Category Archives: MEDICAL COSTS

No Paradox

Sometimes, the solution to a problem is staring you right in the face, but you refuse to see it because you are blinded by your perceptions, your beliefs, or the distortions others have placed in your mind by lies and falsehoods spread about the real benefits of the solution, or the downsides.

Case in point, the question of single-payer health care in the US. The health insurance industry and their lobbyists and defenders in Congress have done a great job poisoning the minds of many Americans against the idea of single-payer, whether on ideological or economic grounds.

Yet, many of these same Americans are getting some form of government-sponsored health care, either Medicare, Medicaid, Tricare, or health care through the Veterans Administration. So, it was striking that before the enactment of the ACA, many Tea Party protesters shouted or carried signs that read, “Keep your hands off of MY Medicare!”

What they did not know or realize, was that it wasn’t THEIR Medicare, but the government’s Medicare. They were ones receiving the benefits.

So, it struck me this morning when I read an article by Tom Lynch of the Lynch Ryan blog, Workers’ Comp Insider.com.

The article, The American Health Care Paradox: A Lot Of Money For Poor Results, compares the US health care system with the health care systems of the OECD nations (Organization for Economic Cooperation and Development).

The OECD has 35 members, of which the US is one, and was formed in Paris in 1961. They promote policies that will improve the economic and social well-being of people around the world. It also performs annual comparative analyses of issues affecting its members.

Health care is one such issue, as is life expectancy, infant mortality, obesity, and death rates from cancer, among other health care-related topics.

But regarding health care, as Tom reports, on a per capita basis, we spend 41% more on health care than our wealthy nation peers in the OECD, and 81% more than the entire OECD average.

The following graph indicates amount of public versus private funding of health care among the OECD nations, as well as the OECD average. The light blue bars indicate private funding; the dark blue bars indicate public funding.

OECD Health Care Funding — 2015

According to Tom, while our public funding (Medicare, Medicaid, etc.) is comparable to many of the other countries in the OECD, private funding in the US is more than 100% greater tham Switzerland, and 300% greater than the OECD average.

Life expectancy:            US: 78.8 years (76.3 men, 81.2 women)
UK: 81 years (79.2 men; 82.8 women)
Japan: 83.9 years (80.8 men; 87.1 women)

Infant mortality:          US: 6.1% (per 1000 live births) 45% higher than UK at 4.2%, and 265%                                                higher than Japan’s at 2.3%.

Obesity and overweight rate is exceeded only by New Zealand. Finally, the rate of death from cancer per 100,000 people is 188, Mexico’s is 115, Japan’s is 177. But we lead the world in smoking cessation (whoopee!). So, I guess we can all breathe easier now than the rest of the world, especially the third world where so many start smoking at a very young age.

Into this discussion, Tom throws the current Republican tax plan, which he rightly says will throw 13 million people off of health care, and see $25 billion cut from Medicare.

Tom says that fixing health care will take time and a lot more money, and he is skeptical that the GOP tax scam will do that.

Duh! Of course it won’t. That’s the whole point of the tax scam and the umpteenth attempts to scuttle the ACA. They don’t believe in health care as a right for all Americans. It is in their DNA as Libertarian Conservatives. They are not Republicans, at least not like the two Republican presidents who tried to get health care passed, Theodore Roosevelt and Richard Nixon.

No, they want the money for their fat cat donors. They even said so publicly and bragged about it. And if all those votes to repeal and replace ACA didn’t convince you that they are fundamentally opposed to any government-sponsored health care, except their own, then you are blind.

The solution is staring you in the face on the above chart, Every other OECD member nation spends more publicly for health care than we do privately, and we are getting bad outcomes. Why is that? It is because health care is not like other consumer goods, and therefore should not be funded or marketed by private companies.

It is long past the time we should follow suit and do what every other OECD country has done, create a single-payer, improved Medicare for All system and stop fooling ourselves that the private market works. It does not, and the proof is in the metrics on cost, life expectancy, infant mortality, obesity and cancer deaths, etc.

