California Single-Payer Bill Looks Backward, Not Forward to A New Era of Patient Choice

 

Covered California(A version of this Health Alert was published by the Orange County Register.)

Here we go again. The California state legislature is considering yet another bill to impose a so-called single-payer, government monopoly, health care system. This has long been an obsession of the militant California Nurses Union, because a health system under total government control would suit the narrow interests of union leaders. They would accrue power similar to that wielded by other public-sector unions and might even be able to negotiate contracts similar to those enjoyed by state and local employees, which are driving public finances across the state into the ditch.

House Obamacare Repeal Bill Limits HSAs for Millions of Americans

 

Hand Holding Cash ca. 1998

Hand Holding Cash ca. 1998

The House Republican American Health Care Act Managers Amendment would not allow Americans to use their tax credits to fund an HSA. Instead of using their tax credit/HSA to pay for doctor visits, prescriptions and OTC drugs, Americans will only be allowed to use their credit for insurance. This is a big mistake – and a giveaway to insurers. Millions more Americans would have an HSA if the proposed $2,000 to $4,000 tax credits were automatically deposited into individuals’ HSAs for use on health insurance premiums, copays, cost-sharing and paying for direct care.

Where Does Your Insurance Premium Go?

 

InsFormSmallAHIP, the trade association for health insurers, has a nifty infographic answering the question: “Where does your premium dollar go?”

Obviously designed to defray accusations that health insurers earn too much profit, the infographic shows “net margin: of only three percent. A full 80 percent of our premium dollar goes to paying medical, hospital, and prescription claims.”

Fair enough. However, the elephant in the infographic is the 18 percent of premium that goes to “operating costs.” Lest you think that’s a synonym for “overhead” or “bureaucracy,” AHIP helpfully explains: “Operating costs include consumer-centric activities such as communicating with members, running customer service operations, quality reviews, and data analysis, among other activities.”

Well, readers have to judge how “consumer-centric” those operations are.

Veterans Health Administration Realizes It Should Buy, Not Build, Software

 

doctor-technologyImagine if you learned a government agency built its own office furniture, HVAC, or telephones. Even if there were a massive amount of corruption in government purchasing, it would be remarkable if a bureaucracy could do a better job building than buying.

Yet, for decades, the Veterans Health Administration has tried to do that with its Electronic Health Record (EHR). I cannot think of another health system that has built its own EHR, rather than buy it from a vendor. It makes as little sense as a health system manufacturing its own MRI machines.

President Trump’s newly appointed VA Secretary has confirmed he will throw in the towel on the VA’s home-brew system, VISTA, and buy a commercial EHR.

The Logic Defying CBO Obamacare Replacement Score Breaks Its Own Rules, Among Other Problems

 

220px-Tom_Price(A version of this Health Alert was published by Forbes.)

Dr. Tom Price, the U.S. Secretary of Health & Human Services has said the Congressional Budget Office’s recent “score” of the Republican Obamacare replacement bill defies logic. Even worse, it defies the very rules which govern the CBO.

The 2016 Budget Resolution, agreed by both the House and Senate in May 2015 directed the CBO to do so-called dynamic scoring of major legislation.  Dynamic scoring includes proposed laws’ macroeconomic effects. It is especially important when new laws cut taxes, as the American Health Care Act would do. Old fashioned, static analysis does not result in accurate estimates.

For example, say a 10 percent tax on a base of $100 million raises $10 million. Cutting that tax to five percent would cut revenue by $5 million, under static analysis. This ignores the economic growth that would occur as a result of the tax cut.

Mayo Clinic Admits it Prioritizes Privately Insured

 

Hand Holding Cash ca. 1998

Hand Holding Cash ca. 1998

The Mayo Clinic has admitted it places Medicaid and Medicare patients in a lower priority than patients with private insurance. This is something that many doctors and hospitals likely do. It is well known that Medicare pays physicians only about 80% of what private insurers reimburse for the same coverage. Medicare reimburses hospitals about 70% of private payers. Medicaid rates are a fraction of Medicare’s rates.

Bargain Basement vs. the Sky is the Limit Health Care

 

Caduceus with First-aid Kit --- Image by © Royalty-Free/Corbis

Caduceus with First-aid Kit — Image by © Royalty-Free/Corbis

How much should a healthy person’s health insurance premiums reflect the cost of another person’s poor health status? Stated another way, how much should society invest in care for the sickest individuals? Moreover, should society invest in primary care or inpatient care?

CPI: Medical Price Hikes Match Inflation

 

BLSBoth the Consumer Price Index and the price index for medical care rose just 0.1 percent in February. This is the sixth month in a row we have enjoyed medical price relief in the CPI. Even prices of prescription drugs dropped by 0.2 percent. Some components – medical equipment and supplies, outpatient hospital services, and health insurance jumped a bit, but not enough to drive overall medical prices higher. Medical price inflation contributed nine percent of CPI for all items.

Over the last 12 months, however, medical prices have increased much more than non-medical prices: 3.5 percent versus 2.7 percent. Price changes for medical care contributed 11 percent of the overall increase in CPI.

More than six years after the Affordable Care Act was passed, consumers have not seen relief from high medical prices, which have increased over twice as much as the CPI less medical care since Obamacare took effect.

See Figures I, II, and Table I Below the fold:

Health Insurance A Cause Of Past-Due Debt?

 

credit-card-2A study of past-due medical debt by Michael Karpman and Kyle J. Kaswell of the Urban Institute demonstrates the expansion of coverage subsequent to the Affordable Care Act is associated with a reduction in the proportion of adults with past-due medical debt.

In 2012, 29.6 percent of U.S. adults had past-due medical debt, versus just 23.8 percent in 2015. The study does not define “past-due,” nor the average amount of medical debt that is past-due. However, it cites research that almost half of debt in collections is owed to hospitals and other providers.

Although health insurance is supposed to protect us from such a situation, it often does not. Among insured people, 26.6 percent had past-due medical debt in 2012, versus 22.8 percent in 2015. However, among uninsured people it declined more: 39.8 percent in 2012, versus 30.5 percent in 2015. What to make of this?

PPI: Health Prices Mixed, Inflation Low

 

BLSFebruary’s Producer Price Index rose 0.3 percent. However, prices for many health goods and services grew slowly, if at all. Nine of the 16 price indices for health goods and services grew slower than their benchmarks.* Prices for medical lab and diagnostic imaging actually deflated in absolute terms.

Even  pharmaceutical preparations for final demand, for which prices increased most relative to their benchmark, increased by just 0.4 percent. Although 0.3 percentage points higher than the price change for final demand goods less food and energy (0.1 percent), this is still tame relative to the trend of pharmaceutical prices. Among services for final demand, only price for health insurance and nursing homes rose higher than their benchmark.

With respect to diagnosing whether health prices are under control, the February PPI is about as mixed as January’s was.

See Table I below the fold: