By George W. Chapman
It’s hard to report on the fate of this bill on a monthly basis because things are so fluid in Washington lately. But as of mid-August, the ACA, with all its pros and cons, is still the law of the land. The critical feature of the ACA right now are the two subsidies available to people with incomes between 100 percent and 400 percent of federal poverty guidelines. The first subsidy is a tax credit toward the premium of a bronze, silver or platinum plan. The second subsidy, CSR or “cost- sharing reduction,” is for out-of-pocket expenses like deductible and copays. The CSR subsidy applies only to silver plans. Of the 7 million people who buy on the exchanges, 58 percent receive the CSR. The CSRs will cost an estimated $7 billion this year. Congress filed a lawsuit against Obama, House v Price, claiming there is no authority for the expenditure of this money as all funds must be approved and appropriated by Congress. The court ruled in favor of Congress but the ruling was stayed by the Court of Appeals, so the whole thing is in limbo. If the CSR is ultimately revoked, it is estimated insurers would be forced to raise their rates on the exchanges by 19 percent. President Trump has threatened to end the CSRs which would virtually kill the exchanges.
You can get the price, or at least an idea of what something will cost, on just about anything in this world. Not so much in healthcare. Patient advocates believe price transparency makes sense as consumers are faced with rising out-of-pocket costs (deductibles and copays) and healthcare reformers believe price transparency will create competition and lower costs. But it is not that simple. Shopping around for prices can be a fool’s errand because healthcare prices or charges have little to no relationship to either the cost of the procedure or what your insurance eventually pays the provider. Hospitals are reluctant to quote a price because they don’t really tell the consumer anything. One hospital may quote you a price/charge of $20,000 and another hospital $15,000. But the odds are both will be reimbursed virtually the same by your insurance company. The explanation of benefits (EOB) you receive after a hospitalization from your insurer tells the story. The charges total $20,000, but your insurer paid only $5,000. Your deductible and copays are based then on the $5,000 reimbursement , not the $20,000 price/charge. Also consider that the vast majority of consumers will be hospitalized where their physician works or refers them. While hospital charges are meaningless and indefensible, it makes little sense for consumers to shop around for care based on “prices.” Hospitals are reluctant to lower their prices/charges out of fear consumers will think the care isn’t as good as a hospital with higher charges.
Single Payer System
California, New York, Colorado and Vermont have all introduced legislation for a single payer or “Medicare for all” plan. Concerns over costs have killed the bills. Ironically, the per capita cost of care in every country with a single payer system is much lower than in the U.S and quality is not compromised. An argument for a single payer system by Cornell professor Robert Frank appeared in New York Times in July. He argues that costs are lower under single payer systems. Administrative costs for single payer systems, (Medicare is around 2 percent), are far less than for private payers which are around 10-15 percent. Single payer systems don’t need to advertise which accounts for a lot of the administrative costs. As a matter of fact, in order to attract private insurers into the Medicare Advantage market, the federal government had to subsidize their high administrative costs. Single payer systems have far greater negotiating power with providers and suppliers. Medicare has already set physician and hospital payments so further efforts to save money there would be getting blood from a stone. The biggest savings would be from drug and device manufacturers which heretofore have been left unscathed thanks to intense lobbying. Single payer systems cover everyone, under one huge risk pool, young and old, healthy and unhealthy. No exceptions. Our several government risk pools — for example: Medicare, Medicaid, VA — cover disproportionate amounts of people who need medical attention. Our population is further divided into literally tens of thousands of smaller risk pools as most businesses with over 200 employees are self-insured. In a single payer system, all must participate and, yes, all will pay taxes. But our entire system would collapse if tax payments were purely voluntary.
US Surgeon General
Physician Jerome Adams has been confirmed as our 20th surgeon general. Adams was an assistant professor of anesthesiology at Indiana University School of Medicine before becoming Indiana’s commissioner of health. One of his first priorities will be tackling the opioid epidemic. The position of surgeon general began in 1871 to head the Marine hospital service.
These highly effective and addictive pain killers include OxyContin, Percocet, Vicodin and fentanyl. 62,000 people died last year of an opioid overdose. Nearly half of the opioid deaths involved prescriptions. The epidemic is worsening every year. In 2010, 16,000 people overdosed. The national average is 10 overdoses per 100,000. It’s 30 per 100,000 in New Hampshire and 40 per 100,000 in West Virginia. Opioids are the most prescribed drug in the US with about 289 million scripts a year. As the epidemic grew, heroin became more prevalent as it was cheaper, easier to get and didn’t require a script. In the 1980s, many medical experts thought opioids were not addictive due in part to a letter published in a popular medical journal in 1980. “Addiction Rare in Patients Treated with Narcotics” may have unwittingly been the genesis of the epidemic. It is estimated that over 1 million people have been eliminated from the job market because of their addictions. Big pharma has done well. Purdue pharma has made over $3 billion on their OxyContin. They have paid over $635 million in fines for misleading physicians and the public. Substance abuse treatment costs us about $600 billion a year.
George W. Chapman is a healthcare business consultant who works exclusively with physicians, hospitals and healthcare organizations. He operates GW Chapman Consulting based in Syracuse. Email him at email@example.com.