POLL VAULT: New Gallup Poll Shows Consensus on Costs -- More Needs to Be Done
Posted by The Campaign on March 31, 2010 at 12:55 PM
Gallup released its latest poll on health care reform and the findings continue to echo the concern about health care costs that independent experts and economists have been raising (and that the Campaign has highlighted.) Here are some key findings from the poll:
"Proponents, as well as opponents, of the new healthcare reform law think the legislation is less than perfect. Both groups agree that the bill didn't do enough to deal with rising healthcare costs."
56% of independents do not think the bill does enough to address costs.
Even among those who think the bill was a good thing, 62% think the bill does not do enough to address costs.
For the full results, click here.
Premiums, Polls and Physicians -- What is Going on in the World of Costs
Posted by The Campaign on March 30, 2010 at 12:06 PM
It has been almost a week since the health care reform legislation became law, but one thing that hasn't changed is the growing concern over the new law's impact on premiums and people's health care costs.
In fact, the Associated Press released an analysis from the RAND Corporation today which showed that premiums for young people in their 20s and early 30s will dramatically increase. From the AP story:
Under the health care overhaul, young adults who buy their own insurance will carry a heavier burden of the medical costs of older Americans - a shift expected to raise insurance premiums for young people when the plan takes full effect...premiums for young adults seeking coverage on the individual market would likely climb by 17 percent on average, or roughly $42 a month, according to an analysis of the plan conducted for The Associated Press...The higher costs will pinch many people in their 20s and early 30s who are struggling to start or advance their careers with the highest unemployment rate in 26 years.
And it's not just RAND saying this will happen, the AP also reports that other experts are arguing that premiums will increase for younger individuals as well. Jim O'Connor an actuary for independent consulting firm Milliman, Inc. estimates that young males will see increases between 10-30 percent. O'Connor says "Young males will be hit the hardest".
While premiums rise for younger folks, it must be good for other working families and employers right? Well not so quick according to AEI's John Calfee. Calfee writes in Forbes "The first thing ObamaCare will do is increase insurance costs." Calfee goes on to point out some serious concerns with the approach in the new law to control premium increases -- price controls. Calfee argues:
Insurance premium price controls cannot do much good. States that already review or control premiums show that premiums are driven by costs.
And Calfee warns this is even before 2014 which he argues is when "Pressure on premiums will become more intense." Why? Simple: a coverage requirement that is too weak. Calfee writes "In the crucial individual insurance market, the penalty for failing to purchase insurance will be only $95 or 1% of income (whichever is more) in 2014, $325 (2.0%) in 2015 and $695 (2.5%) in 2016." What will happen then -- "With healthier consumers opting out of the insurance risk pool, premiums will escalate--probably a lot." (Our emphasis.)
This leads Calfee to conclude:
There are good reasons to worry that come 2015, the nation will be immersed in a crisis of uncontrolled costs and rising insurance premiums. After all, the reform package is essentially devoid of powerful cost control.
Devoid of powerful cost control? That is strong language and can't be right can it? The New York Times has a special section today on the new health care law, and one article seems to backup Calfee's assertion. In the article by the NY Times' Gina Kolota "Law May Do Little Little to Help Curb Unnecessary Care" it is clear that the new law lacks real tools to deal with the 30 percent of health care spending that is wasteful or does nothing to improve quality. Kolota interviews doctors and economists and they seem to agree (although in fairness some say the law takes an important first step) that "the new health care legislation...is not going to make a bit of difference." Kolota continues:
To truly change the nation's chronic overuse of medical care, there will have to be a substantial change in the way patients think about health care, how medicine is practiced and how it is paid for, economists and doctors say. The legislation does little to help in those areas.
So where does the legislation come up short the most? According to the article "But the law in no way forces patients or doctors to choose one test or treatment over another or to aim for the cheapest alternative. And it does nothing to change the reimbursement system, in which doctors often make more money if they order more tests, for instance."
Even doctors are concerned about the lack of cost controls and ways to turn the system more toward value then volume. Check out this quote from the end of the story from one doctor interviewed:
"I really believe that in our heart of hearts most doctors want to curb this. We know what we are doing. And we are frustrated, too. But we can't help ourselves. There is nothing to stop us and nothing to be gained by stopping."
These stories may be why the new law has not changed people's perspective with respect to what they think the impact will be on their costs and costs to the nation, at least according to the latest Gallup poll.
According to Gallup, "One week after the passage of historic new healthcare legislation, Americans remain worried about the bill's effect on costs -- both for the nation as a whole and for them personally. A majority of Americans say healthcare costs in the U.S. and the federal budget deficit will get worse as a result of the bill. Half of Americans believe that healthcare costs for themselves and their families will get worse."
ICYMI: The Economist looks at the impact of health care reform on health care costs
Posted by The Campaign on March 26, 2010 at 7:27 AM
Today, The Economist published several articles on the now passed health care reform law. As The Economist has done over the past year, it has drawn a lot of attention to the issue of costs and what health care reform means for costs - particularly the impact on America's employers.
These articles all highlight the glaring omission from reform - real cost containment that will keep underlying medical costs under control and make reform sustainable over the long run.
