Category Archives: Health Policy

Healthcare Reform: The Perfect or Politically Possible?

Posted on by • Posted in 2020 Election Issues, Health Insurance Coverage Adequacy, Health Insurance Industry, Health Policy, Market Failure, Private Interest Groups, Single Payer Health System, Single Payer Healthcare System, Underinsured, Uninsured • Leave a comment

Healthcare Reform: The Perfect or Politically Possible?

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Health economist William Hsiao PhD lays out two stark choices on healthcare reform facing Americans:

  • should health insurance continue being treated as a market-driven commercial product, or should it be changed to a government-regulated social good?
  • if Americans opt for change, should they alter the system quickly in a few years or slowly over decades?

In the February issue of Foreign Affairs, Professor Hsiao makes the case the healthcare market has failed – “Americans pay more and get less.” But he questions whether Americans currently have enough political will to undertake more than small incremental steps toward transforming it.

He acknowledges that changing to a single-payer approach would radically cut administrative costs, extend coverage to all, strengthen fraud control, and spread actuarial risk more evenly. He also acknowledges that doing so would reduce the overall national spending on healthcare and would relieve households from the financial threats of escalating premiums and illness.

But, he writes, the single-payer approach would encounter both public fear of major change as well as resistance from powerful interest groups like the American Medical Association, American Hospital Association, insurance companies, and pharmaceutical firms. “Although Americans have begun to take a more favorable view of single-payer systems in recent years, it’s far from clear that the idea has enough popular support to clear such hurdles.”

He cites Canada and Taiwan as examples of rapid comprehensive reform undertaken in 1968 and 1995, respectively. He notes that these two systems have kept annual per-capita spending at $4,974 in Canada and $1,430 in Taiwan, compared with over $10,000 annually for Americans. And he notes that both countries enjoy longer life expectancy and lower infant mortality than the U.S.

But he questions whether such a radical approach is politically possible in the U.S. His admonitions should not be ignored, since he is a renowned international expert on healthcare financing and social insurance, with long-standing tenure at Harvard’s Chan School of Public Health. Also, he is no stranger to healthcare politics as the prime architect of Medicare’s resource-based relative-value pricing schema.

The German Alternative

Professor Hsiao suggests another model – Germany.

Germany’s first “sickness funds” were created in 1883 by Chancellor von Bismarck (see my YouTube video, “Brief History of U.S. Healthcare”).  Then, after World War I, the Reichstag mandated universal coverage for all citizens. In the 1990s, chaotic coverage packages were standardized by law. Since then, the hybrid regulated market consolidated down to just 115 insurers currently, all now using required uniform claims procedures. Administrative costs are low, drug costs are controlled, per-capital spending is $5,728, and life expectancy and infant mortality are better than in the U.S.

Professor Hsiao argues that an incremental approach like Germany’s is more politically feasible in the U.S.  For example, implementing a uniform system of records and payments could streamline claims processing and improve control of duplication and fraud. He favors allowing a monopsony of insurers to collectively bargain on drug prices. Measures like these would predictably save $200 to $300 billion dollars annually, a comparatively small but worthwhile step.

Meanwhile, he favors state-level or federal-level risk pools and regional health budgets to cover the uninsured and underinsured.  These measures would require modest tax increases along the way, but would sidestep the politically problematic issue of abolishing private health insurance.

Comment

Professor Hsiao astutely frames the question of healthcare reform as a debate over “the perfect and the good.” He implies that doing nothing is not an option. But he also astutely notes that the clash between public sentiment and the vested interests will drive the political power dynamic. Will Americans’ escalating pocketbook costs prevail over their fear of change and their tolerance for non-costworthy spending in the current system?

This blog has predicted that rising walletbook pain will push Americans to their political tipping point.  Time will tell.

 

Healthcare spending is higher over 5 years, mostly due to a rise in prices, says new report

Posted on by • Posted in 2020 Election Issues, Health Insurance Coverage Adequacy, Health Insurance Industry, Health Policy, Health System, High Deductible Health Plans, High Drug Prices, High Premiums, High Prices, Hospital, Hospital Industry, Market Consolidation, Market Failure, Market Power, Out of Pocket Expenses • Leave a comment

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Between 2014 and 2018, per-person yearly spending, for those with employer-sponsored insurance, climbed 18.4%.

