Tag: ACA

Meet The New Boss, Same As The Old Boss

The announcement by the CEO’s from JP Morgan Chase, Amazon and Berkshire-Hathaway that they are forming a new healthcare company signals the symbolic end of the ACA-reform era. They recognize the inefficiencies and profiteering of the private insurance companies, who add no value to businesses dealing with healthcare. And should there be any doubt that the end of the ACA is nigh, there’s this from Trump: “We repealed the core of disastrous Obamacare. The individual mandate is now gone.”

Given the record of the CEO-in-chief who now occupies the White House, it’s doubtful we can expect improved healthcare, or lower costs, under his leadership, which should give us pause before putting CEOs in charge of our health.

If the ACA had fulfilled its promises, a new company by these CEOs would not be needed. The ACA sought to lower costs by forcing consumers to put more “skin in the game,” in Obama’s Budget Director Peter Orzag’s infamous phrase. Yes, patients are spending more, and in 2017 insurance premiums went up over 25% in many areas, deductibles have continued to climb to an average of $1440 for employees in large groups, and drug prices have skyrocketed for long-standing medications like Insulin and newer specialty drugs like Harvoni for Hepatitis C. High-deductible plans and a steady shift so workers pay more for insurance (on average 30% of premiums that are $18,000/year) has not lowered overall costs. Even worse, patients who have paid high premiums are not able to get care because they cannot afford the out-of-pockets costs their expensive insurance does not cover.

Into the breach come the heroic CEOs Bezos, Dimond and Buffett (BDB*). What do they offer? A company that can control costs. How will they do it? With technology, of course. Apparently we have come full circle: since the government regulatory program couldn’t enact effective cost control and utilize technology to save money, let’s have a corporation do so. But it is precisely the industry model that has created our dysfunctional, “money is the metric” approach to health. In the present healthcare industry, the war for revenue between insurers, drug companies, and hospital corporations, along with medical equipment manufacturers and other suppliers, has raised prices and created immense profits. Electronic Medical Records, and other technological innovations are supposed to anchor the new healthcare system. They are expensive, in fact more expensive than any savings they generate. The result of the ACA push to pay for “performance” has been to punish clinicians and hospitals with high-needs patients, no lowering of costs, and increased denials of care since there is an incentive to avoid rather than treat patients who will lower your “performance” score.

Somebody or some entity is going to make the decisions regarding the healthcare we get. Do we really believe CEO’s rather than clinicians should make those decisions? If the decisions are based on corporate bottom lines we can expect continued cost shifts to workers, deployment of labor-displacing technologies with unproven impacts on patient care quality, and fragmentation as each corporate castle fortifies its strategic market position: Aetna-CVS will go toe-toe-toe with BDB* as the Ascension hospital corporation (nation’s largest) pushes back, for example. Since less care equals greater profits, and more covered lives means greater revenue, we can see that money will likely remain the metric.

Those who control capital, like the richest guy in the world, investment banks and investors, favor capital-intensive approaches to social problems. Technology fits that bill. Yet, technology only serves the purposes for which it is designed: it is neither socially neutral nor a panacea. Nurses know, however, that human health cannot be reduced to an algorithm, subject as it is to the particularities of an individual’s family history, environment and most fundamentally, socio-economic status. Let’s hope the technologists and CEOs quickly learn from direct care RNs. Standardization of treatments whether through algorithms, protocols, or budget-mandates do not match the needs of individual patients.

Alternatively, the US could expand and improve the current program that puts clinicians in charge, is popular, and works at controlling costs: Medicare. With administrative costs as low as 5–6% compared to the 13% or higher for private insurance, Medicare is more efficient. The growth in Medicare spending, around 2.4% annually, is much less than growth in overall healthcare spending and far less than recent premium increases. Under Improved Medicare for All, benefits would be expanded to include those that ACA, Medicaid and CHIP provide, and Medicare will negotiate prescription drug prices. The biggest shortfalls in Medicare, the escalating privatization pushed by the insurance-financed politicians that have resulted in higher out of pocket costs for seniors, over payments to the private Medicare Advantage plans and the “donut hole” in the private the prescription drug benefit, would be eliminated through a robust Medicare for all plan, such as proposed nationally in Sen. Bernie Sanders S 1804 bill or the California single payer bill SB 562.

