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The dramatic increase in deductibles, especially within employer-based coverage

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In employer-based health plans, the average deductible for a SINGLE person is over $1,500, according to Kaiser — 3 times higher than it was a decade ago. The trend toward increasingly high deductibles means families struggle to afford their care, even with insurance.

Now, experts are starting to reconsider whether high cost-sharing — once conceived as a way to turn employees into more discerning healthcare consumers — is working.

“High-deductible plans do reduce health-care costs, but they don’t seem to be doing it in smart ways,” USC professor Neeraj Sood told Bloomberg.

This frustration with existing cost-shifting tools — and the growing sense that we’ve basically maxed out their utility — is contributing to the renewed focus on underlying health care prices.

  • Many employers don’t feel they can shift any more costs onto their workers, but that’s largely how they’ve kept premiums in check for the past several years. And they certainly don’t want to shoulder higher bills themselves.
  • As that frustration mounts, expect to see a greater political appetite for real cost controls.

The Cost of Chronic Diseases in the U.S.

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Chronic disease management is a must when shifting to value-based care! The Milken Institute reported that the total costs in the U.S. for direct health care treatment for chronic health conditions totaled $1.1 trillion in 2016—equivalent to 5.8% of the U.S. GDP.

Chronic diseases also lead to indirect costs—lost income and reduced economic productivity—for the individuals suffering from the conditions, their family caregivers, and the overall economy. When the indirect costs of lost economic productivity are included, the total costs of chronic diseases in the U.S. increased to $3.7 trillion, equivalent to 19.6% of 2016 GDP—i.e., one-fifth of the U.S. GDP.

This trend is expected to get worse as an estimated 83.4 million people in the US will suffer from 3 or more chronic diseases in 2030 compared to 30.8 million in 2015.

Obamacare faces new life-threatening conditions

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Opponents of the Affordable Care Act have been busy. In the midst of several headline-making events on other issues, the Trump administration has instigated two major efforts to effectively do what Congress could not do earlier this year — repeal Obamacare.

The result is a laundry list of warnings for all health care consumers, not just those who buy insurance on the ACA exchanges. The moves are a return to the bad old days before insurers had to adhere to standard regulations that protected consumers from paying insurance premiums, only to find coverage wasn’t there when they needed it.

Here’s a closer look at the latest changes to the health insurance marketplace: [Article]

Medical Mystery: Something Happened to U.S. Health Spending After 1980

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The spending began soaring beyond that of other advanced nations, but without the same benefits in life expectancy.

The United States devotes a lot more of its economic resources to health care than any other nation, and yet its health care outcomes aren’t better for it.

That hasn’t always been the case. America was in the realm of other countries in per-capita health spending through about 1980. Then it diverged.

It’s the same story with health spending as a fraction of gross domestic product. Likewise, life expectancy. In 1980, the U.S. was right in the middle of the pack of peer nations in life expectancy at birth. But by the mid-2000s, we were at the bottom of the pack.

What happened?

 

Read  Austin Frakt full article in TheUpshot

The number of uninsured Americans is rising

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The cold war on Obamacare is having an effect. The uninsured rate has begun to creep back up since Trump became president. After several years of major declines under Obama, the uninsured rate has grown from 10.9 percent to 12.2 percent, according to Gallup. It’s not hard to imagine, in just one Trump term, that we could see half of the gains made under the ACA, which led to 20 million Americans being newly covered, erased.

Poll after poll shows the public wants this assault on the ACA to stop. After all this time, the program remains at a record level of popularity. Fifty percent approve, even as the administration badmouths and undercuts it.

Mostly, Americans want this assault on their ability to care for their families to end so we can begin the process of building back what has been allowed to erode. Americans want to pay less, not more, for health insurance. They don’t want insurance companies to be given unlimited authority again.

They want to see Medicaid strengthened, not weakened. They want the basic dignity of being able to afford medication and an end to the constant fear that grips so many that if they get sick, they will lose everything.

Americans didn’t want last year’s war on Obamacare, and they don’t want this new cold war either.

 

 

 

 

 

 

Sources: Gallup, KFF and  Vox – The Republican cold war on the Affordable Care Act

Under the hood on hospital pricing

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The actual prices hospitals charge private health insurers are closely guarded trade secrets. But a widely circulated health economics paper, which received some new updates, uses actual claims data from three national insurers to show the inner workings of how hospitals get paid.

The bottom line: Hospitals make a lot of money off patients who get their health coverage through their jobs, and hospitals with little or no competition have the power to set their rates at will.

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Why it matters: The amount Americans spend just on hospital care represents 6% of the entire economy, so it’s important to understand how hospitals price their services and to determine if patients and taxpayers are getting a good deal.

The backdrop: This paper builds on previous work that shows Medicare spending is almost entirely driven by the quantity of services, whereas private insurance spending is driven heavily by the prices and market power of hospitals — an increasing concern as more systems merge into dominant regional and national players.

Updates to the paper and thesis include:

  • “Insurers pay substantially different prices for the same services at the same hospitals,” the economists wrote.
  • “Prices at monopoly hospitals are 12 percent higher than those in markets with four or more rivals.”
  • “If private prices were set at 120 percent of Medicare rates rather than at their current levels, inpatient spending on the privately insured would drop by 19.7 percent.”
  • Many hospitals get paid based on percentages of their charges instead of fixed amounts, and that system “places them under less pressure to reduce costs.”

