Monday, December 22, 2014

American Health Care and the Fortress Mentality

“For decades America’s health care debate has pitted Left against Right, federal against state, public against private. All sides, however, have shared a similar, inhibiting mindset—an excessive aversion to risk and deference to medical insiders—instead of stressing the ideal goal of better health care for more people at lower cost on a continuous basis.

A new study published by the Mercatus Center at George Mason University shows how this “Fortress”-like mentality has limited innovation in health care, constraining medical advances and raising costs. Shifting to a “Frontier” approach—one that tolerates risk and opens the field to other participants and disciplines—would bring to health care the kinds of creativity seen in many other fields, such as information technology.

The study illustrates these ideas in part through a set of unconventional characters, including a Hollywood actress who figured out how to stop Nazis from jamming American torpedo controls, a small-town doctor who pioneered stem-cell therapy, an injured carpenter and a puppet-maker who saw $40,000 prosthetic hands and produced a workable alternative that costs less than $50, a dying rodeo enthusiast who successfully battled the Food and Drug Administration (FDA), and—on the other side of the coin—a well-meaning educator who helped destroy African-American medical education.” - Fortress and Frontier in American Health Care, Robert Grabayes, George Mason University

Link to the summary:

Link to the entire paper:





Wednesday, December 3, 2014

Regarding Proponents of ACA and the Bumper Sticker Sized Slogan: “Bending the Cost Curve”. Maybe Not so Much.

“The American middle class has absorbed a steep increase in the cost of health care and other necessities as incomes have stagnated over the past half decade, a squeeze that has forced families to cut back spending on everything from clothing to restaurants.

Health-care spending by middle-income Americans rose 24% between 2007 and 2013, driven by an even larger rise in the cost of buying health insurance, according to a Wall Street Journal analysis of detailed consumer-spending data from the Bureau of Labor Statistics.

That hit has been accompanied by increases in spending on other necessities, including food eaten at home, rent and education, as well as the soaring cost of staying connected digitally via cellphones and home Internet service.

With income growth sluggish, discretionary spending on things like clothing and movies, live shows and amusement parks has given way.” - Basic Costs Squeeze Families, Wall Street Journal, 12/01/2014

Link to the entire story appears below:

Tuesday, December 2, 2014

Why Isn’t Big Business Complaining About ACA? Answer: Self-Insurance

"Have you ever wondered why the largest companies almost never criticize the Affordable Care Act? That may be because they are getting a deal that the rest of us aren’t getting.

The mandate to provide health insurance to employees kicks in for large employers on January 1st and applies to smaller companies the following year. Surprisingly, firms that are large enough to self-insure (and pay employees’ medical expenses directly) can satisfy the mandate without covering hospitalization. They can also avoid paying for mental health care, the services of specialist doctors and even emergency room visits.

In a nutshell, the largest firms can offer the skimpiest plans.

Perhaps aware of the embarrassing implications of these loopholes, the Obama administration made an election eve announcement that there would be limits on the ability of firms to exploit them going forward. On Election Day, a Treasury Department notice alerted employers that any health plans not already finalized will have to cover hospitalization and doctor services—but not other benefits that are required of small-employer plans and plans purchased by individuals.

The timing of these announcements suggests that the administration wanted absolutely no media attention for them. Who is going to pore over changes to Obamacare technicalities when exciting election results are coming in? There are two issues here that the administration doesn’t want discussed: Why does the law have a huge gaping loophole for the largest companies? And how is the Obama administration able (once again) to re-write the law without any act of Congress?

