Category Archives: High Drug Prices

Obamacare Ruling May Spare Republicans Some Political Pain

Posted on by • Posted in 2020 Election Issues, ACA, Contingency Planning, Essential Health Benefits, Health Insurance Coverage Adequacy, Health Policy, High Deductible Health Plans, High Drug Prices, Market Uncertainty, Medicaid, Medicaid Expansion, Preexisting Conditions, Supreme Court, Texas v. United States, Underinsured, Uninsured • Leave a comment

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The practical effect of the decision is likely to be months of delays, pushing the final outcome of the case beyond the 2020 election.

A federal appeals court in New Orleans handed Republicans a Christmas present.

The court had been considering a case with the potential to dismantle the entire Affordable Care Act, an outcome that could have set off waves of chaos and disruption leading up to the November election, and for which there was very little contingency planning.

 

The court had two main options. It could have agreed with the Trump administration, along with a set of Republican state officials and a district court in Texas, and overturned all of the law. Or it could have upheld Obamacare, undermining the arguments of the White House and its allies.

The court found a third way. In a decision at the close of business Wednesday, two of the three judges signaled their support for a key part of the Republicans’ legal argument. The two agreed with a lower court that Obamacare’s individual mandate had been made unconstitutional by a 2017 law that eliminated the financial penalty for remaining uninsured. But the judges punted on the case’s key question of what that meant for the rest of the health law, asking a lower court to reconsider it. The effect is likely to be months of delays, pushing the final outcome of the case beyond the 2020 election.

 

Starting in 2017, the Republicans’ failed effort to repeal and replace large portions of the health law was deeply unpopular and became a central campaign theme of the 2018 election, in which Democrats won a House majority. Democrats cast themselves as the protectors of Obamacare’s most popular provisions, especially its protections for Americans with pre-existing health conditions.

While most Democrats would have favored a court ruling that upheld Obamacare, a reprise of those politics could have given them a lift in an election year. Voters tend to trust Democrats more than Republicans on health care, but much of the debate during the primary season has focused on ambitious new expansions of government coverage. Those proposals do not enjoy the widespread support attached to the preservation of Obamacare’s core consumer protections.

Those dynamics have allowed Republicans to focus on arguments that they will protect private insurance and oppose socialism, without forcing them to articulate their own detailed health plans. President Trump has periodically hinted at an imminent Obamacare replacement plan, but he has yet to produce one. Mitch McConnell, the Senate majority leader, has declined to produce or advance a major health care bill in the Senate.

 

But if a court had ruled that all of Obamacare had to be wiped off the books, it would have been far harder for Republicans to avoid articulating their vision for health care. The public did not like their previous attempts in 2017, and there has been little progress, even behind the scenes, to produce an alternative plan more palatable to the public. Two concepts have emerged since then, one from a group of conservative think tanks, and one from the House Republican Study Committee. Neither has received much public attention by party leaders, and both share the basic structure of an earlier legislative plan that divided Republican legislators so much that it never made it to a vote.

Meanwhile, Democrats could have retreated to safer ground, by promising to reinstate popular Obamacare provisions.

 

If the court had overturned all of Obamacare, it could have meant major disruptions to the health system. Such a ruling, if upheld by the Supreme Court, would have eliminated consumer protections for people with pre-existing health conditions, and wiped away financial assistance that have helped millions of middle-class Americans buy their own coverage.

It would have erased the Medicaid expansion, which provides health insurance to millions of low-income Americans in three dozen states. It would have reversed Medicare policies that make prescription drugs more affordable for seniors, and Food and Drug Administration rules that have allowed cheaper copies of expensive biologic drugs to enter the market.

It would have undone major experiments in the delivery of care, meant to improve health care quality. It would have rolled back enhanced punishments for Medicare fraud. It would have reduced requirements that workplaces provide space for lactating mothers to pump breast milk, and requirements that chain restaurants post calorie counts for their food.

Around 20 million more Americans would have become uninsured, according to an estimate from the Urban Institute. Experts on Medicare policy said they were not even sure how some of the changes could have been carried out now that they have been enshrined in complex regulations and built on in subsequent laws.

