable Care Act (ACA) will expand the ability of Medicaid and CHIP to cover children and families by targeting adults in low- and moderate-income families who are at the greatest risk of lacking health benefits through a job.

When it becomes fully effective in 2014, the ACA will provide near-universal health insurance through a broad expansion of Medicaid, premium tax credits that cap premium contributions as a share of income for people purchasing private health plans through new state insurance exchanges.  Another benefit is new insurance market rules that prevent health insurers from denying coverage or charging people with pre-existing medical conditions higher premiums.

Or, as the Washington Post’s Sarah Kliff puts it, “While the private insurance expansion could get thrown into limbo by the Supreme Court, there’s pretty widespread agreement that, absent full repeal of the bill, health reform’s Medicaid expansion is here to stay.  And that means a wide-reaching expansion of the entitlement program about two years from now.”

According to the Commonwealth Fund’s analysis, as a result of the Affordable Care Act, the majority of the 52 million adults who did not have health insurance in 2010 will gain coverage beginning in 2014.  Millions more will benefit as their ability to afford the price of premiums and out-of-pocket costs improves.

Karen Davis, President of the Commonwealth Fund, said that “The silver lining is that the Patient Protection and Affordable Care Act has already begun to bring relief to families.  Once the new law is fully implemented, we can be confident that no future recession will have the power to strip so many Americans of their health security.”

Amanda Peterson Beadle, writing on the thinkprogress.org website, notes that “The Affordable Care Act has already expanded health insurance to 2.5 million 19-to-25 year-olds, banned lifetime limits on health insurance coverage, created pre-existing condition insurance plans providing health insurance options to those who were often uninsurable, and required insurers to cover preventive care without requiring co-payments.  But the major provisions of the law to be implemented in 2014 will have the biggest effect on narrowing the income divide.”

Medicare Times Are a Changing

Monday, January 16th, 2012

Baby boomers may not like it — and whoever wins the White House this year — but the Medicare that our parents knew and love is destined to change. And it’ll be like it or lump it.

With more than 1.5 million baby boomers enrolling in Medicare every year, the program’s future is one of the most crucial economic issues for anyone who currently is 50 or older. Healthcare costs are the most erratic part of retirement expenses, and Medicare remains a great deal for retirees, who often get benefits worth significantly more than the payroll taxes they paid while working.  “People would like to have what they used to have.  What they don’t seem to understand is that it’s already changed,” said Gail Wilensky, a former Medicare administrator. “Medicare as we have known it is not part of our future.”

Consider these numbers.  Medicare’s giant trust fund for inpatient care is expected to run out of money in 2024.  When that happens, the program will collect only enough payroll taxes to pay 90 percent of benefits.  Additionally, researchers estimate that as much as one-fifth and even two-thirds of the more than $500 billion that Medicare now spends every year is spent on treatments and procedures of little or no benefit to patients.

Representative Paul Ryan (R-WI), chairman of the House Finance Committee, is leading the charge on changing Medicare.  Ryan’s current proposals will not impact people now 55 or older would not have to make any changes.  But how would it work?  Would it save taxpayers’ dollars?  Would it shift costs to retirees, who are least able to afford it?   Will Congress ultimately end traditional Medicare?  These questions are still waiting for answers.  “I’m not sure anybody has come up with a formula on this that makes people comfortable,” said health economist Marilyn Moon, who formerly served as a trustee overseeing Medicare finances.

The White House’s preference is to keep the existing structure of Medicare while “twisting the dials” to control spending, said Medicare trustee, economist Robert Reischauer of the Urban Institute think tank.

Ryan’s original approach would have put 100 percent of future retirees into private insurance.  His most recent plan, written with Senator Ron Wyden (D-OR), would keep traditional Medicare as an option, competing with private plans.

Writing for AARP, Ricardo Alonzo Zaldiver says that, “This could mean more Medicare recipients joining private insurance plans (currently, only about 25 percent of Medicare recipients are in private ‘Medicare Advantage” plans, while the other three-quarters participate in the traditional, government-run Medicare program).  A new voucher-for-private-Medicare plan would be available to anyone currently under 55.

