Health Spending Grew 18 Percent Faster Than GDP in Twelve Months

 

According to the Altarum Institute, health spending rose 4.9 percent in the twelve months through August 2014. In the twelve months to July, it rose 5.1 percent, 18 percent more than the 4.3 percent growth in Gross Domestic Product (GDP):

The health spending share of GDP was 17.4% in July. This is up from 16.0% at the start of the recession in December 2007. This increase is partly attributable to slow GDP growth rather than high health spending growth, as the July 2014 health spending share of potential GDP (PGDP) was 16.7%.

Price Transparency: Organizations to Watch

 

George Washington University’s Master of Public Health program has complied a nice list of fourteen “organizations to watch” because they are moving the ball on price transparency. The woman who wrote the article, Emily Newhook, sent an email to NCPA bringing it to our attention. Unfortunately, we can hardly ever make time and space to profile lists compiled by other parties, but I decided to give this one a boost for a number of reasons.

First, it is exciting to see a school of public health get interested in this issue in a positive way. It was not too long ago that any proposal that included Health Savings Accounts or similar tools that removed healthcare dollars from insurers and returned them to patients brought forth wails of anguish from the public-health community about “barriers to care” and the like. Now, according to Ms. Newhook’s description: “This kind of price transparency empowers consumers to comparison shop for health care as they would a car, house or television, forcing higher priced providers to lower their prices to stay competitive.” This is unusual language for a school of public health, and is to be congratulated.

Mars and Venus on Medicaid

 

A version of this Health Alert appeared at Forbes.

I will be participating in Medicaid Health Plans of America’s annual conference in Washington, DC from October 26 to 28. So, I thought I’d prepare for it by reviewing the research on health outcomes for patients on Medicaid. What a tangled web!

According to evidence cited by Forbes opinion editor and Manhattan Institute Senior Fellow Avik Roy, “[P]atients on Medicaid have the worst health outcomes of any insurance program in America ― far worse that those with private insurance and, strikingly, no better than those with no insurance at all.” On March 10, 2011, the Wall Street Journal published a column by Forbes contributor and American Enterprise Institute Resident Fellow Scott Gottlieb, MD, which concluded that “Medicaid coverage is worse than no coverage at all.”

Yet, others resist these conclusions. The federal and state governments spent $460 billion on Medicaid last year. Is it really feasible that this buys nothing? Gottlieb’s article prompted two scholars affiliated with the Kaiser Family Foundation to publish a paper “setting the record straight on the evidence.” Julia Paradise and Rachel Garfield conclude that “…the Medicaid program, while not perfect, is highly effective…Furthermore, despite the poorer health and the socioeconomic disadvantages of the low-income population it serves, Medicaid has been shown to meet demanding benchmarks on important measures of access, utilization, and quality of care.”

Can these differences be reconciled? The evidence cited by Roy and Gottlieb shows poor outcomes for various cancers, major surgical procedures, coronary angioplasty and lung transplants. The evidence cited by Paradise and Garfield emphasizes preventive and primary care (including blood pressure and PAP smears), birth outcomes, heart attack, congestive heart failure, diabetes management and pneumonia.

The Case for Drugstore Clinics

 

In The Atlantic, Richard Gunderman, MD, PhD, has delivered “The Case Against Drugstore Clinics“. It is a weak case. Let’s take his strongest argument first:

A woman with a sore throat went to a retail clinic and received a prescription for antibiotics. After a few days, she hadn’t gotten better, so she went to her family physician. The physician determined that the sore throat was probably due to a viral infection. He also, however, talked to her about her overall health and life. This conversation led to a previously unsuspected diagnosis of clinical depression. The patient is now in treatment and doing much better.

A case like this illuminates three important differences between the retail clinic and the physician’s office. First, the retail clinic prescribed an antibiotic, but in the physician’s judgment the infection was not bacterial. Overusing antibiotics can promote the development of antibiotic-resistant strains of bacteria. Second, the minute clinic focused exclusively on the sore throat. And third, the physician’s more comprehensive evaluation led to a diagnosis with important implications for the patient’s overall, long-term health.

After Almost One Year, Some Medicaid Applicants Still Not Enrolled

 

man-in-wheelchairWell, there is progress. In June, we discussed the three million people who were funneled into Medicaid by Obamacare’s exchanges, but had still not been enrolled. As of October, the backlog is down to a few hundred thousand.

California and Tennessee are facing lawsuits from residents who say they have seen long delays for coverage after signing up for Medicaid, the federal-state health program for the low income and disabled. Some say they have been waiting since late 2013.

The delays stem from various technical problems and the sheer volume of Medicaid applications states must process.