Moreover, traditional Medicare enables physicians to deliver the care their patients need without onerous “gate-keeping,” prior authorizations or narrow networks that insurers use to restrict access, limit choice of providers and undermine the clinical judgment of doctors and nurses. In fact, since older Americans tend to be the most intensive users of health services, expanding the pool by including everybody especially low-needs patients will make the program more sustainable.

Should patients, workers and employers be on the hook for the excessive compensation and enormous profits of the health insurance industry? In California between 2011–16, insurers made $27 billion in profits/net income. Why should we subsidize the failed business model of health insurers? (Employers get $342 billion each year in tax subsidies to lessen the cost to them of private health insurance.)

On this BDB is right—health insurance companies add no value, and the profits in healthcare are obscene. That recognition matters and can point the way toward real reform. The solution is not more of the same. We must contain prices in order to control costs. An industry approach cannot do that and also place patient care at the center of a reformed system.

Americans Can Save $1 Trillion And Get Better Healthcare

US health care costs are out of sight, more than $10,000 per person per year, compared with around $5,000 per person in Canada, Germany and France. Obamacare expanded coverage without controlling costs. The Republican plan would ruthlessly and cruelly limit coverage without controlling costs.

Of the two options, Obamacare is vastly more just. The Republican plan is ghastly. But America has a much better choice: health for all at far lower costs.

This might seem like an out-of-reach goal or a political slogan, but it is neither. Every other rich country uses the same medical technology, gets the same or better health outcomes, and pays vastly lower sums.

Why the disparity? Health care in America is big business, and in America big business means big lobbying and big campaign contributions, the public interest be damned.

Health care is our biggest economic sector, far ahead of the military, Wall Street and the auto and tech industries. It is pushing 18% of national income, compared with 10% to 12% of national income in the other high-income countries.

In line with its economic size, it ranks first in total lobbying, with a recorded $152 million in lobbying spending in 2017 and an estimated $273 million in federal campaign contributions in the 2016 election cycle, divided roughly equally between the parties.

Both parties have therefore ducked the hard work of countering the health care sector’s monopoly power. Health care spending is now at $10,000 per person per year, roughly twice or more the total of other high-income countries, or a staggering $3.25 trillion a year.

We should aim to save at least $1 trillion in total annual outlays, roughly $3,000 per person per year, through a series of feasible, fair and reasonable measures to limit monopoly power. Our system would look a lot more like that of the other more successful and less expensive nations.

Here’s a 10-point plan Congress should consider.

First, move to capitation for Medicare, Medicaid and the tax-exempt private health insurance plans. Under capitation, hospitals and physician groups receive an annual “global budget” based on their patient population, not reimbursement on a fee-for-service basis.

Second, limit the compensation of hospital CEOs and top managers. The pay of not-for-profit hospital CEOs and top managers, for example, could be capped at $1 million per year.

Third, require Medicare and other public providers to negotiate drug prices on a rational basis, taking account of research and development incentives and the manufacturing costs of the medicines.

Fourth, use emergency power to override patents (such as compulsory licensing of patent-protected drugs) to set maximum prices on drugs for public health emergencies (such as for HIV and hepatitis C).

Fifth, radically simplify regulatory procedures for bringing quality generic drugs to the market, including through importation, by simplifying Food and Drug Administration procedures.

Sixth, facilitate “task shifting” from doctors to lower-cost health workers for routine procedures, especially when new computer applications can support the decision process.

Seven, in all public and private plans, cap the annual payment of deductibles and cost-sharing by households to a limited fraction of household income, as is done in many high-income countries.

Eight, use part of the annual saving of $1 trillion to expand home visits for community-based health care to combat the epidemics of obesity, opioids, mental illness and others.

Nine, rein in the advertising and other marketing by the pharmaceutical and fast-food industries that has created, alone among the high-income world, a nation of addiction and obesity.

Ten, offer a public plan to meet these conditions to compete with private plans. Medicare for all is one such possibility.

There really no mystery to why America’s health industry needs a drastic corrective.

Visit the website of your local not-for-profit hospital system. There’s a good chance the CEO will be earning millions per year, sometimes $10 million or more. Or go to treat your hepatitis C with Gilead drug Sofosbuvir. The pills list for $84,000 per 12-week dose, while their production cost is a little over $100, roughly one-thousandth of the list price. Or go in for an MRI, and your hospital might have an $8,000 billable price for a procedure that costs $500 in a discount clinic outside your provider network.