“It could also mean keeping the existing Medicare structure but making certain tweaks to control spending.  Under President Obama’s healthcare overhaul, the Independent Payment Advisory Board could force Medicare cuts to service providers if costs rise above certain levels and Congress fails to act.  Obama has said he’ll veto any plan to cut Medicare benefits without raising taxes on the wealthy.  During failed budget negotiations last summer, he indicated a willingness to gradually raise the Medicare eligibility age to 67, revamp co-payments and deductibles in ways that would raise costs for retirees, and cut payments to drug makers.  ‘For the 76 million baby boomers signing up over the next couple of decades, it will pay to be watching.’”  President Obama has promised that he will veto any plan to cut Medicare benefits without raising taxes on the wealthy.

The Chicago Sun-Times offers this sage advice: “Fix Medicare, ignore scare talk.”  According to writer Steve Huntley, “I’ve contributed to Medicare every year of its existence. Yet, it’s a myth that seniors have paid the costs of their Medicare services, as demonstrated by the research of economists Eugene Steuerle and Stephanie Rennane of the Urban Institute think tank.  Their study showed that a two-income couple earning $89,000 a year would pay $114,000 in Medicare taxes during their careers but could expect to receive $355,000 in medical care in retirement. They could get prescriptions, doctor visits and hospital services valued at three times their contribution to Medicare.

“Medicare combined with Medicaid and Social Security add up to an entitlement time bomb –  they’ll consume all tax revenues by 2052, according to a Heritage Foundation analysis –  for the people who’ll be stuck with the bill: working Americans.  In 1950, there were 16 taxpaying workers for each retiree; by the time the baby boomers all retire, there will be two workers for each retiree. Entitlement reform has to happen.”

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.

200 Economists Come Out in Favor of ObamaCare

Monday, April 25th, 2011

Approximately 200 healthcare economists are urging Congress to reject a premium support model for Medicare and instead “support vigorous implementation” of last year’s health reform law.  The economists – who are primarily academics – sent a letter to Congressional leadership saying there are two general strategies to Medicare spending and the “right” approach can be found in the Patient Protection and Affordable Care Act (ACA). “It supports research on identifying those procedures that work best,” according to the letter.  “It emphasizes payment reforms and new ways of organizing delivery of care to slow spending growth while improving care,” it said, adding that the Congressional Budget Office (CBO) projects that the Affordable Care Act will decelerate annual growth of per-person Medicare spending over the next 10 years below the rate of overall economic growth.

House Republicans recently released their fiscal year 2012 budget, which seeks to convert Medicare to a premium-support system.  Patients would be given a list of health plans from which to choose, and Medicare would subsidize the premiums.  In their letter to congressional leaders, the healthcare economists said the term “premium support” mislabels a voucher program, which they say will end up forcing consumers to pay more.  Citing CBO statistics, the economists expressed concern that current proposals link voucher payments to growth in the Consumer Price Index adjusted for population growth.  “Because medical care costs are rising much more rapidly than the CPI, this guarantees that the value of the proposed Medicare vouchers would erode over time,” according to the CBO.

Some believe that forcing people to pay more out-of-pocket expenses will make them better healthcare consumers.  Writing in The New Republic, Jonathan Cohn says that “The solution, as this argument goes, is to redesign insurance so that it forces people to pay more out-of-pocket expenses.  And, within reason, it’s not a bad idea.  Most economists, even those on the left, would agree that excessive coverage leads to higher health care spending.  But redesigning insurance in a way that actually lowers spending and, by the way, promotes good health, is a lot more complicated than merely giving people “more skin in the game,” as conservatives like to put it.  A new study by researchers affiliated with the Rand Corporation suggests why.

“The study, published in the American Journal of Managed Care, compares trends in medical spending by two groups of people — one group with traditional insurance and one with newly purchased high-deductible coverage,” Cohn notes.  “It appears to be the largest study of its kind, and the three authors did their best to adjust for factors like age, occupation and underlying medical conditions.  The result? People with high-deductible plans spent substantially less on their medical care.  That’s good news.  Or is it?  Giving people more skin in the game has distributional consequences.  It shifts the burden of medical expenses onto those people with the most serious medical problems, which is, arguably, what insurance is designed to prevent.  In addition, discriminating medical consumers are not always intelligent medical consumers.  People may decide to skimp on useful medical care rather than the superfluous kind.”

