Posts Tagged ‘GDP’

Will the ACA Survive the Supreme Court, 2012 Election?

Wednesday, February 1st, 2012

The 26 states that have challenged President Barack Obamas healthcare law face several dilemmas as they try to convince the Supreme Court to declare the law’s Medicaid expansion unconstitutional   The two lower courts that heard the Medicaid challenge ruled in favor of the Obama administration, even as those judges struck down the healthcare law’s individual mandate. Legal experts on both sides of the mandate debate were surprised that the Supreme Court agreed to also hear the Medicaid piece of the state’  lawsuit.  The healthcare law’s supporters claim that the states erred in their initial brief on the Medicaid expansion, which was filed with the Supreme Court.

According to the states involved in the lawsuit. the ACA’s Medicaid expansion is “coercive.” Although state participation in the program is strictly voluntarily, the brief argues, the healthcare law makes it impossible for states to opt out of Medicaid.  The brief tries hard to link the Medicaid expansion to the individual mandate, arguing that states won’t be able to exercise their legal right to leave Medicaid because it’s the only way for Medicaid-eligible residents to fulfill the mandate.

“While the (Affordable Care Act) purports to leave states’ participation in Medicaid nominally voluntary, multiple aspects of the Act evince Congress’ keen awareness that, in fact, no state will be able to reject its new terms and withdraw from the program,” the brief says. “Most obviously, the ACA’s individual mandate requires Medicaid-eligible individuals to obtain and maintain insurance.”  But most Medicaid-eligible people would be exempt from the mandate, said Timothy Jost, a law professor at Washington and Lee University and a supporter of the health law.

Then there’s the Supreme Court case, which will be heard in the spring and a verdict announced prior to the November presidential election. According to Kurt Mainwaring, a ksl.com contributor, “Far-reaching consequences of the court’s ruling will likely impact both the cost of healthcare and the outcome of the 2012 elections.  If the Supreme Court rules that ACA is constitutional, healthcare costs will likely continue to rise — although at a slower rate than if the law were determined to be unconstitutional.  At present, healthcare costs make up approximately 18 percent of GDP. If expenditures continue on their current trajectory, “the share of GDP devoted to healthcare in the United States is projected to reach 34 percent by 2040.”  Translated to real numbers, the Department of Health and Human Services (HHS) notes that Americans paid approximately $1,000 annually in healthcare costs in 1960; more than $7,000 per year in 2007; and are projected to pay more than $13,000 per year by 2018.  This kind of increase in healthcare costs is not sustainable — and these kinds of projections are part of the reason ACA was enacted in the first place.

Beach Conger, a Vermont internist writing in the Burlington Free Press believes that “Medicare for All” — a possibility that was raised during the lengthy debate over the ACA — should be reconsidered.  According to Conger, “Medicare and I were born in the same year. Professionally speaking, that is. We were raised together, and we have been married to each other for what seems an eternity. As with any long-term relationship, we have had our ups and downs, but we have both matured over the years, and I believe we are both the better for it. Without being too vain, I have to say I have done a better job at providing health care, and I have to admit that Medicare has helped me do it.  At first, it just made sure that those retired people who wished to pay me the fees to which those in my line of work have become so accustomed, could actually do so. But eventually it realized that there was more to the business than just money, and it began to keep an eye over my shoulder, making sure I was not leaving undone those things which ought to be done and not doing those things which I ought not.  So I can’t help but think, why not Medicare for everyone? It would be so simple. And that’s when I realized.  It was too simple.”

Dr. Conge, it should be pointed out, lives in Vermont, to date the only of 50 states to enact a single-payer public option — Green Mountain Care.

Medicare, Medicaid Costs Rising More Slowly

Tuesday, January 24th, 2012

Healthcare spending nationally grew slowly for the second successive year in 2010, bringing it in line with growth in the U.S. economy as a whole, according to the Department of Health and Human Services (HHS).  Spending rose by 3.9 percent in 2010, to $2.6 trillion, while the GDP rose 4.2 percent, according to HHS, which published its findings in the journal Health Affairs.  In 2009, spending increased nearly the same by 3.8 percent, but in contrast it’s growth rate was twice that by 7.6 percent in 2007.  Spending increases frequently hit double digits in the 1980s and 1990s.  While spending growth in general remained slow, premiums for people in private insurance plans grew faster for the first time in seven years than what was spent on their care, according to the Centers for Medicare and Medicaid Services (CMS).  Premiums in 2010 rose 2.4 percent, slightly less than the 2.6 percent increase in 2009, although private health insurers’ spending on actual benefits rose only 1.6 percent in 2010, down from 3.7 percent in 2009.

