Yesterday we examined the potential impact on insurers and insureds of a failure to pass meaningful comprehensive health reform . Today we’ll look at the effect on providers.
Again, we’ll leave aside the possibility of individual bills addressing physician compensation under Medicare, a superMedPAC and other potential measures.
As health care costs increase, the number of employers who can afford coverage drops, as does the percentage of their workers willing to pay their share of the premium. And without meaningful reform that includes cost controls, there is zero evidence that costs will moderate on their own. While the cost cycle will persist, without structural change in the form of changed incentives for payers and revamped reimbursement by Medicare we’re stuck with the same underlying trend of a couple points higher than overall inflation.
The latest data indicate this is already happening, as the largest health plans lost over four hundred thousand commercial members in total in the first quarter.
We’re looking at fewer working families with insurance, but there’s another problem – as employers change to high deductible plans, or increase the deductibles on current plans, employees will have to come up with more cash to pay for their care before their insurance kicks in. Fact is, almost one-fifth of Health Savings Accounts don’t have any funds in them, and most aren’t fully funded (the average account balance was about $950 for individual accounts and $1500 for family as of Q3 2008). Moreover, that only counts the folks who are enrolled in HSA-type plans who’ve opened accounts; according to a GAO study, in 2007 almost half of HSA-eligible plan enrollees hadn’t opened an account.
The net? More patients without coverage, and a sizable chunk of those with ‘coverage’ don’t have funds to pay their deductibles. The result? More indigent care, more unpaid bills, and more trips to the ER instead of primary care doc visits, trips that won’t be compensated and will therefore result in more losses for hospitals and cost-shifting to the shrinking population of commercial insured patients.
Specialties that will be particularly hard hit include orthopedics, ophthalmology, dermatology, ob/gyn, neurology, physical therapy and neurosurgery. With many of their patients presenting with non-emergent conditions, these specialists will likely see a decline in patients as those without coverage put off care – that aching knee, slightly blurry vision, skin blotch or loss of sensation will be ignored as much as possible as long as possible. Ob/gyns will see an increase in indigent care, and a potentially considerable growth in patients covered by Medicaid (a notoriously poor payer in many states).
The consolidation in the payer industry (noted yesterday) will shift more bargaining power to healthplans, especially for physician contracts. Hospitals are a little better off, as many have gotten pretty good at negotiating with insurers and their proxies. But for those providers in markets with two or one dominant payer, rate negotiations will become increasingly one-sided.
Aug
13
I am still stunned on the effort being put on Health Reform. Just stunned. Does something need to be done? Sure, but not now. We have HUGE issues looming for our economy. The Banks are still in trouble, 1/2 of all mortgages may be underwater by 2011, unemployment keeps rising, retail sales are down, the bond market is incredibly shaky. The deficit is soaring. These are the issues that must be addressed before anything else.
Doesn’t George realize that without health care reform we cannot adequately address all the issues he raises? Families as you correctly point out will have fewer funds to pay mortgages should they have the bad luck to have a member become ill.
I’m also concerned that as we see fewer employed people with health benefits that they will attempt to have health issues covered by worker’s compensation ‘accidents’. Perhaps having that diabetic neuropathy looked at under the guise of an alleged repetitive trauma injury. Or that sore knee is now suddenly a twisted knee or contused knee from an unwitnessed slip and fall or other alleged injury. This will serve to drive up WC medical utilization which in turn will drive up costs to employers and cause more businesses, especially small businesses to close their doors, leading to increased unemployment, fewer folks paying their mortgages…and the spiral down continues.
So George, yes. Health care needs to be done now! If we could convince Congress to move toward a single payer option and eliminate all health insurers we would be headed in the right direction of eliminating business from running our government.
Valerie: I disagree with single payer being a good option. However, I think a Public option is imparative. However, I think your statement “eliminating business from running our government” is brillant.
