Obamacare Will Devour Your Pay Raise

 

Mercer’s latest National Survey of Employer Sponsored Health Plans reports that the cost of employer-based benefits will jump significantly in 2015

Employers in the U.S. are predicting that health benefit cost per employee will rise by 3.9 percent on average in 2015, preliminary results from a new survey by Mercer reveal. Cost growth slowed to 2.1 percent in 2013, a 15-year low, but appears to be edging back up. Moreover, a higher percentage of employees signing up for coverage through the worksite could be a wildcard driving costs higher.

The projected increase for 2015 reflects actions employers plan to take to manage cost. If they make no changes to their plans for 2015, they predict that costs will rise by 5.9 percent on average. However, only 32 percent of respondents are simply renewing their existing plans without making changes.

Commonwealth Fund: Most Who Visited Obamacare Exchanges Rated Them Fair or Poor

 

The media have cheered the latest Commonwealth Fund survey of Americans who have tried to enroll in Obamacare plans on health-insurance exchanges. For those who actually read the report, the results are significantly worse for Obamacare than championed by the press release.

To put it bluntly: Visiting an Obamacare health insurance exchange to choose coverage is an experience you would not wish on your worst enemy. Things have gotten a little better during the year: Last October, 61 percent of respondents reported that it was “very difficult or impossible” to “find plans they needed and could afford by end of open enrollment,” and this had dropped in the April-June quarter to 54 percent (Exhibit 2). That is a significant improvement — but it is also a tricky question.

Dartmouth Debunked? Providers Don’t Drive Variation in Health Spending

 

Central planners love to cite the Dartmouth Atlas of Health Care. The Atlas is an impressive, decades-long effort to study geographic variance in health spending. The famous Atul Gawande, MD, is likely responsible for the fact that the Dartmouth results are better known among lay people than any other research in health economics.

The reason central planners love the Dartmouth results is that they easily feed into a narrative that goes like this: “Medicare spending in McAllen, Texas, is about twice as much as it is in El Paso, Texas, even though their populations are similar. The doctors in McAllen must be twice as greedy as the doctors in El Paso. So, we need to tighten the screws on Medicare payments until costs in McAllen are cut in half. If we do that nationwide, we solve Medicare’s fiscal crisis.”

A Very Weak Argument in Favor of Hospital Mergers

 

Earlier this week, I discussed the rapid pace of mergers throughout health care. Hospital consolidation is one point of special concern, because it can reduce competition and increase prices. In the Wall Street Journal, Dr. Kenneth L. Davis, MD, CEO and President of Mount Sinai Health System in New York City puts forward a number of claims in favor of hospital consolidation. Each is weak, making an unconvincing argument overall.

First, Dr. Davis asserts that the new goal of hospitalization is not to make any individual patient well, but “population health management”. Greg Scandlen has thoroughly challenged this as an appropriate goal. With respect to hospitals specifically, Dr. Davis’ theory of population health management leads him to conclude that “stand-alone hospitals have neither the number of patients to manage the actuarial risk of population management, nor the geographic coverage to serve a large population. Hence the reason for allowing strategic hospital mergers.”

Number of Uninsured Americans Aged 18-64 Down 2 Percentage Points

 

The number of uninsured Americans, aged 18-64 has dropped by two percentage points from the first quarter of 2013 to the first quarter of this year, according the Centers for Disease Control (CDC).

As shown in figure 2, that brings the proportion of uninsured down to where it was about ten years ago. In other words, Obamacare has not managed to overcome the results of the recession that began in December 2007. Plus, much of the reduction in uninsured is a result of more people becoming dependent on Medicaid, which is welfare, so should not be viewed as the same type of benefit as individually owned or employer-based health insurance.

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Obamacare’s Second Open Enrollment Starts in Two Months — and It Is Going to be Awful

 

A version of this Health Alert appeared at Forbes.

