Category: Health Insurance Cost

The Bomb Buried In Obamacare Explodes Today-Hallelujah! – Forbes

The Bomb Buried In Obamacare Explodes Today-Hallelujah! – Forbes:

This is the true ‘bomb’ contained in Obamacare and the one item that will have more impact on the future of how medical care is paid for in this country than anything we’ve seen in quite some time. Indeed, it is this aspect of the law that represents the true ‘death panel’ found in Obamacare—but not one that is going to lead to the death of American consumers. Rather, the medical loss ratio will, ultimately, lead to the death of large parts of the private, for-profit health insurance industry.

Why? Because there is absolutely no way for-profit health insurers are going to be able to learn how to get by and still make a profit while being forced to spend at least 80 percent of their receipts providing their customers with the coverage for which they paid. If they could, we likely would never have seen the extraordinary efforts made by these companies to avoid paying benefits to their customers at the very moment they need it the most.

Today, that bomb goes off.

Today, the Department of Health & Human Services issues the rules of what insurer expenditures will—and will not—qualify as a medical expense for purposes of meeting the requirement.

As it turns out, HHS isn’t screwing around. They actually mean to see to it that the insurance companies spend what they should taking care of their customers.

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Is the Fed responsible for health care premium increases? | The Incidental Economist

Is the Fed responsible for health care premium increases? | The Incidental Economist:

Health spending is obviously relevant to premiums, but many other factors affect premium growth too. What everyone wants to know is why employer-sponsored health insurance premiums jumped up so much this year. Since health care spending growth has been low — at near 1990s levels — we can rule that out as an explanation.

Moving on, let’s consider some other things. For what follows, I’ve been aided by Charles Roehrig and colleagues of the Altarum Institute, with whom I exchanged email on this topic. The title of this post is explained in the final entry of the following list (“The underwriting cycle”).

Besides total health spending, what else affects premiums?

Profits. Insurers have been reporting a big profits lately, which implies premiums growing faster than costs.

If you are interested in understanding why premiums have risen far out of proportion to actual health care costs, please go to the link. There are no certain reasons, but this post offers lots of interesting (and plausible) possibilities, including the one in the title: Insurers are so heavily invested in bonds, that the low returns have “forced” them to turn to out-sized premium increases to keep profits up where they like them.

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An Insurance Maze for U.S. Doctors – NYTimes.com

An Insurance Maze for U.S. Doctors – NYTimes.com:

“Researchers asked hundreds of physicians and administrators in private practices across the United States and Canada how much time they spent each day with insurers and other third-party payers, tracking down information for claims that were denied or incorrectly paid, resolving questions about insurance coverage for prescription drugs or diagnostic tests, and filing the different forms required by each and every insurance company.

“Physicians in Canada, where health care is administered mainly by the government, did spend a good deal of time and money communicating with their payers. But American doctors in the study spent far more dealing with multiple health plans: more than $80,000 per year per physician, or roughly four times as much as their northern counterparts. And their offices spent as many as 21 hours per week with payers, nearly 10 times as much as the Canadian offices.

“The amount of time we spend on this is just crazy,” said Dr. Sara L. Star, a partner in a three-physician pediatrics practice in suburban Chicago. “But each insurance company has its own language, its own set of rules and specific contracts with certain laboratories, hospitals, physicians and pharmaceutical companies.”

The Health Affairs article is here.

Huge Profits for Health Insurers as Americans Put Off Care – NYTimes.com

Huge Profits for Health Insurers as Americans Put Off Care – NYTimes.com:

“The nation’s major health insurers are barreling into a third year of record profits, enriched in recent months by a lingering recessionary mind-set among Americans who are postponing or forgoing medical care. “

I know, I’m shocked, too.

Wendell Potter: Insurance Industry Flack Screws Up, Points Us to Report We Really Should Read

Wendell Potter: Insurance Industry Flack Screws Up, Points Us to Report We Really Should Read:

A major point of the Thomson Reuters paper is that up to $700 billion that we spend on health care in the U.S. is wasted and that a big reason for that waste is our multi-payer system of private health insurance companies.

‘Health care providers must deal with dozens of health benefit plans to bill successfully for services rendered,’ the report said. ‘Health plans must support systems for underwriting, claims administration, provider network contracting, and broker network management… Simplifying our health care system’s administration could reduce annual health care costs by almost $300 billion.’

Then there were these bullet points that surely will never appear in a health insurance industry presentation:

• The average U.S. hospital spends one quarter of its budget on billing and administration, nearly twice the average in Canada. American physicians spend nearly eight hours per week on paperwork and employ 1.66 clerical workers per doctor, far more than Canada.

• In 1999, health administration costs totaled at least $294.3 billion in the United States, or $1,059 per capita, as compared with $307 per capita in Canada. After exclusions, administration accounted for 31 percent of health care expenditures in the United States and 16.7 percent of health care expenditures in Canada.


The white paper is here.