A Business Group Reacts Strangely to the Rise of Private Health Exchanges

 

This blog has discussed the rise of private exchanges for health benefits, describing them as “getting ready for individual health insurance to be the standard.” A private exchange allows an employer to make a defined contribution to employees’ health benefits, which they can use to choose one of many policies within the exchange.

AON Hewitt has a thriving exchange practice, and it recently announced significant growth:

Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON), today announced that it expects more than 1.2 million employees, retirees and their eligible dependents from more than 100 companies to choose individual and employer-sponsored health benefits through Aon’s suite of private health exchanges. This is up from more than 70 companies and over 750,000 employees, retirees and their eligible dependents.

Adverse Selection Got Worse as Obamacare’s Open Enrollment Progressed

 

New data from Express Scripts, a leading pharmacy-benefits manager (PBM) indicates that adverse selection in Obamacare exchanges actually got worse as open enrollment reached its hard finish in mid-April. As a PBM, Express Scripts has the best data on beneficiaries’ medical costs. Pharmacy claims are adjudicated immediately, whereas other claims can take weeks or months to adjudicate. We previously discussed Express Scripts’ study of pharmacy claims for the exchanges’ early sign-ups. These beneficiaries had specialty pharma claims 47 percent higher than the commercially insured population, which led to the conclusion that they were much, much sicker than expected.

The new release covers data for everyone who has signed up for coverage in Obamacare’s exchanges. There has been a lot of happy talk in the media that the huge sales and marketing surge in March (funded by taxpayers) likely led more healthy people to sign up at the end of open enrollment. In the most general sense, this is what happened, according to the new data. The later sign-ups were younger and in better shape when we consider only the more common conditions that are increasingly affecting our society, as shown in the graph:

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Ironies Abound: Walmart Associates Who Lose Their Benefits Can Buy Obamacare Policies at Walmart!

 

Walmart stands out as the poster child of Obamacare’s perverse consequences. Last week, the giant retailer announced that it is dropping benefits for workers who put in fewer than thirty hours per week, which is the definition of part-time according to Obamacare. This will affect about 30,000 U.S. workers. For the remaining “associates” still eligible for benefits, their premiums will jump 19 percent, from $18.40 to $21.90 per pay period. Project 2017′s Jeff Anderson has dug up an embarrassing letter published by Walmart in 2009, which championed Obamacare:

…touting “the promise of reduced health care cost increases” that would come from “health care reform.” Walmart and friends wrote, “We are for shared responsibility,” opined that “health care costs more because we don’t cover everyone,” and said that “losing coverage pushes people already dealing with financial hardship to the verge of financial collapse.”

The real reason Walmart was so eager to have Obamacare passed was so that it could socialize the health costs of part-time workers by dropping their benefits:

Think of the 36-year-old Walmart employee here in Washington, D.C. who works 29 hours per week at the company’s average wage of $12.73 per hour. She earns just about $19,000 annually if she works every week of the year.

If Walmart doesn’t offer her insurance, the Kaiser Family Foundation’s subsidy calculator shows that she qualifies for a $1,751 subsidy from the federal government to help buy coverage on the exchange. With that financial help, she can buy insurance for as little as $7 per month. As a low-wage worker, she gets some of the most generous financial help.

But if Walmart does offer her coverage, it becomes her only option. She doesn’t qualify for federal help and the $7 plan disappears. Walmart’s plan, meanwhile, is way more expensive. The average premium there works out to $111 per month. (Sarah Kliff, Vox)

5 Myths about Cancer Care

 

PIC2In this month’s Health Affairs, leading health economists Dana P. Goldman and Tomas Philipson challenge five myths about cancer care. To the right we have an infographic that explains them very clearly.

The most economically interesting one is the fourth. This appears to challenge the notion that we should be skeptical about paying high prices for therapies that might buy only a short time of good life. (In health-economics, we use terms like Quality-Adjusted Life Year [QALY] and Disability-Adjusted Life Expectancy [DALE].)

The classic approach to these calculations was illustrated by Professor Christopher Conover in a recent article:

…[M]ost of the gains were concentrated in the 35-64 age group, which narrows the plausible range of what the average gain in life expectancy might be. Someone who is 60-64 is 7.3 times as likely to die in a given year as someone age 35-39. The reason this matters is that there are reasonably well-accepted rules of thumb about the value of what’s called a quality-adjusted life year (QALY).

Hospital Administrative Costs Higher In U.S. than Other Countries

 

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The Commonwealth Fund has sponsored yet another study that concludes that the U.S. health system is less efficient than others. This time, the measurement is specifically hospitals’ administrative costs. As always, it recommends single-payer, government monopoly as the solution. Readers of this blog know that I am not about to defend hospitals’ bloated administrative costs. However, the Commonwealth Fund’s scholars go way off-base when it comes to capital costs: