Viewing entries tagged with 'Costs'
MUST READ: The Wall Street Journal Examines How Health Plans Are Helping Patients Stay Out of the Hospital
Posted by The Campaign on July 28, 2010 at 1:18 PM
With the debate about MLR definitions still ongoing, we thought this story from The Wall Street Journal offered a great example of the types of programs health plans use to help keep patients healthy and safe and ultimately save them money. These are the types of programs that all health plans use to improve quality and value and are at the core of health plans' role in the system.
Here is a key excerpt from the story:
"It is more important than ever for health plans and patients to combat medical costs, growing at a clip of between 6% and 9% a year, according to various estimates. Heart failure-which can be triggered by simple mistakes such as consuming too much salt-is a leading cause of hospital readmissions, with about 25% of patients returning to the hospital within 30 days. It's also one of the biggest single claims expenses at insurance companies. Aetna estimates that 40% of readmissions are avoidable.
"For patients, the extra surveillance could cut down on trips to the hospital and provide peace of mind. That's what Carolyn Brown, a 63-year-old retired teacher's aide from Bronx, N.Y., found when she started using a new monitoring system covered by her insurer, MetroPlus Health Plan Inc., after she suffered two heart attacks."
For the full story, click here.
MUST READ: The New Health Dialogue Outlines Why Just Attacking Health Plans Doesn't Solve the Cost Conundrum
Posted by The Campaign on June 22, 2010 at 12:20 PM
This is a great piece that ran as a blog entry on The New America Foundation’s blog “The New Health Dialogue.” It smartly makes the point that just focusing on health insurers does not solve the problem of ever increasing costs. Here are some key excerpts and the full piece is below:
“But it's important to remember that to the extent that the focus remains on health insurers' rate increases we may miss the point on overall rising health care costs, and maybe even accelerate their growth.”
"This is because the amount that we pay for private health insurance is primarily determined by the prices that insurers negotiate on our behalf with doctors and hospitals."
"But the logic of rising health care costs is inexorable. Until the people who negotiate with doctors’ offices and hospitals are in a position to get a better deal on our behalf, they will not get a better deal."
"Standing in the middle of this road, it is largely the same group of insurers who have to keep fighting to keep health care costs down for businesses and families. And it’s not at all clear that they will be successful in this fight on our behalf if we focus the majority of our own attention on beating up on them."
FACT CHECK: What is Driving Premium Increases
Posted by The Campaign on June 22, 2010 at 11:19 AM
Fact Check: What Is Driving Premium Increases
“Insurance is still going to be expensive because healthcare is expensive.”
-- Gary Claxton, VP, Kaiser Family Foundation
(Reuters, 06/21/2010)
Underlying Medical Costs Drive Premium Increases
· Federal government data confirms that rising health care costs are driven by increased spending on hospital care, physician services, and prescription drugs. The government data[i] show:
o “Hospital spending growth is projected to have accelerated from 4.5 percent in 2008 to 5.9 percent in 2009, as spending reached $760.6 billion.”
o “Spending growth for physician and clinical services is expected to have accelerated to 6.3 percent in 2009, up from 5.0 percent in 2008, with expenditures having reached $527.6 billion.”
o “Prescription drug spending is expected to have grown 5.2 percent in 2009, an acceleration of 2.0 percentage points from 2008, and to have reached $246.3 billion.”
· Between 2000-2008, the growth in premiums tracked directly with the growth in benefits.
|
|
2000 |
2008 |
2000-2008 Growth |
|
PHI* Premiums |
454,784 |
783,157 |
72% |
|
PHI* Benefits |
402,802 |
691,179 |
72% |
Source: http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf
(see table 12)
Note: PHI = Private Health Insurance as defined by CMS
http://www.cms.hhs.gov/NationalHealthExpendData/downloads/quickref.pdf
*****
Health Plan Administrative Costs are Not the Cause of Premium Increases
· Health plan administrative costs increased at a slower rate than spending on prescription drugs, physicians and clinical services, hospitals, and total national health expenditures from 2000-2009.
