The most expensive health care option of all? Do nothing.

https://www.politico.com/news/2020/01/09/medicare-for-all-health-care-096367?utm_source=The+Fiscal+Times&utm_campaign=b67cf54986-EMAIL_CAMPAIGN_2020_01_09_10_31&utm_medium=email&utm_term=0_714147a9cf-b67cf54986-390702969

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‘Medicare for all’ debate sidesteps cost of current system.

The projected multitrillion-dollar cost of “Medicare for All” has pitted Democratic presidential candidates against each other as they argue about the feasibility of single-payer health care.

But the reality is the current health system may cost trillions more in the long run and be less effective in saving lives.

Spending on Medicare, Medicaid, private health insurance and out-of-pocket expenses is projected to hit $6 trillion a year — and $52 trillion over the next decade. At the same time, the number of people with insurance is dropping and Americans are dying younger.

Sen. Bernie Sanders and other single-payer advocates say Medicare for All would cost the government far less — between $20 trillion and $36 trillion over a decade — by slashing overhead, eliminating out-of-pocket costs and empowering federal officials to bargain directly with hospitals and drugmakers. But the streamlined system would have to care for millions of currently uninsured people at a significant cost to taxpayers, and experts disagree whether it would actually save money in the long run.

Centrist Democrats are pushing narrower plans that would, among other things, expand tax credits for people just above the Obamacare subsidy threshold. Virtually no one is arguing for maintaining the status quo, but that’s precisely what could happen given that congressional gridlock has stymied even popular, and bipartisan, causes like halting surprise medical bills.

“It’s really hard to see anything breaking through, especially when the industry interests and the money they’re willing to spend on lobbying and campaign contributions is just mind-boggling,” said Sabrina Corlette, a researcher at Georgetown University’s Center on Health Insurance Reforms. “And, without question, we are on an unsustainable trajectory.”

With Medicare for All and its price tag likely to come up in the next Democratic debate Jan. 14 in Iowa, here are five of the costliest consequences of inaction:

National health spending keeps rising

The Centers for Medicare and Medicaid Services estimates that nationwide health spending will hit $6 trillion a year by 2027 absent any changes in law. That would be nearly a fifth of the economy. In total, the United States is slated to spend about $52 trillion over the coming decade.

The cost drivers include hospitals, physician and clinical services and prescription drugs. Some local health systems have become monopolies that can largely set prices as they please — leading to higher premiums and more out-of-pocket spending for consumers.

“Even the biggest insurance plans are not big enough to bargain down the cost of services, and they don’t have an incentive to,” said Wendell Potter, a former Cigna executive-turned whistleblower and single-payer advocate.

An aging population is driving up Medicare spending, but the rising cost of private insurance is the biggest factor. A recent Kaiser Family Foundation analysis found per capita spending for private insurance grew by nearly 53 percent over the last decade, or more than double the hike in per capita Medicare spending.

More people will be uninsured

The Census Bureau reported in September that the number of Americans without insurance grew by 2 million people since 2017 — the first increase in nearly a decade. Even with a healthy economy and low unemployment, more than 27 million people weren’t covered at any point last year. That could grow to 35 million by 2029, per the Congressional Budget Office, under current law.

The number of people enrolling in the Obamacare marketplace has declined, and more people are dropping employer-sponsored insurance due to cost and other concerns.

Part of this is President Donald Trump’s doing — the administration has slashed efforts to push Obamacare enrollment and rolled back the massive marketing effort that the Obama administration rolled out for years.

There are also more than 400,000 additional uninsured children than just two years ago — and 4 million in all — and states that haven’t expanded Medicaid are seeing the biggest spikes.

“What we also miss in the debate is the number of people temporarily uninsured, who miss open enrollment, who are between jobs, who fall through the cracks,” said Adam Gaffney, a Harvard Medical School researcher and the president of Physicians for a National Health Program. “I see people all the time in my practice in that situation who don’t fill prescriptions and experience serious complications.”

Going without insurance hits patients and health care providers: Average hospital spending on care for the uninsured was $13 million in 2018 up roughly 3 percent annually since 2016.

Coverage will be skimpier

As the cost of health care has skyrocketed, insurance companies have squeezed patients, charging higher premiums, deductibles and co-pays, and creating narrow networks of providers and aggressively billing for out-of-network care.

