Viewing entries tagged with 'Costs'
BREAKING NEWS: Drug Prices Rose 8% in 2009 - The Largest Increase in Years
Posted by The Campaign on August 24, 2010 at 7:29 PM
The New York Times breaks news late tonight that brand name drug prices increased by more than 8% in 2009. Here are some highlights from the story:
A new report on retail prices of brand-name drugs shows the 217 products most used by older Americans increased by an average of 8.3 percent during 2009, the largest increase in years, even as inflation was negative.
Over the last five years, according to the report to be released on Wednesday by the senior lobby AARP, the retail prices for the most popular brand-name drugs increased 41.5 percent, while the consumer price index rose 13.3 percent.
The story focuses on an annual AARP report that was criticized by some because it focused on wholesale prices rather than retail prices. So AARP adjusted its study and found:
"the same result on price."
FACT CHECK: Medical inflation is only one factor contributing to rising health care costs
Posted by The Campaign on August 19, 2010 at 9:42 AM
Medical inflation is only one factor contributing to rising health care costs
Soaring medical costs are the primary driver of rising health insurance premiums. Medical inflation is only one of the factors contributing to rising health care costs. The medical component of the Consumer Price Index (Medical CPI) simply measures the inflationary component of prices charged for a defined group of services. It does not include other major factors that drive increases in health care spending, such as increased utilization, the needs of an aging population, and the development of new medical technologies and prescription drugs. As a result of these other factors, the cost of providing health benefits increases significantly above Medical CPI.
The Massachusetts appeals panel recently rejected the argument that medical CPI is an accurate measure of how much health care costs are rising. In its report reversing the commissioner's decision to deny Fallon's premium rates the panel said this about the medical CPI:
- "Fallon has proved that using the percentage increase of the New England Regional Medical CPI as the sole criterion for deciding whether to disapprove Fallon's proposed 2010 rates is incorrect for the following reasons":
- the CPI "is purely a backward-looking measure of past expenses and does not measure or forecast future costs"
- the CPI "does not measure costs that are comparable to the costs of Fallon's prospective claims"
- "focusing solely on the percentage increase, to the exclusion of the resultant premium number permits anomalous results, with another company's premiums that are higher than Fallon's proposed premiums for comparable products not being disapproved while Fallon's were disapproved"
- "using a metric external to Fallon's as the sole fact to determine whether Fallon's proposed 2010 rates are excessive violates actuarial and regulatory principles and thereby contravenes the statutory requirement that rates must be adequate"
MUST READ: Former US Comptrollers Question Cost Containment in New Law
Posted by The Campaign on August 16, 2010 at 9:09 AM
This blog has spilled much e-ink (and many megabytes) on the need to address the ever increasing problem of out of control growth in health care costs. We have highlighted many experts who have talked about this issue and the need for the nation to get health care costs under control or risk crowding out of other priorities.
Today's OpEd in The New York Times on the latest Medicare trustees' report offers another example of independent experts questioning the cost containment provisions of the new law.
Here is the line from Stanford Ross and David Walker: "...we just don't know how effective its cost containment provisions will be." Click here for the full OpEd, definitely worth the read.
ICYMI: Background Information on MLR and Federal Tax Exclusion
Posted by The Campaign on August 16, 2010 at 8:57 AM
Early last week, a letter from the six Democratic Chairmen of the committees that have jurisdiction of the health care reform law sent a letter to HHS seeking to clarify a particular provision of the reform law. The provision in question related to how federal taxes should be counted as part of the MLR calculation definition.
This approach has raised legal questions and policy issues. To help provide background on this, here are a couple of documents:
Background information on the MLR and exclusion of federal taxes
Legal analysis of Congress trying to interpret a law after passage. The analysis concludes that "well-settled principles of statutory language and longstanding Supreme Court precedent establish that the post-enactment interpretive opinions of several members of Congress cannot alter the meaning of an otherwise unambiguous statutory provision."
MUST READ: Center for American Progress Study on the Personal Coverage Requirement
Posted by The Campaign on August 05, 2010 at 1:49 PM
In Case You Missed It: A new report released by the Center for American Progress, Health Care Reform Is a “Three-Legged Stool”, validates the need to pair an effective personal coverage requirement with insurance market reforms.
Here are a few highlights:
· Repeal of the requirement to buy insurance would mean more people would wait until they get sick to buy insurance in the new nongroup exchanges, which would increase the average premium by 27 percent in 2019.