· In 2009, the percentage of premiums that went towards administrative costs and profits declined for the sixth year in a row.
· The average yearly increase in health plan administrative costs from 2000-2009 was lower than the increase in spending on hospitals, physicians and clinical services, prescription drugs, and total national health expenditures.
Health Plan Profits Average Between 3-5 percent
“Insurance company profits in the large picture have very little to do with the overall rising cost of health care.”
-- Henry Aaron, Brookings Institution
(ABC News, 11/10/09)
· According to Yahoo! Finance’s latest analysis of quarterly financial data, the net profit margin for the entire health care sector is 15.48%. Using the same index, health plans have a 4.7% net profit margin.
o This ranks the health insurance plan industry 12th out of the 16 industries that make up Yahoo! Finance’s health care sector.
· Analyzing 13 health insurance plan companies on the Fortune 500 list, the profit margin for these 13 companies averaged 3.19 percent for 2009 -- for 2008 it was 2.3 percent for these same 13 companies.
o Six of the 13 companies actually saw a decline in their profit margin - averaging a decline of 48.7% in profit margin from 2008 to 2009.
· What experts say about health insurance plan profits:
o According to Kaiser Health News, “With the nation’s health care spending estimated at $2.5 trillion this year, even the elimination of insurers’ profits and executive compensation would lower health care spending by just 0.5 percent.”
o According to Ezra Klein of The Washington Post “The insurance industry is not a particularly profitable industry…That’s not to pretend that 3.3 percent is nothing, but it’s hard to see how that’s a primary driver of health-care spending, much less the growth in health-care spending.”
o Alwyn Cassil, Center for Studying Health System Change: “‘…this idea that (taking) this $12 billion that they have in profits … would fix our health-care spending problems is just a pipe dream.’”
For a printable version click here.
[i] Truffer, et al, Health Affairs, “Health Spending Projections Through 2019: The Recession’s Impact Continues”, Published online February 4, 2010.)
POLL VAULT: New Deloitte Survey -- Majority Think New Reform Law Will Lead to Higher Medical Prices and Higher Taxes
Posted by The Campaign on June 11, 2010 at 7:42 AM
With reform now the law of the land more and more surveys are being released about people's expectations of the impact of the new law on the health care system and on their personal health care. The latest survey comes from The Deloitte Center for Health Solutions (DCHS), part of Deloitte LLP, in which they survey 1,019 adults aged 18 and older.
The results are very interesting with questions ranging from impact of the reform law on access and costs, to the effectiveness of certain provisions to people's view of their own insurance coverage.
Here are some key highlights from the survey:
43% of all adults surveyed think they will be "worse off" under the new law vs. 36% that think they will be better off
- Among those with employer-provided coverage, 46% think they will be worse off
76% think the cost of the reform bill will be higher than expected
- Among those with employer-provided coverage, 82% think the cost of the reform bill will be higher than expected
53% DISAGREE with the statement "The reform will reduce health care costs in the long term"
- 66% think that hospitals and physicians will increase prices
- 54% think the price of medication will increase as a result of the new law
- Only 30% think cuts in the rate of growth of Medicare costs will be effective
76% think taxes will increase
- 78% of people with employer-provided coverage think taxes will increase
- 80% of individually insured adults think taxes will increase
One stat probably won't hear but it is really telling: "Of the 82 percent of consumers surveyed who consider themselves 'well' or 'adequately' insured, 96 percent are 'very satisfied' or 'satisfied' with their insurance company's performance in serving their needs."
ICYMI: Expert Highlights Lessons to Be Learned From MassCare
Posted by The Campaign on June 09, 2010 at 1:42 PM
This OpEd from a employee benefits expert in Massachusetts is a little delayed in being posted, but is still incredibly relevant. It is written by Mark Gaunya who has over 20 years experience in the employee benefits field.