Valarie,
The proposed health care bill is NOT a single payer system. This bill still has “big business” heavily involved, si I don’t really understand your point. Remember, Big Business, BIG PHARMA has given the President 150 million dollars to help push this current plan through. Do you really believe this bill can be good for the American people if Big Pharma is trying to push it through?
Where do I start. My company (small company – 50 employees) offers a high deductible HSA plan. $1500 for individuals and $3000 for two-plus person households.
The company funds all HSA accounts to the tune of $1500 annually. Most of our employees in two-plus person households contribute somewhere between $750 and $1000 annually. Often, those with families will run short.
Despite being in a high deductible and presumably low premium plan, we received a 25% premium increase for this plan year. This is truly stunning.
The company carries a heavy load with the premiums and shared HSA contributions not to mention the cost of workers’ comp. Health plan reforms will significantly reduce our financial load and help us in our recovery.
As to the idea of a consumer driven plans, the consumer thing is bunk!! – Its all about choice – choice of plan that meets financial and personal needs. Most of the folks complaining about government intervention have no idea of the financial load their employers are carrying in paying paying for health care. Why do other countries have more competitive economies – we all know the answer!!!
This is the plight of our company and I am willing to bet the plight of many small employers.
Every MSM outlet should link to your post and broadcast it! People have no idea what’s at stake here. It’s so sad that this debate has turned into political theater…. Meanwhile people are sleeping in parking lots to get free healthcare, not in some third world country, but right here in good ol USofA http://blogs.wsj.com/health/2009/08/12/sleeping-in-a-parking-lot-to-get-health-care/
I am more thankful everyday that I work in a specialty that has a Medicare patient volume over 85%… yes I said thankful. Yes, we have challenges with Medicare’s compensation, but we lead the Nation in clinical outcomes, respective to the type of care we provide, over a 97% successful procedure rate (meaning no complications and the need for repeat procedures). So whoever thinks people on Government health plans don’t have access to the best care possible, have no fricken clue.
Bob, As usual, a good piece. I do wonder though as I hear about dwindling enrollments whether a result of losing accounts or simply an effect of layoffs. The outcome for the employees is about the same. However, I see that United has had a significant drop in utilization and a concurrent doubling of income! Maybe a little underwriting to assist the cherry picking?
What’s in a name or a title? The drift of the current debate concerning “health reform” underscores the efficacy in use of deflection in the current debate. It is all too clear to this observer that the basic problem lies in the uncompetitive nature of the health insurance underwriting community. With the demise, I mean, merger of so many of health insurance carriers, there is little reason to competitively price a product that delivers a meaningful service to the policyholder. The idea that some Republican “know nothings” have offered that increasing access to carriers across state lines will introduce competition is farcical!! It is an example that ignorance is bliss and hyperbole gets you a snipet on TV. It certainly does not contribute to a true debate!
There will be no “health reform” until the insurance industry monopoly is broken along with the demogogic entreaties of the hospital and physician communities. That combine will not let their fiefdoms be invaded by any kind of reform that requires them to behave more responsibily! Risk, that is not our business, has been the recurrent theme of insurance carrier and health care provider captains!
Health costs are a *supply side* economics problem. Doctors are expensive. Drugs are expensive. Hospitals are expensive. In a functioning marketplace we would see supply increasing to match demand but the marketplace is stymied by:
– Medical licensing restrictions (supported by AMA lobby)
– FDA drug approval process and drug patents
– Hospital costs (regulations and employee unions)
– Malpractice claims
– Warped tax incentives & disincentives.
Let’s call the President’s package what it is: universal coverage. It is not a healthcare reform package it is an insurance reform package. It *will* achieve universal coverage but it *will not* lower costs.
(The silver lining from the economic crisis is that those who are currently unemployed are moving into the health care field. See the unemployment statistics. This will work over time to lower costs by increasing labor supply. Your local real-estate agent is likely to become your nurse in a few years.)