Will Record Surpluses Among Not-for-Profit Blues Plans Trigger Price Wars in 2011? (with Table: Not-for-Profit Blues Plans Hold $27 Billion in Excess Capital) | AIS Health

Will Record Surpluses Among Not-for-Profit Blues Plans Trigger Price Wars in 2011? (with Table: Not-for-Profit Blues Plans Hold $27 Billion in Excess Capital) | AIS Health:

 “Record surpluses amassed by not-for-profit Blue Cross and Blue Shield plans during the first nine months of 2010 could be used to price products more aggressively next year. And that could put pressure on competitors to hold down their rates or risk losing market share, according to one equities analyst. But other industry observers tell HPW that Blues plans are more likely to hold onto their surpluses due to increased regulatory scrutiny over rate hikes and the unknown financial impact of the health reform law.”

I mainly put this here to remind me of the Medical Loss Ratio implications of PPACA, specifically the minimum requirements coming into effect this year. The fact that NOT FOR PROFITS don’t meet these standards voluntarily, eagerly and easily tells you almost all you need to know about our broken system, but go to the link and scroll down and see the MASSIVE financial reserves these guys are amassing.

The Debate Over Selling Insurance Across State Lines

Kaiser Health News Today’s Headlines:

An article giving a brief overview of the issue. My favorite line, from John Shadegg is here:

“Why are Republicans critical of how Democrats handle the issue?

They say its redundant for states to have to pass laws to allow their residents to buy coverage from other states. And they don’t like the idea of having the federal government set minimum standards. ‘In reality, (their) bill nationalizes federal insurance regulation and gives the average American family no relief from expensive mandates that drive up the cost of health insurance,’ said Rep. John Shadegg, R-Ariz. said.”

Expensive mandates like, covering stuff.

But, according to CBO estimates quoted at the end, even the states with the laxest regulations would only generate a 5% reduction in premium costs.

Until, of course, the industry picks a state, buys the insurance regulating apparatus and the state’s legislature, and develop the classic “never pay policy.”

Paying for Reform – Updated

I was asked recently, how will we pay for reform. Tom Coburn, on Sermo.com, asked physicains to support him not supporting us physicians in asking for repeal of SGR with its $250 billion dollar price tag. I don’t know when he had this sudden change of heart, feeling physicians should not get paid more for Medicare patients, but hey…

The other question was about the overall price tag of HR 3200, somewhere in the neighborhood of $100 billion a year, or $1 trillion over ten years.

[Cross posted at DailyKos.]
No problem. First and best answer: REPEAL THE BUSH TAX CUTS!
http://www.usnews.com/blogs/john-farrell/2009/04/15/no-tea-party-protests-for-teddy-roosevelt-republican-champion-of-the-income-tax.html

They were bad economics, bad public policy, and bad morally.

UPDATE: Susie Madrak at Crooks and Liars summarizes a Citizens for Tax Justice report on the disaster that the Bush Tax cuts were and are:

I’d advise listening to the two EXCELLENT “This American Life” episodes on HC reform:
http://cmhmd.blogspot.com/2009/10/this-american-life-hc-reform-part-2.html

Follow the links, download the MP3’s and you can make audio CDs for the car.

There are lots of answers in there, but I’ll give you a few easy ones:

1.) McAllen, TX and EOL Care:

http://cmhmd.blogspot.com/2009/05/annals-of-medicine-cost-conundrum.html

That’s actually two, practice variation and EOL care.

2.) Prescription co-pays: $10 for a $20 prescription, $30 for a $600 prescription. (Unless you have a coupon from the manufacturer to make the $30 copay $0.00 – the second TAL episode explains this.)

3.) George Lundberg has a few ideas:
http://cmhmd.blogspot.com/2009/08/health-care-blog-how-to-rein-in-medical.html

4.) Uwe Reinhardt has a modest proposal:
http://healthaffairs.org/blog/2009/07/24/a-modest-proposal-on-payment-reform/

5.) Wendell Potter, too:
http://www.time.com/time/politics/article/0,8599,1920893,00.html

6.) Administrative costs:
http://cmhmd.blogspot.com/2009/07/health-affairs-2-articles-on-cost-of.html

Bottom line is, as has been suggested before, passing the bill is going to be half the battle, implementing reform in a way that is most beneficial to patients at the least cost to us as a society is next up.

But let’s get everyone taken care of first, and avoid the 18K to 45K people dying EVERY YEAR due to lack of access to health care and THEN we’ll deal with reducing costs. Turns out, if you read the Gawande article, they may be by doing the exact same things.

And finally, $1 trillion over ten years is $100 billion a year, and we spend $2.5 trillion a year on HC already, so that is very little money in the grand scheme of national economics. So, as Uwe would say, “Go explain to God why you cannot do this. He will laugh at you.”

Cheers,http://cdn.crooksandliars.com/files/uploads/2009/09/nationaldebt_42d6b.jpg

HEALTH REFORM: Poll Shows Hopes, Not Just Fears for Reform | New America Blogs

HEALTH REFORM: Poll Shows Hopes, Not Just Fears for Reform New America Blogs:

The poll doesn’t indicate that Americans would prefer not to have health reform. In fact, the data shows just the opposite. When asked what they though would happen if ‘the government did NOT create a system of providing health care for all Americans,’ a solid majority of people were ‘very’ or ‘somewhat’ concerned that the number of uninsured people in the U.S. would keep increasing, that they themselves might be uninsured at some point and that the cost of their own health care would go up.