Gaunya argues that Massachusetts is a perfect test case of what to expect from the new health care reform law. He writes:
"Almost four years after implementing the Massachusetts health care reform law (MassCare), the private market is 'wrestling' with state government to address rising health insurance costs. What was lost in the national debate and threatening the sustainability of MassCare is the fact that health insurance is expensive because health care is expensive."
While this observation is not new, it certainly carries a lot of weight coming from someone who is living the experience of expanded access without controlling costs.
In fact, Gaunya argues that a lot of the rhetoric used against health plans is off the mark, writing "Pointing the finger at health insurers is politically convenient, but significantly misguided."
He also offers a series of five lessons that can be learned from Massachusetts' health care reform law, concluding with this: "MassCare created an unsustainable 'access' model, because it didn't address cost at the same time as access."
Sound familiar? That's because it was the same argument made by hundreds of experts about what will happen at the national level if costs are not addressed.
And it leads to Gaunya's conclusion:
"One thing is clear - health insurance is expensive because health care is expensive."
The fortunate thing the nation has going for it is we can see firsthand what happens if we do address costs at the same time as expanding access. It's not too late, but the question is will policymakers heed the warning and learn the lessons of recent history?
ICYMI: The New York Times Highlights The ‘Incidentaloma’ Problem
Posted by The Campaign on June 09, 2010 at 1:16 PM
Over the past year here at the blog we have shined the spotlight on some of the problem areas in our health care system that lead to higher costs and no corresponding increase in quality of outcomes or patients' care. And even in some cases potentially causing patients to become sicker.
No where is this more of an issue than in the explosion of medical tests and imaging over the past 10 years. In fact, many recent studies have come out highlighting the potential negative impact of medical tests and imaging on patients including potentially more cases of cancer.
Today's New York Times focuses on this topic and coins a phrase for it "The 'Incidentaloma' Problem". The article highlights the story told by Nicholas Kristoff's experience with CT scans. The article notes:
"His tale also brings to the fore a conundrum the medical community confronts with increasing urgency, given the pressing need to deploy expensive imaging technologies in a manner that balances risks and costs with benefits."
But, the article continues, this is the problem with with screening by imaging "...medical scans pick up incidental findings that may be benign, leading to complications that make an otherwise healthy person ill."
The author of the article, Dr. Peter Libby, further notes "...it's important to think rigorously about the benefits versus the risks and costs of medical procedures, rather than relying on impressions or remarkable individual cases. The medical literature indicates that incidental findings leading to follow-up medical procedures occur in more than 8 percent of cardiovascular imaging studies."
Dr. Libby concludes that while medical imaging is useful when used correctly, all of the benefits must weighed against all of the potential PROBLEMS that could arise. He writes "...we should bear in mind the potential risks they entail if used indiscriminately. In most situations, a prior consideration of risk for disease using non-imaging markers like medical history, physical exams and simple blood tests may help us target imaging in a way that better balances risks with benefits, and help us avoid in particular encountering those 'incidentalomas' best left undetected."
BREAKING NEWS: New Survey Shows Employers Think Costs Will Rise Under New Reform law
Posted by The Campaign on May 26, 2010 at 6:47 AM
Throughout the health care reform debate, there were many voices that raised concerns about the issue of health care costs and whether the new reform law would adequately address in a meaningful way the ever increasing growth in costs. One of those voices was America's employers, and while they regularly raised the issue of costs, the law seemed to have ignored those concerns and did not effectively develop long term strategies on this issue.
It is not surprise then that a survey released yesterday by Towers Watson shows that employers' concerns about health care costs has not abated. Click here for the full survey, and read below for some highlights as reported in an AP story from today:
"Big companies think health care reform will hike their costs..."
"...94 percent of those that responded believe the reform law passed by Congress earlier this year will raise costs."
"Some companies could see small reform-related cost hikes next year, after the start of provisions that ban lifetime maximums for benefits and extend coverage of young adult dependents on parental plans to age 26."
"Containing health care costs was an essential or high priority for 96 percent of survey respondents..."
