Tag: "Health Care Costs"

CPI: Health Insurance Premiums Jump Amid General Deflation

BLSThis morning’s Consumer Price Index corroborates yesterday’s Producer Price Index, which indicated health insurance and certain other health prices increased in a generally deflationary environment. While the CPI for all items dropped 0.2 percent in February, health insurance increased 1.3 percent. Over the last twelve months, CPI has increased just 1.0 percent, while health insurance has increased 6.0 percent.

Prescription drugs continue to stand out, as well, having increased 0.9 percent last month and 3.4 percent over twelve months. However, the increase in prescription prices alone cannot explain the health insurance premium hikes.

Inpatient hospitals services also stand out, having increased 0.6 percent last month and 4.8 percent in the last twelve months. Outpatient services are only slightly better.

February’s CPI confirms that, while nominal increases in health prices are moderate, real price increases are quite high, because we are in a generally deflationary environment.

(See Table I below the fold.)

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Mar 16, 2016 | 12 comments | by

Donald Trump on Drugs

Trump(A version of this Health Alert was published by Forbes.)

In last Thursday’s Republican presidential primary debate in Florida, Donald Trump made the curious assertion that Medicare does not “bid out” prescription drugs, before moving on to a similar assertion about military procurement. As with all thing related to whatever “Trumpcare” would look like if he were President, this statement requires some effort to decipher.

Medicare’s prescription drugs are very well “bid out.” Indeed, they are “bid out” twice – both directly and indirectly. Doctors and hospitals are not “bid out” at all. Instead, they are subject to Soviet-style price fixing by a central government authority. This is changing quickly, but the alternative payment methods are at a very early and unproven stage. Further, these alternative payment methods are not subject to competitive bidding, but to quality measures dictated by the central government (as I described last week).

Medicare spending on durable medical equipment (for example, walkers or oxygen equipment), prosthetics, and other supplies (for example, diabetic test strips) has been competitively bid since 2011. However, those competitive bids are delivered to the central government. Medicare prescription drugs are doubly bid, because drug-makers do not negotiate prices with the central government. Instead, health insurers compete to provide Medicare Part D drug plans, and the winning insurers negotiate with drug-makers for medicines. Consumers of prescription drugs enjoy two levels of protection from political interference.

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Mar 16, 2016 | 10 comments | by

PPI: Health Insurance Jumps, Deflation Returns

BLSDeflation returned to the Producer Price Index (PPI) last month, as the PPI for final demand dropped 0.2 percent from January. Prices for final demand goods, less volatile food and energy, increased 0.1 percent. Most prices for health goods for final demand were flat. The exception – again – was pharmaceutical preparations, for which prices increased 1.2 percent.

With respect to final demand services, for which inflation was flat (or up 0.3 percent less trade, transportation, and warehousing), the increase in the price of health insurance stands out at 0.9 percent. This is the first jump in health insurance for a while. (Home health prices also increased 1 percent, but such increases have been common.)

With respect to goods for intermediate demand, prices for chemicals (which go into pharmaceutical preparations) decreased, but not by nearly as much as prices for other intermediate goods declined. With respect to services for intermediate demand, prices for health insurance increased by 0.9 percent, significantly more than prices for other intermediate services.

Looking back over the 12-month period, the price increase of 10.1 percent in pharmaceutical preparations continues to stand out like a sore thumb. However prices for services delivered in residential settings have also increased more than other services.

What is new for February is the increase in health insurance. Increasing health costs are finally being passed on through premiums. (See Table I below the fold.)

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Mar 15, 2016 | 1 comment | by

Retail Clinics Raise Medical Spending??? So What!

Many health policy wonks had hoped that retail clinics would reduce medical spending. Yet, an article in the health policy journal, Health Affairs, claims that retail clinics, like CVS Minute Clinics, don’t save money.   Although, the article did confirm that retail clinics are less expensive than a traditional physician visit, it found retail clinics are associated with an increase in medical spending of $14 per year by those who use them.

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Mar 11, 2016 | 2 comments | by

QSS: Revenue Growth Strong in Health Services, Hospital Profitability Recovered

Census2This morning’s Quarterly Services Survey (QSS) from the Census Bureau showed 2015 was a good year for revenue growth in health services. Overall, fourth quarter revenue grew 1.8 percent on the quarter, 3.7 percent from Q4 2014, and 5.5 percent year on year (Table I).