 

None of those effects would have happened immediately, even if the Fifth Circuit had agreed in full with the lower court; the Supreme Court would have probably weighed in. But the prospect of such huge changes had the potential to reset the political conversation about health care in both parties. By avoiding a decision on the case’s consequences, the Fifth Circuit has effectively postponed that shift.

In a statement Wednesday night, President Trump applauded the court’s ruling that the individual mandate was unconstitutional. But he emphasized that the decision would not result in any meaningful changes to voters’ health care.

“The radical health care changes being proposed by the far left would strip Americans of their current coverage,” he said. “I will not let this happen. Providing affordable, high-quality health care will always be my priority. They are trying to take away your health care, and I am trying to give the American people the best health care in the world.”

 

Such a statement would have been harder to issue if the court panel had agreed with the arguments made by Mr. Trump’s lawyers and called for the reversal of Obamacare’s coverage expansions.

Democrats’ frustration with the court’s indecision was palpable. Chuck Schumer, the Senate minority leader, described the judges’ move as “cowardly.” The decision is “obviously an attempt to shield Republicans from the massive blowback they would receive from the public if the highest court in the land were to strike down the A.C.A. before the upcoming election,” he said in a statement.

It’s possible, of course, that the case will reach a final disposition sooner anyway. California’s attorney general, Xavier Becerra, announced that he and other Democratic state officials involved in the case would be appealing the decision to the Supreme Court. Even though the appellate court sent the case back to Texas, the country’s highest court could still choose to take it, should four justices wish to. But the most likely path involves months or years of additional litigation, with lingering uncertainty over the fate of Obamacare.

 

 

 

Government funding bill deal will repeal key ACA taxes

Posted on by • Posted in 2020 Election Issues, ACA, Health Insurance Coverage Adequacy, Health Insurance Industry, Health Policy, High Drug Prices, Out of Pocket Expenses, Pharmaceutical Industry, Surprise Bills • Leave a comment

https://www.axios.com/government-funding-bill-affordable-care-act-taxes-ce13c0af-15d8-4e54-8210-296afa68e9b0.html

U.S. Capitol building

Congress is expected to soon announce a deal to repeal the Affordable Care Act’s health insurance, medical device and “Cadillac” employer health plan taxes — and to raise the smoking age to 21, according to a senior House Democratic aide familiar with talks.

Why it matters: The decision is a colossal win for the health care industry.

  • If this wasn’t good enough news for the industry, the deal won’t address surprise medical bills — and it avoids prescription drug prices except for the CREATES Act, which helps generics get to market faster.
  • The taxes have been repeatedly delayed. And while the industry has pushed for their repeal for years, it hasn’t yet been successful.

Between the lines: Voters are decidedly not asking Washington to lift industry taxes while avoiding dealing with two of the most popular health care issues, but if that’s how this plays out, it’s a great indicator that the industry’s lobbying strength is as good as ever.

  • It’s also a good sign that cost control — the intention of the Cadillac tax, a 40% excise tax on the most generous employer plans — is still not very popular with lawmakers, even as health care costs continue to rise.
  • The tax was expected to raise $200 billion over 10 years.

The other side: The industry says that the ACA taxes end up getting passed along to patients.

 

 

 

Private insurance’s costs are skyrocketing

Posted on by • Posted in 2020 Election Issues, Health Insurance Industry, Health Policy, High Deductible Health Plans, High Drug Prices, High Premiums, High Prices, Highly Specialized Drugs, Out of Pocket Expenses, Underinsured, Uninsured • Leave a comment

https://www.axios.com/health-insurance-costs-private-medicare-medicaid-c40bb6f1-c638-4bc3-9a71-c1787829e62e.html?utm_source=The+Fiscal+Times&utm_campaign=7d18fa690b-EMAIL_CAMPAIGN_2019_12_16_10_26&utm_medium=email&utm_term=0_714147a9cf-7d18fa690b-390702969

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The cost of private health insurance is out of control, compared to Medicare and Medicaid. You see that clearly if you take a long-term view of recently released federal data on health spending.

