Why Do Other Rich Nations Spend So Much Less on Healthcare?
The U.S. delivers roughly three times as many mammograms, two-and-a-half times as many MRI scans, and a third more C-sections per capita than the average OECD country.
VICTOR R. FUCHSDespite the news last week that America's healthcare spending will not be rising at the sky-high rate that was once predicted, the fact remains that the U.S. far outspends its peer nations when it comes to healthcare costs per capita. This year the United States will spend almost 18 percent of the gross domestic product (GDP) on healthcare—six percentage points more than the Netherlands, the next highest spender. Because the U.S. GDP in 2014 will be approximately 17 trillion dollars, those six percentage points over the Netherlands amount to one trillion dollars in additional spending. The burden to the average household through lost wages, insurance premiums, taxes, out-of-pocket care, and other costs will be more than $8,000.
Why does the United States spend so much more? The biggest reason is that U.S. healthcare delivers a more expensive mix of services. For example, a much larger proportion of physician visits in the U.S. are to specialists who get higher fees and usually order more high-tech diagnostic and therapeutic procedures than primary care physicians.
Compared with the average OECD country, the U.S. delivers (population adjusted) almost three times as many mammograms, two-and-a-half times the number of MRI scans, and 31 percent more C-sections. Also, the U.S. has more stand-by equipment, for example, 1.66 MRI machines per 6,000 annual scans vs. 1.06 machines. The extra machines provide easier access for Americans, but add to cost. Similarly, occupancy rates in U.S. acute care hospitals are much lower than in OECD countries, reducing the likelihood of delays in admissions, but building that extra capacity adds to cost. Aggressive treatment of very sick elderly also makes the mix expensive. In the U.S. many elderly patients are treated in intensive care units (ICUs), but in other countries they would receive only palliative care. More amenities such as privacy and space in hospitals and more attractive clinics also add to U.S. costs.
While the U.S. mix of services is disproportionately tilted toward more expensive interventions, the other OECD countries emphasize a “plain vanilla” mix. Compared with the U.S., the average OECD country has 30 percent more physician visits and more than 30 percent more hospital days per capita.
Obamacare premiums to rise a modest 4.2% in 2015
Defying an industry trend of double-digit rate hikes, California officials said the more than 1.2 million consumers in the state-run Obamacare insurance exchange can expect modest price increases of 4.2% on average next year.
On Thursday, Covered California announced the results of its negotiations with Anthem Blue Cross, Kaiser Permanente and other major insurers, an important yardstick for President Obama's Affordable Care Act.
"We have changed the trend in healthcare costs," said Peter Lee, Covered California's executive director. "This is good news for Californians."
Policyholders in some major urban areas will see increases slightly above the statewide average. San Francisco posted the highest average increase of 6.6%. Orange County wasn't far behind at 6.3%. The Los Angeles area was closer to 4%.
Consumers can see how their coverage would be affected by the new rates at Covered California's online rate calculator.
State officials and insurers credited the strong turnout during the first six-month enrollment window that ended in April for helping to keep 2015 rates in check. But others cautioned it's still too early to gauge the health law's impact, suggesting several factors may be temporarily holding rates down in the individual market.
"We don't really know what the real cost of Obamacare is yet because insurance companies are heavily subsidized for the first three years" of the law's implementation, said Robert Laszewski, a healthcare consultant in Virginia who has closely tracked the overhaul. "The insurance companies essentially can't lose money."
California Insurance Commissioner Dave Jones said the modest uptick in premiums was a positive sign, but he said insurers were likely motivated by a November ballot initiative, Proposition 45, that would give his office new authority to regulate health insurance rates.
"This is merely a pause in the double-digit rate increases we've seen historically," Jones said.
The rates released Thursday are still subject to review by state regulators. Open enrollment for 2015 begins in November.
While many consumers will see a small bump in premiums, others may experience far larger increases depending on where they live and the type of coverage they purchased. Affordability is a crucial factor for future enrollment and renewals.
Lee acknowledged that not all consumers would be spared from sizable increases, but he emphasized that people also have more freedom to shop around for a new plan under Obamacare.
Average California Obamacare Rate Increase Only 4%––Success!!!
The weighted average increase for plans being sold on the Obamacare California public exchange in 2015 will be 4%. So, that means Obamacare is working really well, right?
Well, wait a minute.
