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Consumer-Driven Health Care Round Up

Lots going on in the Consumer-Driven space these days.

AHIP released its latest version of the annual HSA enrollment census. The results are impressive, though still understated since they only received responses from 71% of the companies. It finds enrollment growth of about 15% every year, now reaching 17.4 million. Perhaps the most interesting aspect is the state-by-state breakdown of market penetration. The old Red State/Blue State divide does not hold up when it comes to market behavior. Some of the states with low enrollment include Mississippi, Alabama, and South Carolina, while some of the highest enrollments are found in Minnesota, Illinois, and Maine.

AHIP also released, along with the American Bankers’ Association, a report on HSA account activity. One notable tidbit from this report is the size of the contributions, both personal and from employers. The average personal contribution in 2012 was $2,337, and the average employer contribution was $1,142. Also interesting is that only 19% of all the accounts had $0 balances at the end of the year, indicating that most people are retaining funds in their accounts at least for future use, if not for long-term savings.

Dr. Ben Carson has become a passionate advocate for HSAs, seeing them as a viable alternative to much of Obamacare. An op-ed he wrote has been widely circulated.

Thanks, Suckers

HHS is crowing about how much money has been returned to consumers due to the Medical Loss Ratio (MLR) rules.

The Hill reports –

Insurance companies returned about $ 9 billion dollars from premiums since 2011 because of an Obamacare provision to cap how much profit they can make, according to a new Department of Health and Human Services (HHS) report released Thursday.

Actually the MLR thingy was always a con. First, this regulation had never been tried anywhere. A couple of states tried it with lower ratios but without success. There was absolutely no evidence it was either a good idea or would work without big unintended consequences.

One of those consequences is obvious. Insurers are free to overcharge people, collect the money, earn interest on it during the course of a year, and rebate the overcharge 18 months later. So consumers in effect are simply giving the insurers an interest free loan for a year. That is why there has been $9 billion in rebates. This is not a good thing. Consumers unwillingly loaned insurers $9 billion for a year and got nothing in return.

Three Conservative Ideas Buried within Obamacare

Caduceus with First-aid KitThe Affordable Care Act is the worst piece of legislation ever passed into law in the United States. However, it does open up some doors that were firmly locked before — things that most free-market economists have been espousing for years without success. We should not run away from those things just because they have President Obama’s name on it.

I am not talking about the things the idiot media think are popular — the slacker mandate, open enrollment, equal premiums for men and women, and free “preventative” services.

However, I see three conservative ideas buried in Obamacare. Read about all three in my column in The Federalist.

The Verdict Is In?

Politico‘s headline was unambiguous ― “The verdict is in: Obamacare lowers uninsured.”

Well, my goodness, I would certainly hope so after spending several hundred billions of dollars to do just that. We can’t be sure how much has been spent so far, but the legislation called for over $1,000 billion over ten years. Let’s see ― it has been in effect for four years now, so is that $400 billion so far?

The Politico article reports that the Commonwealth Fund estimates 9.5 million fewer uninsured, and the Urban Institute finds 8 million newly insured adults. Let’s round it up to ten million. That would make $40,000 for each newly insured person. Wow!

Of course, there are some problems with even these optimistic numbers. Chris Conover delves deeply into the methodology in Forbes. But I want to add a few other observations –

There is no Patient Privacy

Dr. Deborah Peel is probably the nation’s foremost advocate for patient privacy. The Texas psychiatrist has worked tirelessly to include privacy protections in all of the health reform ideas of the past twenty years.

She recently gave a presentation at TEDx where she informed the geek community of how extensive medical data breaches have become. Not just extensive but perfectly legal and even encouraged by our government. Bottom line ― there is no medical privacy anywhere in American health care.

EBRI’s First Look at HSA Account Balances and Distributions

The Employee Benefits Research Institute has just published its first analysis of HSA accounts, balances, and distributions, based on its own HSA database. This is an excellent report, in part because it also looks at other similar reports and discusses the strengths and weaknesses of each.

It is well worth downloading and saving the entire report and using it as a baseline to watch the growth of HSAs over the coming years.

Here are some of the bullet points –

  • This year marks the 10th anniversary of the creation of health savings accounts (HSAs) under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
  • Starting from scratch a decade ago enrollment in HSA-eligible health plans is estimated to range from 15.5 million to 20.4 million policyholders and their dependents, and it has also been estimated that there are 10.7 million accounts holding $19.3 billion in assets as of Dec. 31, 2013. Seventy percent of HSAs were opened since 2011.

Price Controls

Phil Gausewitz, MD, recently focused on the problem of price controls in medicine. He argues that the imposition of price controls have devastated quality and innovation in medical care and makes a compelling case that removing them would open up a new era of patient centered care and restore the physician/patient relationship.

With the removal of the price controls we can expect that, in addition to saving the enormous administrative costs they cause, the devastating effects of the physician shortage will be relieved. Patient care services will improve significantly as physicians compete for patients on service and fees. Medicare patients will regain the right to protect their lives, which they are denied now, by being able to freely contract with physicians who require fees greater than the government allows, and we will be spared the ridiculous spectacle of the “doc fix”.

Shortages caused by price controls protect less effective doctors who now have busy practices regardless of the quality of their service. The exciting new developments in diagnostic and treatment procedures, equipment, immunology, informatics and genetics will be brought more efficiently to patient care, without being inhibited by burdensome and needless financial regulations. The relationships between physicians and patients will improve as patients choose physicians with whom they are comfortable.

Value Based Payments

In Information Week David Carr writes about some of the current trends in health care, and especially about “value based payments.” He writes –

“Value based” is a catch-all label for Accountable Care Organizations (ACOs) and other ways of restructuring healthcare around payment for value delivered, as measured by metrics of healthcare quality or the aggregate health of a population rather than by the volume of visits, procedures, or hospital stays a healthcare organization records. In other words, it’s a highly data-driven vision of healthcare reform, intended to improve quality and efficiency while reducing costs.

He reports on a new study by Availity that says while 75% of providers currently participate in some form of “value-based payment model…fewer than 30% believe these schemes offer a good level of reward for the risk.” Generally, both physicians and hospitals are concerned about the additional administrative burden and expense needed to justify payment.

That concern is certainly borne out by an article titled “What is Value in Health Care?” from the New England Journal of Medicine sent to me by a friend. This was published in 2010 and written by Michael Porter of the Harvard Business School.

Population Health

I’ve been wanting to write about “Population Health” for some time now. It is a huge new trend that has risen under the radar of almost the entire population. Nearly every medical school now has a Department of Population Health or a Center for Population Health. Thomas Jefferson University has an entire school devoted to the subject — The Jefferson School of Population Health, founded in 2008.

The concept is kind of creepy, but it is getting even creepier. The Institute for Healthcare Improvement (IHI), Don Berwick’s old outfit, recently announced a conference on “Population Management” to be held September 28 to October 1 this year. Enrollment will cost $4,950 per person, so you know it’s a very big deal.

One of the reasons it is hard to write about this is there is no settled definition of what it is. A paper written in 2003 by David Kindig and Greg Stoddard in the American Journal of Public Health took a stab at it. They write –

Although the term “population health” has been much more commonly used in Canada than in the United States, a precise definition has not been agreed upon even in Canada, where the concept it denotes has gained some prominence.

Variations in Post-Acute Care Spending

A publication called “Becker’s Hospital CFO” recently ran a story based on data from a company called DataGen on “The Truth Behind Variation in Episode Payments.” The article claims it will explore “the regional variations in Medicare payments for 90-day episodes of care.” This is to prepare for the new era of bundled payments, which is supposedly right around the corner.

Toy Businessman on a Pile of MoneyIn fact, the article does two things:

  1. It completely fails to explain the regional variations it identifies, and
  2. It illustrates what a poorly thought-through idea bundling is, especially when designed by payers like Medicare.

The article defines four types of episodes that are likely candidates for bundled payment. These all start with an inpatient admission followed by post-acute care treatment –

  1. Acute Myocardial Infarction (AMI)
  2. Congestive Heart Failure (CHF)
  3. Pneumonia
  4. Major joint replacement