Why it matters: This is why the health care industry — not just insurers, but also hospitals and drug companies — is so opposed to proposals that would expand the government’s purchasing power. And it’s why some progressives are so determined to curb, or even eliminate, private coverage.

By the numbers: Per capita spending for private insurance has grown by 52.6% over the last 10 years.

  • Per-capita spending for Medicare grew by 21.5% over the same period, and Medicaid 12.5%.

Private insurance generally pays higher prices for care than Medicare, which generally pays more than Medicaid.

  • There’s a long-running debate about whether public programs deliver efficiency because of their purchasing power, or simply underpay.
  • Democrats have proposed a variety of steps to curb health care costs, including cutting payments for out-of-network care, competition from a public insurance plan, and steep payment cuts through Medicare for All.
  • Industry opposes most of them.

The bottom line: The industry knows cutting government spending can only go so far. Any effort to rein in health care costs will have to confront the growth in the cost of private insurance.

 

 

 

Benefit design, higher deductibles will increase bad debt for hospitals

Posted on by • Posted in 2020 Election Issues, Bad Debt Expense, Health Insurance Coverage Adequacy, Health Insurance Industry, Health Plan, Health Policy, Health System, High Deductible Health Plans, High Drug Prices, High Premiums, High Prices, Hospital, Hospital Industry, Out of Pocket Expenses, Underinsured, Uninsured • Leave a comment

https://www.healthcarefinancenews.com/node/139468

Legislative proposals could reduce bad debt, but would likely introduce additional complexity to billing processes.

Changes in insurance benefit design that shift greater financial responsibility to the patient, rising healthcare costs and confusing medical bills will continue to drive growth in bad debt — often faster than net patient revenue, according to a new report from Moody’s.

Legislative proposals to simplify billing have the potential to reduce bad debt, but the downside for hospitals is that they’ll likely introduce additional complexity to billing processes and complicate relationships with contracted physician groups. A recent accounting change will reduce transparency around reporting bad debt.

Higher cost sharing and rising deductibles are the main contributors to the trend of patients assuming greater financial responsibility, a trend that’s been occurring for more than a decade, and that will further increase the amount of uncollected payments. Hospitals and providers are responsible for collecting copays and deductibles from patients, which may not always be possible at the time of service; the longer the delay between providing service and collecting payment, the less likely a hospital is to collect payment.

On top of that, the higher an individual’s deductible is, the greater the share of reimbursement that a hospital has to collect. The prevalence of general deductibles increased to 85% of covered workers in 2018, up from 55% in 2006, and the amount of the annual deductible almost tripled in that time to an average of $1,573.

Multiple factors are driving the trend toward higher cost sharing, including a desire among employees and employers for stable premium growth despite steadily rising healthcare costs and the growing popularity of high deductible health plans.

WHAT’S THE IMPACT

Hospitals face an uphill battle when it comes to reducing bad debt. Strategies include point-of-service collections, enhanced technology to better estimate a patient’s responsibility for a medical bill, and offering low-cost financing or payment plans.

A common feature of these approaches is educating patients about what portion of a medical bill is their responsibility, after taking into account the specifics of their insurance plan. But hospitals often find it hard to provide reliable cost estimates for a given service, which can thwart efforts to provide patients with an accurate estimate of their financial responsibility.

One difficulty is that medical bills partly depend on the complexity of service and amount of resources consumed — which may not be known ahead of time. There’s also the need to incorporate specific benefits of the patient’s own insurance plan. A certain amount of bad debt is likely to arise from patients accessing emergency care given the insufficient time to determine insurance coverage.

Another difficulty in billing is surprise medical bills, received by insured patients who inadvertently receive care from providers outside their insurance networks, usually in emergency situations. While the term “surprise medical bills” refers to a specific, narrow slice of healthcare costs, they have become part of the broader debate about the affordability and accessibility of U.S. healthcare.

THE LARGER TREND

To minimize surprise bills, Congress is considering proposals to essentially “bundle” all of the services a patient receives in an emergency room into a single bill. Under a bundled billing approach, the hospital would negotiate a set charges for a single or “bundled” episode of care in the emergency room. The hospital would then allocate payments to the providers involved.