Let's consider a few things:
The California insurance commissioner has said that consumers saw individual health insurance rate increases of 22% to 88% to get into Obamacare in the first place.
There is a highly contentious November ballot initiative facing the health plans they absolutely do not want to see passed, that would put the government in charge of their rate setting in future years, giving the carriers every incentive to low-ball the 2015 rates so voters don't have any more incentive to vote for it.
And, to the extent the carriers low-ball the rates, taxpayers will pay for every dime of it given that their losses are capped by the federal government.
Does the average 4% rate increase mean Obamacare is a big success in California?
For 2015 it does.
Let's see how this all goes when the training wheels come off after the federal Obamacare reinsurance program goes away at the end of 2016 and this November's Prop 45 is behind us.
Well, wait a minute.
Let's consider a few things:
- This week the California insurance commissioner reported that the average unsubsidized 2014 rate increase carriers charged going into Obamacare was between 22% and 88%. That was a pretty healthy bump (I'll call it a bump because "Rate Shock" didn't happen) to get everyone into Obamacare in the first place. And remember, many of these consumers are now in narrow networks in California to boot.
- California voters will go to the polls this fall to vote on Proposition 45. That ballot initiative would regulate health insurance rates in California for the first time––something the carriers are dead set against. Big rate increases on part of the carriers would do a lot to get that proposition passed and very low increases would do a lot toward defeating it. The state's largest carriers have so far made $25 million in political contributions to defeat Prop 45.
- The health plans competing in the Obamacare exchanges are limited to very small losses this year because of the Obamacare reinsurance program that runs through 2016. In effect, anymore underpricing the insurers put into their rates for 2015 is subsidized by the federal government. In fact, the Obama administration recently took the statutory caps off of how much they can pay the carriers to keep their bottom line whole.
The California insurance commissioner has said that consumers saw individual health insurance rate increases of 22% to 88% to get into Obamacare in the first place.
There is a highly contentious November ballot initiative facing the health plans they absolutely do not want to see passed, that would put the government in charge of their rate setting in future years, giving the carriers every incentive to low-ball the 2015 rates so voters don't have any more incentive to vote for it.
And, to the extent the carriers low-ball the rates, taxpayers will pay for every dime of it given that their losses are capped by the federal government.
Does the average 4% rate increase mean Obamacare is a big success in California?
For 2015 it does.
Let's see how this all goes when the training wheels come off after the federal Obamacare reinsurance program goes away at the end of 2016 and this November's Prop 45 is behind us.
Lawyers challenging health subsidies seek quick Supreme Court ruling
Lawyers challenging President Obama's healthcare law filed a quick appeal with the Supreme Court on Thursday, urging justices to take up the issue this fall and throw out insurance subsidies for nearly 5 million Americans.
"The monumental significance of this legal issue requires the court's immediate, urgent attention," they said in a filing. "The longer the lawless IRS rule is in effect, the greater the upheaval when it is ultimately vacated."
Last week, two federal appeals courts handed down conflicting rulings on whether the Obama administration may pay subsidies to low-and middle-income Americans who buy insurance on the federal "exchange" created under the Affordable Care Act.
In one ruling from the District of Columbia, an appeals court panel said these subsidies are illegal in the 36 states that rely on an exchange established by federal authorities. The judges pointed to a part of the law that says tax subsidies may be paid for insurance purchased on an exchange "established by the state."
But in a second ruling, an appeals court in Virginia rejected this challenge and decided Congress intended to offer subsidies nationwide regardless of whether consumers use a state or federal exchange.
Under the court's rules, lawyers who lose in an appeals court have 90 days to seek a review in the Supreme Court. And normally, lawyers take the full time. But in this instance, the opponents of the Affordable Care Act want the court's conservative justices to have a chance to take up the new healthcare case in a few months so they can rule by next spring.
The Obama administration has the opposite strategy on timing. The Justice Department said it planned to ask the full appeals court in the District of Columbia to reconsider last week's ruling by a three-judge panel. If so, that could delay a final ruling from the appeals court until next year and push off a Supreme Court decision to 2016.
Why Crucial Vaccines Are Sometimes Unavailable
When cases of a potentially fatal strain of meningitis began cropping up at Princeton last year, university officials trying to stop its spread could recommend little beyond precautions like frequent handwashing and not sharing beverage containers.