Healthcare represents 17.9 percent of the U.S. economy, the same proportion as in 2009, according to a government report. “Persistently high unemployment, continued loss of private health insurance coverage and increased cost sharing led some people to forgo care or seek less costly alternatives than they would have otherwise used,” the report said.

The report showed that the federal government paid 29 percent of the nation’s healthcare bill in 2010, up from 23 percent in 2007. Some of that increase reflects a transitory increase in federal aid to states to enroll more uninsured people in Medicaid. The percentage of spending by private businesses and state and local governments fell.

The recession played a large role in impacting spending, CMS officials said.  Because fewer people were insured, and private insurers generally picked up less of the cost, patients went to the doctor and hospital less frequently.  The answer may go beyond the recession.  “The utilization slowdown is at least in part structural, and not just cyclically driven by the economy, and the adoption of higher cost sharing plan designs will result in some level of permanent slowdown in trend,” said Ana Gupte, a senior analyst at Sanford Bernstein, which conducts research for investors.

“Premiums grew faster than benefits for the first time in seven years, and benefits grew at their slowest rate in the history of the accounts, according to Anne Martin, a CMS economist.  Martin said this was because private health insurance companies lost enrollees as people were laid off, moved to cheaper health insurance plans as a result, cost-sharing increased.

Karen Ignagni, president of America’s Health Insurance Plans, said that the portion of premiums “allocated to health plans administrative costs was among the lowest in recent years, despite the fact that health plans have been in compliance with the healthcare reform law.”

Additionally, spending on prescription drugs declined in 2010.  Not only did individuals buy fewer drugs, but there were also more switches from brand to lower-cost generic medications. According to CMS, fewer new drugs came onto the market.

Paul Ginsburg, president of the Center for Studying Health System Change, a Washington research group, said the report didn’t address the biggest question: “When the economy gets strong again, do we just return to the old business as usual?  Probably,” he said. “But there’s a chance that the experience of people economizing may have longer-lasting effects.”

The Obama administration was pleased with the report and called it good news for the healthcare law, although some researchers found the law had a less than 0.1 percent impact on national health spending in 2010.  “These numbers do not take into account all of the cost-saving provisions in the Affordable Care Act that are still being implemented.  But they do show why the Affordable Care Act is so important,” senior White House adviser Nancy-Ann DeParle said. According to DeParle, the insurance regulations in the law will keep insurance companies “in check.”

The phasing in of the patient Protection and Affordable Care Act (ACT) which will expand insurance coverage to as many as 32 million people, will incur larger cost increases later in this decade. National health spending is expected to increase by 8.3 percent in 2014, when the most ambitious coverage expansions take effect, according to CMS projections.  “The law will control the growth of healthcare spending through fraud prevention, better coordination of care, disease prevention and overhauling insurance markets,” DeParle said.

According to DeParle, “Starting in 2011, insurance companies were required to publicly disclose and justify any premium increases larger than 10 percent. Many states have the authority to reject unreasonable premium increases and the Affordable Care Act gives states $250 million to strengthen their rate review programs. Additionally, insurers are required to spend at least 80 percent of your premium dollars on healthcare expenses instead of overhead and profits.”

Healthcare Costs Wiping Out Your Income Gains

Monday, September 26th, 2011

If Americans’ incomes are not growing, part of the blame can be placed on the high cost of healthcare.  According to the Washington Post’s Sarah Klitt, “All evidence points to American voters not really caring about rising healthcare costs.  But here’s one pretty compelling reason they should:  The escalating cost of healthcare has wiped out nearly all income gains made by the average American family in the past decade.”

Research in the September issue of Health Affairs notes that American physicians are paid more per service than in other countries — in some instances, double the amount.  There is also a larger gap between fees paid for primary care and specialty care, when compared with other industrialized countries.  These higher fees translate to higher incomes for American physicians than those earned by their foreign counterparts, and are the primary driver of higher overall spending on physicians’ services. 