· Retaining the law’s insurance reforms, but repealing the subsidies as well as the requirement to purchase insurance, would further discourage people from buying insurance when they’re healthy. Premiums in 2019 would cost twice as much as projected under the law as a result.
· Retaining the law but repealing the mandate would newly cover fewer than 7 million people in 2019 rather than the 32 million projected to be newly covered by the law. Federal spending, however, would decline by only about a quarter under this scenario since the sickest and most costly uninsured are the ones most likely to gain coverage.
· If insurance companies must charge the same price to people whether they’re sick or healthy many healthy people will view this as a “bad deal” and not buy insurance. This results in higher prices that chase even more people out of the market. The result is a “death spiral” that leads only the sick to purchase insurance at very high prices. Several states tried such community rating reforms—offering health insurance policies within a given territory at the same price to all persons without medical underwriting— in their nongroup markets over the past two decades, and sharp rises in insurance prices ensued along with rapidly shrinking market size.
COST ALERT: Florida Paper Draws Attention to Emergency Room Costs -- $4 Aspirins
Posted by The Campaign on August 02, 2010 at 10:11 AM
It is known that underlying medical costs continue to increase every year. These costs are seen in higher prices for prescription drugs, medical imaging tests and even doctor's visits. And an article in the Florida paper "Highlands Today" shows trips to the emergency room can't avoid higher costs either.
The article picks up on costs that individual Floridians have been charge upon visits to the emergency room. The article does not draw any conclusions, but it does provide a few anecdotes to highlight the ever increasing cost of care including:
One patient said "...it cost $36 to have an X-ray read and $4 for an aspirin."
For the full article click here.
MUST READ: The Wall Street Journal Examines How Health Plans Are Helping Patients Stay Out of the Hospital
Posted by The Campaign on July 28, 2010 at 1:18 PM
With the debate about MLR definitions still ongoing, we thought this story from The Wall Street Journal offered a great example of the types of programs health plans use to help keep patients healthy and safe and ultimately save them money. These are the types of programs that all health plans use to improve quality and value and are at the core of health plans' role in the system.
Here is a key excerpt from the story:
"It is more important than ever for health plans and patients to combat medical costs, growing at a clip of between 6% and 9% a year, according to various estimates. Heart failure-which can be triggered by simple mistakes such as consuming too much salt-is a leading cause of hospital readmissions, with about 25% of patients returning to the hospital within 30 days. It's also one of the biggest single claims expenses at insurance companies. Aetna estimates that 40% of readmissions are avoidable.
"For patients, the extra surveillance could cut down on trips to the hospital and provide peace of mind. That's what Carolyn Brown, a 63-year-old retired teacher's aide from Bronx, N.Y., found when she started using a new monitoring system covered by her insurer, MetroPlus Health Plan Inc., after she suffered two heart attacks."
For the full story, click here.
MUST READ: The New Health Dialogue Outlines Why Just Attacking Health Plans Doesn't Solve the Cost Conundrum
Posted by The Campaign on June 22, 2010 at 12:20 PM
This is a great piece that ran as a blog entry on The New America Foundation’s blog “The New Health Dialogue.” It smartly makes the point that just focusing on health insurers does not solve the problem of ever increasing costs. Here are some key excerpts and the full piece is below:
“But it's important to remember that to the extent that the focus remains on health insurers' rate increases we may miss the point on overall rising health care costs, and maybe even accelerate their growth.”
"This is because the amount that we pay for private health insurance is primarily determined by the prices that insurers negotiate on our behalf with doctors and hospitals."
"But the logic of rising health care costs is inexorable. Until the people who negotiate with doctors’ offices and hospitals are in a position to get a better deal on our behalf, they will not get a better deal."
"Standing in the middle of this road, it is largely the same group of insurers who have to keep fighting to keep health care costs down for businesses and families. And it’s not at all clear that they will be successful in this fight on our behalf if we focus the majority of our own attention on beating up on them."
FACT CHECK: What is Driving Premium Increases
Posted by The Campaign on June 22, 2010 at 11:19 AM
Fact Check: What Is Driving Premium Increases
“Insurance is still going to be expensive because healthcare is expensive.”
-- Gary Claxton, VP, Kaiser Family Foundation
(Reuters, 06/21/2010)
Underlying Medical Costs Drive Premium Increases
· Federal government data confirms that rising health care costs are driven by increased spending on hospital care, physician services, and prescription drugs. The government data[i] show:
o “Hospital spending growth is projected to have accelerated from 4.5 percent in 2008 to 5.9 percent in 2009, as spending reached $760.6 billion.”
o “Spending growth for physician and clinical services is expected to have accelerated to 6.3 percent in 2009, up from 5.0 percent in 2008, with expenditures having reached $527.6 billion.”
o “Prescription drug spending is expected to have grown 5.2 percent in 2009, an acceleration of 2.0 percentage points from 2008, and to have reached $246.3 billion.”
· Between 2000-2008, the growth in premiums tracked directly with the growth in benefits.
|
|
2000 |
2008 |
2000-2008 Growth |
|
PHI* Premiums |
454,784 |
783,157 |
72% |
|
PHI* Benefits |
402,802 |
691,179 |
72% |
Source: http://www.cms.hhs.gov/NationalHealthExpendData/downloads/tables.pdf
(see table 12)
Note: PHI = Private Health Insurance as defined by CMS
http://www.cms.hhs.gov/NationalHealthExpendData/downloads/quickref.pdf
*****
Health Plan Administrative Costs are Not the Cause of Premium Increases
· Health plan administrative costs increased at a slower rate than spending on prescription drugs, physicians and clinical services, hospitals, and total national health expenditures from 2000-2009.
· In 2009, the percentage of premiums that went towards administrative costs and profits declined for the sixth year in a row.
· The average yearly increase in health plan administrative costs from 2000-2009 was lower than the increase in spending on hospitals, physicians and clinical services, prescription drugs, and total national health expenditures.
Health Plan Profits Average Between 3-5 percent
“Insurance company profits in the large picture have very little to do with the overall rising cost of health care.”
-- Henry Aaron, Brookings Institution
(ABC News, 11/10/09)
· According to Yahoo! Finance’s latest analysis of quarterly financial data, the net profit margin for the entire health care sector is 15.48%. Using the same index, health plans have a 4.7% net profit margin.
o This ranks the health insurance plan industry 12th out of the 16 industries that make up Yahoo! Finance’s health care sector.
· Analyzing 13 health insurance plan companies on the Fortune 500 list, the profit margin for these 13 companies averaged 3.19 percent for 2009 -- for 2008 it was 2.3 percent for these same 13 companies.
o Six of the 13 companies actually saw a decline in their profit margin - averaging a decline of 48.7% in profit margin from 2008 to 2009.
· What experts say about health insurance plan profits:
o According to Kaiser Health News, “With the nation’s health care spending estimated at $2.5 trillion this year, even the elimination of insurers’ profits and executive compensation would lower health care spending by just 0.5 percent.”
o According to Ezra Klein of The Washington Post “The insurance industry is not a particularly profitable industry…That’s not to pretend that 3.3 percent is nothing, but it’s hard to see how that’s a primary driver of health-care spending, much less the growth in health-care spending.”
o Alwyn Cassil, Center for Studying Health System Change: “‘…this idea that (taking) this $12 billion that they have in profits … would fix our health-care spending problems is just a pipe dream.’”
For a printable version click here.
[i] Truffer, et al, Health Affairs, “Health Spending Projections Through 2019: The Recession’s Impact Continues”, Published online February 4, 2010.)
POLL VAULT: New Deloitte Survey -- Majority Think New Reform Law Will Lead to Higher Medical Prices and Higher Taxes
Posted by The Campaign on June 11, 2010 at 7:42 AM
With reform now the law of the land more and more surveys are being released about people's expectations of the impact of the new law on the health care system and on their personal health care. The latest survey comes from The Deloitte Center for Health Solutions (DCHS), part of Deloitte LLP, in which they survey 1,019 adults aged 18 and older.
The results are very interesting with questions ranging from impact of the reform law on access and costs, to the effectiveness of certain provisions to people's view of their own insurance coverage.
Here are some key highlights from the survey:
43% of all adults surveyed think they will be "worse off" under the new law vs. 36% that think they will be better off
- Among those with employer-provided coverage, 46% think they will be worse off
76% think the cost of the reform bill will be higher than expected
- Among those with employer-provided coverage, 82% think the cost of the reform bill will be higher than expected
53% DISAGREE with the statement "The reform will reduce health care costs in the long term"
- 66% think that hospitals and physicians will increase prices
- 54% think the price of medication will increase as a result of the new law
- Only 30% think cuts in the rate of growth of Medicare costs will be effective
76% think taxes will increase
- 78% of people with employer-provided coverage think taxes will increase
- 80% of individually insured adults think taxes will increase
One stat probably won't hear but it is really telling: "Of the 82 percent of consumers surveyed who consider themselves 'well' or 'adequately' insured, 96 percent are 'very satisfied' or 'satisfied' with their insurance company's performance in serving their needs."