Although a vaccine against the rare bacteria that was causing the illness on campus existed in much of the developed world, it was not available in the United States. Novartis, its Swiss-based manufacturer, had not applied here for licensure of the vaccine, called Bexsero, because it seemed unlikely to be used enough in the United States to offset the cost of entering the market.
In all, it took nine months after the first case was detected in March 2013 before Princeton students could be immunized and nearly a year before they had completed the two-shot course, and that happened only after extraordinary interventions from the Centers for Disease Control and the Food and Drug Administration to allow the vaccine into the country.
By the end of the outbreak, seven more students had contracted the disease on the Princeton campus, and a student at another university died after contact with Princeton students. In a second outbreak involving four students at the University of California, Santa Barbara, a lacrosse player had to have his feet amputated.
The episode highlights a drug approval process in the United States that experts say does not always take into account public health needs. Regulators typically do not seek out new treatments, but wait for pharmaceutical companies to apply for approval of new products. Drugmakers weigh their estimates of sales potential against the high costs of application. And that calculation is often more fraught in the United States than in other countries, in part because American regulators are historically loath to grant approval based solely on foreign trials, so they require expensive new studies.
“Remarkable, unprecedented action was needed because Novartis had decided there wasn’t enough of a market for it here,” said Jason Schwartz, a fellow at the Princeton University Center for Human Values and an expert in vaccine policy. He added that it did not make sense for Novartis to spend millions of dollars to license a vaccine that would most likely be used only in scattershot outbreaks in the United States.
Maine could be in danger of losing Affordable Care Act subsidies
by Joe Lawler
Maine is one of 36 states where residents could lose subsidies to purchase health insurance through the Affordable Care Act if a ruling by a Washington, D.C. appeals court panel last week is upheld.
The three-judge panel ruled that because of the way the federal law is worded, the insurance subsidies apply to only state-run marketplaces. Maine is among the states that allowed the federal government to operate its marketplace through healthcare.gov, where families and individuals can shop for health plans and apply for subsidies to help pay for them. Fourteen states chose to run their own marketplaces.
Some states that could be affected by the ruling are now considering either creating state-run marketplaces or taking advantage of an administrative workaround to avoid losing the subsidies, according to news reports. Whether Maine will join those efforts isn’t clear – Gov. Paul LePage’s administration is taking a “wait-and-see” approach.
Some experts say the case could ultimately be appealed to the U.S. Supreme Court, others doubt the court would take the case. Other courts have ruled that the subsidies apply to both federal- and state-run marketplaces.
The rulings have no immediate effect – the Obama administration announced last week that all subsidies would remain in place for now.
What action Maine will take may depend on the outcome of the November gubernatorial election between LePage, Democratic U.S. Rep. Mike Michaud and independent Eliot Cutler. In the meantime, an advisory board formed by the Legislature to monitor the health insurance marketplace will examine the issue, said Mitchell Stein, a Cumberland health policy consultant who sits on the board.
The subsidies are key to making the marketplace insurance plans affordable for low- to middle-income families. They are available on a sliding scale for families that earn from 100 percent to 400 percent of the federal poverty level, or up to about $90,000 for a family of four. Without the subsidies, premiums would increase by an average of 78 percent for Mainers who buy through the marketplace.
Stein said it’s unlikely that the Washington appeals court ruling will be upheld. Common readings of the law show it intended for the subsidies to be available everywhere, he said, and it contradicts three other court rulings.
If Maine signed a contract with the federal government saying the state had its own marketplace but would use healthcare.gov for sign-ups and renewals, an administrative workaround, the subsidies would remain, Stein said.
How much, Doc? New laws aim to help Maine consumers understand medical bills - Maine news, sports, obituaries, weather - Bangor Daily News
by Jackie Farwell
Sashie Misner of Harrison took her 16-year-old son to the local hospital last fall for an inflamed appendix. With no health insurance, she knew she’d get hit with a bill. She asked what their options were and how much to expect.
Her son was in stable condition, so Misner inquired about having him discharged and arranging for a less expensive outpatient visit.
“They couldn’t give me any information at all,” she said.
As she waited for answers, the costs piled up: the hospital room, acetaminophen for her son’s pain, water to keep him hydrated. As he was wheeled into surgery that evening for an appendectomy, a nurse gave her an estimate of $12,000, she said.
Her son spent just shy of a day at the hospital.
“For about 23 hours, the bill was over $19,000,” Misner said.
Months later, Misner’s still negotiating with Bridgton Hospital.
