Consumer Power Report #467
In response to concerns about the possibility of rising health care costs under the Affordable Care Act (ACA), President Barack Obama insisted his signature law would cut health care expenses, in large part by creating a healthier, more physically fit society. The Obama administration promised to accomplish that through a variety of measures, including the Prevention and Public Health Fund, initially granted $15 billion to “invest in proven prevention and public health programs that can help keep Americans healthy – from smoking cessation to combating obesity.”
The theory was if then-uninsured Americans were given access to primary care physicians, healthy lifestyle changes would be quick to follow, inevitably reducing the overall cost of health insurance for all. The foundation of this approach is sound; if people are healthier, health care costs for everyone would likely be reduced.
There’s no denying obesity is a major problem in the United States and contributes significantly to higher health care costs. According to Todd Hixon, writing in Forbes, obesity-related diseases and conditions account for $732 billion, or 24 percent, of U.S. health care expenditures. If those expenses could be reduced, all Americans would reap the benefits of those savings.
Unfortunately, available data show the Affordable Care Act has not dramatically altered the way many people, especially those who are poor, receive health care. As a result, health care costs continue to rise.
Provisions in ACA require health insurance companies to offer programs that help obese patients lose weight and provide free preventative health screenings for those who see primary care doctors, but these programs depend on the patient’s willingness to enroll in the offered programs and to regularly work with primary care physicians to create healthier lifestyle routines.
For many of the lowest-income Americans, who often have the poorest eating habits and some of the highest obesity rates, increased access to health insurance through the expansion of Medicaid has not created real access to primary care doctors. This is largely because many primary care doctors won’t accept new Medicaid patients because reimbursement rates are too low.
This has pushed many low-income patients back into emergency rooms, where obesity reduction strategies cannot properly be implemented. According to a poll conducted by the American College of Emergency Physicians, 75 percent of the 2,099 emergency room doctors surveyed say they have seen increases in the number of people going to emergency rooms to receive basic medical care since Obamacare was fully rolled out in 2014. Fifty-six percent of the physicians claim they have seen a higher number of Medicaid patients.
There is some recent evidence Americans’ daily caloric intake has started to decline, which could eventually help reduce obesity rates and total health care costs. According to a report by The New York Times, a study in The American Journal of Clinical Nutrition (AJCN) claims the “number of calories that the average American child takes in daily has fallen … by at least 9 percent.”
The number of calories reduced, however, has little or nothing to do with the programs mandated by the Affordable Care Act. Instead, the study suggests Americans’ healthier diets are the result of “people’s growing realization that they were harming their health by eating and drinking too much.”
Some would argue ACA’s mandates or the slew of soda and sugar taxes that have been created in 39 states and Washington, DC, as of January 1, 2014, may be the root causes of the positive changes to the average U.S. diet. This is unlikely considering the evidence presented by AJCN, which shows the average daily caloric intake began to decrease in 2003, long before Obama entered the White House and First Lady Michelle Obama initiated her many healthy eating programs.
The Times acknowledges the slight progress made in the battle against obesity is not the result of recent government action: “The reversal appears to stem from people’s growing realization that they were harming their health by eating and drinking too much. The awareness began to build in the late 1990s, thanks to a burst of scientific research about the costs of obesity, and to public health campaigns in recent years.”
Even with the improvements in daily consumption, the most recently available data from the Journal of the American Medical Association show there has been “no significant change” in the overall prevalence of obesity since 2003–04, and no change at all from 2009–10 to 2011–12.
Despite the billions of taxpayer dollars spent by the Obama administration to improve Americans’ health and the $1.2 trillion the federal government is expected to spend from 2016 to 2025 on Obamacare, according to the Congressional Budget Office, the U.S. obesity problem and its high associated costs have improved only slightly. And there’s no indication the few improvements that have been made have anything to do with the intrusive and destructive policies forced onto Americans through the Affordable Care Act.
— Justin Haskins
IN THIS ISSUE:
Nearly $1 in every $5 spent in the United States by 2024 will be on health care, according to a government projection released Tuesday, forecasting a quickening of the health inflation rate. Nonetheless, that rate still falls well short of the sharply upward trend seen prior to the Great Recession.
Annual health spending is expected to grow an average of 5.8 percent during the period of 2014 through 2024, mainly because of the expansion in the number of people with health insurance due to Obamacare, stronger economic growth and an older population transitioning into the Medicare system, the Office of the Actuary at the Centers for Medicare and Medicaid Services said.
Other factors driving the inflation include expected substantial increases in prescription drug spending, fueled primarily by new high-cost specialty drugs for hepatitis C, and new treatments for cancer and multiple sclerosis.
By 2024, national health expenditures are forecast to be $5.43 trillion annually. Nearly half of that spending – 47 percent – will be paid for by federal, state or local governments, primarily through the Medicare and Medicaid health coverage programs. That is up from 43 percent last year.
The rate of health spending growth being forecast represents a marked upswing from the historically low rate of health spending inflation of 4 percent annually seen between 2008 – the first year of the worldwide economic downturn, and 2013, the year before the Affordable Care Act’s coverage provisions began taking full effect.
The rate began rising more significantly last year, when it grew by an estimated 5.5 percent to reach $3.1 trillion in total spending, the first time since 2007 that health inflation had topped 5 percent.
But the 5.8 percent annual average rate being forecast over the next decade is also much less than the average annual increases of about 9 percent seen in the 30 years prior to 2008, noted a report on the projection published Tuesday in the journal Health Affairs.
SOURCE: Dan Mangan, CNBC
As hospital operators begin to report second period earnings – the sixth consecutive quarter of new revenue from once uninsured patients – the number and size of unpaid medical bills continues to fall thanks to the Affordable Care Act. The health law last year began to provide subsidized private health insurance coverage on public exchanges and expanded Medicaid for poor Americans. With increasing numbers signing up to private coverage and more states opting to expand Medicaid in the last 18 months, hospital companies are seeing expenses for charity and uncompensated care fall. A snapshot of this trend could be seen in last week’s earnings report of Universal Health Services (UHS), a large multi-state investor-owned operator of hospitals, which reported uncompensated care declined in the second quarter “as it has the last six quarters now,” Universal Health chief financial officer Steve Filton told analysts on the company’s second quarter earnings call.
Universal Health said its acute care hospitals have seen a “decrease in the aggregate of charity care, uninsured discounts and provision of doubtful accounts as a percentage of gross charges” this year through June 30 compared to the same period in 2014. Universal Health’s cost providing for so-called “doubtful accounts” dropped 17 percent to $274 million during the first half of the year from $331 million during the six-month period ended June 30, 2014.
Such trends, which helped Universal Health raise its earnings forecast for the rest of the year, should help the entire hospital industry, particularly as more states opt to expand Medicaid.
SOURCE: Bruce Japsen, Forbes
Health care in Colorado could be radically different in a few years. All it’ll take is thousands of signatures this year and a million more votes the following November.
No more insurance markets. No more employee benefits. Just an insurance card that entitles all Colorado taxpayers and their dependents to coverage.
That’s the hope of those pushing ColoradoCare, a ballot initiative to establish a single-payer system in Colorado. The philosophy behind the push, according to State Sen. Irene Aguilar, is simple: “We’re all going to use health care, so we’re all going to pay for health care.” …
The push, in one iteration or another, has been around for several years, previously under the name Co-operate Colorado.
This most recent try has proponents optimistic that it will hit the necessary milestone of ballot validation – 99,000 valid signatures – and strong headwinds in the November general election, where top-ballot races usually pull broader swaths of the population than nonpresidential and off-year elections.
SOURCE: Nick Coltrain, The Coloradoan
Many Americans who bought health insurance through exchanges operated by states or the federal government have a good understanding of how their plan works, but also are afraid they can’t afford medical services, according to research published Monday by the Deloitte Center for Health Solutions.
Health insurance exchanges, or “marketplaces,” were created as part of President Barack Obama’s health care law, the Affordable Care Act. They are used to help Americans shop for health insurance when they do not qualify for a government health program and do not have insurance through an employer.