Since 2009, the amount workers have had to pay for health insurance has increased 71 percent, while wages have only risen 26 percent over that time.

More than 80 percent of workers now have to pay a minimum amount out of pocket before insurance kicks in — and the amount of that deductible has doubled over the last 10 years, now standing at an average of $1,655, though many workers have to pay a lot more.

These costs are putting care out of reach for millions.

new Gallup poll found that a full quarter of adults have put off treatment for a serious medical condition due to the cost — the highest since Gallup began asking the question three decades ago. A full third say they’ve delayed or deferred some kind of health care service over the past year. Another Gallup and West Help survey found that 34 million people know at least one friend or family member who died over the past five years after skipping treatment due to costs.

 

Needed drugs will become more out of reach

U.S. patients pay vastly more for prescription drugs than people in other developed countries and the disparity is set to grow. The United States spent $1,443 per person on prescription drugs in 2018, while other developed countries fell somewhere between $466 and $939.

In just five years, national spending on prescription drugs increased 25 percent, according to the Government Accountability Office, and CMS expects that increase to “accelerate” over the next several years.

Increasingly, patients are responding by forgoing their medications. Gallup found in November that nearly 23 percent of adults — roughly 58 million people — said they haven’t been able to “pay for needed medicine or drugs that a doctor prescribed” over the past year.

This widespread inability to take needed medication, a government-funded study found last year, is responsible for as much as 10 percent of hospital admissions. And the Centers for Disease Control and Prevention estimates that medication nonadherence accounts for somewhere between $100 and $300 billion in national health spending every year.

 

Americans will continue to get sicker and die younger

The cost of maintaining the status quo is evident not only in dollars but in human lives.

Life expectancy in the United States has declined over the last three years, even as other developed countries around the world saw improvements.

Though the United States spends nearly twice as much on health care as other high-income countries, there’s been a stark increase in mortality between the ages of 19 and 64, with drug overdoses, alcohol abuse, suicide and organ diseases driving the trend. It’s cut across race and gender with the worst effects felt in rural areas.

The opioid epidemic only accounts for a fraction of the problem. The National Research Council found that the United States has higher mortality rates from most major causes of death than 16 other high-income countries.

Researchers at USC estimate that if these trends continue, it would take the United States more than a century to reach the average life expectancy levels other countries hit in 2016.

 

 

Despite provider claims, hospital M&A not associated with improved care, NEJM finds

https://www.healthcaredive.com/news/despite-provider-claims-hospital-ma-not-associated-with-improved-care-ne/569671/

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.

 

 

 

Hospital M&A spurs rising healthcare costs, MedPAC finds

https://www.healthcaredive.com/news/hospital-ma-spurs-rising-healthcare-costs-medpac-finds/566858/

Dive Brief:

  • Both vertical and horizontal hospital consolidation is correlated with higher healthcare costs, according to a congressional advisory committee on Medicare, in yet another study finding rampant mergers and acquisitions drive up prices for consumers.
  • The Medicare Payment Advisory Commission found providers with greater market share see higher commercial profit margins, leading to higher costs per discharge, though the direct relationship between market share and cost per discharge was not statistically meaningful itself.
  • MedPAC also found vertical integration between health systems and physician practices increases prices and spending for consumers. The top-down consolidation leads to higher prices for commercial payers and Medicare alike, as hospitals have more bargaining heft and benefit from Medicare’s payment hikes for hospital outpatient departments.

Dive Insight:

Hospital consolidation has become a major point of concern for policymakers, antitrust regulators and patient advocacy groups.slew of prior studies have found unchecked provider M&A contributes to higher healthcare costs, with the brunt often borne by consumers in the form of higher premiums and out-of-pocket costs.

Since 2003, the number of “super-concentrated” markets has increased from 47% to 57%, according to the MedPAC analysis of CMS and American Hospital Association data. Those markets, with a high amount of consolidation, rarely see new providers enter, which stifles competition, and are rarely reviewed by the government.

There’s been little change in antitrust regulation since the 1980s and, though the Federal Trade Commission has won several challenges to hospital consolidation in the 2010s, the agency only challenges 2% to 3% of mergers annually.

