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Category Archives: High Prices
Healthcare spending is higher over 5 years, mostly due to a rise in prices, says new report
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.
Cartoon – High Deductible
The health care debate we ought to be having
https://www.axios.com/what-matters-2020-health-care-costs-7139f124-d4f7-44a1-afc2-6d653ceec77d.html
Americans worry a lot about how to get and pay for good health care, but the 2020 presidential candidates are barely talking about what’s at the root of these problems: Almost every incentive in the U.S. health care system is broken.
Why it matters: President Trump and most of the Democratic field are minimizing the hard conversations with voters about why health care eats up so much of each paycheck and what it would really take to change things.
Cartoon – Got a Hand?
Despite provider claims, hospital M&A not associated with improved care, NEJM finds
Dive Brief:
- Hospital consolidation is associated with poorer patient experiences and doesn’t improve care, according to a study published Thursday in the New England Journal of Medicine, refuting a common provider justification for rampant mergers and acquisitions.
- The study funded by HHS’ health quality research division, the Agency for Healthcare Research and Quality, found that acquired hospitals saw moderately worse patient experience, along with no change in 30-day mortality or readmission rates. Acquired hospitals did improve slightly in clinical process, though that can’t be directly chalked up to the results of an acquisition, researchers found.
- It’s further evidence that bigger isn’t always better when it comes to hospitals, and adds onto a heap of previous studies showing provider mergers lead to higher prices for commercially insured patients.
Dive Insight:
Hospitals continue to turn to M&A to navigate tricky industry headwinds, including lowering reimbursement and flatlining admissions as patients increasingly turn to alternate, cheaper sites of care. Provider trade associations maintain consolidation lowers costs and improves operations, which trickles down to better care for patients.
Though volume of deals has ebbed and flowed, hospital M&A overall has steadily increased over the past decade. The hospital sector in 2018 saw 90 deals, according to consultancy Kaufman Hall, up 80% from just 50 such transactions in 2009.
Thursday’s study analyzed CMS data on hospital quality and Medicare claims from 2007 through 2016 and data on hospital M&A from 2009 to 2013 to look at hospital performance before and after acquisition, compared with a control group that didn’t see a change in ownership.
American Hospital Association General Counsel Melinda Hatton took aim at the study’s methods to refute its findings, especially its reliance on a common measure of patient experience called HCAHPS.
“Using data collected from patients to make claims about quality fails to recognize that it is often incomplete, as patients are not required to and do not always respond comprehensively,” Hatton told Healthcare Dive in a statement. “The survey does not capture information on the critical aspects of care as it is delivered today.”
The results contradict a widely decried AHA-funded study last year conducted by Charles River Associates that found consolidation improves quality and lowers revenue per admission in the first year prior to integration. The research came quickly under fire by academics and patient advocates over potential cherrypicked results.
A spate of previous studies found hospital tie-ups raise the price tag of care on payers and patients. Congressional advisory group MedPAC found both vertical and horizontal provider consolidation are correlated with higher healthcare costs, the brunt of which is often borne by consumers in the form of higher premiums and out-of-pocket costs.
A 2018 study published in the Quarterly Journal of Economics found prices rose 6% after hospitals were acquired, partially due to limiting market competition. Groups like the left-leaning Center for American Progress have called for increased scrutiny from antitrust regulators as a result, but — despite snowballing M&A — there’s been little change in antitrust regulation since the 1980s. The Federal Trade Commission won several challenges to hospital consolidation in the 2010s, but the agency only contests 2% to 3% of mergers annually, according to MedPAC analysts.
Providers, like most actors across the healthcare ecosystem, are increasingly under fire for high prices and predatory billing practices. President Donald Trump’s administration finalized a rule late last year that would force hospitals to reveal secret negotiated rates with insurers, relying on the assumption that transparency would shame both actors into lowering prices.
A cadre of provider groups led by the AHA sued HHS over the regulation, arguing it violates the First Amendment and would place undue burden on hospitals, while potentially stifling competition. The lawsuit is currently being reviewed by the U.S. District Court for the District of Columbia.
Private insurance’s costs are skyrocketing
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.
Benefit design, higher deductibles will increase bad debt for hospitals
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
Americans are putting off medical treatment in record numbers because of cost, Gallup data shows
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.
Health care spending grows — again — in 2018
Americans spent $3.65 trillion on health care in 2018 — 4.6% more than the year before. That growth also was higher than the 4.2% rate from 2017, according to revised figures from independent federal actuaries, Axios’ Bob Herman reports.
Between the lines: U.S. health care spending climbed again not because people went to the doctor or hospital more frequently, but because the industry charged higher prices. And private health insurers didn’t do a particularly good job negotiating lower rates.
The intrigue: The number of people with private health plans — which mostly consists of the coverage people get through their jobs — dipped in 2018, yet the amount spent per person soared 6.7%.
- That is the highest per-enrollee spending growth rate among people with private health insurance since 2004, actuaries wrote.
- Part of that increase was due to higher premiums that insurance companies passed on from the Affordable Care Act’s health insurance tax.
- More importantly: Hospitals, doctors and drugmakers continued to wring out much higher rates from private insurers thanks to provider mergers and perverse negotiating incentives.
Medicare and Medicaid had much lower per-enrollee spending growth rates in 2018 than private insurance, but those figures were the highest they’ve been since 2015 — again due to higher costs for the private insurers that are increasingly running those government programs.
HENRY KOTULA 