Health Policy Blog

Health Construction Declined in January, Robust Year on Year

The construction market was weak overall in January, especially in health facilities, where construction starts declined 1.6 percent from December. Other construction starts declined only 1.0 percent. Health facilities construction accounted for just under six percent of the value of all new nonresidential construction.

Construction of private health facilities dropped 0.2 percent, versus an increase of 0.3 percent for private non-health facilities. Private health facilities construction starts accounted for over seven percent of private nonresidential construction starts. Construction of public health facilities dropped by 6.6 percent. However, construction of other public facilities dropped by 4.9 percent. In other words, the decline in health facilities construction was 0.4 percentage points worse than the change in non-health private construction, versus 1.7 percentage points worse than non-health public construction (Table I).

Mar 01, 2017 | Leave a Comment | by John R. Graham

Repealing Obamacare Will Create Jobs

(A version of this Health Alert was published by InsideSources.com and widely syndicated in local newspapers.)

Obamacare channeled billions of dollars out of the productive economy and diverted it towards a health-services sector that has become even more bloated than it was before 2010.

Last July, Dr. Bob Kocher, a venture capitalist who served as a special assistant to President Obama when the Affordable Care Act was created, noted that more than half of all health care workers today are administrators, up from just over a third before Obamacare became law.

These are paper pushers, not doctors and nurses—not the kind of jobs we should be bragging about.

Mar 01, 2017 | 5 comments | by John R. Graham

GDP: Strong Health Spending In Weak Report

For those (like me) concerned about how much health spending continues to increase after Obamacare, today’s second report of fourth quarter Gross Domestic Product shows concern is still warranted. Because of revisions to the advance estimate, health spending accounted for a greater share of GDP than we had thought.

Overall, real GPD increased 1.8 percent on the quarter, while health services spending increased 5.6 percent, and contributed 36 percent of real GDP growth. Growth in health services spending was much higher than growth in non-health services spending (0.3 percent) and non-health personal consumption expenditures (2.4 percent). However, the implied annualized change in the health services price index increased by just 1.6 percent, lower than the price increase of 2.4 percent for non-health services, 2.0 percent for non-health PCE, and 2.1 percent for non-health GDP.

(See Table I below the fold.)

Feb 28, 2017 | 1 comment | by John R. Graham

Employer-Based Coverage Does Not Equalize Workers’ Access to Health Care

One reason public policy favors employer-based health benefits instead of individually owned health insurance is the former is supposed to equalize access to health care among workers of all income levels. Insurers usually demand 75 percent of workers be covered, which leads to benefit design that attracts almost all workers to be covered.

Employers do this by charging the same premium for all workers but only having workers pay a small share of the premium through payroll deduction. Most is paid by the firm. Last year, the average total premium for a single worker in an employer-based plan was $6,435, but the worker only paid $1,129 directly while the employer paid $5,306.

Although this suppresses workers’ wages, workers cannot go to their employers and demand money instead of the employers’ share of premium. The tax code also encourages this, by exempting employer-based benefits from taxable income.

Does this equal access to care? Not at all, according to new research:

Feb 27, 2017 | 55 comments | by John R. Graham

Louisiana Shows Coverage Does Not Equal Access

Readers know I disagree with using measurements of “coverage” as proxies for access to medical care. New data from the Louisiana Department of Health, which cheers the expansion of Medicaid dependency in the state, shows (unwittingly) exactly why.

Healthy Louisiana’s Dashboard shows 402,557 adults became dependent on Medicaid as a result of Obamacare’s expansion. The Department notes benefits for some sick people. For example, screening resulted in 74 people being diagnosed with breast cancer and 64 diagnosed with colon cancer.

The Dashboard stops there, not telling us how those newly diagnosed were treated. (Medicaid patients often receive treatment later than privately insured.) However, there is another, likely bigger problem.