20160310 T1

Revenue growth in psychiatric and substance abuse hospitals really blew the doors off in Q4, increasing 8.2 percent. However, this looks idiosyncratic. Q4 2014 to Q4 2015 growth was only 1.6 percent, and year on year growth was 4.0 percent.

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Mar 10, 2016 | 2 comments | by

Ten Percent of Cancer Drug Spending Wasted

BMJA remarkable study published in the BMJ concludes that $1.8 billion of the $18 billion spent on the 20 most expensive cancer drugs in the U.S. is wasted due to cunning marketing by drug-makers. Chemotherapeutic doses are often adjusted by body weight. However, the drugs are shipped in vials containing doses appropriate to bigger people. Once opened, the drug that remains after an oncologist selects the does appropriate for a smaller or average-sized person has to be discarded.

vaccine-shot

The authors allege the drug-makers do this deliberately, to increase profits. Their proposed solution is that the Food and Drug Administration should regulate the size of vials!

There is a better way.

First, the FDA is not concerned with the cost of medicines. The proposed solution has nothing to do with safety or efficacy, so is not within the FDA’s purview.

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Mar 08, 2016 | 23 comments | by

GDP: Health Services Are 29 Percent of Growth

BEAToday’s second release of Q4 GDP showed the production of goods actually shrank in the fourth quarter. As a result, the (annualized) $26 billion growth in health services spending accounted for 29 percent of GDP growth of $88.2 billion. It comprised 31 percent of services spending growth and 35 percent of growth in personal consumption expenditure (Table I). This means that health services spending continues to devour more of our budgets. The evidence continues to indicate Obamacare is not bending the cost curve.

20160226 TI

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Feb 26, 2016 | 2 comments | by

Health Care Savings in Obama’s Budget

(A version of this Health Alert was published by The Hill.)index1

In a remarkable move breaching a four-decade precedent and characterized by many as a snub, the Republican chairmen of the House and Senate Budget Committees declined to invite the director of the Office of Management and Budget to present President Obama’s 2017 budget to their committees.

Utterly ignoring the president’s proposed budget is short-sighted, especially since congressional Republicans are disunited on fiscal issues. In January the Congressional Budget Office (CBO) updated its estimate of the cumulative federal deficit for the next 10 years to $8.5 trillion, versus just $7 billion last August.

The reason for the increase is that Republicans, who control both chambers, have won some tax cuts but no spending cuts. Obama’s latest budget offers the opportunity to remedy this, if only to a small degree and only by being very selective.

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Feb 24, 2016 | 14 comments | by

CPI: Health Insurance Premiums Jump

BLSThis morning’s Consumer Price Index showed a significant jump of 1.1 percent in health insurance premiums in January, versus a flat CPI for all items and a 0.3 percent rise in CPI for all items less food and energy. Prices for physician services increased only 0.1 percent, less than prices for other services.

This corroborates the Producer Price Index, which showed a slight decrease in physician prices. However, the divergence in price increases for prescription drugs in the CPI and PPI is continuing. Prescription prices in the CPI increased by only 0.5 percent, in line with medical care overall.

Over the last twelve months, prices for medical care still increased a little more than twice as fast as the CPI for all items, and 0.7 percentage points more than the CPI for all items less food and energy. Relatively speaking, medical inflation is not as tame as some others suggest.

Further, over the past twelve months, price increases for health insurance and hospital services stand out significantly more than price increases for prescription drugs. (See Table I below the fold.)

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Feb 19, 2016 | 1 comment | by

PPI: Physician Prices Pull Back

BLSDecember’s surprising jump in physician prices looks to have been idiosyncratic. January’s Producer Price Index for physician services declined 0.6 percent, versus a 0.5 percent rise in prices of final demand services. Prices for home health and hospice care increased 0.7 percent on the month. However, other prices for final demand health services were in line with other services inflation.

For final demand goods, prices for pharmaceutical preparations increased 1.6 percent, versus zero change for final demand goods less food and energy. (When the next Consumer Price Index is released on February 19, we will see whether the divergence between pharmaceutical prices in the PPI and CPI continues.) With respect to intermediate demand goods, prices of biologics, including diagnostics, increased 1.1 percent, versus a 1.3 percent decline in prices of processed goods, less foods and feeds.

It does not look like complaints about high and increasing prices for pharmaceuticals and biologics will be going away soon. (See Table I below the fold.)

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Feb 17, 2016 | 2 comments | by
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