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Tag: cost of healthcare

Health Spending — Under Control?

Has the monster of exploding health costs finally been slain? After five years of slow spending growth, it’s tempting to think so. This would be a momentous development, because rising health spending has had damaging side effects. It has reduced workers’ take-home pay, as employers devoted more compensation dollars to insurance and fewer to wages and salaries. Growing government health spending (mainly through Medicare for the elderly and Medicaid for the poor) has had a similar effect. It has squeezed other public programs.

The trend lines seem favorable. Recently, the Centers for Medicare and Medicaid Services (CMS) reported that from 2009 to 2013 annual increases in health spending averaged only 3.9 percent — well below historical experience. As recently as 2007, the gain was 6.3 percent. The result: Since 2009, health care’s share of the economy has stabilized at 17.4 percent of gross domestic product. Although that’s $2.9 trillion ($9,255 for every American), health care is no longer siphoning more resources from the economy’s other sectors.

Can this continue?

Unfortunately, experts disagree. Differing on what’s caused the slowdown, they split on how long it will last.

One theory is that a weak economy translates into weak health spending. A study last year by the Kaiser Family Foundation — a nonpartisan research group — attributed three-quarters of the slowdown to the economy. The trouble is that there’s no simple explanation of why. The conclusion reflects a “statistical analysis of 50 years of health spending and economic trends.” Larry Levitt, one of the study’s authors, says these relationships predicted a continued slowdown in 2013. Now, spending is expected to accelerate.

Read the full article here.

Contact Steven G. Cosby, MHSA with questions or to request more information and to schedule a healthcare plan evaluation, savings analysis or group plan solution for your company.

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House Energy and Commerce Subcommittee on Health Hearing

Chairman Pitts, Ranking Member Pallone and members of the Subcommittee, thank you for the opportunity to testify regarding fiscal priorities in the 114th Congress. As a major driver of federal spending, our health care system must be central to this discussion. I would like to make three main points today regarding the fiscal future of the health care system in the 114th Congress.

First, the expansive spending created by the Affordable Care Act (ACA) will continue to generate fiscal issues for years to come. The ACA was left largely untouched by the Budget Control Act, resulting in unrestrained spending in some of health care’s most expensive programs. Next year Congress should rein in this spending and subject the ACA and Medicaid to cost saving reforms.

Second, making reforms within the exchanges and cutting back on ACA spending will create savings; some of which should be utilized to ensure a sustainable Medicare program for seniors well into the future. In order to preserve Medicare for the next generation, big policy changes must occur, and savings generated through scaling back the excesses of health reform can help pay the way.

Finally, decreasing ACA spending and applying some of these savings to Medicare reform is just part of the fiscal priorities conversation. Any change undertaken should lay a foundation for a more efficient health care system, and the 114th Congress should work to towards that ultimate objective by focusing on achievable goals in the present.

Read the full article here.

Contact Steven G. Cosby, MHSA with questions or to request more information and to schedule a healthcare plan evaluation, savings analysis or group plan solution for your company.

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Why We Should Know the Price of Medical Tests

One of the common arguments against mandating or providing upfront prices for medical tests and procedures is that American patients are not very skilled consumers of health care and will assume high prices mean high quality.

A study released Monday in the journal Health Affairs suggests we are smarter than that.

The insurer WellPoint provided members who had scheduled an appointment for an elective magnetic resonance imaging test with a list of other scanners in their area that could do the test at a lower price. The alternative providers had been vetted for quality, and patients were asked if they wanted help rescheduling the test somewhere that delivered “better value.”

Fifteen percent of patients agreed to change their test to a cheaper center. “We shined a light on costs,” said Dr. Sam Nussbaum, WellPoint’s chief medical officer. “We acted as a concierge and engaged consumers giving them information about cost and quality.”

Read the full article here.

Contact Steven G. Cosby, MHSA with questions or to request more information and to schedule a healthcare plan evaluation, savings analysis or group plan solution for your company.

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Disturbing PwC Report on Employer Medical Cost Trends

PwC’s Health Research Institute (HRI) projects 2015’s medical cost trend to be 6.8% — a modest increase over our 2014 projection of 6.5%. This projection is based on HRI’s analysis of medical costs in the large employer insurance market, which covers about 150 million Americans. By comparison, Medicare serves 52 million beneficiaries and a little over 8 million Americans enrolled in the public exchanges this year.

The net growth rate in 2015, after accounting for benefit design changes such as higher deductibles and narrow provider networks, is expected to be 4.8%. Benefit design changes typically hold down spending growth by shifting costs to consumers, who often choose less expensive healthcare options.

Although total US health spending will likely increase as more people gain insurance under the Affordable Care Act (ACA), it may have little effect on employer health spending. The increase in utilization under the ACA will likely drive up total national health expenditures without changing prices for those with employer coverage.


High-Deductible Plans Will Continue to Tamp Down Use of Services

The popularity of high-deductible health plans continues to rise as employers attempt to manage their benefit costs. According to PwC’s 2014 Touchstone Survey, 44% of employers across all industries are considering high-deductible plans as the only insurance option for their employees during the next three years. In addition, according to the same survey, 33% of employers are considering moving their active employees to a private exchange in the next three years, and this strategy tends to accelerate employee adoption of higher deductible plans.

Now more than ever, consumers are experiencing increased financial responsibility and are evaluating and rethinking how and when to spend.

Read the full article here.

Contact Steven G. Cosby, MHSA with questions or to request more information and to schedule a healthcare plan evaluation, savings analysis or group plan solution for your company.

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