A new report confirms concerns about healthcare costs, as it shows per-person spending is increasing faster than per-capita gross domestic product.

Between 2014 and 2018, per-person yearly spending, for those with employer-sponsored insurance, climbed  from $4,987 to $5,892, an 18.4% increase, according to the 2018 Health Care Cost and Utilization Report released Thursday.  The average annual rate of 4.3% outpaced growth in per-capita GDP, which increased at an average 3.4% over the same period.

There’s an exception from 2017 to 2018, when per-capita GDP grew slightly faster than healthcare spending per person.

The $5,892 total includes amounts paid for medical and pharmacy claims but does not subtract manufacturer rebates for prescription drugs.

Healthcare spending grew 4.4% in 2018, slightly above growth in 2017 of 4.2%, and the third consecutive year of growth above 4%.

After adjusting for inflation, spending rose by $610 per person between
2014 and 2018.

The cost estimates are consistent with National Health Expenditure data from the Centers for Medicare and Medicaid Services, the report said.

WHAT’S THE IMPACT

Higher prices for medical services were responsible for about three-quarters, 74%, of the spending increase above inflation. These increases were across all categories of outpatient and professional services.

Average prices grew 2.6% in 2018. While that is the lowest rate of growth over the period, consistent year-over-year increases mean that prices were 15% higher in 2018 than 2014.

The increase for outpatient visits and procedures was $87 in 2018, the largest annual increase between 2014 and 2018.

Average out-of-pocket price for ER visits increased more sharply than other subcategories of outpatient visits, though all saw an increase in the average amount for which patients were responsible

Professional service spending per person rose $86 in 2018, reflecting an acceleration in spending growth consistent with previous years’ trends, according to the report.

Inpatient services and prescription drugs also saw an increase in spending per person.

Inpatient admissions increased $24 in 2018, a smaller annual increase than in 2016 or 2017, but above the rise in 2015.

Per-person spending on prescription drugs rose $50, similar to increases in 2016 and 2017, but smaller than the rise in 2015. The total does not reflect manufacturer rebates.

On average, Americans with employer-sponsored insurance spent
$155 out-of-pocket on prescription drugs in 2018.

Prices rose, as did utilization, which grew 1.8% from 2017 to 2018, the fastest pace during the five-year period. And because of the higher price levels, the effect of the increase in utilization in 2018 on total spending was higher than it would have been in 2014.

Higher utilization may be the result of a population that got slightly older between 2014 and 2018. The population also became slightly more female.

People with job-based insurance saw their out-of-pocket costs rise by an average of 14.5%, or $114, between 2014 and 2018.

THE LARGER TREND

As most Americans have job-based health insurance, this data is critical for understanding overall health costs in the United States, the report said.

An estimated 49% of the U.S. population, about 160 million people, had employer-based health insurance in 2018, based on Census data.

The report combined data from large insurers, using 4,000 distinct
age/gender/geography combinations. It contains previously unreported information drawn from 2.5 billion insurance claims.

Claims data is the most comprehensive source of real-world evidence available to researchers as databases collect information on millions of doctors’ visits, healthcare procedures, prescriptions, and payments by insurers and patients, giving researchers large sample sizes, the report said.

 

Californians increasingly concerned about access to mental healthcare and rising cost of care

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For the second year in a row, residents say making sure people with mental health problems can get treatment is their top healthcare priority.

Mental healthcare access remains a top priority for nine in 10 Californians, while the rising cost of physical and mental healthcare is causing increasing numbers of Californians to struggle to pay for prescription drugs, medical bills, and healthcare premiums, finds a new poll from the California Health Care Foundation.

The poll, Health Care Priorities and Experiences of California Residents, offers detailed insight into Californians’ views on a range of critical health issues, including healthcare affordability and access, perceptions on homelessness, the healthcare workforce, Medi-Cal, and the experiences of the uninsured. Results from the survey are also compared to a 2019 CHCF poll on the same topics to identify emerging trends.

WHAT’S THE IMPACT

For the second year in a row, California residents say making sure people with mental health problems can get treatment is their top healthcare priority. Nine in 10 said this was extremely or very important, and 52% said it was “extremely” important — topping all other health issues.

