Posts Tagged ‘healthcare spending’

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.

The Concierge Revolution: Bringing Back Marcus Welby

Thursday, February 21st, 2013

During  a historic time of change within the healthcare sector, most notably the passage of the $938 billion Affordable Care Act (ACA), which will reduce healthcare spending by $138 billion according to the independent Congressional Budget Office, doctors are feeling new pressures. As the Physician Administrator for Evanston Northwestern Healthcare (now NorthShore University HealthSystem Highland Park Hospital) for more than ten years, I saw this first hand. Just think, a single physician routinely sees 1,500 to 2,000 patients in one year’s time, and the average time spent with a patient is now reduced to about 7 minutes and dropping (that includes time spent with the nurse as they take vital signs). With reimbursements being slashed and the number of chronic patients at 145 million, doctors today are expected to do so much more in less time.  This is one of the main drivers for many primary care physicians and even some specialists to look for another way.  They want to practice medicine the way they believe it should be…as they imagined it would be when they first graduated from medical school.

Concierge/personalized care practices have continually been gaining traction over the past decade.  Personalized medicine means true consumer medicine –  for patients, it means little or no office waiting, more face-to-face time with their own doctor, prompt return of phone calls, important additional services not covered by their insurance and a renewed sense of personal connection between patient and doctor. For the physician, it means having more time and resources exclusively dedicated to patient care rather than to the “business” of modern medicine. Now more than ever, physicians are exploring their options as they navigate through new legislation and our country’s ever evolving healthcare system. They are not giving up on medicine. Rather they’ve given up on a broken system and created their own – one that that works for them, for their staff, and most importantly for their patients.

Roberta Greenspan is the Founder of Specialdocs Consultants, Inc., a medical practice consulting firm dedicated to converting traditional medical practices to “personalized care or concierge” models.

To hear Roberta Greenspan and Michael Friedlander on the Concierge Revolution, click here.

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.”

Most Firms Plan to Keep Their Health Insurance Plans After 2014

Tuesday, September 6th, 2011

Approximately three-quarters (71 percent)  of mid-sized to large companies plan to retain their health insurance plans in 2012, according to a new Towers Watson survey.  Another 53 percent expect the health reform law, the Patient Protection and Affordable Care Act (ACA), to be fully implemented in January, 2014.  At that time, people will be mandated to buy coverage and employers must provide coverage.  Anyone who fails to follow the mandate face fines.  About 53 percent of employers expect to trigger the health reform excise tax by 2018, meaning they will pay the fine, rather than provide coverage.  The average rate increase for health premiums expected for 2012 is 5.9 percent, a decrease from the 7.6 percent in 2011, according to the 368 business owners surveyed. 

Another 45 percent of respondents plan to rethink their long-term healthcare strategy next year, and many are not certain how they will respond to the impact of state-based insurance exchanges in 2014.  An additional 29 percent are unsure about whether they will continue sponsorship or offset the loss of healthcare benefits if they end employee coverage with an equivalent salary increase.  For retirees, more than half of employers (54 percent) that offer health care benefits plan to discontinue them for both pre-65 and post-65 retirees.  Approximately 70 percent of employers are skeptical that health insurance exchanges, where individuals and small businesses will be able to compare prices, buy coverage and get federal subsidies, will be a viable alternative to employer-sponsored coverage for their employees in 2014 or 2015. 

 Another finding of the Towers Watson survey is that nine percent of the companies recently polled plan to drop employer-sponsored health insurance after the ACA takes effect in 2014.  Other research predicts that even more firms will discontinue coverage, letting employees buy insurance through the online marketplaces, or exchanges, that will be established. 

“There are just a lot of unanswered questions, and a lot of it’s speculation,” said Dale Thoma, managing partner for Willis of Wisconsin, Inc., a subsidiary of global insurance broker Willis Group Holdings.  Clients are asking for help exploring options, including the possibility of dropping coverage in three years.  “Absolutely, people are talking about it,” Thoma said.  “It will probably be the No. 1 topic in our business.”  Dianne Kiehl, executive director of the Business Health Care Group, a coalition of Milwaukee-area employers who work to curb rising costs, said her members are “all kind of still waiting” although some haven’t ruled out dropping coverage.  Thomas R. Sobocinski, Wauwatosa-based national director for healthcare at accounting and advisory firm Baker Tilly, said companies are looking at whether to continue offering health insurance to employees.  “There is serious cost-benefit evaluation as to what employers are going to do 2014 and beyond,” he said. 


A study by Mercer shows different results.  http://www.liveinsurancenews.com/enrollment-rate-for-employer-offered-health-insurance-plans-is-on-the-rise-according-to-mercer/854779/ Despite reports that employers will cut the healthcare benefits they offer to workers as the ACA goes into effect in 2014, Mercer http://www.mercer.com/home says that quite the opposite will happen.  According to Mercer, enrollment in health insurance plans offered by employers is on the rise.  The consulting firm surveyed companies and found that the vast majority will continue to provide their workers with health care benefits.  According to Mercer’s survey, only two percent said that they were “very likely” to discontinue offering health benefits.  Rather, they will send employees to state-run health insurance exchanges.  

