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What Does Healthcare Really Cost?

Posted by Laura McMullen on Fri, Jun 10, 2016

The Affordable Care Act primarily addressed the cost and availability of health insurance. What about the cost of healthcare? An Unprecedented Look at Medical Costs Nationwide talks about The Health Care Pricing Project, which is looking at exactly that.

Researchers from Yale University, Carnegie Mellon University, and the London School of Economics examined $682 billion of healthcare bills for 88 million people from Aetna, Humana, and UnitedHealth. The study was funded by The Commonwealth Fund, National Institute for Health Care Management Foundation, and Economic and Social Research Council.

Here are some highlights from their first paper, The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured:

  • “If you happen to live in an area with only one hospital you are going to pay more.”
  • “After decades of mergers, nearly a third of US markets have monopolies, or are close to having monopolies.”
  • Variation in provider price drives spending differences across Hospital Referral Regions for employer-sponsored insurance. Variation in quantity of care provided drives spending differences in Medicare.
  • Prices vary widely across the nation and significantly even within Hospital Referral Regions.

How does the variation in prices of health care services and it's influence on spending levels across the nation impact your organization?

 

Tags: health insurance, Healthcare, ACA, insurance companies, medicare, medical insurance

High Hospital Costs Encourage New Entrants To Market

Posted by Laura McMullen on Thu, Mar 10, 2016

Hospitals are the cornerstone of our healthcare system. The Centers for Disease Control and Prevention’s National Center for Health Statistics reports there were 35.1 million discharges in 2010 with an average length of stay of 4.8 days, based on the National Hospital Discharge Survey. The 2014 National Health Interview Survey showed that just 7.3% of Americans had an overnight hospital stay. Even though most people don’t need to go to the hospital regularly, hospital costs are what we’re insuring against when we buy health insurance.

According to Kaiser State Health Facts, the adjusted average hospital expenses per inpatient day in 2014 were:dollar.png

  • $2,346 for non-profit hospitals
  • $1,974 for state/local government hospitals
  • $1,798 for for-profit hospitals

So for an average hospital stay at a non-profit community hospital, the cost would be approximately $11,250 or 21% of the median household income of $53,657. Fortunately, most people won’t need to go to the hospital at all.

The American Hospital Association reports there are just 5,627 hospitals in the US. While all accept Medicare, NetMinder shows that 85% are in-network for the broadest national commercial health insurance networks. This means that roughly two-thirds of the US population is a potential customer for 3,800 hospitals.

Hospital Alternatives

With a limited footprint, high demand for services, and third-party payment mechanisms, it’s no surprise that substitutes and complements are entering the marketplace.

  • Ambulatory surgery centers. There are approximately 5,000 ambulatory surgery centers in the US. According to the Ambulatory Surgery Center Association, its members offer “same-day surgical care, including diagnostic and preventive procedures.” Common services are cataract surgery and colonoscopies.
  • Urgent care centers. The Urgent Care Association of America estimates that there are about 7,100 urgent care centers in the US. These facilities offer “a baseline of a broad scope of both ‘primary care’ type services as well as more acute care that is beyond the typical primary care office but below the treatment of life or limb-threatening conditions.”  Patients frequently need treatment for sprains, fevers without a rash, and ear pain.

While hospitals, ambulatory surgery centers, and urgent care centers compete for patients, they also have an opportunity to deliver on the promise of the Triple Aim: applying integrated approaches to simultaneously improve care, improve population health, and reduce costs per capita. Whether your book of business includes government-sponsored plans, individual plans, or employer-sponsored plans, all customers benefit from increased access to quality care.

How well are ambulatory surgery centers represented in your network? What about urgent care centers?

Tags: medicare, American Hospital Association, ambulatory surgery centers, urgent care centers, healthcare system, healthcare providers

Pros and Cons of Health Insurer Mergers for Employers

Posted by Laura McMullen on Wed, Aug 05, 2015

mergerAetna acquires Humana. Anthem acquires Cigna. Centene acquires Health Net. Assurant Health is bought by National General. These are big moves that are creating bigger companies in an already huge $2.9 trillion industry. There’s been lots of analysis about the acquisitions, like this Modern Healthcare article from July 2015 that explains how gaining more Medicare Advantage business is the purpose of these mergers, but the perspective that I’m finding most interesting is what employers are saying.

Consolidations Are a Mixed Blessing

A Business Insurance article published after the Aetna/Humana and Centene/Health Net deals were announced described the results of an Aon Hewitt employer survey of nearly 100 employers. Jim Walker, Aon Hewitt’s global chief innovation officer for health and benefits consulting, wasn’t surprised at the results. “On the one hand, consolidation will give insurers more clout in negotiating with health care providers. On the other hand, employers are concerned that fewer and bigger health insurers will mean they have less leverage in negotiating with insurers.” Here are some of the top line results of the survey:

  • Three-quarters of the employers surveyed thought the impact would reduce options or have no effect.
  • More than half said they were considering changes to their health plan strategies.
  • More than three-quarters said the industry consolidation would not affect their short-term decision-making about retiree options.