Feb 24, 2017 | 18 comments | by John R. Graham

Medicare, Medicaid, Veterans Health At High Risk For Fraud, Waste, Abuse

The Government Accountability Office (GAO) has published its biennial update of federal programs “that it identifies as high risk due to their greater vulnerabilities to fraud, waste, abuse, and mismanagement…”

Healthcare programs feature high on the list. Medicare, the entitlement program for seniors, and Medicaid, the joint state federal welfare program for low-income households, are longstanding members of the list; and the GAO notes that legislation will be required to fix them: “We designated Medicare as a high-risk program in 1990 due to its size, complexity, and susceptibility to mismanagement and improper payments.” “We designated Medicaid as a high-risk program in 2003 due to its size, growth, diversity of programs, and concerns about the adequacy of fiscal oversight.”

So, that would be 27 years for Medicare and 14 years for Medicaid. Seen any progress?

Feb 23, 2017 | 13 comments | by John R. Graham

Health Spending & Prices to Rise Through 2025

Actuaries at the Centers for Medicare & Medicaid Services, a government agency, have just updated their estimate of future health spending:

For 2018 and beyond, both Medicare and Medicaid expenditures are projected to grow faster than in the 2016–17 period, and more rapidly than private health insurance spending, for several reasons. First, growth in the use of Medicare services is expected to increase from its recent historical lows (though still remain below longer-term averages). Second, the Medicaid population mix is projected to trend more toward somewhat older, sicker, and therefore costlier beneficiaries. Third, baby boomers will continue to age into Medicare, with some of them dropping private health insurance as a result. And finally, growth in the demand for health care for those with private coverage is projected to slow as the relative price of health care—the difference between medical prices and economywide prices—is expected to begin gradually increasing in 2018 and as income growth slows in the later years of the projection period.

Feb 21, 2017 | 62 comments | by John R. Graham

American Patients Have Much, Much Greater Access to New Cancer Drugs Than Others Do

New research by scholars at the University of Pittsburgh shows how much better access American patients have to new cancer medicines than their peers in other developed countries:

Of 45 anticancer drug indications approved in the United States between January 1, 2009, and December 31, 2013, 64% (29) were approved by the European Medicines Agency; 76% (34) were approved in Canada; and 71% (32) were approved in Australia between January 1, 2009, and June 30, 2014. The U.S. Medicare program covered all 45 drug indications; the United Kingdom covered 72% (21) of those approved in Europe— only 47% (21) of the drug indications covered by Medicare. Canada and France covered 33% (15) and 42% (19) of the drug indications covered by Medicare, respectively, and Australia was the most restrictive country, covering only 31% (14).

(Y. Zhang, et al., “Comparing the Approval and Coverage Decisions of New Oncology Drugs in the United States and Other Selected Countries,” Journal of Managed Care and Specialty Pharmacy, 2017 Feb;23(2):247-254.)

Feb 20, 2017 | 9 comments | by John R. Graham

Lifetime HSAs: The ‘Antisocial’ Health Reform that’s Good for You!

In an ideal world, people would save for retirement, have an emergency fund and save for future health care needs. A mandatory payroll tax dedicated to your health care would be the ideal way to fund your future medical needs. Singapore has such a system, called MediSave accounts. Liberals consider personal accounts to be antisocial, since money in one account cannot be diverted to someone else’s medical needs. However, a dose of antisocial selfishness would benefit our health care system.

Feb 20, 2017 | 15 comments | by Devon Herrick

Repealing Obamacare Will Improve California’s Job Market

(A version of this Health Alert was published by the Orange County Register.)

Obamacare was a cash cow for providers, which now argue it was a program for jobs and economic growth. They now say that repealing Obamacare will kill California jobs. That grabs any politician’s attention, but it is not true.

According to a study by the UC Berkeley Labor Center, which is promoted by the California Hospital Association:

“The majority (135,000) of these lost jobs would be in the health care industry, including at hospitals, doctor offices, labs, outpatient and ambulatory care centers, nursing homes, dentist offices, other health care settings and insurers. But jobs would also be lost in other industries. Suppliers of the health care industry, such as food service, janitorial and accounting firms, would experience reduced demand, leading to job loss. The lost jobs also include those lost due to the ‘induced effect’ of health care workers spending less at restaurants, retail stores and other local businesses.”

Such research relies on the so-called “multiplier effect,” a politically seductive but misleading type of voodoo economics.

Feb 17, 2017 | 7 comments | by John R. Graham