According to White House press secretary Jay Carney, healthcare savings are necessary to control the deficit. Carney said that the president would build on the work of his debt commission, whose recommendations he initially refrained from endorsing.  Carney also praised a small group of senators from both parties, known as the “Gang of Six”, which is establishing a framework where a sharply divided Congress can compromise on deficits.  “The president understands very well that healthcare spending is a major driver of our deficit and debt problem,” Carney said.  “He believes we can achieve those savings in ways that protect the people that these programs are supposed to, and were designed to, support and help.”

Healthcare Reform May Not End Medical Bankruptcies

Monday, March 21st, 2011

Is healthcare reform a cure-all for the issue of medical bankruptcy?  Depends.  Bankruptcies occur when a person has a serious illness and cannot keep up with paying the bills.  Since RomneyCare became law n Massachusetts, the number of medical-related bankruptcies fell from 59.3 percent to 52.9 percent between 2007 and 2009, according to a recent study.

“Health costs in the state have risen sharply since reform was enacted.  Even before the changes in health care laws, most medical bankruptcies in Massachusetts — as in other states — afflicted middle-class families with health insurance.  High premium costs and gaps in coverage — co-payments, deductibles and uncovered services — often left insured families liable for substantial out-of-pocket costs.  None of that changed.  For example, under Massachusetts’ reform, the least expensive individual coverage available to a 56-year-old Bostonian carries a premium of $5,616, a deductible of $2,000, and covers only 80 percent of the next $15,000 in costs for covered services,” according to the researchers.  According to the authors, an insured couple earning more than $44,000 a year – a level that is higher than the eligibility requirement for subsidies – might pay as much as $20,512 a year for medical services.  “Massachusetts’ health reform, like the national law modeled after it, takes many of the uninsured and makes them underinsured, typically giving them a skimpy, defective private policy that’s like an umbrella that melts in the rain: the protection’s not there when you need it,” lead author Dr. David Himmelstein said in a Physicians for National Health Reform news release.  The organization’s goal is a national single-payer healthcare system.

The study’s results, which were published in the American Journal of Medicine, suggest “that reducing medical bankruptcy rates in the United States will require substantially improved – not just expanded – insurance.” http://www.latimes.com/health/boostershots/la-heb-obamacare-insurance-costs-03082011,0,7832154.story To determine if RomneyCare had cut the number of bankruptcies, the research team examined a random sample of Massachusetts bankruptcy filings from July of 2009.  After sending surveys to 500 households, they compared the results to national and Massachusetts data assembled during 2007.  The Massachusetts healthcare law went into effect in 2008. According to Dr. Steffie Woolhandler, one of the study’s authors, health insurance in Massachusetts has risen since RomneyCare was implemented.  “It’s really too much money for the average family – especially if the breadwinner is the one who gets sick,” she said.  “We need to reduce limits on deductibles and out-of-pocket costs.”

“People think they have reasonable insurance until they try and use it,” said Dr. David Himmelstein, another study author.  “You are carrying an umbrella and it starts to rain and you put it up and it’s full of holes.  For most people, it just hasn’t rained yet.”  High premiums, large co-payments and deductibles mean that even families with insurance have to pay substantial out-of-pocket costs, said Himmelstein, a professor of public health at City University of New York.  Himmelstein said his survey’s findings suggest that the national health overhaul — which was modeled on the Massachusetts law and takes full effect in 2014 – is unlikely to ease the number of medical bankruptcies, either.

Sally Pipes, a conservative healthcare expert, is a long-time critic of the Massachusetts healthcare law.  “In fact, a substantial portion of Massachusetts’ newly insured still can’t afford to purchase even basic medical services, and are effectively no better off than before the law’s passage. Meanwhile, government health spending is spiraling out of control, adding to the state’s already massive public debt.  Nearly 30 percent of Massachusetts residents report that their medical costs have increased since MassCare’s implementation.”