More than one in four Californians (27%) say that they or a family member received treatment for a mental health condition in the past 12 months; 7% say they or a family member received treatment for an alcohol or drug use problem.

Among those with insurance who tried to make an appointment for mental healthcare in the past 12 months, almost half (48%) found it very or somewhat difficult to find a provider who took their insurance. More than half (52%) of those who tried to make an appointment (with or without insurance) believe they waited longer than was reasonable to get one.

Nearly nine in 10 (89%) respondents are in favor of increasing the number of mental healthcare providers in parts of the state where providers are in short supply. And 89% favor enforcing rules requiring health insurance companies to provide mental healthcare at the same level as physical health care.

WHAT ELSE YOU SHOULD KNOW

Meanwhile, a little more than half of Californians (51%) have skipped or postponed physical or mental healthcare due to cost — up from 44% last year. Of those who took this step, 42% said it made their condition worse.

Compared to last year’s survey, Californians are more worried about paying for unexpected medical bills (63% last year; 69% today), out-of-pocket healthcare costs (55% vs. 66%), prescription drugs (42% vs. 50%), and health insurance premiums (39% vs. 44%).

Nearly a quarter of residents said they or someone in their family had problems paying, or an inability to pay medical bills in the past 12 months, while almost one-third of those with incomes under 200% of the federal poverty level report having problems paying their medical bills, compared to 19% of those with higher incomes. Uninsured adults report trouble paying their medical bills (45%) at twice the rate of those with employer-sponsored health insurance (20%).

More than eight in 10 (82%) respondents say it is important to lower the price of prescription drugs — up from 75% last year.

When compared to other issues facing the state, Californians rank healthcare affordability as their top priority among a range of public challenges presented in the poll — with 84% of respondents citing it as extremely or very important.

Improving public education received the same response (84%), closely followed by addressing homelessness (83%), attracting and retaining businesses and jobs (78%), and making housing more affordable (76%). Support for making healthcare more affordable cut across party identification, race, and income lines.

THE LARGER TREND

Ninety-six percent of employers believe improving mental health in the workplace is good for their business, but only 65% indicate their company provides adequate mental health services, according to findings from a December survey released by national nonprofit Transamerica Center for Health Studies.

Generally, there’s awareness that an employee’s physical health has an impact on absenteeism and productivity. But mental health, formerly a taboo subject, is garnering increasing recognition as well, and for the same reasons.

While almost all employers believe improving mental health in the workplace is good for their business, 17% of employers acknowledge not offering any resources at all. The most common mental health resources offered by employers are stress management classes (39%) and mental health awareness training (39%).
 

Budget Cuts Target Medicaid, Medicare

Posted on by • Posted in 2020 Election Issues, ACA, American Hospital Association (AHA), Health Policy, Health System, Hospital, Hospital Industry, Medicaid, Medicaid Work Requirements, Medicare • Leave a comment

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Blueprint includes cuts for care in hospital outpatient departments, teaching hospitals and post-acute care providers, AHA says.

President Trump’s proposed $4.8 trillion budget slashes billions of dollars from Medicaid, food stamps and other safety net programs in an attempt to shrink the federal deficit.

Medicaid and the Affordable Care Act see about $1 trillion in cuts over the next decade, according to The Hill. The budget eliminates the enhanced federal match for Medicaid expansion enrollees. An additional $150 billion is expected to be shaved off of Medicaid from the implementation of work requirements, which is expected to result in people losing their healthcare coverage.

The “President’s health reform vision” to ax the Affordable Care Act takes $844 billion over 10 years from the ACA, the report said.

The decrease in federal spending on Medicare would total about $750 billion over 10 years, but that includes shifting two programs out of the budget. After accounting for those changes, the reduction is just over $500 billion, according to CNN. Much of that cut comes from reducing payments to providers.

The budget needs Congressional approval and is not expected to get past a Democratic-controlled House without changes.

House Speaker Nancy Pelosi tweeted: “The budget is a statement of values. Once again, the #TrumpBudget makes it painfully clear how little the President values the good health, financial security and well-being of America’s hard-working families.”