Here are some key excerpts from these articles:
Missed Opportunity -
- "Because the bill does almost nothing to control costs, it was a huge missed opportunity. American business, which anyhow feels unloved by this White House, will suffer the consequences."
(American politics after health reform: Now What?, 03/25/10)
Far too little done to drive down costs -
- "They will also do far too little to rein in the underlying drivers of America's roaring health inflation."
- "Analysis by RAND, an independent think-tank, suggests that the reforms will actually increase America's overall health spending-public plus private-by about 2% by 2020, in comparison with a scenario of no reform (see chart). And that rate of spending was already unsustainable at a time when the baby-boomers are starting to retire in large numbers."
- "If coverage is the new law's strong point, cost control is its weakness."
- "...the new law carves out a ten-year exemption for hospitals-appalling, when one considers that runaway costs and misaligned incentives in hospitals lie at the very heart of the cost problem."
- "Indeed, by adding tens of millions of people to an unreformed and unsustainably expensive health system, this reform makes it all the more urgent to tackle the question of cost."
(Signed, sealed, delivered, 03/25/10)
American public is still concerned it will drive up costs -
(Miracle or monstrosity, 03/25/10)
"Looming disaster for American business" -
- "From Main Street's point of view the Obama administration has done too little to control the costs of this flawed system."
- "The administration has also talked endlessly about 'bending the cost curve downward'...[A]lmost all of the curve-bending measures have been abandoned in the fight to pass the bill."
- "The most reasonable assumption for Main Street is that health-care costs will either continue to grow at the same pace as for the past decade-or accelerate. This is a looming disaster for American business."
(The health-care squeeze, 03/25/10)
MUST READ: Time -- What Will It Cost
Posted by The Campaign on March 25, 2010 at 6:07 AM
This week, Time magazine explores the new reforms and what it will mean for America. One part of the article focuses on what the reforms will mean for costs. As many independent experts and economists have pointed out: the reforms will not do enough to lower costs.
Here are some key excerpts:
"Unlike plans to expand coverage and end discrimination against the sick, there's no proven strategy in the reform bill - or anywhere else, for that matter - guaranteed to fix the most daunting problem in U.S. health care: medical costs that are rising at twice the rate of inflation."
"...premiums will continue to rise, just with more predictability."
"Despite the demonization of the health insurance industry - some of it deserved - the business operates on a simple principle: collect enough premium dollars to cover overhead and claims plus, in the case of commercial insurers, earn a profit margin of 3% to 6%."
"Contrary to the rhetoric that has permeated the reform debate, insurance rates in most cases are rising steadily not because of price gouging but rather because underlying health care costs are increasing at an unsustainable and possibly unstoppable rate."
"Slowing the rate of increase is the only solution to a health care crisis that is still looming. On its own, the law does not necessarily do that. The reform's ultimate success will hinge on whether it can transform an industry that now rewards volume and accounts for one-sixth of the U.S. economy to one that pays for results."
Click here to read the full article.
On The Hill: Implementation Timeline of New Reform Law
Posted by The Campaign on March 24, 2010 at 12:55 PM
Please find below an implementation timeline of the various provisions of the reform law recently signed by President Obama. Click here for a printable version of the timeline.
ICYMI: What They Are Saying About Health Care Costs
Posted by The Campaign on March 24, 2010 at 11:47 AM
While the House has passed health care reform legislation, experts continue to point out concerns about what the legislation will mean for costs and premiums.
Here are what some independent experts have said:
Associated Press: “...there’s very little reason to think premiums will go down.” (Associated Press, 03/24/10)
Uwe Reinhardt, Economist, Princeton University: "What drives prices is the amount of services people are getting, plus the prices doctors and hospitals charge for those services." (Health Day/Harris Interactive, Poll Finds Americans Blame Insurers, Drug Companies for Rising Health Costs, 03/24/10)
Dan Mendelson, Avalere Health: "You'll continue to see premium rates go up because there are so many aspects of the system that are still increasing prices." (AP, Health Overhaul Promises Pain, Gain for Businesses, 03/22/10)
Drew Altman, Kaiser Family Foundation: "Premiums will continue to go up." (The Washington Post, Ezra Klein, An interview with Kaiser's Drew Altman, 03/22/10)
Uwe Reinhardt, Economist, Princeton University: "This thing will not get us off the hook cost-wise." (The Washington Post, Ezra Klein interview with Uwe Reinhardt, 03/22/10)
MUST SEE TV: AHIP's Karen Ignagni on MSNBC "We'll have a cost explosion."
Posted by The Campaign on March 17, 2010 at 8:48 AM
AHIP's Karen Ignagni appeared on MSNBC's The Daily Rundown this morning. In the appearance, she outlined the strong concerns with the current bill and the lack of cost containment in the bill. At one point she stated "We'll have a cost explosion."
MUST READ: The Christian Science Monitor -- Health Reform Must Cut Costs First
Posted by The Campaign on March 16, 2010 at 7:35 PM
The Christian Science Monitor hits the nail on the head in its latest editorial on health care reform. The editorial writers argue that health care reform must first address ways to get costs under control or reform will not be sustainable.
