Federal Health Bureaucracy Growing? Don’t Blame (Just) Obamacare

 

Libertarians and conservatives and others have spent five years complaining about the increased bureaucratic burden of Obamacare. New research by Sam Batkins of the American Action Forum, while not letting Obamacare off the hook, shows the problem predates the current Administration. The following chart shows the burden of paperwork has increased linearly since at least 2005:

20160509 Batkins AAF

Taxpayers Increasingly Victimized in Obamacare Exchanges

 

-18(A version of this Health Alert was published by The Hill.)

Recent news has renewed attention on Obamacare’s health insurance exchanges (misleadingly called “marketplaces” by the Administration).

America’s largest health insurer, UnitedHealth Group, will all but withdraw from the Obamacare exchange business. Having sold plans in 34 states this year, the company will participate in only a “handful” next year. With 795,000 beneficiaries, UnitedHealth Group indicates it will lose $650 million in the exchanges this year – over $800 per enrollee.

Other insurers are sticking it out. Notably, Anthem, another leading for-profit insurer, which has nearly one million Obamacare enrollees, is positive about its future in the exchanges. In its latest quarterly earnings call, Anthem anticipated a profit of three to five percent. However, that is not likely to happen until 2017. Further, the insurer said it needs the federal government to take unspecified actions to “stabilize” the market. Anthem’s optimism is surprising.

Another Hit On Price Transparency

 

HSAJAMA, the Journal of the American Medical Association, has published a research article challenging the doctrine that price transparency leads to lower health costs. Sunita Desai, et al., found:

Two large employers represented in multiple market areas across the United States offered an online health care price transparency tool to their employees. One introduced it on April 1, 2011, and the other on January 1, 2012. The tool provided users information about what they would pay out of pocket for services from different physicians, hospitals, or other clinical sites.

Mean outpatient spending among employees offered the tool was $2021 in the year before the tool was introduced and $2233 in the year after. In comparison, among controls, mean outpatient spending changed from $1985 to $2138. After adjusting for demographic and health characteristics, being offered the tool was associated with a mean $59 (95% CI, $25-$93) increase in outpatient spending.

Ouch! Let me make a couple of points. First, higher out-of-pocket spending might not be associated with higher health spending overall. If the price-transparency tools give patients confidence they understand their potential financial liability when going to doctors, that might encourage them to go rather than wait. If that increases timeliness of care, total health costs might go down while out-of-pocket costs go up. This is supported by previous research.

Common Sense Solution to Opioid Abuse is Being Ignore

 

With opioid addiction on the rise, Congress has taken up the issue of drug abuse. This week the U.S. House will likely approve more than $100 million in funds for substance abuse treatment and training for emergency medical technicians and emergency room personnel. Many Democrats in Congress are requesting even more — much more. Some Democrats think an additional $600 million is needed to combat drug abuse and slow the epidemic of drug overdoses.

Strong Opposition to Change in Part B Drug Reimbursements

 

The Center for Medicare and Medicaid Services (CMS) recently proposed a pilot project to test alternative payment methods for drugs under Medicare Part B. These are the drugs administered in hospital outpatient clinics and physicians’ offices.

Health Jobs Grow More Than Three Times Faster Than Other Jobs

 

BLSHealth services jobs grew over three times faster than non-health, nonfarm civilian jobs in April. Health services jobs comprised 44,200 (28 percent) of 160,000 jobs added. The rate of growth from March was 0.29 percent for health services jobs versus only 0.09 percent for other jobs (Table I).

20160506 TI

Wrong Way for Consumer-Driven Health Care?

 

Peterson KaiserGary Claxton and colleagues, of the Kaiser Family Foundation, have written a concise analysis of the evolution in health payments from 2004 through 2015:

From 2004 to 2014, the average payments by enrollees towards deductibles rose 256% from $99 to $353, and the average payments towards coinsurance rose 107%, from $117 to $242, while average payments for copays fell by 26%, from $206 to $152.  Overall, patient cost-sharing rose by 77%, from an average of $422 in 2004 to $747 in 2014. During that period, average payments by health plans rose 58%, from $2,748 to $4,354. This reflects a modest decline in the average generosity of insurance – large employer plans covered 86.7% of covered medical expenses on average in 2004, decreasing to 85.3% in 2014. Worker’s wages, meanwhile, rose by 32% from 2004 to 2014.

I would quibble with Claxton, et al’s use of the noun “generosity” to describe the share of health costs paid by insurers. Insurers pass costs through: Claims they pay are covered by premiums, which are charged to either beneficiaries or employers. If the latter, beneficiaries pay through lost wages. Plus, because claims processed and paid by insurers add administrative costs (“load”) to the costs of actual medical care, total health costs are higher. Quibbling aside, the analysis gives great insight into how the way we pay for health care has changed.

Health Insurers Shift More Costs To Taxpayers In Obamacare Exchanges

 

money-burden(A version of this Health Alert was published by Forbes.)

America’s health insurers are undergoing a crisis of consensus with respect to their engagement with Obamacare. Between 2010 (when the Affordable Care Act was signed), and 2014 (the first year of taxpayer-subsidized coverage in the health insurance exchanges), it was widely understood that health insurers had scored a big win. After all, which other industry could get the federal government to pass a law mandating individuals purchase its product or service as a condition of residency in the United States?

This view was reflected in the stock market’s valuation of health insurers, which outperformed the S&P 500 Index. Since then, of course, we have learned that insurers have been losing money on Obamacare’s exchanges. Further, they have lost the sympathetic ear of the Congressional Republican majority, which has prevented insurers extracting as much taxpayer funding as they had expected from the Treasury. We should not expect insurers which continue to participate in exchanges to just keep losing money. In fact, the evidence indicates some insurers have quickly learned how to shift more costs onto taxpayers, despite failing to win an explicit political commitment to do so.

The Obamacare Chickens have Come Home to Roost for Former Head of CMS

 

The second most powerful women in health care, Marilyn Tavenner, helped implement Obamacare and was one of its biggest defenders. During the rollout of the Affordable Care Act (ACA) in late 2013 and early 2014, Tavenner ran the Centers for Medicare and Medicaid Services. She now heads America’s Health Insurance Plans, the trade association for health insurers. Now that she’s no longer in government, she has to live with the mess she helped create. In a recent interview, she admits it’s not looking too good. In an interview with Morning Consult she predicted premiums will rise yet again in 2017.

Health Construction Boomlet Continues

 

Census2The boomlet in health construction, first noted in last month’s Census Bureau release, continued in March. Health facilities construction starts grew 1.6 percent, while other construction grew only 0.3 percent (Table I).

The rate of growth was significantly greater for public health facilities (2.3 percent) than private health facilities (1.4 percent). Further, the relative growth was much larger for public health facilities, because non-health public construction declined by 2 percent, while non-health private construction grew 0.7 percent.

This is the second month of uptick in health facilities construction. Over the last twelve months, health facilities construction starts have grown only half as fast as non-health starts (4.1 percent versus 8.2 percent). It is too early to say whether the boomlet in health facilities construction indicates a trending upturn. However, it suggests health systems are beginning to be optimistic about their abilities to continue to extract revenue from the system.