Category: Health Care Costs

Mid-Atlantic Employers Cut Health Benefits, Obamacare to Blame

Yesterday, we discussed the New York Fed’s survey of employers in its region, in which they blamed Obamacare for raising health insurance premiums 10 percent.

The Federal Reserve Bank of Philadelphia has just released a similar survey, with similar results. Because of Obamacare:

  • 18.2 percent of employers reported that they cut workers, versus 3.0 percent who hired more;
  • 18.2 percent reported that the proportion of part-time workers was higher, versus 1.5 percent who lowered the proportion of part-timers;

New York Employers: Health Costs Up 10 Percent Next Year, Obamacare to Blame

The New York Fed has published the results of its latest Empire State Manufacturing Survey and Business Leaders Survey (which covers both manufacturing and services). It’s devastating news for Obamacare. Business leaders expect health costs to rise ten percent next year. About 73 percent (almost three quarters) of the business leaders blamed Obamacare for some of the increase.

This is going to hurt workers, too. Twenty percent of employers expect to increase the proportion of part-time workers, versus only five percent who expect to go the other way. About 22 percent plan to cut wages and benefits, versus only six percent who plan to increase them. With respect to benefits, 68 percent (two thirds) of business leaders plan to cut the range of services covered or size and breadth of their provider networks.

Drug Discounts Should Go to Poor Patients, Not Hospitals

In 1992, the federal government mandated discounted drug prices for certain “safety-net providers”. The purpose was to ensure that these facilities, which served low-income patients, could acquire medicines at low prices to dispense to those patients. The drug-makers finance the discounts.

The 340B program is a roundabout way to finance a welfare benefit. The primary beneficiaries are hospitals, although only outpatient drugs are discounted via the 340B program. Evidence suggests that the program has become a profit center for hospitals. The number of sites benefitting from the program has doubled in ten years, to 16,500 across the country.

Cost-Conscious Patients: Why Is That a Bad Thing?

An article in Modern Healthcare discusses the uneasy feeling doctors experience when patients ask awkward questions about the medical care recommended for them. Among the uncomfortable questions doctors are expected to answer: “How much is that going to cost?” “Do I really need that MRI?” “Why do I have to get that?” “Can it wait?”

Imagine how any other profession would respond when the purveyors of goods and services are expected to suffer the indignity of customers quizzing them about the merits, demerits and costs of their products. Oh, I forgot, every other profession does suffer the indignity of having to convince buyers that their services are valuable.

Political Control of Obamacare Insurance Pricing Harms Those with Lower Incomes

When Obamacare kicked off, Colorado State government had grouped its ski resort  counties into a single rating area. This makes sense geographically. But everything is more expensive in the ski resort counties, and under Obamacare pricing rules resort county residents ended up with the highest health insurance exchange premiums in the country. The resulting town meetings were spirited, county commissioners threatened to sue, and Colorado Insurance Commissioner Marguerite Salazar began looking for ways to redraw the rating areas to lower the political angst.

Before Obamacare, someone in the mountain towns might economize on health costs by buying a high deductible health insurance policy and making regular contributions to an HSA. He might use a local physician, hospital, or clinic. He could also save money with in-state medical tourism. A few hours of driving would let him seek lower priced care in Denver’s more competitive health care market.

Tax Expenditure from Employer-Based Health Benefits Hits $785.1 Billion, 2014-2018

How much tax revenue does the Treasury lose by exempting employer-based benefits from households’ taxable income? $785.1 billion over the next five years, according to the latest estimate by the Joint Committee on Taxation.

To put that in perspective, Obamacare’s exchange premium tax credits and cost-sharing subsidies are reckoned to amount to $276 billion over the same period. So the exclusion of employer-based benefits from taxable income costs 2.8 times more than the Obamacare tax credits.

I anticipate your objections: Yes, the exclusion is not a subsidy, whereas the Obamacare payments clearly are. Nevertheless, if everyone received the same tax credit, it would be a lot fairer and easier to navigate than taxing high-income households via Uncle Sam’s left hand to fund Obamacare subsidies (not to mention Medicare and Medicaid) for other households; and then giving them a significant tax break via Uncle Sam’s right hand for their own health benefits. A universal, refundable tax credit for every household would simplify our healthcare finances dramatically.

Fourth Month of Healthcare Price Inflation; Longest Trend since January 2012

increaseThe Altarum Institute’s latest Price Brief shows that prices of healthcare goods and services are rising:

In June 2014, the health care price index (HCPI) rose 1.7% above June 2013. The 12-month moving average of 1.3% is near the all-time low for our data (1.2%), but it has now risen for four straight months, the first increasing trend since January 2012.

Healthcare Prices Flummox the Experts

The absurdity of our healthcare pricing is never more clear than when described by experts — people who study the system for a living — who become patients and are shocked and confused by the bills that hit them. Here are three examples:

1. Paul Keckley, PhD, is one of the top consultants in the healthcare sector. From 2006 to 2013, he ran the Deloitte Center for Health Solutions, a period during which it rose to prominence and produced excellent research. Well, Mr. Keckley has just undergone knee-replacement surgery:

This week, I started getting the bills: the whopper $51,829.35 from the hospital for my 55-hour stay. And that doesn’t include professional fees for my surgeon, internist and anesthetist, the 3 medications I now take, the crutches and walker I bought, and the over-the-counter aids I’ve purchased. In all likelihood, the final tally will be close to $60,000. Wow.

Price Transparency: Even Hospitals are Starting to Figure It Out!

credit-card-2Like many, we’ve been frustrated at the lack of price transparency in U.S. health care, especially form hospitals. Good news: They are coming around!

The American Hospital Association (AHA) has published an informative white paper, clearly explaining the state of price transparency for both hospitals and health plans. It surveys what hospitals are doing to ensure patients better understand their expected out-of-pocket costs, what tools health plans are offering beneficiaries to estimate costs, and the legal and regulatory environment. The language used in the white paper is strikingly different from that which we are used to seeing from hospitals:

Price transparency also can lead to improved quality and efficiency as providers benchmark and improve their performance against peers and national averages. To realize these potential benefits, policymakers and the public increasingly are calling for greater access to information.

Health Spending Slowed Because of Recession, Not Obamacare

Health spending has been slow in the U.S. for a number of years. It’s clearly not due to Obamacare. New research by Professor David Dranove and colleagues corroborates that the recession, which started in 2007, is mostly responsible for the reduced rate of growth of health spending:

The source of the recent slowdown in health spending growth remains unclear. We used new and unique data on privately insured people to estimate the effect of the economic slowdown that began in December 2007 on the rate of growth in health spending. By exploiting regional variations in the severity of the slowdown, we determined that the economic slowdown explained approximately 70 percent of the slowdown in health spending growth for the people in our sample. This suggests that the recent decline is not primarily the result of structural changes in the health sector or of components of the Affordable Care Act, and that — absent other changes in the health care system — an economic recovery will result in increased health spending.

Whether there will be significant economic recovery as long as Obamacare reduces incentives for businesses to grow and hire is not discussed in the article.