All of these are examples of the vast market power of the health care industry. The sector is designed to squeeze consumers and the government for all they’re worth (and sometimes more, driving many into bankruptcy).

As a result, the sector is awash in profits and compensation levels, and the stock prices of the health care industry are soaring. In the meantime, human and financial resources are pulled away from low-cost (but also low-profit) disease prevention, such as low-cost community health workers and wellness counselors who work within the community, including household visits.

The health care sector is a system of monopolies and oligopolies — that is, there are few producers in the marketplace and few limits on market power. Government shovels out the money in its own programs and via tax breaks for private plans without controls on the market power. And it’s getting worse.

Every other high-income country has solved this problem. Most hospitals are government-owned, while most of the rest are not for profit, but without allowing egregious salaries for top management. Drug prices are regulated. Patents are respected, but drug prices are negotiated.

None of this is rocket science. Nor is the United States too dumb to figure out what Canada, the UK, France, the Netherlands, Germany, Japan, Sweden, Norway, Denmark, Finland, Austria, Belgium, Korea and others have solved. The problem is not our intelligence. The problem is our corrupt political system, which caters to the health care lobby, not to the needs of the people.

National Health Expenditures 2015 Highlights

In 2015, U.S. health care spending increased 5.8 percent to reach $3.2 trillion, or $9,990 per person. The coverage expansion that began in 2014 as a result of in the Affordable Care Act continued to have an impact on the growth of health care spending in 2015. Additionally, faster growth in total health care spending in 2015 was driven by stronger growth in spending for private health insurance, hospital care, physician and clinical services, and the continued strong growth in Medicaid and retail prescription drug spending. Lastly, the overall share of the U.S. economy devoted to health care spending was 17.8 percent in 2015, up from 17.4 percent in 2014.

Health Spending by Type of Service or Product:

Hospital Care (32 percent share): Spending for hospital care increased 5.6 percent to $1.0 trillion in 2015 compared to 4.6 percent growth in 2014. The faster growth in 2015 was driven by continued growth in non-price factors such as the use and intensity of services. However, hospital price growth was just 0.9 percent in 2015, which was the lowest rate of growth since 1998. Hospital services, from a payer perspective, experienced faster growth in Medicaid and private health insurance spending; however this strong growth was slightly offset by slower growth in Medicare hospital spending.

Physician and Clinical Services (20 percent share): Spending on physician and clinical services increased 6.3 percent in 2015 to $634.9 billion. This was an acceleration from growth of 4.8 percent in 2014 and was the first time since 2005 that the growth rate exceeded 6.0 percent. As with hospitals, the faster growth in overall physician and clinical services spending was driven by continued growth in non-price factors. Price growth for physician and clinical services, however, declined 1.1 percent in 2015, driven by the expiration of temporary increases in Medicaid payments to primary care physicians.

Other Professional Services (3 percent share): Spending for other professional services reached $87.7 billion in 2015, an increase of 5.9 percent and an acceleration from growth of 5.1 percent in 2014. Spending in this category includes establishments of independent health practitioners (except physicians and dentists) that primarily provide services such as physical therapy, optometry, podiatry, or chiropractic medicine.

Dental Services (4 percent share): Spending for dental services increased 4.2 percent in 2015 to $117.5 billion, which was an acceleration from 2.4 percent growth in 2014. Out-of-pocket spending for dental services (which accounted for 40 percent of dental spending) increased 1.8 percent in 2015 after increasing 0.8 percent in 2014. Private health insurance (which accounted for 47 percent of dental spending) increased 3.0 percent in 2015 following 2.1 percent growth in 2014.

Other Health, Residential, and Personal Care Services (5 percent share): Spending associated with other health, residential, and personal care services grew 7.8 percent in 2015 to $163.3 billion after increasing 5.0 percent in 2014. The robust growth was driven by 10.0 percent growth in Medicaid spending, which represented nearly 57 percent of all spending in this category. This category includes expenditures for medical services that are generally delivered by providers in non-traditional settings such as schools, community centers, and the workplace; as well as by ambulance providers and residential mental health and substance abuse facilities.

Home Health Care (3 percent share): Spending growth for freestanding home health care agencies accelerated in 2015, increasing 6.3 percent to $88.8 billion following growth of 4.5 percent in 2014. Stronger growth in both Medicare (2.6 percent) and Medicaid (6.0 percent) spending — the two largest payers which accounted for 76 percent of home health spending — along with faster growth in private health insurance and out-of-pocket spending drove the overall acceleration in 2015.