The study — by Miriam Laugesen of the Mailman School of Public Health at Columbia University and Sherry A. Glied, also of the Mailman School and presently Assistant Secretary for Planning and Evaluation at the Department of Health and Human Services (HHS) — compared fees paid by public and private payers for primary-care office visits and hip replacement surgery in Australia, Canada, France, Germany, the United Kingdom, and the United States. 

The researchers determined that American primary-care physicians on average are paid 27 percent more by public payers for an office visit, and 70 percent more by private payers for an office visit, compared to the typical amount paid in other nations.  The largest difference in fees paid to American physicians versus fees paid to doctors in other countries was for hip replacements.  American physicians earned 70 percent more for these procedures by public payers, and 120 percent more by private payers, than the average fees paid to physicians in other countries.

“The gap between the fees paid for primary care and those for orthopedic services such as hip replacements is significantly bigger in the United States than it is in other countries,” Laugesen said.  “For decades, policymakers and medical leaders in this country have debated financial incentives to spur more doctors to become primary-care physicians.  Our work shows that continuing attention needs to be paid to the difference in payments across specialties, and how we can get better value for those expenditures.” 

Additionally, American physicians reported higher salaries when compared with the other countries, despite the fact that there was minimal difference in the volume of services provided.  Laugesen and Glied suggest that the differences may reflect the fact that American physicians are paid more for their skill and time than doctors in other countries.  Whether or not those higher payments have merit is a question that the study did not address.  American primary-care physicians earned the highest average annual incomes ($186,582) while French ($95,585) and Australian ($92,844) primary-care physicians earned the lowest.  American orthopedic surgeons earned the highest average annual incomes at $442,450, followed by $324,138 for surgeons in the UK.  Although UK surgeons earned 50 percent more than surgeons in the other comparison countries, they earned 30 percent less than American orthopedic surgeons.

A study by the RAND Corporation determined that rapidly rising healthcare costs have eaten nearly all the income gains made by middle-income American families over the past 10 years, leaving them with just $95 per month in extra income, after accounting for taxes and price increases.  Had healthcare costs risen only as fast as the cost of other goods and services from 1999 to 2009, the same family would have had an additional $545 per month to spend in 2009.

“Accelerating healthcare costs are a primary reason that the so many American families feel like they are just treading water financially,” said David Auerbach, the study’s lead author and an economist at the RAND Corporation, a non-profit research organization.  “Unless we reverse the trend, Americans increasingly will notice that health costs compromise their other spending options.”

Between 1999 and 2009, healthcare spending in the United States nearly doubled, from $1.3 trillion to $2.5 trillion.  During the same timeframe, the percentage of the nation’s GDP devoted to health care rose from 13.8 percent to 17.6 percent.  Per-capita healthcare spending rose from $4,600 to just over $8,000 a year.

Although the numbers are arresting, they don’t necessarily translate to the daily routine of American families because many healthcare costs are hidden, according to the researchers.  Auerbach and co-author Dr. Arthur L. Kellermann, director of RAND Health, combined information from multiple sources to describe the obligation that rising healthcare costs placed on middle-income families with employer-sponsored health insurance from1999 to 2009.  

“The complex way that the United States pays for healthcare often obscures the consequences of healthcare cost growth for most American families,” Kellermann said.  “This makes the challenge of controlling healthcare costs that much harder.”

Study: U.S. Needs a Comprehensive National Health Strategy

Monday, February 7th, 2011

The United States needs to formulate a consistent national strategy to address life expectancy and overall health, according to recent report from the Institute of Medicine (IOM).  “Although the United States invests over 17 percent of its gross domestic product on medical care – far more than any nation – we lag behind other countries in several measures of health,” said Marthe Goldman, chairwoman of the committee that wrote the report.  “Our understanding of more effective and efficient strategies for improving health is hampered by inadequacies in the current system.”

The IOM report, which was sponsored by the Robert Wood Johnson Foundation,  notes that the Department of Health and Human Services (HHS) should take the lead to coordinate and provide pertinent health information and statistics to Americans.  Additionally, HHS should assist in efforts to integrate population health data collection, analysis and reporting, as well as offer guidance on how to develop health indicators and analyze the effects of these over time.  Finally, the nation should adopt a single-summary measure of the population’s health to serve as the GDP equivalent for the health sector.

Typically, the United States and other nations have used death rates as the standard measure of population health.  “However, life expectancy is a blunt tool.  It cannot capture the diminution in life experience and capacities that is associated with the chronic illnesses and injuries that are of increasing prevalence in modern society,” according to the report.

