Tag: "Health Care Costs"

Health Spending Up, Up, and Away

The Quarterly Services Survey (QSS) is Census Bureau report that we should be watching to see how health costs are climbing. This blog last looked at it in September 2014. Fortunately, Dr. Drew Altman, CEO of the Kaiser Family Foundation has been keeping a close eye on it. His conclusion:

New Evidence Health Spending Growing Faster Again

Analysis of the survey data shows that health spending was 7.3% higher in the first quarter of 2015 than in the first quarter of last year. Hospital spending increased 9.2%. Greater use of health services as well as more people covered by the ACA appear to be responsible for most of the increase. People are beginning to use more physician and outpatient services again as the economy improves. The number of days people spent in hospitals also rose. (Drew Altman, “New Evidence Health Spending Growing Faster Again,” Wall Street Journal, June 11, 2015)

The growth in number of days spent in hospital is very disconcerting. It had been on a downward trend for years. (See page 300 of this CDC report.)

Jun 19, 2015 | Leave a Comment | by

Producer Prices: Health Goods & Services Lag

Last Friday’s Producer Price Index showed a jump from April to May of 0.5 percent (seasonally adjusted). When I last looked at the PPI, it looked like prices of health goods and services were outpacing other producer prices.

The latest data show them lagging (see Table 1). Although, looking at year-on-year data, pharmaceutical products, hospitals, and nursing homes have had relatively high price increases. Price inflation for health insurance has been moderate, according to the PPI.

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Jun 17, 2015 | Leave a Comment | by

Milliman: Health Costs Rising Again

The latest annual edition of the Milliman Medical Index (which estimates “the cost of healthcare for a typical American family of four covered by an average employer-sponsored preferred provider organization”) suggests that last year’s moderate rate of growth was idiosyncratically low.

Last year’s 5.4% growth rate was the lowest in the history of the Index. This year, the growth rate has climbed to 6.3 percent – exactly the same as 2013.

Milliman also concludes that the “Cadillac tax” is fast approaching, especially for workers at smaller firms.

Jun 05, 2015 | 2 comments | by

Access to Health Care Unchanged After Obamacare’s First Year

The Centers for Disease Control and Prevention (CDC) has released early estimates of health insurance and access to health care for January through September 2014. The National Health Insurance Survey (NHIS) is (in my opinion) the most effective survey of health insurance, because it asks people three different but important questions: Are they uninsured at the time of the survey? Have they been uninsured for at least part of the year? Have they been uninsured for more than a year?

As shown in Figure 2, the proportion of long-term uninsured is about the same as it was circa 2000. The proportion of short-term uninsured has shrunk a little in Obamacare’s first year.

F2

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Mar 31, 2015 | Leave a Comment | by

400 Percent Cost Difference to Treat Prostate Disease

UCLA researchers have for the first time described cost across an entire care process for a common condition called benign prostate hyperplasia (BPH) using time-driven activity-based costing. They found a 400 percent discrepancy between the least and most expensive ways to treat the condition.

The finding takes on even further importance as there isn’t any proven difference in outcomes between the lower and higher cost treatments, said study first author Dr. Alan Kaplan, a resident physician in the UCLA Department of Urology.

“The rising cost of health care is unsustainable, and a big part of the problem is that health systems, health care providers and policy makers have a poor understanding of how much health care really costs,” Kaplan said. “Until this is well understood, taxpayers, insurers and patients alike will continue to bear the burden of soaring health care costs.”(UCLA Health)

From the study itself: “Although listed as ‘optional’ in practice guidelines, invasive diagnostic testing can increase costs by 150% compared with the standalone urology clinic visit. Of five different surgical options, a 400% cost discrepancy exists between the most and least expensive treatments.

We know why this happens: Patients are not involved in forming prices in U.S. health care. One solution is reference pricing. Why that has not yet taken of like wildfire is a question that we will be addressing in future entries.

Mar 17, 2015 | 1 comment | by

Obamacare is Expensive and Difficult or Impossible to Afford

Obamacare is crushing agents and brokers, according to industry sources:

Amid the national debate over raising the federal minimum wage to $10 per hour, Scott Leavitt of Boise says he and his fellow advisors have been enrolling clients in their state’s health insurance exchange for an hourly wage that works out to about $4.50 – and sometimes even less. (Susan Rupe, InsuranceNewsNet)

And that is just the advisors. The same article also reports results from neutral or pro-Obamacare organizations like HealthPocket, Kaiser Family Foundation, and the Commonwealth Fund to show how much pain Obamacare is causing patients: Deductibles too high, premiums too expensive, and he whole shebang unaffordable.

 

Mar 17, 2015 | 4 comments | by

Health Goods Prices Rise; Other Prices Fall

Last Friday’s release of the Producer Price Index  for February confirms that prices for health goods and services are rising at a much higher rate than other producer prices, most of which are declining significantly.