Nursing Care Facilities and Continuing Care Retirement Communities (5 percent share): Spending for freestanding nursing care facilities and continuing care retirement communities increased 2.7 percent in 2015 to $156.8 billion. The slightly faster growth in 2015 (from 2.3 percent growth in 2014) was mainly due to the faster growth in Medicare spending of 5.6 percent versus 2.5 percent in 2014.

Prescription Drugs (10 percent share): Retail prescription drug spending decelerated in 2015, increasing 9.0 percent to $324.6 billion. Although growth in 2015 was slower than the 12.4 percent growth in 2014, spending on prescription drugs outpaced all other services in 2015. The strong spending growth for prescription drugs is attributed to the increased spending on new medicines, price growth for existing brand name drugs, increased spending on generics, and fewer expensive blockbuster drugs going off-patent.

Durable Medical Equipment (2 percent share): Retail spending for durable medical equipment, which includes items such as contact lenses, eyeglasses and hearing aids, reached $48.5 billion in 2015, and increased 3.9 percent, slightly faster than the 3.5 percent growth in 2014.

Other Non-durable Medical Products (2 percent share): Retail spending for other nondurable medical products, such as over-the-counter medicines, medical instruments, and surgical dressings, grew 3.7 percent to $59.0 billion in 2015.

Health Spending by Major Sources of Funds:

Medicare (20 percent share): Medicare spending grew 4.5 percent to $646.2 billion in 2015, which was a slight deceleration from the 4.8 growth percent in 2014. The slightly slower growth in 2015 was largely attributable to slower growth in Medicare enrollment, which increased 2.7 percent to 54.3 million beneficiaries following 3.1 percent growth in 2014.

Medicaid (17 percent share): Total Medicaid spending slowed slightly in 2015 to 9.7 percent, but continued the strong growth that began in 2014 (11.6 percent) State and local Medicaid expenditures grew 4.9 percent while Federal Medicaid expenditures increased 12.6 percent in 2015. The increased spending by the federal government was largely driven by newly eligible enrollees under the ACA, which were fully financed by the federal government.

Private Health Insurance (33 percent share): Total private health insurance expenditures increased 7.2 percent to $1.1 trillion in 2015, faster than the 5.8 percent growth in 2014. The acceleration in 2015 was driven by increased enrollment and strong growth in benefit spending.

Out-of-Pocket (11 percent share): Out-of-pocket spending grew 2.6 percent in 2015 to $338.1 billion, slightly faster than the growth of 1.4 percent in 2014. The increase in 2015 was influenced by the expansion of insurance coverage and the corresponding drop in the number of individuals without health insurance.

Health Spending by Type of Sponsor:

In 2015, the federal government accounted for the largest share of health care spending (29 percent), followed by households (28 percent), private businesses (20 percent), and state and local governments (17 percent).

Federal government spending on health increased 8.9 percent in 2015 after growing 11.0 percent in 2014, and outpaced all other sponsors of health care in both years. In 2015, the federal government was the largest sponsor of health care at 29 percent, up from 28 percent in 2014 and 26 percent in 2013. The main driver for the increased federal share of health care was the continued enrollment of newly eligible adults into Medicaid, who were fully financed by the federal government.

Health spending by households grew at a rate of 4.7 percent, which was an acceleration from 2.6 percent in 2014. Household spending accounted for 28 percent of health care spending in 2015, unchanged from the year before. The faster growth in spending by households was driven largely by households’ contributions to employer-sponsored private insurance premiums.

State and local government spending increased 4.6 percent in 2015 compared to 3.2 percent growth in 2014. The acceleration was largely driven by faster growth in state and local Medicaid spending which resulted from increased reimbursement rates and an increased effort to expand care in the home and community setting. Overall, state and local government health care spending represented 17 percent of total health care spending in both 2014 and 2015.

Health care spending financed by private businesses accelerated slightly, increasing 5.3 percent in 2015 compared to 4.7 percent growth in 2014. The private business share of overall health spending has remained fairly steady since 2010, at about 20 percent.

Note: Type of sponsor is defined as the entity that is ultimately responsible for financing the health care bill, such as private businesses, households, and governments. These sponsors pay health insurance premiums and out-of-pocket costs, or finance health care through dedicated taxes and/or general revenues.