This approach, which major hospital and physician trade groups oppose, has the potential to significantly affect hospitals and disrupt the business models of physician staffing companies, according to Moody’s. Many hospitals outsource the operations and billing of their emergency rooms or other departments to staffing companies. Bundling services would require a change in the contractual relationship between hospitals and staffing companies.

Another recent proposal in Congress would require in-network hospitals to guarantee that all providers operating at their facilities are also in network. This approach adds significant complexity because many physicians and ancillary service providers are not employed or controlled by the hospitals where they work. Some hospitals would likely seek to employ more physicians, leading to increases in salaries, benefits and wages expense.

 

A stunning indictment of the U.S. health-care system, in one chart

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

https://www.washingtonpost.com/business/2019/12/10/stunning-indictment-us-health-care-system-one-chart/?fbclid=IwAR35UzHd8LQexhBxPukkwmBAmGGyxhagBfTR6CINomsJcSM-IkjiC26x10c

Americans are putting off medical treatment in record numbers because of cost, Gallup data shows

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One quarter of American adults say they or a family member has put off treatment for a serious medical condition because of cost, according to data released this week by Gallup. That number is the highest it’s been in nearly three decades of Gallup polling.

An additional 8 percent have made the same choice for less serious ailments, the survey showed. That means a collective 33 percent of those polled have prioritized financial considerations over their health, tying the high set in 2014.

The report also shows a growing income gap in cost-related delays. In 2016, for instance, one-fourth of U.S. households earning less than $40,000 a year reported cost-related delays, vs. 13 percent for households making more than $100,000. In 2019, the rate of cost-related delays among poorer households shot up to 36 percent, while the rate for the richer group remained at 13 percent.

Gallup cautions that the Trump presidency may be influencing these numbers on a partisan level: From 2018 to 2019, the share of Democrats reporting cost-related delays for serious conditions jumped from 22 percent to 34 percent. Among Republicans, the year-over-year increase was more subdued, from 12 percent to 15 percent.

Gallup data also show Democrats (31 percent) self-report higher rates of preexisting conditions than Republicans (22 percent).

“Whether these gaps are indicative of real differences in the severity of medical and financial problems faced by Democrats compared with Republicans or Democrats’ greater propensity to perceive problems in these areas isn’t entirely clear,” according to Gallup’s Lydia Saad. “But it’s notable that the partisan gap on putting off care for serious medical treatment is currently the widest it’s been in two decades.”

Data from the Kaiser Family Foundation’s Employer Health Survey underscores the severity of the health-care spending problem. In 2019, 82 percent of covered workers must meet a deductible before health-care coverage kicks in, up from 63 percent a decade ago. “The average single deductible now stands at $1,655 for workers who have one,” according to KFF, “similar to last year’s $1,573 average but up sharply from the $826 average of a decade ago.”

Deductibles have surged 162 percent since 2009, data show — more than six times the 26 percent climb in earnings over the same period.

There are many factors driving up the cost of care for most American families. Administrative costs are a big part of the issue: Health insurance is largely a for-profit industry, meaning insurance companies and their shareholders are reaping a percentage of your deductibles and co-pays as profit.

Many hospitals, too, are raking in profits. In recent years, surprise billing practices and outrageous markups for simple drugs and services have drawn the ire of lawmakers looking for ways to reduce health-care spending.

Physician pay is another significant expense. The Commonwealth Fund, a health-care research group, estimates American doctors earn “nearly double the average salary” of doctors in other wealthy nations. The American Medical Association, a trade group representing doctors, has a long history of opposing efforts to implement European-style single-payer health-care systems in the United States.

The American health-care system, in other words, works pretty well for the powerful players in the health-care industry. Hospitals and insurance companies are reaping significant profits. Doctors are earning high salaries. But what are the rest of us getting in return for our ever-growing co-pays and deductibles?

The national Centers for Disease Control and Prevention has an answer, and it’s an indictment of our health-care system: The United States is in the midst of the longest sustained drop in life expectancy in at least 100 years. Relative to other wealthy countries, lives in America are short and getting shorter.