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Fallout of the End of ACA Subsidies

Joe Paduda today gave a very succinct and clear-minded assessment of the fallout of the ending of the ACA subsidies, also known as Cost-Sharing Reimbursement (CSR) payments.

Here is Joe’s article.

It makes perfect sense that what the Orange man said yesterday will do more damage to health care than his false and misleading pronouncements of the past year that the ACA is failing and doing harm.

It is you, sir, who are doing harm. To the poor, to minorities like those in Puerto Rico despite your morning mea culpa, to African-Americans and Latinos,  to women, to international agreements and organizations,  and to our credibility with our allies and adversaries.

 

Workers’ Comp Medical Benefits Represent More Than Half of Employer Costs

The National Academy of Social Insurance (NASI) recently issued its 20th annual report on Workers’ Compensation: Benefits, Coverage, and Costs. The study provides estimates of workers’ compensation payments—cash and medical—for all 50 states, the District of Columbia, and federal programs providing workers’ compensation.

Much of the study, as reported today by Workers Comp Insider.com, deals with the decrease in benefits as a percentage of payroll, an issue outside the purview of this blog.

But I was intrigued by the graphic at the bottom, which stated that thirty-three states spent more than half their workers’ compensation benefits on medical costs for injured workers.

And the share of total costs of workers’ comp benefits that are medical costs rose from 1980 to 2015, from 29% to 50%.

WC Benefits

While the study does not provide any insight into what that 50% represents, it is conceivable to assume that a good part of it involves surgery to repair the injury the worker suffered.

So, if this study is right, then the only way to begin to bring down the medical costs in workers’ comp is to look at alternatives that as of yet have not been tried because of lack of will, or a belief that alternatives are not realistic, or because we still cling to the notion that our healthcare system is the best in the world. and no one else comes close.

As Puck said, “Lord, what fools these mortals be.”

Another Scheme to Delay the Inevitable, part 2

Last week, I reported on an effort to create payer-provider partnerships, and said that it was another scheme to delay the inevitable move towards a Medicare for All, single-payer system.

Thanks again to Dr. Don McCanne for this week’s article from Modern Healthcare, on yet again another delaying tactic. This time it is from Congress, and while it purports to be “bipartisan”, it really isn’t, because they are very partisan in Congress today; partisan to the health care industry’s profit-making off of sick people.

Without further ado, here is the article in full:

http://www.modernhealthcare.com/article/20170803/NEWS/170809957

IT IS HIGH TIME TO STOP WASTING TIME, WASTING ENERGY AND THE PATIENCE OF THE AMERICAN PEOPLE WITH “SOLUTIONS” THAT ONLY MAKE THINGS WORSE, NOT BETTER. IT IS TIME TO EXPAND MEDICARE TO EVERYONE, WITH NO BUY-IN, AND BE DONE WITH IT.

 

 

Now It’s Personal

Last week, some of my LinkedIn connections, as well as several other connections, learned of my recent hospitalization. The reason for this was not mentioned at the time, but I will tell you now.

Not having health insurance through an employer, and being denied renewal of a local county health care program, led to my going from Stage 4 to End Stage Kidney Disease.

The hospitalization last week was to place a catheter in me for peritoneal dialysis, and to repair an umbilical hernia.

My hospitalization was brought to light quite unexpectedly by my friend, Maria Todd. Maria’s sending best wishes for my speedy recovery and quick discharge from the hospital was much appreciated, and the warm words by others in response, and the thirty plus “likes” made me feel that people cared. For that. I am grateful.

But the events of the past month have brought home to me one very important point, given the current activity surrounding the so-called “repeal and replace” of the ACA, and the two Congressional bills that many consider doing more harm than good.

This nation needs Medicare for All.

There, I said it.

