So what’s up with health care costs?

Actuaries are projecting health care costs will increase 5.8% annually over the next 9 years. Others think that increases will be significantly smaller.

While the 5.8% is a bit higher than we’ve seen of late, it is a heckuva lot lower than the average for the last three decades.

Currently health care is responsible for 17.4% of US GDP; if the inflation rate prediction holds true and other economic sectors also grow as projected, health care will account for one out of every five dollars in ten years (19.6% to be precise).

We do know that the prediction will prove to be somewhat wrong, and economic growth for the next quarter is hard enough to predict, making a ten-year projection the proverbial dartboard in a dark room.  So, what’s with the discrepancy between predictions?

The actuaries responsible for the 5.8% figure believe the soft economy over the last few years has been the primary driver of low health care cost inflation.  Their thinking is that now the the economy is back to steady and significant growth, demand and prices will both heat up.

The counter-argument attributes the recent happy days of low medical cost inflation to structural changes in the health care delivery system. Their view is these changes, while overwhelmed somewhat by the big increase in the insured population due to PPACA, will help keep cost growth low as they become increasingly commonplace.

At this point, we just don’t know; there is anecdotal evidence that medical homes work and don’t; that ACOs are a success and a failure; that behavioral changes are working and are non-existent. That is far from surprising; we are still pretty early into this process, a process which is massively changing almost one-fifth of our nation’s economy.

What does this mean for you?

The key message is costs will continue to increase, with health insurance cost increases somewhat mitigated by higher deductibles and copays.

What’s also very clear is the health plans that are able to deliver lower costs and sufficient outcomes will do very well.



The Everything-PPACA edition of Health Wonk Review

The ongoing rollout of the Affordable Care Act is the primary subject of this edition of Health Wonk Review – but there’s much more from the best of the health policy blogosphere – all summarized here for your reading pleasure!

PPACA rollout

Brad Flansbaum has written a thoughtful and compelling perspective on the impact of reimbursement changes on physician compensation, posing tough questions and seeming to come down on the side of longer/harder/tougher/knottier vs slam-dunk.

The coverage gap (wherein folks  have to pay a penalty if they go without insurance coverage) is covered by Louise Norris at Colorado Health Insurance Insider – in fact she’s more on the ball than any of the other sources folks normally turn to.  One key – if “your gap in coverage includes three or more months, you’ll be assessed a penalty for the entire period without health insurance; ” so being covered sometime during the fourth month doesn’t meet the test.

BTW, the IRS will assess a penalty for those going without coverage – and Louise has the skinny on those details too.

Bob Laszewski highlights the low consumer ratings of Covered California and the massive dollars poured into the site by the Feds.  Bob notes coverage expansion has been far below estimates, while costs have been far above.  Ouch.

Friend and colleague Hank Stern continues his merciless coverage of PPACA rollout with InsureBlog’s entry this biweek – a quick summary of notable news about the “ObamaTax”.  Double Ouch…

Another coverage gap is addressed by Anthony Wright of Health Access California.  Anthony reports on efforts by CA legislators to expand coverage to include undocumented workers in the Golden State.  Pending changes in immigration may well increase the number of people eligible for coverage under PPACA.

Some want to kill PPACA; others, more politically savvy, want to replace it. Writing in Health Affairs’ blog, Tim Jost discusses the various ideas/thoughts/concepts circulating among GOP Senators and Congresspeople, concluding that it isn’t really possible – given the GOP’s antipathy for the core goals of PPACA – to “replace” it.  And, most of the ideas floated to date won’t do much to increase coverage or reduce cost.

From MCM I submit a brief post detailing the cost trends for private health insurance, Medicare, and Medicaid.  Notably, the “Ms” have lower trend rates than private insurers.

SGR is dead!

Pigs will fly.  Lions and lambs will lie together.  The Cubs will win the World Series (well, that may be a stretch).  Those are events as equally unlikely as Congress agreeing on a bipartisan fix to Medicare physician reimbursement. Writing in, the estimable Louise Norris contributes another worthy piece dissecting the implications of the replacement of the much-reviled SGR with small, but predictable increases in physician pay.  Of note, there are also incentives to improve quality, extension of some niche health plans, and continued emphasis on increasing transparency.  All good things, which just shows things can get done on Capitol Hill...

Our favorite health care economist, Jason Shafrin, contributes a quick take on the passage of a Medicare reimbursement “doc fix” – a fix that, while it adds $141 billion in additional cost over the next ten years, also simplifies other programs intended to reward top-performing docs.

Stuff you need to know

Julie Ferguson has a sobering piece on workplace suicides, noting law enforcement, farming, and auto repair are the industries most affected. Julie teases out the common factors, provides additional insight into specific industry risks, and focuses on the need for mental health support for family farmers.  A great piece.

Returning from the annual HIMSS conference, contributor John Lynn shares his thoughts on what’s going to happen to Health IT in the near future; with implications for new entrants, entrenched old-line vendors, and the mid-tier outfits alike.

This biweek’s “hey, I didn’t know that! that’s pretty cool” moment comes from Jaan Sidorov MD, who reports that:

persons of low socioeconomic status are more likely to have smart phones vs. the “banked” population. They may not have a checking account, but, compared to other segments of the population, they are more able to use these devices to access and manage their “e”care. [emphasis added]

HWR veteran Roy Poses MD has a tough piece on hospital CIO’s perspectives that they, the CIO, “own” patient engagement.  Roy’s take is this is part of the problem with health care; generic managers who don’t actually deliver care think they “own” it.  Well worth a read.