The disparities domestically are perhaps even more shocking: In the nation’s wealthiest places, where the high cost of modern health care remains within relatively easy reach, life expectancies are literally decades longer than in America’s poorest places.

As health care becomes more expensive and economywide inequalities more pronounced, these disparities in life span are likely to get worse — and the share of Americans skipping out on much-needed medical care only likely to grow.

 

 

 

 

Democrats double down on health care prices

Posted on by • Posted in 2020 Election Issues, Health Insurance Industry, Health Policy, Health System, High Deductible Health Plans, High Drug Prices, High Premiums, High Prices, Hospital, Hospital Industry, Medicare for All • Leave a comment

https://www.axios.com/newsletters/axios-vitals-bd00103b-e940-45bb-ad9a-a4576971fc39.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

Illustration of price tag stickers in the shape of a health plus.

Many 2020 Democrats’ health care proposals feature aggressive price regulations, either as a feature or a byproduct — a sign the party has largely given up on the idea that competition alone can keep costs in check.

Between the lines: It’s not just Democrats. As public outrage has grown over prescription drug prices and surprise medical bills, there’s been bipartisan congressional interest in regulating prices.

“The two big trends are increasing out-of-pocket costs to consumers and increasing disparity between public and commercial rates — and therefore consumer and employer pushback on those dynamics — and policymakers are now attempting to respond.”

— Chris Jennings, a Democratic health care consultant

The big picture: “Medicare for All” brings all provider and drug reimbursements under the federal government’s control.

  • Sen. Bernie Sanders has been elusive about what those rates would be, but Sen. Elizabeth Warren has proposed massive rate cuts to doctors and hospitals as a way to reduce her plan’s cost.

Even the more moderate candidates’ public-option plans would enroll more Americans in government health care plans that set rates. And some have pitched ideas like limiting how much providers can charge for out-of-network care.

  • But supporters of a public option argue that it also enhances competition in the private insurance market, driving prices down across the board without completely abandoning the use of market forces.

All of the leading 2020 candidates have proposed drug policies, ranging from limiting how much drug companies can increase their prices to allowing the federal government to strip the patent from drugs that are deemed too expensive.

  • Even President Trump has proposed limiting how much Medicare pays for certain drugs by tying the price to what other countries pay.

The other side: The industry hates all of these ideas.

 

 

 

The Health 202: Here’s what doctors, drugmakers and politicians are thankful for

Posted on by • Posted in 2020 Election Issues, ACA, Health Insurance Industry, Health Policy, Health System, High Deductible Health Plans, High Drug Prices, High Premiums, High Prices, Hospital, Hospital Industry, Out of Pocket Expenses, Physician, Physician Compensation, Surprise Bills • Leave a comment

https://www.washingtonpost.com/news/powerpost/paloma/the-health-202/2019/11/27/the-health-202-here-s-what-doctors-drugmakers-and-politicians-are-thankful-for/5ddd69ec88e0fa652bbbda64/

A turkey pardoned by President Trump yesterday. REUTERS/Tom Brenner

It’s Thanksgiving Eve. Which for Health 202 begs this question: What is everyone thankful for this year when it comes to health policy?

We suspect that maybe – just maybe –you’d get vastly different answers from doctors versus insurers versus drugmakers versus consumers versus any other stakeholder in the $3.6 trillion U.S. health-care industry complex. Everyone has competing interests, which is a prime reason why the country’s besetting problems of ever-rising costs and subpar medical outcomes never quite seem to get solved.

So before you tune out the news cycle for Turkey Day, here’s our best guess at what’s giving each health-care stakeholder an attitude of gratitude.

—The White House and Republicans: Democrats are fixated on Medicare-for-all.

The GOP could hardly be more eager to focus on Medicare-for-all proposals from the Democratic presidential candidates. They view it as a way to veer the political conversation away from their own, unpopular actions on health-care policy and to depict Democrats as out-of-touch with voters.

President Trump and his top health officials have repeatedly decried Medicare-for-all, including during an October speech where the president announced an executive order boosting the role of private plans in the Medicare program.