MedPAC also found super-concentrated insurance markets actually led to lower costs per discharge compared to lower levels of payer concentration, deflating somewhat hospital lobbies’ arguments that payer consolidation is driving prices higher.

Committee members called for more analysis of how macro trends like an aging population and federal policy could be driving consolidation and impacting prices, leading some to call for a revamp of the hospital payment framework itself.

“We have to change the way hospitals are paid. I don’t see another solution,” said Brian DeBusk, CEO of Tennesse-based DeRoyal Industries, a medical manufacturer. “Are you going to undo a thousand hospital mergers? Are you going to enact rate setting? I don’t see another way.”

MedPAC also looked at vertical integration, where hospitals snap up physicians practices downstream. According to the Physician Advocacy Institute, only 26% of physician practices were owned by hospitals in 2012, but by last year that number had spiked to 44%.

Since 2012, billing has shifted from physician offices to hospital outpatient departments, especially in specialty practices. In chemotherapy administration, for example, physician offices saw almost 17% less volume between 2012 and 2018, while outpatient centers saw a 53% increase in volume, according to MedPAC.

Physicians in hospital-owned practices also refer more patients to the hospital’s facilities and, despite a common stumping point that integration improves quality through care coordination, its effect on quality is “ambiguous,” MedPAC analyst Dan Zabinski said Thursday at the committee’s November meeting.

Despite the mountain of evidence, the AHA published a widely-decried study in September claiming acquired hospitals see a reduction in operating expenses and a statistically significant drop in readmission and mortality rates. The study was criticized for not using actual claims data in its analysis among other methodological and conflict of interest concerns.

Republican leaders in the House Energy and Commerce Committee asked MedPAC to study provider consolidation in August, and the body’s full findings will be included in its March report to Congress.​

 

 

 

 

 

TOP 6 HEALTHCARE MERGERS OF 2019

https://www.healthleadersmedia.com/finance/top-6-healthcare-mergers-2019?spMailingID=16768251&spUserID=MTg2ODM1MDE3NTU1S0&spJobID=1781800057&spReportId=MTc4MTgwMDA1NwS2

M&A activity continued to thrive among insurers and providers in 2019.

As was the case in 2018, the healthcare industry saw several megamergers occur in 2019.

Healthcare leaders pointed to industry consolidation as the year’s top priority, according to a Definitive Healthcare survey, with different reasons for pursuing mergers.

Related: Top 5 Healthcare Mergers of 2018

Providers sought to achieve scale in order to address staffing shortages while insurers looked to respond to the increasing influence of consumerism in healthcare.

While some mergers fell through, many organizations announced or finalized deals during the course of the year.

Below are six major healthcare mergers that were announced or completed in 2019.

1. CVS-AETNA

The nearly $70 billion megamerger received final judicial approval in September after an extended review by U.S. District Judge Richard J. Leon.

The merger originally received approval from the Department of Justice in October 2018 but was subject to questions and criticisms by numerous stakeholders.

The deal was marked by scrutiny over vertical mergers, with Leon noting that his approval shouldn’t be seen as a rubber stamp.

 

2. CENTENE-WELLCARE

Centene Corp. announced a $17.3 billion merger with WellCare Health Plans in March, a move seen as doubling down on the marketplaces established by the Affordable Care Act.

The merged company will be based in St. Louis and encompass 22 million members, $97 billion in revenues, and $5 billion in EBITDA for 2019.

The pending transaction has already received regulatory approval from 25 states.

Earlier this month, Centene agreed to sell its subsidiary IlliniCare Health to CVS Health, including its Medicaid and Medicare Advantage plans in Illinois.

3. DIGNITY-CHI

Dignity Health and Catholic Health Initiatives finalized a $29 billion megamerger between the two Catholic health systems in February.

Renamed as “CommonSpirit,” the Chicago–based health system has a footprint in 21 states, with more than 700 care sites and 142 hospitals.

In November, the system released its Q1 2020 financials highlighted by $7.1 billion in revenues and a net loss of $227 million.

 

4. HARVARD PILGRIM-TUFTS

Harvard Pilgrim Health Care and Tufts Health Plan announced an intention to merge in August, potentially serving nearly 2.4 million plan members across New England.

As part of the proposed deal, Tufts CEO Tom Croswell would serve as CEO of the merged company while Harvard Pilgrim CEO Michael Carson would serve as president.