ICYMI: The Milliman Medical Index -- Costs Keeping Rising
Posted by The Campaign on May 12, 2010 at 10:04 AM
Everyday seems to bring to light new information about rising health care costs and the impact of the new health care reform law on costs (HINT: It is going to increase them.) The latest information comes from the Milliman Medical Index, an annual report that shows "total annual medical spending for a typical American family of four covered by an employer-sponsored preferred provider organization (PPO) program."
The report provides further evidence that health care costs continue to rise at an unsustainable rate and are being driving by soaring prices for medical services.
Here are some nuggets from the report:
"Increasing healthcare costs remain a challenge for both employers and employees and are largely driven by increases in the underlying cost of care."
"The 2009 to 2010 hospital inpatient annual rate of increase grew from 7.7% to 9.8%. Most of the inpatient annual rate of increase is driven by average unit costs; we are seeing very little change in utilization. The hospital outpatient annual rate of increase grew from 10.2% to 11.6%, mostly because of increased average unit costs. Hospital outpatient care is the area of highest growth for the second year in a row."
"Most of the hospital and physician cost increases identified in this year's MMI have been driven by average unit cost, not utilization, which frames the coming effort to control costs. Provider/payor negotiations will be more visible and intense in the reform environment and as regulators put more pressure on the premium rate-setting process."
"Only about 17% of this year's increase in pharmacy spending is due to increased utilization, and the other 83% of the increase is due to average unit cost increases."
"While employers are making the immediate changes required to their benefit plans and adapting their longer-term benefit strategy to the new regulatory environment, healthcare costs continue to increase at rates exceeding most other costs of doing business."
"Efforts to enforce insurance rate controls may have indirect impact on the growth in healthcare costs but still do not address the underlying cost of care."
"While underlying cost drivers as yet remain relatively unchanged, there are some changes that will have a predictable effect on cost. The most immediate changes, such as increasing dependent coverage up to age 26 and elimination of lifetime and annual benefit maximums, will cause a direct shift in costs from employees to employers."
To read the whole report, click here.
POLL VAULT: No Shock Here -- Nearly 6 in 10 Americans Think Reform Law Will Increase Costs
Posted by The Campaign on May 11, 2010 at 1:43 PM
While the health care reform debate has receeded a little bit from the public domain, America's views on the bill haven't changed very much. In fact, Americans continue to think, overwhelmingly, that the reform law will increase their health care costs.
The latest proof comes from Rasmussen's latest poll:
"Fifty-eight percent (58%) expect the cost of health care to go up under the new law, up slightly from last week and the highest result found so far."
Click here for more on results from Rasmussen's latest poll.
ICYMI: The New York Times on the Need to Bring Down Underlying Medical Costs
Posted by The Campaign on April 21, 2010 at 5:49 AM
With each passing day, there seems to be a greater and greater recognition of the fact that health care costs are growing out of control. And it is these costs that are driving the icnreases in premiums. Thus if the country is going to get premium growth under control it has to design a strategy to get these underlying costs under control.
The New York Times picks up this line of argument today in its editorial "Health Care Reform and Massachusetts." First, the NY Times recognizes that premium caps are "a short-term fix."
The editorial goes on to argue:
"Like the rest of the nation, the state needs to deal with the underlying issue: the relentlessly rising prices charged by health care providers. Those are driven in part by costly new technologies and treatments. In Massachusetts, it is exacerbated by the outsized bargaining power of prestigious teaching hospitals and regionally dominant community hospitals."
This argument follows closely to the points made by AHIP in yesterday's hearing in front of the Senate HELP Committee. The Committee held a hearing on premium increases. The New York Times covered the hearing and picks up AHIP's point of view here:
"Congress, [AHIP's President and CEO Karen Ignagni] said, has largely ignored the cause of rising premiums: the explosive growth of medical costs and the power of hospitals and other health care providers to dictate prices. Ms. Ignagni said the law imposed new requirements, taxes and fees on health plans, which could further drive up costs."