“Every major Democrat in Washington has backed a massive government health care takeover that would totally obliterate Medicare,” the president said during that address. “These Democratic policy proposals … may go by different names, whether it’s single payer or the so-called public option, but they’re all based on the totally same terrible idea: They want to raid Medicare to fund a thing called socialism.”

—Democrats: The Trump administration is refusing to defend the Affordable Care Act.

Democrats are well aware that the refusal by Trump’s Justice Department to defend the Affordable Care Act from a challenge by GOP-led states is a political gift. They spent the 2018 election castigating the administration for not standing by the health-care law’s protections for patients with preexisting conditions – and it helped them win the House majority.

They plan to hammer that message again in 2020, as they seek the White House.

—The Department of Health and Human Services: Obamacare hasn’t been struck down (yet).

A federal appeals court is expected to rule any time now on the challenge to the ACA, which was upheld by a lower court last year. As The Health 202 has written, the decision against defending the law was a deeply controversial one inside the administration.

HHS Secretary Alex Azar and Seema Verma, administrator of the Centers for Medicare and Medicaid Services, tried to persuade the White House to defend the law. If the courts ultimately strike down the ACA, the administration will be on the hook to propose a replacement that would preserve health coverage for millions of Americans who gained it under the health-care law.

—Health-care advocates: Marketplace premiums are somewhat more affordable.

After several rough years for the ACA’s individual marketplaces, they got some good news this year. Average premiums for mid-level “silver” plans fell four percent for 2020 – a marked shift from the double-digit increases shoppers have typically seen.

That doesn’t mean plans are suddenly affordable for consumers ineligible for government subsidies. But it does mean insurers have found a sustainable way to keep participating in the marketplaces – and the marketplaces are here to stay for people without access to employer-sponsored coverage.

—Drugmakers: Chances for a major, bipartisan drug pricing deal this year are fading.

One of the pharmaceutical industry’s biggest fears is that Congress passes legislation allowing the federal government to directly negotiate lower prices in the Medicare program – a move the industry describes as government “price-fixing.”

Trump used to support allowing direct negotiations, and his staff was even in discussions with House Speaker Nancy Pelosi’s (D-Calif.) office earlier this fall over the potential for a bipartisan effort along these lines.

But the president and his aides have increasingly distanced themselves from Pelosi’s bill to allow direct negotiations. Now it looks like House Democrats will pass that measure as a messaging tactic, only to see it blocked in the GOP-led Senate. A bipartisan Senate bill capping how much drugmakers can annually raise prices has somewhat better prospects, but even that measure has made many Republicans suspicious.

In the end, only minor and less-controversial drug pricing measures may end up being attached to a longer-term spending bill.

—Doctors and hospitals: Any legislation protecting patients from “surprise” medical bills will almost certainly include arbitration – an approach that means higher payments for them.

Virtually every member of Congress agrees American patients should be protected from the surprise bills that can result when they visit an emergency department outside their health plan’s provider network or get care from an out-of-network provider at an in-network hospital.

But how to solve that has turned into an insurers-versus-doctors food fight.

Insurers and the Trump administration want to use a benchmarking approach to resolve out-of-network bills, in which the payments are tied to average prices in the same geographic area. That approach would save the government money, the Congressional Budget Office has said.

But doctors – and some dark-money groups that represent their interests – have been spending millions of dollars to push Congress toward adopting an approach called arbitration. In arbitration, which CBO has said would cost the government more money, the medical provider and the insurer each submit a bid to a third party arbiter, who then make a final decision.

Doctors believe arbitration would translate to beefier payments for them – and outcomes from New York’s arbitration system supports that notion. So if Congress passes surprise billing legislation, it will likely include some element of arbitration given the heavy influence by the doctor lobby.

—Regular Americans: Not much.

We hate to say it, readers, but there’s little for you to be thankful for this year when it comes to health-care policy. Costs for employer-sponsored coverage are going up and coverage plans are getting less generous. Congress appears unable to pass major reforms on the biggest consumer concerns. And the next election is likely to result in a government severely split over how to improve health-care – making it likely the status quo will prevail for some time.