The two Massachusetts-based insurers told The Boston Globe earlier this month that the merger would benefit consumers with more affordable health coverage.

 

5. TOTAL HEALTH CARE-PRIORITY HEALTH

Total Health Care and Priority Health received final regulatory approval from the Michigan Department of Insurance and Financial Services (DIFS) in late November.

The two Michigan-based healthcare organizations, which announced plans to merge in late August, plan to complete the deal by the end of 2019.

Prior to receiving approval from state regulators, Total Health Care members approved the merger earlier this fall.

As part of the merger, the two Michigan-based healthcare organizations will also be establishing a $25 million foundation to improve health outcomes in Detroit.

 

6. DARTMOUTH-HITCHCOCK-GRANITEONE HEALTH

Two New Hampshire-based health systems agreed to merge nine months after signing a letter of intent to merge.

The new merged system will be renamed “Dartmouth-Hitchcock Health GraniteOne” and includes Catholic Medical Center in Manchester.

Both organizations will maintain their locations and local leadership as part of the deal.

 

 

 

Sutter Health to pay $575M to settle antitrust case

https://www.beckershospitalreview.com/legal-regulatory-issues/sutter-health-to-pay-575m-to-settle-antitrust-case.html?origin=CFOE&utm_source=CFOE&utm_medium=email

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Sutter Health, a 24-hospital system based in Sacramento, Calif., has agreed to pay $575 million to settle an antitrust case brought by employers and California Attorney General Xavier Becerra.

The settlement resolves allegations that Sutter Health violated California’s antitrust laws by using its market power to overcharge patients and employer-funded health plans. The class members alleged Sutter Health’s inflated prices led to $756 million in overcharges, according to Bloomberg Law.

Under the terms of the settlement, Sutter will pay $575 million to employers, unions and others covered under the class action. The health system will also be required to make several other changes, including limiting what it charges patients for out-of-network services, halting measurers that deny patients access to lower-cost health plans, and improving access to pricing, quality and cost information, according to a Dec. 20 release from Mr. Becerra.

To ensure Sutter is complying with the terms of the settlement, the health system will be required to cooperate with a court-approved compliance monitor for at least 10 years.

Mr. Becerra said the settlement, which he called “a game changer for restoring competition,” is a warning to other organizations.

This first-in-the-nation comprehensive settlement should send a clear message to the markets: if you’re looking to consolidate for any reason other than efficiency that delivers better quality for a lower price, think again. The California Department of Justice is prepared to protect consumers and competition, especially when it comes to healthcare,” he said.

A Sutter spokesperson told The New York Times that the settlement did not acknowledge wrongdoing. “We were able to resolve this matter in a way that enables Sutter Health to maintain our integrated network and ability to provide patients with access to affordable, high-quality care,” said Flo Di Benedetto, Sutter’s senior vice president and general counsel, in a statement to The Times.

The settlement must be approved by the court. A hearing on the settlement is scheduled for Feb. 25, 2020.

 

Adventist, St. Joseph merger rejected by California regulators

https://www.beckershospitalreview.com/hospital-transactions-and-valuation/adventist-st-joseph-merger-rejected-by-california-regulators.html

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The California Department of Justice denied a proposed merger between nonprofits Adventist Health System/West and St. Joseph Health System Oct. 31, stating it’s not in the public’s interest.

The transaction would increase healthcare costs and possibly limit healthcare access in Northern California, the department determined.

In June 2018, Roseville, Calif.-based Adventist and Irvine, Calif.-based St. Joseph requested to form a joint operating company to integrate 10 select facilities in Northern California. At the time, the systems said their integration would improve healthcare access, especially for vulnerable and underserved patients. 

Sean McCluskie, chief deputy to California’s attorney general, disagreed with those predictions.

“The California Department of Justice is responsible for ensuring that any proposed sale or transfer of a nonprofit health facility protects the health and safety interests of the surrounding community. After careful review, we found this proposal falls short of protecting consumers,” he said.

In a joint statement to Becker’s, Adventist and St. Joseph expressed disappointment about the department’s decision.

“Our intent has always been to better serve our communities, increase access to services, and create a stronger safety net for families in Northern California,” they said. “At this time, our organizations will need to take a step back and determine implications of this decision. The well-being of our communities remains our top priority.”