Here are some key excerpts:
"Insurance companies are easy political targets but they are not the main drivers of medical inflation. The causes are more fundamental, from Americans living longer to ever more costly medical procedures to too few incentives for consumers to control costs. Those issues need to be addressed first before taking an expensive leap into making sure the uninsured are insured."
"But in implicit admission that such reform probably wouldn’t bring enough savings, he proposes the creation of a seven-member federal board – the Health Insurance Rate Authority – that would bluntly set price controls on rate increases in health insurance. In other words, don’t expect much savings from the Obama plan, and so government will need to keep a cap on insurance premiums."
Click here to read the full editorial -- it's definitely a must read.
MUST READ: The Washington Examiner Puts Health Plan Profits in Perspective
Posted by The Campaign on March 16, 2010 at 7:21 PM
The Washington Examiner shines a spotlight on one of the industry deals and how the campaign to vilify health plans is misdirected.
Here are some highlights:
"...the battle at this point is not reformers versus industry, as Obama would have you believe. Rather, it is a battle between most of the health care industry and the insurance companies."
"Of all the single-industry lobbies in Washington, the largest is the Pharmaceutical Researchers and Manufacturers of America. PhRMA spent $26.2 million on lobbying last year — that's nearly three times as much as the insurance lobby, America's Health Insurance Plans, which spent $8.9 million."
"Let's look at those profits. Drug makers' combined profit margin last year was 22.2 percent, compared with insurers' 4.4 percent. Drug maker Merck's net income, $12.9 billion, exceeds that of the 10 largest insurers combined."
For the full article click here.
FACT CHECK: What They Are Saying About Costs
Posted by The Campaign on March 16, 2010 at 5:00 PM
Uwe Reinhardt, economist, Princeton University:
“What really drives it is the cost trend of health care, which is composed in part of utilization and in part of prices.” (Milwaukee Journal Sentinel, Insurers alone can’t be blamed for rates, economists say, 03/13/10)
Mort Kondracke, Roll Call:
“CMS figures show that insurance costs closely track the underlying — and surging — costs for hospitals, doctors and drugs. National health spending rose a whopping 5.7 percent in 2009, according to a February CMS report, and the ‘primary drivers’ were a 5.9 percent increase in hospital costs, a 5.2 percent increase for drugs and 6.3 percent for physician care. Insurance company administrative costs were not even mentioned as a driver — they dropped 2 percent last year — and abundant evidence indicates that industry profit margins run 3 percent to 4 percent, compared with 20 percent for drug companies and an average 13 percent for the health care industry.” (Roll Call, Will Democrats Fare Worse With or Without Passing Obamacare?, 03/11/10)
Robert Samuelson, The Washington Post:
“Whatever their sins, insurers are mainly intermediaries; they pass along the costs of the delivery system. In 2009, the largest 14 insurers had profits of roughly $9 billion; that approached 0.4 percent of total health spending of $2.472 trillion. This hardly explains high health costs. What people need to know is that Obama's plan evades health care’s major problems and would worsen the budget outlook. It’s a big new spending program when government hasn’t paid for the spending programs it already has.” (The Washington Post, Obama’s illusions of cost-control, 03/15/10)
“The big problem is uncontrolled spending, which prices people out of the market and burdens government budgets. Obama claims his proposal checks spending. Just the opposite. When people get insurance, they use more health services. Spending rises.” (The Washington Post, Obama’s illusions of cost-control, 03/15/10)
Dr. JudyAnn Bigby, secretary of the Executive Office of Health and Human Services:
“So much of what drives costs now is the revenue that hospitals want to generate.” (The Boston Globe, Insurer details its unequal payments, 03/16/10)
USA Today:
“As the debate reaches the endgame, here are five ways the final product could be better: -- Go after costs. The biggest void in the legislation is any major effort to control medical inflation…” (USA Today, Our view on medical reform: Five ways to improve the health care hybrid, 03/16/10)
Doug Schoen, Democratic Pollster:
“The data has been clear since at least the summer about how the American people feel about health insurance and their fears about the scope of government and the cost of this initiative. They would like greater focus on cost than any other goal.” (Politico, The handwriting on the wall, 03/15/10)
San Diego Union-Tribune:
“Another factor that has barely been debated is also sure to inflate premium costs…because the annual fine for refusing to buy health insurance is only up to $750 or 2 percent of income, whichever is greater, millions of Americans would pass on coverage, aware they could readily get insurance if facing a major medical problem. This ‘free riding’ means honest citizens would have to pick up the tab for those who game the system.” (San Diego Union-Tribune, Health Reform Bill Fails Two Tests, 03/16/10)
The Wall Street Journal:
“Above all other reasons, voters who oppose ObamaCare cite their fear over costs: They think it will cause their insurance premiums to soar and result in far higher taxes to fund a vast new entitlement.” (The Wall Street Journal, The Cost-Control Illusion, 03/13/10)
Richard Lord, Associated Industries of Massachusetts:
“You have to address the underlying medical costs.” (The Boston Herald, Business group backs health-care price caps, 03/11/10)