Ways and Means Committee Chairman Richard E. Neal, D-MA, said, “When I saw the President’s proposed budget today, I felt an immense sense of relief – relief that there is absolutely no chance of his ruthless cuts to critical programs ever becoming law. Slashing billions from Medicare and Medicaid will only make it harder for Americans to access the healthcare they need.

Cutting nutrition assistance and Social Security benefits for the disabled won’t enable people to get back on their feet financially.”

Senator Lamar Alexander, R-Tenn said, “Under the Constitution, it is Congress’ job to set spending priorities and pass appropriations bills, and as a member of the Senate Appropriations Committee, my priorities will continue to be making sure our national defense, national laboratories, the National Institutes of Health and national parks have the resources they need. I am encouraged to see the president is calling to end surprise medical billing.”

The budget adds money to the National Institutes of Health. The NIH will invest $50 million for new research on chronic diseases, using AI and related approaches, according to the White House briefing. It adds $7 billion over 10 years to fight opioid abuse and for mental health in the Medicaid program.

WHY THIS MATTERS

Cuts to Medicare and Medicaid mean uncompensated care to providers, or a reduction in the government payments.

The American Hospital Association said, “The budget request, which is not binding, proposes hundreds of billions of dollars in reductions to Medicare and Medicaid over 10 years.”

AHA President and CEO Rick Pollack said, “Every year, we adapt to a constantly changing environment, but every year, the Administration aims to gut our nation’s healthcare infrastructure. The proposals in this budget would result in hundreds of billions of dollars in cuts that sacrifice the health of seniors, the uninsured and low-income individuals. This includes the one in five Americans who depend on Medicaid, of which 43% of enrollees are children.

“In addition to the hundreds of billions in proposed reductions to Medicare, the blueprint includes cuts we strongly oppose for care in hospital outpatient departments, teaching hospitals and post-acute care providers.

These cuts fail to recognize the crucial role hospitals serve for their communities, such as providing 24/7 emergency services. Post-acute cuts threaten care for patients with the most medically complex conditions.”

 

 

How runaway healthcare costs are a threat to older adults — and what to do about it

Posted on by • Posted in 2020 Election Issues, Health Insurance Coverage Adequacy, Health Policy, High Deductible Health Plans, High Drug Prices, Medicare, Out of Pocket Expenses, Underinsured, Uninsured • Leave a comment

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Authors call for allowing Medicare to directly negotiate drug prices with manufacturers, which is currently prohibited by law.

Empowering Medicare to directly negotiate drug prices, accelerating the adoption of value-based care, using philanthropy as a catalyst for reform and expanding senior-specific models of care are among recommendations for reducing healthcare costs published in a new special report and supplement to the Winter 2019-20 edition of Generations, the journal of the American Society of Aging.

The report, “Older Adults and America’s Healthcare Cost Crisis,” includes a dozen articles by experts and leaders from healthcare, business, academia and philanthropy.

The authors examine the major drivers of the high cost of healthcare and its impact on patients, then offer solutions that can reduce costs and potentially improve the quality of care for older adults and society at large.

Topics include the employer’s role in reining in healthcare prices; the high cost of prescription drugs; investing in the social determinants of health; the value of home-based acute care; the need for oral health programs for older adults; value-based payment reform; and the geriatric emergency care movement.

WHAT’S THE IMPACT

In the report’s lead article, West Health President and CEO Shelley Lyford and Timothy Lash, chief strategy officer of West Health and president of the West Health Policy Center, called for allowing Medicare to directly negotiate drug prices with manufacturers, which is currently prohibited by law.

They write it “would be a game-changing lever that could force prescription drug manufacturers to bring down prices and lower costs for older Americans.” They also said it’s essential to quickly move from unfettered fee-for-service to value-based payment models, and that more transparency on price and quality is needed so consumers and other purchasers can make more informed decisions about care.

Among the other recommendations are for employers to demand greater price accountability from hospitals and health plans, and to take the lead in adopting value-based payment models.

Authors also call for establishing senior-specific models of care, including geriatric emergency departments, which may improve health outcomes and reduce hospital admissions, and senior dental centers, which can address what they call an epidemic of oral health problems among older adults.

They also support widespread use of home-based acute care, which they say increases the value of healthcare.