David Frum, CEO of Bridgton and Rumford Hospitals, said as a member of the Central Maine Medical system, the facility uses centralized billing.
“Central Maine Medical Family makes every effort to provide clear and accurate pricing for services provided within our organization,” he said in a statement. “We welcome feedback that will help us continually improve and deliver the best possible experience for our patients and their families.”
The two acetaminophen pills cost $90, Misner said. The hospital charged $622 for hydration packets, which Misner learned medical supply distributors sell for $45, she said.
So far, the hospital has offered to shave $367 off her bill, she said.
“It’s really just a joke reducing it that much,” Misner said.
While the surgery may have been unavoidable, Misner says the lack of transparency about her options and the potential costs kept her in the dark.
The legacy of Medicaid, Medicare: Dignity and security for vulnerable families
by Christie Hager
The legacy of Medicaid, Medicare: Dignity and security for vulnerable families
In 1965, almost half of America’s seniors had no health insurance. For the men and women who survived World War I, World War II and the Great Depression, retirement often meant insecurity and hopelessness. Our nation’s seniors reached their most medically vulnerable years with few, and sometimes no health care options.
That’s why, after decades of failed attempts to right this wrong, the establishment of Medicare and Medicaid wasn’t just health care reform, it was a turning point in our nation’s history.
When he signed that legislation 49 years ago this week, President Lyndon Johnson spoke for the nation, saying, “No longer will older Americans be denied the healing miracle of modern medicine. No longer will illness crush and destroy the savings that they have so carefully put away over a lifetime so that they might enjoy dignity in their later years.”
After a lifetime of contributing so much to our nation, our seniors deserve to be able to live out their years with the dignity, security and the peace of mind that comes with enrollment in Medicare. We can do no less for the millions of vulnerable families, children, seniors and individuals living with disabilities than provide access to quality health care through Medicaid, as well.
Medicare and Medicaid are arguably our country’s single most important anti-poverty initiatives. As we celebrate their 49th anniversary, 52 million people are covered by Medicare and more than 60 million people by Medicaid.
More than ever, we are committed to making health coverage more accessible and affordable for all Americans, while continuing to improve the quality of care. We are making significant progress on that commitment and seeing incredible results.
In fact, earlier this week, the Department of Health and Human Services reported that Medicare is considerably stronger than it was four years ago when President Barack Obama signed the Affordable Care Act. Medicare is more solvent. It’s more cost effective. And it’s delivering high-quality care for our parents, grandparents, aunts and uncles.
Just a few years ago, the Medicare Trust Fund was projected to run out of money by 2017. Thanks in part to the Affordable Care Act, we’ve extended the life of the fund through 2030. Medicare spending per beneficiary is growing slower than the growth in the economy, while the savings for seniors in Maine have been significant. Maine’s seniors have saved $34,937,539 on prescription drugs since 2010 and $784 per beneficiary.
For beneficiaries, that means the trust fund and their benefits are more secure. For taxpayers, a strong trust fund means it will be there in the future for new seniors.
President Johnson once said, “There are no problems we cannot solve together, and very few that we can solve by ourselves.”
Forty-nine years ago, we came together to declare that we, as a nation, owed our parents, grandparents, children and our most vulnerable neighbors better than health uncertainty and insecurity. Our work to keep Medicare and Medicaid strong for all future generations is not over, but we remain committed to that sacred promise.
Working together, we can ensure that all Americans have the medical care they need to live with the security and dignity they deserve.
Christie L. Hager is New England regional director of the U.S. Department of Health and Human Services.
Improve health care by building on Medicare’s success
By Erica Heiman, M.D.
The Sacramento Bee, July 31, 2014
Lately, I have been diagnosing a lot of high blood pressure and diabetes. Patients who have never received medical care are now pouring into the county-funded Sacramento Primary Care Clinic, which provides care to low-income and other underserved patients.
The Affordable Care Act has expanded access to 8 million more Americans. Although Sacramento County has always tried to ensure high-quality care to indigent patients, Obamacare has opened our doors even wider.
Often, these new patients are unaware they have a condition that requires treatment because it has never caused them any trouble. But these conditions, if untreated, lead to increased risk of heart attack, stroke and other serious complications.
In short, it’s important for everyone to have a doctor. If hypertension and high cholesterol are detected early and treated, the risks down the road are dramatically reduced. That’s why I love primary care; it may be difficult to see the benefits from day to day, but in the long run, they are vast.