Another Business Insurance article published a week later, after the Anthem/Cigna deal was announced to result in the nation’s biggest health insurer, offered similar perspective. Here are a few quotes:

“From the employer side, the deal can be ‘good news,’ if the much larger Anthem can ‘cut better deals with medical providers,’ concurs Dave Osterndorf, a partner and chief health care actuary at Health Exchange Resources in Mequon, Wisconsin.”

“Adding Cigna's book of business ‘may rebalance provider negotiation leverage in Anthem's favor after years of provider consolidation that has gone pretty much under the radar screen,’ says Brian Marcotte, president of the National Business Group on Health in Washington. “Large employers will have concerns about the merger between Anthem and Cigna because employers will be left with only three major insurers who can support large multi-state employers on a nationwide basis.”

PricewaterhouseCoopers predicts medical cost trend to increase 6.5% in 2016, with a projection of 4.5% after benefit design changes, in their Behind the Numbers 2016 report. The trend is increasing more slowly than in years past although healthcare costs continue to outpace inflation so employers are understandably still interested in reducing the impact of healthcare costs in their bottom lines.

Balancing Cost and Choice

I’ve written that headline a million times in my healthcare career. Most of the time, I’ve been describing benefit options to employees but it applies to the choice facing employers as well. They want to offer health insurance for a variety of reasons – the other companies in their industry offer it, they’ve always offered it, healthy employees are more productive than sick employees, etc. As the costs continue to rise, employers hold the line on their costs and shift more to the employees through higher deductibles and more premium cost-sharing.

The mergers and acquisitions we’re seeing now are bringing that choice to the forefront again for employers. Which way are your customers leaning?

Tags: health insurance, healthcare reform, healthcare benefits, health insurers, medicare, medical insurance, health insurance mergers

Guest Blog: How Will Affordable Care Act Affect Your Tax Bill?

Posted by Louis Balbirer on Wed, Jan 29, 2014

David Merzel of Kaufman Rossin CPAs

Louis Balbirer of Kaufman Rossin writes a guest blog for NetMinder about tax changes related to healthcare reform.

Several tax changes are being rolled out as a result of the Patient Protection and Affordable Care Act (ACA). Here are a few that may affect you or your business this tax season.

Refundable Tax Credits


  • Health Care Tax Credit (aka Premium Assistance Credit)
    – Individuals or families with less than 400% of the Federal Poverty Level can qualify for the health care tax credit for the 2014 tax year, which can be applied in advance toward health insurance premium payments to the exchange. 
  • Small Business Health Care Tax Credit – Small businesses that offer health insurance to employees and cover 50 percent or more of the insurance premiums might qualify for a tax credit. Employers can complete Form 8941 to find out if they are eligible.

Additional Taxes Under ACA for 2013 Tax Year

  • Net Investment Income Tax – A new 3.8% tax will be assessed on net investment income for individuals with modified adjusted gross income above $200,000 (above $250,000 for married filing jointly and above $125,000 for married filing separately). Net investment income includes interest, dividends, rents, royalties, capital gains and other passive income.
  • Additional Medicare Tax – Individuals with wages or self-employed earnings that exceed $200,000 will be subject to an additional 0.9 % Medicare tax. For those who are married filing jointly, the threshold is $250,000 and it is $125,000 for those who are married filing separately.

Contact your accounting professional to learn how these ACA-related tax changes will affect your tax bill.

Louis Balbirer, CPA, is a director of tax services with Kaufman Rossin, one of the top CPA firms in the U.S. He has 20 years of experience providing tax and accounting services to clients and can be reached at lbalbirer@kaufmanrossin.com.

Tags: Affordable Care Act, healthcare reform, ACA, employee benefits, medicare, health care tax credit, premium assistance credit

Should Medicare Patients Buy Vision Insurance?

Posted by Aaron Groffman on Fri, Apr 26, 2013

Many Medicare patients don't have routine vision coverageNavigating Medicare can be tricky, especially when dealing with vision expenses. While most major procedures (e.g., cataract surgery, eye diseases) are covered, routine exams and eyeglasses are not, which leaves many older Americans with a coverage gap.

As a recent Wall Street Journal article states, there are some exceptions to the rule. For example, diabetes patients and those who are at high risk for glaucoma are entitled to an annual vision exam. Also, Medicare will pay for glasses and contact lenses for post-cataract surgery patients who have had a conventional “intraocular” lens inserted during the operation. And Medicare Advantage planholders, who have insurance plans that are run by private insurers, are typically covered for basic exams and prescription eyewear, but their vision provider network may be limited.

While those who don’t meet the criteria for routine vision coverage can save money by shopping for glasses or contacts through discount retailers, such as Wal-Mart or Costco, or through online retailers, such as Coastal.com, it seems the gaps in Medicare coverage may present an opportunity for vision insurers and brokers.  I would love to hear from readers – especially those in the vision industry. Do you think it makes sense for Medicare beneficiaries to seek voluntary supplemental vision insurance to cover gaps? 

Tags: Ancillary benefits, Vision insurance, medicare

 

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