The International Health Partnership, which is dedicated to improving health services and health outcomes, issued a white paper in July, 2009, assessing national health strategies and plans.  According to the paper, “The way a joint assessment is done will be unique to each country, but based on some key principles:  it will be country demand driven; be country led and build on existing processes; be as light as possible without being superficial; include an independent element; and engage civil society and other relevant stakeholders.”

Australia has taken the lead in setting a comprehensive national healthcare strategy.  With the goal of being the world’s healthiest country by 2020, the strategy set in April, 2008, by the National Preventative Health Task Force for the Minister for Health and Ageing focuses on eating healthier foods; reducing obesity; smoking cessation; and addressing the health and social issues associated with heavy drinking.

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.

Anthony Downs On Financial Reform

Tuesday, September 14th, 2010

Anthony Downs discusses the ins and outs of financial reform.  The nation’s financial system needs significantly more regulation than exists now.  The lack of tough regulatory powers strongly impacted the recent financial crash and the Great Recession that ensued.  The good news is that the Obama administration is moving firmly in this direction with financial reform legislation a critical item on its agenda.  This is the opinion of Anthony Downs, a senior fellow with the Brookings Institution and former President of the Real Estate Research Corporation.  In a recent interview for the Alter+Care Podcasts, Downs said that between 1980 and 2007, the value of international capital markets – including bank deposits, assets, equities, public and private debt – quadrupled relative to the world’s GDP, lifting millions of people out of poverty.  Although unprecedented, this growth relied heavily on borrowed money to finance higher living standards and highly leveraged loans with limited reserves backing them.  In the end, the growth was unable to be sustained.

The financial reform legislation currently undergoing reconciliation by a Senate-House conference committee is not a reinstatement of the 1933 Glass-Steagall Act – which separated investment and commercial banking — because banks will still be allowed to deal with securities.  Under the new law, banks will have to register derivatives with some type of formal exchange and maintain records on who is borrowing money and under what terms.  This marks a significant change from before the Great Recession, when derivatives were traded with virtually no oversight.

Downs believes that former Federal Reserve Chairman Alan Greenspan contributed to the financial crisis in two ways.  In 2001, when Greenspan was informed that there was fraud in the subprime housing market and that he should do something about it, he refused to take action because he didn’t believe in regulation.  According to Downs, “that was a terrible mistake and meant that all the horrible loans made in the subprime market could continue unchecked.”  Greenspan’s second error was to maintain low interest rates for as long as he did at a time when an enormous amount of capital was coming into the United States economy from overseas.  Because investors were avoiding the stock market, they put their money into real estate.  That drove the price of properties sky high and destroyed the concept of intelligent underwriting and evaluating the risk before approving the loan.

 
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CBO Warns That Healthcare Reform Will Increase Federal Spending

Monday, July 26th, 2010

Reform translates to more federal healthcare spending.  The federal government’s share of dollars spent on healthcare is expected to soar from five percent of the current GDP to approximately 10 percent by 2035.  The increases are likely to continue unabated after that.  These projections are based partly on the recently passed healthcare reform legislation, which is expected to increase federal spending in the next 20 years, according to the Congressional Budget Office’s (CBO) analysis, “The Long-Term Budget Outlook”.

“The retirement of the baby boom generation portends a significant and sustained increase in the share of the population receiving benefits from Social Security, Medical and Medicaid.  Moreover, per-capita spending for healthcare is likely to continue rising faster than spending per person on other goods and services for many years,” according to the report.  The CBO predicts that these factors will increase federal spending relative to the overall economy in the future.  Only a major change in government policy will reverse this trend.  Once all provisions of the new healthcare law are implemented in 2014, there is a strong possibility that federal spending will decrease by 2030.  According to the CBO, reform could yield reduced spending over time.

Peter Orszag, director of the White House Office of Management and Budget, notes “CBO reiterates that the Affordable Care Act will reduce the deficit by more than $100 billion in the current decade and more than $1 trillion in the decade after that – which represents the most deficit reduction enacted since the 1990s.”