Medicare entered its 50th year on Wednesday. Signed into law by Lyndon B. Johnson in 1965, its goal was to alleviate “the threat of financial doom” faced by aging Americans and their families. Since the 1960s, Medicare has steadily expanded, currently providing coverage to more than 50 million elderly and disabled Americans. Medicare is far from perfect – but it has succeeded in reducing poverty among its beneficiaries and in reducing health disparities.
Opponents often assert that Medicare is wasteful and should be cut. Aside from the political infeasibility of this, given how popular it is, it’s actually inaccurate: Medicare’s operational costs are estimated at about 2 percent, far below that of most private insurance companies. According to recent studies, Medicare’s growth rate is actually lower than projected and lower than cost increases in the private sector.
Proposed changes to Medicare have recently focused on granting vouchers for Medicare-like insurance plans run by the private sector. These plans receive lower approval ratings from their beneficiaries than traditional Medicare. Other proposals would increase the age of eligibility for Medicare, which may save the federal government money in the short term, but would result in higher costs to employers, individuals and Medicaid. In the longer term, this would be much more likely to look nice on a written budget projection than to provide meaningful benefit to the American people.
To rein in skyrocketing costs in health care, the answer isn’t cutting Medicare. It’s expanding and reforming it to create an improved “Medicare for All.”
Eliminating private insurance companies would eliminate their high overhead costs and the hefty salaries their CEOs earn. It would allow more bargaining on pharmaceutical prices so patients would have more affordable choices. Health care delivery would still be done by private-sector hospitals and clinics, and the number of options would likely expand for the average American, as current insurance plans restrict to “in-plan providers” who can be difficult to find and hard to schedule with.
http://www.pnhp.org/print/news/2014/july/improve-health-care-by-building-on-medicare’s-success
The Sacramento Bee, July 31, 2014
Lately, I have been diagnosing a lot of high blood pressure and diabetes. Patients who have never received medical care are now pouring into the county-funded Sacramento Primary Care Clinic, which provides care to low-income and other underserved patients.
The Affordable Care Act has expanded access to 8 million more Americans. Although Sacramento County has always tried to ensure high-quality care to indigent patients, Obamacare has opened our doors even wider.
Often, these new patients are unaware they have a condition that requires treatment because it has never caused them any trouble. But these conditions, if untreated, lead to increased risk of heart attack, stroke and other serious complications.
In short, it’s important for everyone to have a doctor. If hypertension and high cholesterol are detected early and treated, the risks down the road are dramatically reduced. That’s why I love primary care; it may be difficult to see the benefits from day to day, but in the long run, they are vast.
Medicare entered its 50th year on Wednesday. Signed into law by Lyndon B. Johnson in 1965, its goal was to alleviate “the threat of financial doom” faced by aging Americans and their families. Since the 1960s, Medicare has steadily expanded, currently providing coverage to more than 50 million elderly and disabled Americans. Medicare is far from perfect – but it has succeeded in reducing poverty among its beneficiaries and in reducing health disparities.
Opponents often assert that Medicare is wasteful and should be cut. Aside from the political infeasibility of this, given how popular it is, it’s actually inaccurate: Medicare’s operational costs are estimated at about 2 percent, far below that of most private insurance companies. According to recent studies, Medicare’s growth rate is actually lower than projected and lower than cost increases in the private sector.
Proposed changes to Medicare have recently focused on granting vouchers for Medicare-like insurance plans run by the private sector. These plans receive lower approval ratings from their beneficiaries than traditional Medicare. Other proposals would increase the age of eligibility for Medicare, which may save the federal government money in the short term, but would result in higher costs to employers, individuals and Medicaid. In the longer term, this would be much more likely to look nice on a written budget projection than to provide meaningful benefit to the American people.
To rein in skyrocketing costs in health care, the answer isn’t cutting Medicare. It’s expanding and reforming it to create an improved “Medicare for All.”
Eliminating private insurance companies would eliminate their high overhead costs and the hefty salaries their CEOs earn. It would allow more bargaining on pharmaceutical prices so patients would have more affordable choices. Health care delivery would still be done by private-sector hospitals and clinics, and the number of options would likely expand for the average American, as current insurance plans restrict to “in-plan providers” who can be difficult to find and hard to schedule with.
http://www.pnhp.org/print/news/2014/july/improve-health-care-by-building-on-medicare’s-success
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