Finally, One Happy Nurse reveals why a 7 hour wait in the ER isn’t so bad…and she should know – she’s been working in an inner-city Level II trauma center ER for more than two years.

Whew…after almost ten years of HWR, it’s great to see the best keep getting better!

Leaves are falling, and wonks are opining!

Thanks to Louise Norris, Colorado’s leading expert on all things health insurance related, for hosting this biweek edition of Health Wonk Review.

Among the submissions are several on Ebola, including a very good piece on CDC Director Dr. Thomas Frieden.  I’ve been a bit shocked at the piling-on suffered by the good doctor; everyone from Bill Maher to Mitch McConnell has had nasty things to say about him and his agency – most of which is ignorant blather.

There’s also a great synopsis of a post on health reform’s human side.  Something we forget far too often.

here’s a sample –

The ACA reduces the burden of health premiums on our family. By reducing this monthly expense, we have a little extra to purchase products, use services, save for vacation, and invest in the market. We have a little less anxiety and stress month to month.


UPDATE – Lots of health policy stuff, all right here!

This biweekly edition of Health Wonk Review brings the best writing about health care, policy, and the impacts thereof direct to your eyeballs – with NO effort on your part!

Apologies to Hank Stern – somehow I missed his contribution for this edition.  The ever-prolific Mr Stern asks why coverage for some autism treatment ends at 21.  Good question.

Roy Poses leads us off with his intel on the rollout of the Sunshine Act – the part of PPACA requiring much more disclosure of financial relationships between doctors and suppliers.  Dr Poses opines that the beginning has been anything but smooth – but far better to have a rocky rollout than continued ignorance.

Our friends at Wing of Zock have a great post from Steve Lipstein, CEO of BJC Healthcare.  Steve has a much-needed outsider’s perspective on the Wilensky-Berwick committee’s recommendations on graduate medical education. His take is that re-vamping higher ed is going to be affected far more by operating models and the economic models in each physician specialty area than by pronouncements on high.

The problem in the diagnosis of Thomas Duncan, the Dallas Ebola patient, reflects the promises and pitfalls inherent in electronic health records, and Peggy Salvatore’s synopsis of the situation and lessons learned is a very high-value read.

From Health Insurance Colorado we get intel on how things are looking in Colorado – the state Exchange is doing very well; the uninsurance rate dropped by six points and enrollment in private plans via the Exchange has almost hit the 150,000 mark. That said, improvements can still be made.

If are ever going to get better quality and lower costs, it will happen because payers and providers work together to tie value much closer to payment.  Health Affairs brings us an update on progress to date – which is considerable – while warning that continued progress is not assured.  Here’s the Holy Smoke! headline – 40% of commercial insurers’ payments to doctors and hospitals now “flow thru value-based payment methods”, up from 11% in 2013.  See Suzane DelBanco’s take on value-based purchasing here…

A great companion piece is Jason Shafrin’s review of the recent national survey of ACOs, noting that there’s a lot of variation amongst and betweenst (my new word) ACOs – which is all to the good as the variability means we’ll learn a lot about what models work and what doesn’t.

There’s good news for those who like their current non-ACA compliant health plans; many will be “grand mothered”.  Louise Norris tells us “Grandmothered – or transitional – plans are those that are not grandfathered but were effective prior to 2014.”  Simply put, grand mothered plans must have some aspects of ACA-compliant plans while grandfathered plans don’t – unless they are changed significantly.  

Pharmacists are one of the more-often-taken-for-granted clinical professions, and Brad Flansbaum is here to update us on the state of the profession. In a phrase; “over-staffed”.  There are far more graduates of PharmD programs that jobs, with one pundit predicting 20% of graduates will not find jobs in 2018…

David Williams gets us up to speed on Apple’s health application plans and prognosticates on its market position – think “one of” and not “THE” health apps.  As always, David’s knowledge and experience make his view well worth consideration.

Starting in January, employers’ OSHA reporting requirements will change – while this may seem esoteric, it would behoove risk managers and their colleagues to make sure they are complying – Julie Ferguson gives us the skinny at WorkCompInsider...

Good friend and colleague Sandy Blunt reminds us that a lot of what drives success is the simple stuff – blocking and tackling.  While fancy moves and tricky plays are entertaining, they don’t deliver like the basics do…

Richard Krasner contributes his piece on poor actors and poor actions in work comp with a focus on an employer in Florida where over a hundred undocumented workers were accused of work comp fraud. Richard details other transgressions wherein workers were penalized/ due to transgressions that sure look to be endorsed, if not authorized by employers. Hat tip to David DePaolo for his original work on the FL case…noting that Florida CFO Jeff Atwater busted the FL workers for fraud, even though only a handful had filed work comp claims…as David said; 105 workers get arrested for immigration and documentation fraud under a workers’ compensation statute, even though most did not file any injury claims…”

I round out the work comp section with my take on the current non-sale of Aetna’s Coventry Workers’ Comp Services unit to APAX; while it may not be a dead duck, it looks to be on life support.

Thanks to all – see you in two weeks.

HWR is up

As the March 31 “deadline” for enrollment in insurance approaches, the good folks at Health Affairs have put together the best health policy blog posts of the last two weeks and present them to you for your edification.

And managed to do this while keeping up on March Madness too – Christopher Fleming is one impressive guy…

In these days of less and less insight from the mass media, we’re fortunate indeed to have very smart – and very good writers – working for you – and for cheap, too!