But Happy Thanksgiving, anyway!

 

 

 

Nonprofit bad debt climbs again amid steeper deductibles, Moody’s says

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

https://www.healthcaredive.com/news/nonprofit-bad-debt-climbs-again-amid-steeper-deductibles-moodys-says/567981/

Dive Brief:

  • Bad debt, a proxy for unpaid bills, rose in 2018 for nonprofit hospitals after falling for several years since 2014, when some states decided to expand Medicaid, Moody’s Investors Services said in a recent report.
  • Rising deductibles are fueling the trend, as patients are on the hook for an increasing share of care costs. The growth of bad debt may at times outpace net patient revenue, the ratings agency said.
  • At the same time, deductibles and premiums are increasing faster than wage growth, another ominous signal for hospitals.

Dive Insight:

More Americans have high deductible plans than ever before, according to the Kaiser Family Foundation.

“More than a quarter (28%) of all covered workers, including nearly half (45%) of those at small employers with fewer than 200 employees, are now in plans with a deductible of at least $2,000, almost four times the share who faced such deductibles in 2009,” KFF said in a recent report.

But when patients with high deductibles seek care, hospitals typically have to collect from the patient first. And as more Americans struggle to afford treatment, it’s harder to collect from patients right away.

“The longer the delay between providing service and collecting payment, the less likely a hospital is to collect payment,” Moody’s said.

Many patients don’t have enough saved to cover the cost of their deductible, according to a survey from accounting firm PwC. At least a third of those with employer-based coverage and HDHPs don’t have enough on hand to pay for their deductible, the company reported.

It will be difficult for hospitals to reduce bad debt, according to Moody’s, which characterized it as an “uphill battle.” Collecting on unpaid bills requires “constant vigilance,” the ratings agency said.

In 2014, bad debt clocked in at roughly 5.6% of net patient revenue for nonprofit health systems, and then fell below 4.5% in 2016 and 2017. But in 2018, bad debt climbed again above 4.5%, Moody’s said.

 

 

 

Opinion: ‘Medicare for all’ won’t fix soaring healthcare costs

Posted on by • Posted in 2020 Election Issues, Cost Management, Cost Reduction, Health Insurance Industry, Health Policy, Health System, High Drug Prices, High Premiums, High Prices, Hospital, Hospital Industry, Market Consolidation, Market Power, Market Trends, Medicare for All, Monopoly Behavior, Pharmaceutical Industry • Leave a comment

https://www.latimes.com/opinion/story/2019-11-15/medicare-for-all-health-care-costs?fbclid=IwAR0uMTlEMcPuefoVjeuSvyIa69AIRk8v4N0d4ux6f1HMg1k4wMbM_SRElh8

Medical bill

The idea of “Medicare for all” advanced another step with the recent release of Sen. Elizabeth Warren’s more detailed health proposal. It is expansive and bold, and has brought some excitement to the progressive core of the Democratic Party. While policy mavens can delight in the details, the enormity of the proposal is a sign that this debate has clearly gone off the rails.

There is no question that healthcare cost is a pocketbook challenge for all of us. Employer and employee premiums for private health insurance for a household now average $20,576, before deductibles and copayments, and before payroll and state and local taxes to pay for healthcare for the elderly and the poor.

National health expenditures increased 179% between 2000 and 2019 to $3.8 trillion, and 50% of this increase was directly due to increases in unit prices and service intensity by hospital systems and physicians. In the U.S., healthcare is 28% more expensive than the next highest cost system, Switzerland, and 78% more expensive than in Germany. For a primary care doctor in the U.S., submitting invoices to insurers and collecting payments costs almost $100,000 per year.

What we should be debating — instead of the politics around Medicare for all — is how this market evolved in such a malignant direction, and whether anything can be done to change these trends.

Hospital consolidation has been shown to drive up healthcare costs, and yet 90% of U.S. hospital markets are highly consolidated. Physician employment by hospitals and health systems has increased from 26% to 44% of the market from 2012 to 2018, increasing the pricing leverage of consolidated systems even further.