To us, the poll doesn’t indicate support is falling apart for health reform — it does mean that uncertainty is on the rise. This is understandable, as a lot of details are still being hashed out and even members of Congress have difficulty quickly grasping all the complexities of the policy options being discussed right now. That’s why it will be important for advocates of reform, including the President, to explain it clearly (and repeatedly) in the coming weeks. Shift the focus from the scary unknown to the known — that the current system is broken, and it’s time to fix it. Because there’s a lot in it for all of us.

Facts About Healthcare Costs – National Coalition on Health Care

NCHC Facts About Healthcare – Health Insurance Costs:

In 2008, total national health expenditures were expected to rise 6.9 percent — two times the rate of inflation.1 Total spending was $2.4 TRILLION in 2007, or $7900 per person. Total health care spending represented 17 percent of the gross domestic product (GDP).

U.S. health care spending is expected to increase at similar levels for the next decade reaching $4.3 TRILLION in 2017, or 20 percent of GDP.1

In 2008, employer health insurance premiums increased by 5.0 percent – two times the rate of inflation. The annual premium for an employer health plan covering a family of four averaged nearly $12,700. The annual premium for single coverage averaged over $4,700.2

…………….

National Health Care Spending

In 2008, health care spending in the United States reached $2.4 trillion, and was projected to reach $3.1 trillion in 2012.1 Health care spending is projected to reach $4.3 trillion by 2016.1
Health care spending is 4.3 times the amount spent on national defense.3

In 2008, the United States will spend 17 percent of its gross domestic product (GDP) on health care. It is projected that the percentage will reach 20 percent by 2017.1

Although nearly 46 million Americans are uninsured, the United States spends more on health care than other industrialized nations, and those countries provide health insurance to all their citizens.3

Health care spending accounted for 10.9 percent of the GDP in Switzerland, 10.7 percent in Germany, 9.7 percent in Canada and 9.5 percent in France, according to the Organization for Economic Cooperation and Development.4

Employer and Employee Health Insurance Costs

Premiums for employer-based health insurance rose by 5.0 percent in 2008. In 2007, small employers saw their premiums, on average, increase 5.5 percent. Firms with less than 24 workers, experienced an increase of 6.8 percent.2

The annual premium that a health insurer charges an employer for a health plan covering a family of four averaged $12,700 in 2008. Workers contributed nearly $3,400, or 12 percent more than they did in 2007.2 The annual premiums for family coverage significantly eclipsed the gross earnings for a full-time, minimum-wage worker ($10,712).

Workers are now paying $1,600 more in premiums annually for family coverage than they did in 1999.2

Since 1999, employment-based health insurance premiums have increased 120 percent, compared to cumulative inflation of 44 percent and cumulative wage growth of 29 percent during the same period.2

Health insurance expenses are the fastest growing cost component for employers. Unless something changes dramatically, health insurance costs will overtake profits by the end of 2008.5

According to the Kaiser Family Foundation and the Health Research and Educational Trust, premiums for employer-sponsored health insurance in the United States have been rising four times faster on average than workers’ earnings since 1999.2

The average employee contribution to company-provided health insurance has increased more than 120 percent since 2000. Average out-of-pocket costs for deductibles, co-payments for medications, and co-insurance for physician and hospital visits rose 115 percent during the same period.6

The percentage of Americans under age 65 whose family-level, out-of-pocket spending for health care, including health insurance, that exceeds $2,000 a year, rose from 37.3 percent in 1996 to 43.1 percent in 2003 – a 16 percent increase.7

The Impact of Rising Health Care Costs

National surveys show that the primary reason people are uninsured is the high cost of health insurance coverage.2

Economists have found that rising health care costs correlate to drops in health insurance coverage.8

A recent study by Harvard University researchers found that the average out-of-pocket medical debt for those who filed for bankruptcy was $12,000. The study noted that 68 percent of those who filed for bankruptcy had health insurance. In addition, the study found that 50 percent of all bankruptcy filings were partly the result of medical expenses.9 Every 30 seconds in the United States someone files for bankruptcy in the aftermath of a serious health problem.

A new survey shows that more than 25 percent said that housing problems resulted from medical debt, including the inability to make rent or mortgage payments and the development of bad credit ratings.10

About 1.5 million families lose their homes to foreclosure every year due to unaffordable medical costs. 11

A survey of Iowa consumers found that in order to cope with rising health insurance costs, 86 percent said they had cut back on how much they could save, and 44 percent said that they have cut back on food and heating expenses.12

Retiring elderly couples will need $250,000 in savings just to pay for the most basic medical coverage.13 Many experts believe that this figure is conservative and that $300,000 may be a more realistic number.

According to a recent report, the United States has $480 billion in excess spending each year in comparison to Western European nations that have universal health insurance coverage. The costs are mainly associated with excess administrative costs and poorer quality of care.14

The United States spends six times more per capita on the administration of the health care system than its peer Western European nations.14

Acrobat version with references is here.