Sources AxiosThe Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured

When a rural hospital shuts down

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When rural hospitals close, their communities often lose their biggest employers and closest access to health care, struggling to stay afloat in the aftermath. And that’s happening a lot as the health care industry keeps consolidating — 83 rural hospitals have closed since 2010, according to the North Carolina Rural Health Research Program

The impact: This is happening now in rural Missouri, where Community Health Systems is shuttering a 116-bed hospital. Axios spoke with some of the hospital employees who are losing their jobs. They are sad, angry and concerned about what will happen to their community.

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Driving the news: CHS said it is “consolidating” the services of the 116-bed Twin Rivers Regional Medical Center in Kennett, Missouri, with another facility 50 miles away. That means Twin Rivers won’t deliver babies, have an open emergency room, or offer other inpatient services after July 1. Roughly 300 people are losing their jobs.

  • Kennett is a farming community in Dunklin County, whose residents are poor and have some of the worst health outcomes in the state. (The area voted overwhelmingly voted for President Trump in 2016.)
  • Twin Rivers used to be part of Health Management Associates, which CHS acquired in 2014. CHS is mired in debt and other problems, and its CEO has since said he would not have done the HMA deal again.
  • The company did not respond to a list of questions, including whether it attempted to sell Twin Rivers.

What they’re saying: Axios spoke with Twin Rivers employees, who asked to remain anonymous because they said their severance packages require them not to talk to media. They expressed deep frustration and concern for the future.

  • “That’s how they treat us, like we are nothing,” a longtime employee said about CHS terminating their positions.
  • Many people are worried residents won’t get care at all or will suffer from having to drive long distances for hospital care.
  • “We have two nursing homes, and people are already talking about pulling their loved ones out because there’s not a hospital close enough,” another worker said.
  • “This little town just lost its biggest employer…financially, a lot of businesses are going to suffer,” an employee said.
  • At a city council meeting last week, a packed crowd of hospital employees and residents made emotional pleas to save the hospital and railed against CHS for “corporate greed” and indifference to the community. City officials said they are exploring their options.

Go deeper: HuffPost and Georgia Health News last year profiled three Georgia counties that lost their hospitals, and how their communities suffered as a result.

Source: Axios – Bob Herman

The shrinking health spending gap

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One of the laws of health care baked into the heads of every policy analyst is that health care spending almost always rises much faster than GDP. Except it hasn’t really been doing that since 2010, and the gap between health spending and GDP growth is projected to continue to be small through 2026.

What we don’t know: The cause. We don’t know why the gap has closed (experts disagree and emphasize different factors), and we don’t know if the narrowing is permanent or if the gap will widen again.

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The big picture: Health spending is still growing somewhat faster than GDP, meaning it will continue to gobble up more and more of our GDP.

The details: As the chart shows, health spending grew 2.8 percentage points faster than GDP annually from 2000 to 2010, then just a half percentage point faster between 2010 and 2016. It’s projected to grow only 1 percent faster than GDP from 2017 to 2026.

Have we seen this movie before? Health spending grew only one percentage point faster annually than GDP in the 1990s, when the economy boomed for much of the decade and managed care reached its peak. By the next decade, the gap widened again.

  • Even if health care grows only marginally faster than GDP through 2026, it is still projected to grow to 19.7 percent of GDP in 2026 — substantially more than the next highest nation, Switzerland, at 12.4 percent.

Modest errors in the projections are certainly possible and can matter. But the narrowed gap also presents an opportunity. If we were able to shave 1 percent off the projected rate of growth in health spending, it would actually be rising at the same rate as GDP.

The impact: The health cost problem is multidimensional. Employers worry about their annual premium increases. Policymakers worry about the impact of federal health spending on the budget, and their state counterparts worry about the role Medicaid plays in their budgets.

Experts worry about the value we get for the health care dollar and work on tweaking delivery and payment to improve it. And most of all, consumers worry about paying their health care bills at a time when wage growth has been relatively flat.

The bottom line: The gap between health spending and GDP has long been a preeminent measure of cost, and it has narrowed. Now we should watch to see if the change has staying power.

 

Source: Axios  Drew Altman, Kaiser Family Foundation

The true story of America’s sky-high prescription drug prices

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The United States is exceptional in that it does not regulate or negotiate the prices of new prescription drugs when they come onto market. Other countries will task a government agency to meet with pharmaceutical companies and haggle over an appropriate price. These agencies will typically make decisions about whether these new drugs represent an improvement over the old drugs — whether they’re even worth bringing onto the market in the first place. They’ll pore over reams of evidence about drugs’ risks and benefits.

The United States allows drugmakers to set their own prices for a given product — and allows every drug that’s proven to be safe come onto market. And the problems that causes are easy to see, from the high copays at the drugstore to the people who can’t afford lifesaving medications.

What’s harder to see is that if we did lower drug prices, we would be making a trade-off. Lowering drug profits would make pharmaceuticals a less desirable industry for investors. And less investment in drugs would mean less research toward new and innovative cures.

There’s this analogy that Craig Garthwaite, a professor at Kellogg School of Management who studies drug prices, gave me that helped make this clear. Think about a venture capitalist who is deciding whether to invest $10 million in a social media app or a cure for pancreatic cancer.

“As you decrease the potential profits I’m going to make from pancreatic cures, I’m going to shift more of my investment over to apps or just keep the money in the bank and earn the money I make there,” Garthwaite says.

 [Read the full article here]