These changes directly result in higher prices for commercial health insurance as hospitals use their exaggerated hospital “charges,” often many multiples of their costs or of the market price, to drive up their reimbursement rates for in-network care and especially for out-of-network care, where there is no price negotiation. Further, even at most not-for-profit healthcare systems, hospital leaders are compensated based on the profits they generate, not premiums they reduce, as is the case with leaders of for-profit hospital systems.

The pharmaceutical market has also come under scrutiny for the enormous prices of newly approved medications, and for price increases of existing medicines such as insulin. Behind the scenes are layers of businesses that further exploit this market. For example, one pharmaceutical benefit manager (a company hired by a health plan or employer to oversee prescription drug benefits) reported profits of $1.8 billion in 2013 that rose to $4.5 billion in 2017 despite a 4% reduction in revenue reported over this period.

It’s easy to see that consumers need relief from this market. One might imagine that politicians from both political parties would band together in a search for actionable solutions. Yet the debate has migrated from a discussion of why costs are spiraling out of control to a simple and unrealistic answer — Medicare for all. Here are some ideas on how to frame a meaningful discussion about costs.

Reducing administrative costs has been a stated policy goal of the federal government since the passage of the Health Insurance Portability and Accountability Act (HIPAA) in 1996, yet these costs continue to increase. To reduce these costs, we have to simplify the complexity of the billing process for hospitals and physicians across the multiple different health plans in the market, and we need to transform the expensive set of public data reporting mandates into a model in which we are assured these data are used by providers internally to improve the quality of care they provide.

We need to rebalance negotiating power between hospitals and physicians and insurers. Hospitals and other providers have been allowed to set their list prices without any relationship to the cost of care they provide. These inflated prices are then imposed on out-of-network patients, most egregiously in the practice of surprise medical billing in which patients encounter deliberately out-of-network air ambulances and independent anesthesiologists. In billing disputes, state law should offer these patients a default of a market price closer to Medicare payments than to hospital charges.

Finally, it’s time to stop the practices that are driving up prescription drug costs for all of us. Secret payments between pharmaceutical manufacturers and pharmaceutical benefit managers and distributors totaled over $100 billion in 2016. This business model needlessly inflates drug prices for the benefit of intermediaries in the market. We need laws requiring price transparency at the pharmacy for brand and generic drugs, and price competition for medications at the retail level.

The problem with focusing on Medicare for all is that rather than developing practical approaches, the debate is heading down a path likely to leave us without any tenable solutions to address healthcare costs — the issue that ignited the public’s interest in the first place.

 

 

 

The fall of a major specialty pharmacy

Posted on by • Posted in High Drug Prices, Pharmaceutical Industry, Pharmacy Benefits Management • Leave a comment

https://www.axios.com/newsletters/axios-vitals-00d53b0a-89cb-415d-81ab-8501d2bab6da.html

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Diplomat Pharmacy, which sells medications to people with complex conditions and acts as a drug benefit middleman, is a shell of itself. The company was worth more than $3 billion in its heyday in 2015, but is now worth a little more than $200 million after a disastrous third quarter.

The bottom line: Larger specialty drug players — owned by Cigna, CVS Health and UnitedHealth Group — have crushed Diplomat with their size, Axios’ Bob Herman reports.

  • Now, Diplomat is running out of cash and is being forced to sell assets, or the entire company, because it has “substantial doubt surrounding our ability to continue,” the company said in its earnings report.

By the numbers: Diplomat’s main business, which distributes high-cost infusion drugs and other medicines that you don’t find at your typical pharmacy, is still lucrative.

The pharmacy benefit manager business, which Diplomat just got into a couple years ago, has been a mess.

  • Health insurers continue to drop Diplomat’s PBM, including one of Diplomat’s largest clients.

What to watch: Diplomat executives will have to spell out their plans for a full or partial sale before the end of the year.

  • Diplomat “would be perfect” for a company like Amazon, according to a high-ranking person who worked at Diplomat.
  • Amazon now owns PillPack, but lacks a PBM and is not involved with these kinds of specialty medications.