Low- and middle-income consumers who use the marketplaces often are able to qualify for tax subsidies to offset the cost of monthly premiums and help them afford care. But while the Department of Health and Human Services has touted low premiums averaging $100 a month for the majority of Americans who use exchanges, that message only tells part of the story, leaving out details about copays, deductibles and provider costs that may be out of reach.
“There is a lot of evidence to suggest consumers are learning as they go, and I’m sure it’s not without a lot of painful experiences,” says Paul Lambdin, insurance exchanges and retail practice leader for health plans at Deloitte Consulting. The Deloitte Center for Health Solutions, a research arm of Deloitte, has been polling consumer attitudes about health insurance and the health care system since 2008.
For this report, researchers surveyed 3,887 people who used online marketplaces to buy health insurance. The analysis did not distinguish between people who used state exchanges and those who used the federal website, HealthCare.gov.
Despite having insurance coverage that some may not have had before, the survey revealed costs are still a major concern for exchange customers. Results showed only 24 percent felt they could get affordable care when they needed it, and just 16 percent felt financially prepared to handle future health care costs. And 1 in 3 reported they had difficulty paying for out-of-pocket expenses when enrolled in a marketplace plan for a full year.
Andy Slavitt – President Obama’s choice to manage Obamacare, Medicare and Medicaid – was linked seven years ago to a massive medical data fraud scheme that resulted in what was then the largest settlement ever by an insurance company.
If he is confirmed by the Senate, Slavitt will head the Centers for Medicare and Medicaid, which manages the federal government’s three biggest health care programs. He will manage an estimated $1 trillion in benefits that are paid to millions of doctors, patients and hospitals.
Slavitt was CEO of Ingenix, a health data analytics firm at the center of a $50 million settlement in 2009 with then-New York Attorney General Andrew Cuomo and a $350 million settlement with the American Medical Association.
Cuomo and the AMA charged that Ingenix supplied databases to insurance companies that fraudulently calculated reimbursements for out-of-network medical services provided to policyholders, according to a Daily Caller News Foundation investigation.
Ingenix was owned by UnitedHealth Group, which did not admit to any criminal wrong-doing in the settlements.
The Ingenix scandal became public in February 2008 when Cuomo filed a “notice of intent to sue” Ingenix and UnitedHealth Group for “rigged” reimbursement rates that forced patients to overpay up to 30 percent for out-of-network doctors and hospitals.
Cuomo charged that Ingenix was running a “scheme” that sought “to defraud consumers by manipulating reimbursement rates.”
The AG told reporters, “This involves fraud in the hundreds of millions of dollars, affecting thousands and thousands of families. Too many people have been hurt. It has to stop.”
It was estimated that years of data manipulation by Ingenix affected as many as 110 million Americans – about one in three patients – who used doctors, labs or hospitals that were out of their insurance network.
Cuomo, who is now New York’s Democratic governor, estimated that patients who used out-of-network providers received between 10 to 28 percent less than they were entitled to because of Ingenix’s flawed data.
The $350 million was to reimburse doctors and patients shortchanged by Slavitt’s company. The $50 million went to establish a database of physician charges to be administered independently by a university. Ingenix also agreed to shutter its entire medical data analytics department.
The case was first raised in 2000 by the New York and Missouri chapters of American Medical Society, but languished in the courts until Cuomo stepped in. Slavitt was the Ingenix CEO from 2006 to 2011. His first position at the firm was as COO in 2005.
In 2011, following the settlement, UnitedHealth eliminated the name Ingenix and rebranded it as OptumInsight, where Slavitt remained as an executive until he joined CMS last year. Obama nominated him earlier this month to replace Marilyn Tavenner. She stepped down last January in part over the troubled launch of Obamacare.
Sen. Jay Rockefeller, D-WV, who chaired two days of public hearings on the scandal for the Senate Commerce Committee in March 2009, said Slavitt’s company used a “downward skew” in reimbursements to cheat patients.
“Everywhere experts have looked at this data, they have found what statisticians called a ‘downward skew’ in the numbers. For 10 years or even longer, this skewed data was used to stick consumers with billions of dollars that the insurance industry should have been paying,” Rockefeller said.