Current healthcare spending is expected to more than double from 2010 – 2014, http://www.beckershospitalreview.com/news-analysis/health-affairs-affordable-care-act-to-spur-healthcare-spending.html according to Health Affairshttp://content.healthaffairs.org/content/30/8/1594.abstract  The study found that healthcare spending growth in 2010 was estimated to be 3.9 percent.  That level of healthcare spending is expected to grow to 8.3 percent in 2014 when expanded Medicaid and private insurance coverage under the ACA take effect.  Expanded healthcare coverage under the ACA is expected to drive demand for healthcare, particularly for prescription medications and physician/clinical services.  The researchers also expect that the federal government’s share of healthcare spending will grow from 27 percent in 2009 to 31 percent in 2020. 

Dr. Donald Saelinger, former CEO of Patient First Physicians Group and former Vice President with St. Elizabeth Healthcare, and a healthcare consultant, is committed to making the ACA work.  http://news.cincinnati.com/article/20110824/EDIT02/108240325/Guest-Column-We-can-make-ACA-work?odyssey=mod|newswell|text|FRONTPAGE|s  According to Saelinger, “One major concern is the ability of the health-care infrastructure to manage the influx of nearly 50 million new patients. An added concern is the absence of any reasonable tort reform, which would eliminate seven percent of the cost of healthcare.  An important challenge to full implementation of the ACA law is the issue of the its constitutionality.  Is it constitutional for United States government to force all Americans to purchase insurance, referred to as the individual mandate?  We must understand that insurance works as a result of the rule of large numbers; it must have healthy people and sick people in the insurance pool, otherwise it does not work.  Furthermore, if we were allowed to buy health insurance only when we get sick, the cost of the insurance would be unaffordable.”

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.

Spending Big Bucks Doesn’t Equal Better Healthcare

Tuesday, November 9th, 2010

There’s no correlation between health plans’ spending and the quality of care their members receive.  The National Committee for Quality Assurance (NCQA) reports that there is no correlation between the amount health plans spend and the quality of care their members receive. In their annual State of Health Care Quality report, which crunched data from 1,000 health plans insuring 118 million Americans, researchers analyzed spending on the five most costly diseases (diabetes, hypertension and asthma) and found significant variations among the plans.  The biggest spenders don’t always deliver the best care.

Margaret O’Kane, NCQA president, said the study found no clear relation between resource utilization and quality.  She believes that the results point to a need to create a system that spends less and delivers higher quality care.  Additional findings are increases in colorectal cancer screening rates and the ongoing use of beta blockers after heart attacks.  There is room for improvement in the overuse of imaging and antibiotics, as well as helping Medicare patients avoid falling.

In one interesting finding, the researchers learned that vaccination rates for children with private plans fell by nearly four percent over the previous year.  By contrast, vaccination rates rose for children covered by Medicaid in 2009.  One possibility is a popular misconception that links vaccines to autism (blame Oprah partly for this) and has driven some parents away from evidence-based recommendations.  Additionally, there’s been a drop in patient satisfaction with their health plans and physicians.  For example, while 64 percent of members with Medicare plans said they usually or always get the care they need, just 53 percent of respondents with commercial plans felt the same.  This represented a drop from a high of 80 percent in 2005.

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.”

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.

2008 Healthcare Spending Experiences Slowest Growth Rate in 48 Years

Tuesday, February 2nd, 2010

Americans spent an average of $7,681 per person on healthcare during 2008, just a 3.5 percent rise over the previous year – the slowest growth rate in 48 years.  According to a report issued by the Department of Health and Human Services, healthcare spending totaled $2.3 trillion in 2008 and accounted for 16.2 percent of the GDP.Healthcare spending rose just 3.5 percent in 2008.

The culprit is the recession, which achieved what a generation of public officials attempted without success.  Federal officials said the slowdown in health spending resulted from the soft economy, people delaying elective procedures, for example, and did not cite any factors that will alter the long-term outlook for continued increases as baby boomers age and physicians rely more on new technologies to treat patients.

According to Micah Hartman, a government statistician who contributed to the report, federal spending for health services and supplies grew 10.4 percent in 2008 and equaled 36 percent of federal receipts, up from 28 percent in 2007.  “In 2008, federal Medicaid spending increased 8.4 percent – the highest rate of growth since 2003 – while state spending declined by 0.1 percent, the first decline in these expenditures in program history,” Hartman said.  “Spending for healthcare by private businesses grew just 1.2 percent in 2008, in part because of a drop in the proportion of employer-sponsored insurance paid by employers.  Private business’ health spending remained relatively flat as a share of compensation at 7.9 percent.”

In other findings, the report noted that “private health insurance premiums and benefits grew in 2008 at their slowest rate since 1967, 3.1 percent and 3.9 percent respectively.”  The slowdown reflects a drop in the number of Americans with private health insurance.  That fell to 195.4 million in 2008, compared with 196.4 percent in 2007.