If you work for a self-insured company and have an above-average income, you probably don’t have much to worry about. Employers are going to provide higher-income employees reasonably good health insurance in the future, just as they have in the past. But if your income is below-average, you could end up with worse coverage than you had before." - Obamacare’s Gift to Big Business: The Largest Firms Can Offer the Skimpiest Health Plans, The Independent Institute, 11/25/2014

Link to the entire article appears below:



Wednesday, November 26, 2014

Narrow Networks and the 2015 Version of ACA

"More directly, Obamacare is eliminating access to many of the best specialists and best hospitals for middle-income Americans. To meet the law's requirements, major insurers all across the country are declining to participate in the exchanges, or only offering plans that exclude many of America's best doctors and hospitals. McKinsey reported 68% of Obamacare insurance options only cover narrow or very narrow provider networks, double that of one year ago." -If you like choice in health care, look to Republicans, Scott Atlas, CNN

Atlas is correct, the vast majority of the choices on the ACA exchange are that of narrow networks regarding the 2015 offerings (effective 01/01/2015).

Last year, James and Jane Goodfellow would have had a tough time discerning what was a broad or narrow network of providers as insurers used their pet names regarding what was broad or narrow. This go around, after the insurers pet name appears, regarding PPO's (preferred provider organizations), there is inserted the term "board network" or "limited network" as a clarification for consumers.

However, once you get outside the PPO, the HMO (health maintenance organization) offerings do not explain or add a clarification what an HMO is and how it functions. One might say the HMO was/is the original narrow network (only those inside the HMO are one’s providers).

CMS and 1600 Pennsylvania Avenue are stating that one can keep one’s premium level (current ACA policyholders) or with a slight increase by switching insurers i.e. buy one of the new offerings. They fail to point out the particulars of their claim of level or slightly increased price. By switching to a more narrow network or from old insurer narrow network to new insurer narrow network, one might keep premium increases modest. However a secondary and as important phenomena is at work regarding the claim of modest price increase by switching insurers: anti-selection. How so?

Consider 10/01/2013 and the initial availability of ACA with effective date 01/01/2014. Crowded at the starting line, like a group of marathon runners awaiting the starting pistol, were hundreds of thousands of chronically ill people. This group, the existence thereof caused by a variety of reasons, wanted to obtain coverage immediately and so they did. Hence the initial group of insurers that appeared on the ACA exchange for the 2014 offering ended up with large numbers of chronically ill insured’s. Stated alternatively, rather than attracting a wide variety of homogeneous exposure units spread over a wide geographic area they attracted an inordinate number of chronically ill exposure units.

The initial group of insurers offering ACA products, attracting the chronically ill, suffered losses that that drove up loss ratios and hence premium increases were called for to offset losses.

Now comes the 2015 offerings and a new set of insurers appear. The new insurers have the knowledge that anti-selection has already occurred regarding the initial insurers. They also know that the chronically ill are less apt to change insurers for a lower price but healthy insured’s, face with a price increase yet having made no claims are very apt to change insurers based on price. The new insurers offer a slightly lower premium rate to attract the healthy away from the initial insurers. Hence the new insurers attract the healthy exposure units while the initial insurers, in the main, lose the healthy but retain the chronic.

The entire process ends with the initial insurer faced with few new entrants into their plan due to spiraling price increases and an ever increasing exodus of healthy insured’s must close the book of business regarding the offered plan and transition the remaining insured’s to a new plan or merely exit ACA.

Friday, November 21, 2014

ACA/Obamacare: Spending Figures Released on the Medicaid Component of Obamacare

‘WASHINGTON (Reuters) - One part of the Affordable Care Act is going according to plan, with U.S. states receiving and spending more money on the Medicaid health insurance program, a report released by the National Association of State Budget Officers on Thursday showed.’

‘"The large increase in federal funds to states in fiscal 2014 was almost solely due to additional Medicaid dollars, mainly resulting from the expansion of Medicaid in a majority of states under the Affordable Care Act," the association found. "While federal Medicaid funds to states increased $41.8 billion in fiscal 2014, all other federal funds to states are estimated to have declined $3.4 billion."‘

‘Medicaid spending rose the most of all states' budget areas, increasing 11.3 percent in fiscal 2014, but the federal government shouldered most of the burden. Federal funding for Medicaid increased 17.8 percent, and state dollars directed to the program only grew 2.7 percent, according to NASBO.’ - U.S. states get more, spend more on Medicaid under Obamacare: report, 11/20/2014, yahoo

Link to the entire article appears below: