Health Wonk Review
The latest edition of the Health Wonk Review is up. “Dog Daze 2013” covers such topics as insurance, pharmaceuticals, ObamaCare battles, keeping costs in check and more.
Tag: "Health Care Costs"
Aug 15, 2013 | 10 comments | by John Goodman
Obama’s Mistake
As related by Jonathan Cohn, here’s what President Obama said:
[T]hey’re going to be able to go on a website or call up a call center and sign up for affordable quality health insurance at a significantly cheaper rate than what they can get right now on the individual market. And if even with lower premiums they still can’t afford it, we’re going to be able to provide them with a tax credit to help them buy it. [Emphasis added]
Yet, as Cohn notes:
Regulations requiring insurers to cover “essential” benefits, will tend to make insurance more expensive.
In addition, guaranteed issue and modified community rating requirements will make insurance more expensive for the healthy so that it can be less expensive for the sick. Since the vast majority of people are healthy, insurance premiums are going to be higher for most people, for given network and package of benefits.
What about the subsidies? They are generous at first, but after 2018 they will grow at the rate of growth of the economy ― and that is well below the expected rate of growth of health care generally.
Aug 14, 2013 | 13 comments | by John Goodman
Casey Mulligan Corrects David Cutler
ObamaCare is going to cost jobs after all:
David Cutler of Harvard testified about the Baicker-Chandra results and asserted that the Affordable Care Act would reduce average health care costs by about 5 percent by 2015, reduce the health care cost implicit tax on employers and thereby increase nationwide employment more than it would have grown had the Affordable Care Act not been enacted.
He also organized and signed an economists’ letter to Congress asserting that “repealing the Affordable Care Act would produce job reductions of 250,000 to 400,000 annually.” The Affordable Care Act was cutting employer costs and Congress needn’t worry that it would contract the labor market, they wrote…
The Affordable Care Act’s explicit taxes on employers, subsidies for layoffs and implicit taxes on employees, together amount to a five or six percentage point addition to the average marginal tax rate on labor income (this includes the fact that many people will not take part in programs for which they are eligible, the tendency of the act to move people off means-tested uncompensated care and the fact that the act implicitly taxes unemployment benefits, as I noted in testimony before the Human Resources Subcommittee of the House Ways and Means Committee). By these calculations, the tax effects that Professor Cutler left out are about 10 times greater than, and in the opposite direction of, those he conveyed to Congress.
Professor Cutler projected that the Affordable Care Act’s cost reductions by themselves will increase employment in 2015 by about 400,000, or about 0.3 percent of total employment (see Figure 2 in his testimony). If his estimate of the cost-savings channel is accurate, and I am right that the overall labor market effect of the act is about 10 times larger (in the other direction) than the cost-savings channel, we might then expect the act to contract the 2015 labor market by about 3 percent rather than expand it. [Ed: that’s a loss of 4 million jobs!]
Aug 07, 2013 | 18 comments | by John Goodman
Where the Medicare Dollars Go
Medicare reform thus far has been focused on $79 office visits, co-payments for home health care, hospital readmissions, Miami infusion clinics, the price paid for scooters, $45 resting EKG’s, the Plan B deductible, etc. These are important areas to pursue — but they are not where the real money is.
While we are debating the “doc fix,” the drug companies, device companies and hospitals are backing up the truck and cleaning out the store!
Consider the following paid claims paid by Medicare in Indiana in 2011:
- 113 Heart Transplants…Average payment was $773,877 apiece.
- 96 Bone Marrow Transplants…Average payout was $509,637 apiece.
- 129 Liver Transplants…Average payout was $367,000 apiece.
- 2,200 Tracheostomies…Average payout was $376,103 apiece.
- 1,517 Open Heart Surgeries…Average payout was $185,000 apiece.
Altogether, the 12,000 largest claims in one state totaled $2.4 billion in Medicare spending. If the other states are consistent, then large claims like these ate up $120 billion of Medicare’s total spending of $545 billion. And when you factor in sepsis treatments, defibrillator-implants, and similar claims that cost “only” $75,000 each, almost two-thirds of Medicare spending — over $300 billion a year — is focused on just ten percent of beneficiaries.
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Aug 05, 2013 | 14 comments | by Bob Hertz
Medical Tourism
After getting a U.S. estimate for a new hip at over $78,000,
Michael Shopenn…chose to have his hip replaced in 2007 at a private hospital outside Brussels for $13,660. That price included not only a hip joint, made by Warsaw-based Zimmer Holdings, but also all doctors’ fees, operating room charges, crutches, medicine, a hospital room for five days, a week in rehab and a round-trip ticket from America.
But the amenities are not great:
NewYork-Presbyterian Hospital…had “comfortable waiting rooms, an elegant lobby and newsstands,” Mr. Shopenn remembered.
But in Belgium, he said, “I was immediately scared because at first I thought, this is really old. The chairs in the waiting rooms were metal, the walls were painted a pale green, there was no gift shop. But then I realized everything was new. It was just functional. There wasn’t much of a nod to comfort because they were there to provide health care.”
Source: NYT.
Aug 05, 2013 | 11 comments | by John Goodman
Unions Discover the Cadillac Tax
State and local governments across the country tend to offer more expensive health plans than private businesses do, and workers often accept smaller wage increases to retain their benefits. Because of this, state and local government employees are expected to be disproportionately represented among those whose plans will be subject to the tax.
Jonathan Gruber, an economist at the Massachusetts Institute of Technology who was a paid consultant to the Obama administration on health care policy, said forcing state and local governments to rein in health care costs was exactly what the tax was intended to do.
“This is intended to shift compensation away from excessively generous health insurance toward wages,” he said. (New York Times)
Aug 05, 2013 | 11 comments | by John Goodman
Rate Filing: ObamaCare Taxes and Mandates Increase Premiums by $407 a Year
Under the ObamaCare law, health insurance policies must add coverage for pediatric vision, pediatric dental, substance abuse, women’s wellness benefits, and habilitative care. This adds to the cost of kids’ eyeglasses and dental visits because it adds the cost of insurer claims processing, general overhead, and profit to the cost of the item itself. Covering wellness benefits for women makes insurance more expensive for men who don’t get those benefits. People who don’t drink or abuse drugs will have to pay for substance abuse treatment that mostly doesn’t work. We all will have to pay for habilitative care, even though no one is exactly sure what it is.
How much does this overkill cost? In its 2014 filing with the Colorado Department of Insurance, Rocky Mountain Health Plans notes that “annual increases in the cost of health care are expected to continue, since there are not inherent cost controls in the new plan designs,” and reports that it used a two year health care cost increase trend of 16.3 percent. It estimated the cost of the ObamaCare add-ons listed above at $17.93 per member per month. It estimated that ObamaCare taxes and fees, with other licensing fees, add 3.77 percent to the gross premium index rate, slightly over $16 a month. This includes the cost of the Health Insurance Provider Tax, the Exchange Fee, the Patient Centered Outcomes Research Tax, the Risk Adjustment, and the Data Collection Transitional Reinsurance Contribution.
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Aug 02, 2013 | 13 comments | by Linda Gorman
Should You Get to Know What Medicare Knows?
From an editorial by Chuck Grassley and Ron Wyden:
For no compelling reason, a commanding tool for trying to contain health care costs is lying unused. That sidelined powerhouse is the Medicare claims database, which holds a record of all payments from taxpayers to physicians and other providers for seniors’ health care. If bipartisan legislation now before the Senate becomes law, this information would be made available to all Americans through a free, searchable online database. It would instantly position Americans to secure more value for the $2.7 trillion being spent this year on health services. That’s because the publication of the Medicare data will become health care’s new financial baseline; the measure of what America’s largest and most powerful buyer of health care gets for nearly $600 billion a year. (Politico)
Aug 01, 2013 | 15 comments | by John Goodman
Detroit to Dump Its Retirees on the Exchange
As Detroit enters the federal bankruptcy process, the city is proposing a controversial plan for paring some of the $5.7 billion it owes in retiree health costs: pushing many of those too young to qualify for Medicare out of city-run coverage and into the new insurance markets that will soon be operating under the Obama health care law. (New York Times)
Jul 30, 2013 | 11 comments | by John Goodman
How Good Are Those Hospital Rankings?
A quick look shows that these rankings are not all they’re cracked up to be. The methodology that U.S. News uses to rank hospitals yields a list that is flawed to the point of being nearly useless. It also may be counterproductive, since some of the so-called quality criteria U.S. News cites can encourage investments in higher-cost and lower-quality care. (Wall Street Journal)
Jul 26, 2013 | 10 comments | by John Goodman