As shown in Table 1, prices of goods for final demand actually dropped 4.2 percent over the last twelve months. However, prices of pharmaceutical preparations increased by 7.1 percent; and prices of medical, surgical, and personal-aid devices also crept up.

20150313 PPI

Prices for intermediate goods tell a similar story, with prices for medicinal, botanical, and biological chemicals experiencing higher price growth than other processed chemicals.

Prices for services sends a much less clear signal, being distributed around an increase of 1.2 percent for all demand services. (Health insurance is categorized as both a final and intermediate services, as it is sold both retail and wholesale.)

Prices of services are more important than prices of goods in determining overall health price inflation. Nevertheless, there is no evidence that Obamacare is holding down prices of health services.

(The Altarum Institute has also released its updates of health spending and prices, which show strong growth in health spending of 5 percent in 2014 and high relative price inflation.)

Mar 16, 2015 | 1 comment | by

Obamacare’s Second Open Season: Average Premium Up 23 Percent – After Subsidies

With enrollment data through February 22, the administration finally declared Obamacare’s second enrollment season closed and released its report on the results. (Although, people who have to pay Obamacare’s mandate/penalty/fine/tax as a result of information disclosed in their 2014 tax returns will have a special open enrollment in April).

Obamacare’s supporters cheered that enrollment hit 11.7 million people, exceeding the low-ball estimate of 9.1 million the administration made last November. Lost in the enthusiasm for Obamacare’s new high-water mark are a few uncomfortable facts.

First, the average premium — net of subsidies — has jumped 23 percent from 2014. In both years, insurers covering almost nine in ten Obamacare subscribers received subsidies to reduce premiums. The average monthly premium, before insurers receive subsidies, across all “metal” plans, is $364 in 2015. The average subsidy is $263, resulting in a net premium of $101 (Table 6). In 2014, the administration reported an average premium of $346, less an average tax credit of $264, for a net premium of $82 (Table 2). Therefore, the gross premium increased 5 percent but the subsidy declined by a scratch. Due to the power of leverage, this resulted in subscribers seeing an average premium jump of 23 percent.

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Mar 16, 2015 | 11 comments | by

One Family’s Obamacare Nightmare

One of this blog’s consistent themes is that Obamacare incentivizes insurers to attract the healthy and shun the sick. Pattie Curran is a North Carolina mother of two children born with a rare bone-marrow dysfunction. She reported her experience in the Washington Times:

The co-pay for a medication that protects my youngest son’s kidneys from damage had been $131 for a three-month supply for five to six years before the law passed. In 2011, the medication suddenly more than doubled. We watched in horror as it skyrocketed to $532 by the middle of 2013, while at the same time trying to get a medical-necessity exception. Obamacare not only made everything less affordable, it created more work for families and providers. We have witnessed a corresponding decrease in quality of care because of the extra administrative demands placed on physicians and their staff.

During the past month, some of our sons’ most important medications have been discontinued from coverage altogether.

This is a tragic, but not surprising outcome of a system that gives politicians the power to allocate medical resources. They will allocate them such that the majority of healthy people get “free” “preventive” care, while the truly sick pay the price.

Mar 13, 2015 | 3 comments | by

Let Medicare Patients Decide Which Accountable Care Organization to Join

Woman Using Exercise MachineA similar version of this Health Alert appeared at Forbes.

One of the reasons people rebelled against Obamacare was that it financed the growth of government-run health care through drastic cuts to Medicare. According to the Congressional Budget Office (CBO), Medicare spending will see a $455 billion cut over the next decade, which would finance almost half of Obamacare spending.

Most of the Medicare cuts were simply reducing the fees Medicare pays doctors and hospitals. These payment mechanisms would make a Soviet bureaucrat blush. William Hsiao, the economist who designed the Medicare Prospective Payment System, determined Medicare’s fees as follows:

“He put together a large team that interviewed and surveyed thousands of physicians from almost two dozen specialties. They analyzed what was involved in everything from 45 minutes of psychotherapy for a patient with panic attacks to a hysterectomy for a woman with cervical cancer. They determined that the hysterectomy takes about twice as much time as the session of psychotherapy, 3.8 times as much mental effort, 4.47 times as much technical skill and physical effort, and 4.24 times as much risk. The total calculation: 4.99 times as much work. Eventually, Hsiao and his team arrived at a relative value for every single thing doctors do.” (Rick Mayes and Robert A. Berenson, Medicare Prospective Payment and the Shaping of U.S. Health Care, Baltimore: Johns Hopkins University Press, 2006, p. 86.)

Instead of Fee-For-Service (FFS), Medicare planners and their academic supporters endorse various bureaucratic methods of paying for “value” – as perceived by the government. Indeed, Sylvia Burwell, U.S. Secretary of Health & Human Services, recently expressed the – ahem – aspirational goal of tying 85 percent of Medicare’s payments to value by 2016, and 90 percent by 2018.

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Mar 11, 2015 | 16 comments | by
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