THE LARGER TREND

As spiraling U.S. healthcare costs dominate policy agendas at the state and federal level, older adults — the largest group of consumers of healthcare services — have a particularly high stake in solving the crisis. According to a 2019 West Health-Gallup poll, seniors withdrew an estimated $22 billion from long-term savings in the past year to pay for healthcare and an estimated 7.5 million were unable to pay for a prescribed medicine.

 

President Trump releases his budget and suffers a loss in court

Posted on by • Posted in 2020 Election Issues, ACA, Health Policy, Medicaid, Medicaid Block Grants, Medicaid Expansion, Medicaid Work Requirements • Leave a comment

https://mailchi.mp/0ee433170414/the-weekly-gist-february-14-2020?e=d1e747d2d8

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This week, the Trump administration unveiled its $4.8T federal budget for the upcoming fiscal year, including major cuts to spending on healthcare programs.

Rather than proposing specific spending cuts, however, the President’s budget calls for Congress to put forward plans to “advance the President’s health reform vision”—which presumably includes the administration’s recent proposal to allow states to partially convert Medicaid to a block-grant structure—with promised savings of $844B over the coming decade.

Coupled with additional proposals targeting specific changes to Medicaid reimbursement (including further implementation of work requirements for Medicaid enrollees) and reductions in subsidies for Affordable Care Act (ACA) marketplace consumers, the budget envisions a total of $1T in healthcare cuts over the next 10 years.

Complicating the administration’s vision for Medicaid transformation, however, a federal appeals court on Friday unanimously ruled that the version of Medicaid work requirements proposed by Arkansas is unlawful, because it does not further the statutory purpose of the Medicaid program.

Although the ruling does not impact work requirements programs elsewhere, it does cast a shadow over the administration’s larger attempt to encourage states to implement such policies.

Like the broader fate of the ACA, the future of Medicaid work requirements will ultimately lie in the hands of the US Supreme Court.

The President’s budget, however, will face immediate opposition in Congress, where House Speaker Nancy Pelosi (D-CA) called it “a complete reversal of the promises [President Trump] made in the campaign and a contradiction of the statements he made in the State of the Union.”

As the general election approaches, voters will eventually have to choose between the conservative vision for healthcare underpinning the President’s budget, and progressive proposals being advanced by Democratic candidates. With healthcare being the number one issue on the mind of the electorate, that choice could not be more stark.

 

 

 

Learning to live on Medicare margins

Posted on by • Posted in 2020 Election Issues, ACA, Cost Management, Cost Reduction, Health Policy, Health System, Hospital, Hospital Industry, Medicare, Public Option • Leave a comment

https://mailchi.mp/0ee433170414/the-weekly-gist-february-14-2020?e=d1e747d2d8

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“If Democrats take back the Senate and win the White House, there’s a good chance they’ll implement some version of a public option or Medicare buy-in, and that would be devastating for the fragile economics of our health system.” That was the message delivered by the CEO of a system we were visiting recently, in her report to the board of directors.

That kind of alarmist message might seem career-limiting, but given the way the politics of healthcare are playing out at both the national and state levels (see Colorado and Washington State), it’s past time for executives to get beyond the rhetoric and begin to prepare for the real financial consequences of public option proposals.

That’s what this CEO had done—what followed the dire warning was a detailed analysis (which we helped assemble) of what would happen in various scenarios—what if one percent of our revenue shifted from commercial rates (around 250 percent of Medicare) to possible public option rates (somewhere between 140 and 180 percent of Medicare)? That’s a knowable number, and you can begin to make assumptions about how much business would shift under different scenarios, and how quickly.

The reality for health systems is that most of the margin comes from the 55-to-65-year-old population—who use more healthcare services but whose care is reimbursed at commercial rates. That cohort cross-subsidizes much of the rest of a typical hospital’s business.

The presentation to the board laid those economic realities out in concise detail—and provided a bracing wake-up call that the system needs to be prepared to live on a different level of margin than they enjoyed in the past.

That means radical cost controls, sharp reductions in “system bloat”, and a laser-like focus on shifting care to lower-cost settings. For years, hospital leaders have tossed around the notion that “we have to learn to live on Medicare margins”.

Given the rising popularity of public option policies (67 percent of Americans support the idea according to a recent poll, as do 42 percent of Republicans), that lesson may need to be learned sooner rather than later.