If there is one thing that the Administration and Democratic candidates have in their favor going into the mid-term elections, it is that election day is November 4, and Obamacare’s second open enrollment begins on November 15. If the dates were flipped, there is little doubt that voters affected by Obamacare would wreak havoc on the politicians who imposed the Rube Goldberg contraption of exchanges on them.

Despite having just tossed another $60 million out the window “to help consumers navigate their health care coverage options in the Health Insurance Marketplace,” the Administration will likely face an even more bemused and disgruntled population of Obamacare “consumers” than it did the first time around.

Obamacare enrollment may already be below the 8.1 million trumpeted by the Administration after the first enrolment season legally closed on March 31 (although it actually closed sometime around the middle of April). Because there are special circumstances (for example, marriage, divorce, or moving to a new state) that allow people to change coverage outside enrollment season, that number has changed.

Unfortunately, the Administration has stopped reporting exchange enrollment, which it used to do monthly. The latest evidence, from Amanda Kowalski of Yale University and the Brookings Institution, is that 13.2 million people were covered in the individual market at the end of June, representing an increase of 4.2 million above the pre-Obamacare trend. This includes both on-exchange and off-exchange coverage.

UnitedHealthcare’s Price-Transparency Tool is Having an Impact

 

UnitedHealthcare has released a study describing the results of its myHealthcare Cost Estimator, and mobile version (Health4Me). The results are, perhaps, unusual. The report concludes that patients who used these tools chose higher quality providers. However, it did not report savings from using the tools. I also note that the report was finished on February 25, but only released to the public today.

As far back as 2009, this blog discussed a previous report on consumer-driven health plans published by UnitedHealthcare, in which it promoted very precise estimates of savings through such plans. The lack of such precise estimates for the price-transparency tool suggests it is not having the same effect. On the other hand, it is having an impact by leading patients to choose higher quality providers. This must be beneficial, or UnitedHealthcare would not have released the report, even with such a long delay! And over one million people have downloaded the online app, so there is clearly a lot of interest.

Massive Momentum for Mega-Mergers in Health Care

 

Paul Keckley of Navigant Consulting summarizes the rapid pace of consolidation within U.S. health care:

“Go big or get out” seems to be a mandate across the health system these days. Across the continuum of healthcare products and services, consolidation is a given. Consider:

  • Total enrollment of the top 10 insurers increased from 20% in 2003 to 46% in 2011
  • The share of total revenues for pharmacy benefits management services for the top 2 Pharmacy Benefit Managers increased from 27% in 1999 to 61% in 2012
  • The numbers of physicians practicing in groups of 5 or fewer physicians decreased from 66% in 2001 to 51% in 2012, while physicians in groups of 100 or more increased from 3% to 12% in the same period
  • The employment of physicians in medical practices owned by hospitals increased from 24% in 2004 to 49% in 2011
  • The numbers of hospitals in multi-hospital systems increased from 53% in 2003 to 60% in 2013.

Individual Health Insurance Premiums Rose 24.4 Percent in 2014

 

debtA new paper written by Professor Amanda Kowalski of Yale University, the National Bureau of Economic Research (NBER), and the Brookings Institution examines the effect of Obamacare on premiums in the individual market for health insurance in 2014 versus 2013. Her analysis includes policies sold in the individual market off the exchanges, as well as those sold on Obamacare exchanges:

Across all states, from before the reform to the first half of 2014, enrollment-weighted premiums in the individual health insurance market increased by 24.4% beyond what they would have had they simply followed state-level seasonally-adjusted trends.

Federal Health IT Standards Still Taking On Water

 

electronic-medical-record

Last May, this blog discussed the proposed watering down of standards for hospitals and other facilities to get federal bounties for so-called “meaningful use” of electronic health records (EHRs) in 2014.

Well, they appear to have done it again. In a final rule that affected both 2014 and 2015, the Office of the National Coordinator of Health Information Technology (ONC) announced that: “Health information technology (IT) developers, providers and consumers will get more flexibility through a final rule issued on Sept. 10, 2014.”