I know in the past, I have advocated single payer for others, but my illness has shown that anyone who loses health care for any amount of time, once they have reached adulthood, cannot go without health insurance.

This is what happens when men and women are removed prematurely from the workforce, for whatever reason, employer decides you are no longer wanted, economic downturn or just to eliminate positions that affect the bottom-line of the company, and are generally targeted to individuals in their 40’s, 50’s and early 60’s so that the company can save on health care costs for those employees, and so that younger workers can be hired to replace them.

This is not something new, and not related to automation and artificial intelligence disrupting whole industries, which is inevitable.

My initial view on single-payer was that if employers were no longer responsible for the health insurance of their employees, and they were guaranteed full coverage by the government, some of the job losses of the past decades would not have happened, and many talented men and women out of the workforce would be employed until their retirement.

If you don’t believe me, go to LinkedIn and read the many posts from such individuals who are still unemployed. One fellow in Texas even got turned down from jobs at fast food restaurants.

So, now it is personal for me.

I also know that many of you make your living from the health care system we currently have, and that some of you have expounded on why you think a single payer system is unrealistic.

I get it that your financial outlook depends on working in a broken, free-market system because it pays your salary, but healthcare was not supposed to be a business, nor was it supposed to marketed like any other commodity.

If you don’t believe me, read what Pope Francis said: “health is not a consumer good, but rather a universal right, and therefore access to health care services cannot be a privilege.”

But try telling that to Messrs. McConnell, Ryan, Paul, et al in Congress, and the current POTUS, all of whom want to eliminate medical coverage for millions of Americans they received under the ACA, cut back Medicare and Medicaid, and destroy Social Security.

Now that I will be receiving dialysis, and quite likely will qualify for disability, the prospect of not having those resources is very personal to me, and could literally mean my life.

Look in the mirror, then look at your spouse, your children, your parents, your neighbors, friends, etc. What do you think would happen to them if these programs were eliminated? Would you have enough money to care for them? Would you have money to pay for private insurance?

I lost my mother last month to dementia. She died on her 85th birthday in a nursing home some miles from my home (the home she and my father bought), but if the Republicans in Congress had gotten their way, and she had lived longer, I feared she would have been forced out of that nursing home, with no place to go, and would have been an even bigger burden to me.

So, I really don’t care if you are a Democrat, Republican, Independent, Libertarian, Socialist, Liberal, or Conservative, we all need health care at some point in our lives.

One of the friends I met here in Florida back in the 90’s died last July of a stroke. He was 73. He worked out, never smoked, had a good life, three kids, and like many of you, worked in Risk Management, as well as Human Resources, the legal profession, and served in Vietnam. But despite all that, he died prematurely, and went into involuntary retirement because he was in his 60’s. Luckily, his wife worked. But you get the picture.

We must all do our part to see that every American can get health care. Not just access to care, which is a Republican euphemism for being able to afford it, and if you can’t, too bad. But actual health insurance. Medicare for All.

A Deeper Dive into Medical Cost Rising for Lost-Time Claims

It is said, a picture is worth a thousand words, and I have ten pictures, courtesy of NCCI’s Barry Lipton’s presentation on that subject.

It was brought to my attention by my fellow blogger, James Moore, of J&L Risk Management Consultants. I met James back in February at the NCCI 2017 Data Education Program in West Palm Beach.

Mr. Lipton is the Senior Actuary and Practice Leader, and his presentation was called, “Medical Cost Trends Then and Now.

Yesterday’s posts regarding the slight increase in the average medical costs for lost-time claims only scratched the surface of the subject. I hope this post will dive deeper into it, so that we can see the whole picture.

In my first post from yesterday, “Slight Increase in Average Medical Costs for Lost-Time Claims, Part 1”, I discussed how physician costs and prescription drug costs impacted medical costs for lost-time claims.

On the issue of physician costs, Mr. Lipton showed that there was a decline in the 2015 medical payments per claim due to physician costs, but as the following chart proves, despite this decline, physician costs contribute a larger share of the total costs.

Chart 1.

Chart 6.

Source: NCCI Annual Issues Symposium 2017

According to James, the main reason for the reduction in costs is the physician utilization per claim. Even though it is only a3% reduction, it is significant, James says, in a time of upward spiraling medical costs. Chart 2 bears this out.

Chart 2.

Chart 7.

Source: NCCI Annual Issues Symposium 2017

The second part of my post yesterday, “Slight Increase in Average Medical Costs for Lost-Time Claims, Part 2”, looked at the steady rise of the average medical cost for lost-time claim.

If we compare the chart from yesterday’s post to the one Mr. Lipton presented, we will see that his chart does show increases and decreases over time in the average medical costs per lost-time claim, but my chart indicates that ever since 1995, it has been rising steady.

Both charts, do show that the average medical cost per lost-time claim is hovering around $30,000, and if the numbers are consistent with ones for earlier years, represents almost 60% of the total claims cost.

My Chart.

Chart 2.

Chart 3.

Chart 4.

Source: NCCI Annual Issues Symposium 2017

To examine this in greater detail, Mr. Lipton broke down the Accident Years into three separate periods and slides, to show the change in medical cost per lost-time claim. He compared the change in Personal Health Care (PHC) Spending per Capita with the Medical Cost per Lost-Time Claim.

In the period, 1995-2002, the average growth rate (AGR) for WC was 9%, and the AGR for PHC was 6%. In the next period, 2002-2009, WC AGR was 6%; PHC AGR was 5%, and finally, in the last period, 2009-2015, the WC AGR was 1%, while the PHC AGR was 3%, as seen in chart 4.

Chart 4.

Chart 10.

Source: NCCI Annual Issues Symposium 2017

To understand what was driving the decline in Accident Year 2015, Mr. Lipton identified six different drivers, as indicated in chart 5.

Chart 5.

Chart 8.

Source: NCCI Annual Issues Symposium 2017

Finally, Mr. Lipton discussed how hospital costs contributed to medical cost per lost-time claims by highlighting the difference between inpatient and outpatient costs, which are rising.

The following chart looks at the four years prior to the 2016 Accident Year, 2012-2015.

Chart 6.

Chart 9.

Source: NCCI Annual Issues Symposium 2017

In 2012, Hospital Inpatient Paid per Stay amounted to $19,514, in 2013, it rose to $22,944 (18% increase), in 2014, it was $24,558, or a 7% increase, and last, in 2015, it was $25,320, or 3% increase over the previous year.

As for Hospital Outpatient Paid per Visit, the number are considerably lower for each year when compared to Inpatient Stays, but nonetheless have been rising.

So perhaps this, at the end is why the average medical cost per lost-time claim has been rising over a period of over twenty years, from 1995 to 2015.

I wrote to James last night when I saw his recent posts on this presentation, and he responded that we are both correct in our analysis, but looking at it from different points of view.

My conclusion after reading this presentation and my discussion with James suggests to me that there are two things going on here. One, when a worker is injured and receives medical care, unless and until he or she goes to a hospital, the best way to lower costs is through what James calls one of his six keys to reducing workers’ comp costs. One of those keys is medical control by the employer, which James said reduced cost by 75%.

But I also realized that when an injured worker goes to the ER or an Ambulatory Service Center as an Outpatient, has an Inpatient stay, that this is where the medical costs go up.

Naturally, Workers’ Comp medical spending is only a fraction of the overall health care spend of the US, and as costs for health care in general rise, so too does costs in workers’ comp.

So, while many have argued or shown that they can lower costs on the front end, from time of injury to return to work for most claims where no surgery is required, one of the largest reasons for the steady rise in the average medical cost per lost-time claims is hospital costs.

On this, both James and I agree. However, it is important that many in the industry see this as well. Keep thinking that it will change by doing this or that has not worked, the numbers prove that. Maybe it is time for something out of the box.