Global Healthcare Spending Growing Faster Than GDPs

Tuesday, July 13th, 2010

Blame the Great Recession for sharp increases in the ratio of healthcare spending to GDP.  Real annual per-capita health spending climbed 4.2 percent between 2000 and 2008 in Organization for Economic Cooperation and Development (OECD) countries, according to a new study.  Not surprisingly, the United States led the pack of 31 nations with healthcare spending as a proportion of GDP rising by 16 percent.  Next in line were France (11.2 percent); Switzerland (10.7 percent); Austria (10.5 percent); and Germany (10.5 percent).  Healthcare spending in the United States was $7,538 person.  Compare that to $5,003 in Norway; $4,627 in Switzerland; $4,210 in Luxembourg; and $4,079 in Canada.

According to the OECD, healthcare spending is rising faster than economic growth.  The average ratio of healthcare spending to GDP rose from 7.8 percent in 2000 to nine percent in 2008.  Technological changes, an aging population and high expectations are among the factors driving up costs, a situation that is unlikely to change in the near future.  The Great Recession also led to increases in the ratio of healthcare spending to GDP in several countries.  Ireland, for example, saw an increase from 7.5 percent in 2007 to 8.7 percent in 2008, while it rose from 8.4 percent to nine percent in Spain.

Government pays for healthcare coverage in the majority of OECD nations.  As a result, government spending on healthcare rose from an average of 12 percent in 1990 to 16 percent in 2008.  As a result, nations currently under pressure to reduce budget deficits have some difficult decisions to make to sustain their healthcare systems.  The options are to cut the growth of public spending on healthcare, cutting other expenditures, or raising taxes.

Healthcare Costs Add Up to 17.3 Percent of GDP in 2009

Tuesday, May 18th, 2010

Healthcare spending in 2009 reached a record high of 17.3 percent of the nation’s GDP, representing a growth rate of 5.7 percent in a year when the general GDP shrank.  The Kaiser Family Foundation, a non-profit and non-partisan group reports that healthcare costs for the average family have doubled over the past 10 years.Healthcare costs an average family $13,375 yearly, representing a 131 percent increase over 10 years.

The almost $2.5 trillion spent in 2009 was $134 billion more than 2008, when healthcare ate up 16.2 percent of the GDP, according to an annual report by the federal Centers for Medicare and Medicaid Services (CMS).  “The health system is hurting, and we are seeing that in these numbers,” said Karen David, president of the Commonwealth Fund, a healthcare policy authority.  Federal and state spending on Medicaid – the primary health insurance program for low-income Americans – climbed nearly 10 percent in 2009, according to the report.  Medicate spending increased eight percent last year.

According to the Kaiser Family Foundation, the average premium for a company-provided family health insurance plan soared from $5,791 in 1999 to $13,375, a 131 percent increase.  Employees’ portions of those costs have also risen, from $1,543 on average 10 years ago to $3,515 in 2009.

During 2010, companies said they planned to shift more costs to workers, with 42 percent saying they would increase employees’ premiums and 39 percent said employees would pay more for doctor visits.  Another 37 percent said workers would have to pay more for prescriptions.  “When healthcare costs continue to rise so much faster than overall inflation in a bad recession, workers and employers really feel the pain.  That’s why we are having a health reform debate,” said Drew Altman, Kaiser’s president and CEO.

Rick Mattoon: Is the Recession Over?

Monday, March 8th, 2010

 The Fed says the recession is over.  Economic indicators show that the recession is over.  This is the opinion of Rick Mattoon, a senior economist and advisor in the economic research department of the Federal Reserve Bank of Chicago and a lecturer at the Kellogg School of Management at Northwestern University.  Rick’s primary research focuses on issues facing the Midwest regional economy.

In a recent interview for the Alter Inspire Podcasts, Mattoon warned that most people probably don’t feel like the nation is coming out of a recession because there are few signs of job creation or easier access to credit.  One of the major concerns economists have is that this will be a double-dip “W-shaped” recession because once the bump from the $787 billion stimulus ends, there will be scant pent-up consumer demand for products and services to take the place of government spending.

One positive sign is an uptick in hiring by temporary employment agencies, which usually is considered to be a good harbinger of what future demand will be.  Another interesting theory about this particular recession in terms of jobs is the idea that companies adjusted their employee levels much more aggressively at the beginning of this cycle.  As a result, they are operating at extremely lean levels and so may hire earlier rather than later.

One problem is that there is a skills mismatch in the economy.  Many people who have lost their jobs don’t possess the right skills to find employment in growth industries such as clean energy or healthcare.  The challenge is training these individuals to bring their skills up to par.

 
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