Healthcare in a Minute – May 2017

By George W. Chapman

Trumpcare —“Take 2”

There were 60 attempts to repeal the Affordable Care Act (ObamaCare) while its namesake was president. The first attempt to repeal and replace the politically charged ACA under President Trump has failed. The Freedom Caucus of the Republican Party refused to cooperate with the president and replace the ACA with the American Health Care Act — call it TrumpCare — because they felt there were too many components of ObamaCare leftover in TrumpCare. So, a second attempt (take 2) to repeal ObamaCare and roll out TrumpCare is forthcoming. If the Freedom Caucus gets its way, states would be allowed to opt out of the ACA’s most important features. The first being requiring insurers to cover 10 essential benefits including: drugs, mental health, hospitalization and maternity care. The second being the prohibition of charging higher premiums to those at higher risk of getting sick. If insurers can charge the sick and injured more, then the guarantee of covering pre-existing conditions (which Trump favors) is moot because the sick and injured won’t be able to afford the probably exorbitant premiums. Moderate Republicans will most likely be opposed to removing these important features of the ACA from TrumpCare: take 2.

ObamaCare 2017

Until it is repealed, the ACA remains law of the land and Americans are changing their tune about the ACA. A recent Gallop poll shows 55 percent of us approve of the ACA. That is up 13 points from survey taken before the election. A recent survey by the Kaiser Family Foundation finds 75 percent of us prefer we keep the ACA but continue to make it better. The biggest criticism of the ACA is insurers are exiting, leaving only one insurer in some markets. Congress can easily stabilize the insurance markets and draw insurers back in by continuing to subsidize the premiums and waive some of the deductibles and co-payments of those who qualify based on income. Under section 1402 of the ACA, the government is required to reimburse insurers for the cost of these subsidies. This impacts the 7 million of us who purchase insurance on the exchanges. However, last year a district court enjoined HHS from continuing to reimburse the insurers. So, fearing they will be left holding the bag, insurers naturally fled the markets. Congress can also support/fix the ACA by negotiating process for drugs. Other countries pay 40 percent less than we do for the same drugs. If Congress could lower drug prices 40 percent, that would cut premiums about 8 percent.

Psychiatrist Shortage

Two thirds of primary care physicians report having trouble arranging for psychiatric services for their patients. It often takes three to six months to get in and it is far worse in rural America vs. urban. There are about 40,000 practicing psychiatrists in the U.S. or one per 8,000 people. Fifty percent of psychiatrists are over 50. Other than revamping how they are paid, (typically 45-60 minute increments) there needs to be much better integration of “step child” psychiatric and mental health services into developing hospital systems. Twenty percent of Americans have some sort of mental health disorder.

Healthcare Spending

The office of the actuary for Medicare projects total healthcare spending in the US will average 5.6 percent growth per year between now and 2025. The total gross domestic product for the US is expected to grow at 4.4 percent a year. By 2025, healthcare will account for a staggering 20 percent of the nation’s total GDP. The projection is based on current healthcare law and does not speculate on growth should the ACA be amended or repealed and replaced altogether.

Urgent Care Facts

More and more consumers are ignoring/avoiding their primary care physician in favor of free standing urgent care centers. There are about 7,400 urgent care centers in the US and that number continues to grow. That’s up from 6,700 centers in 2015. According to their trade association, 92 percent of the centers had an average waiting time of 30 minutes or less. Twenty-seven percent of us visited an urgent care center in the last two years. The most common diagnoses were: acute upper respiratory infection, acute sinusitis, acute pharyngitis and cough/acute bronchitis. All could have been taken care of by their primary care provider. Most users of urgent care centers claim they could not get a timely appointment from their regular provider.

Daily Hospital Cost

Based on information from the 2015 American Hospital Association survey, the Kaiser Family Foundation has compiled a list of daily inpatient costs for nonprofit hospitals by state. The national daily average is $2,413. The five states with the lowest costs per day are: Alabama, $1,664; Arkansas, $1,649; Iowa, $1,481; Mississippi, $1,391; and Montana, $1,280. The five states with the highest costs are: Idaho, $3,241; Massachusetts, $2,965; Oregon, $3,397; Washington, $3,592; and Colorado, $2,922. New York is just above the national average at $2,456. The US spent $3.4 trillion on health care in 2016: $1.1 trillion or 32 percent inpatient; $638 billion or 5 percent on physician services and $348 billion on drugs.

Pomco Sold

The East Syracuse based third party administrator (pays and manages claims for self-insured employers) was sold to United Healthcare. Pomco employs approximately 400. While Pomco is not an insurance company per se, the acquisition by United further reduces competition/choice in the market.

Overall MD shortage

There have been numerous predictions of a worsening physician shortage. Recently, the Association of American Medical Colleges projected the shortage to be anywhere between 40,000 and 103,000 by 2030. Most predictions do not account for the impact of physician assistants, nurse practitioners, advanced technology and miracle drugs, telemedicine, and significantly reduced times for major operations, consumerism, etc. Physicians are not fighting the battle alone. The dire predictions are also based on past and present fee for service reimbursement which rewards pure volume of services resulting in unnecessary utilization. Demand for services tends to decrease as insurance deductibles and co-pays increase.

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 gwc@gwchapmanconsulting.com.

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