HEALTH CARE COMPACT Blog

5-16-2012
Steve O'Keefe
Health Care Costs for Family of Four Top $20,000

Health Care Costs for Family of Four Top $20,000
The esteemed actuarial firm Milliman has just released its 2012 Milliman Medical Index showing that the annual health care costs for a family of four now exceed $20,000/year for the first time ever.

The total costs for the average family of four -- $20,728 -- consists of three elements. First is the employer's cost of providing health insurance, which averages $12,144 in 2012 -- a new record. The second component is the employee's payroll deductions for health insurance, which average $5,114 in 2012 – also a record. The third component is out-of-pocket costs paid by employees, including co-pays and deductibles. That cost was $3,470 in 2012 – yet another record.

Even though employers are shifting more of the costs of health insurance to employees, employer costs are still going up. Costs to employers for employee health care have risen from an average of $10,000 in 2009 to $12,144 in 2012 -- an increase of 21%. For the same three-year period, employee deductions for health insurance have risen from $4,000 to $5,114, an increase of almost 28%. And during the same period, the amount employees contribute to their own health care through co-pays and deductibles shot up over $1,000 -- or 40%.

Assessing the situation for The Huffington Post, health care reporter Jeffrey Young notes:

Relentless increases in health care costs, which the federal government says rose to $2.6 trillion in 2011, are squeezing employers, workers, families and government budgets every year.

The irony in all this is that the rate of increase in health care costs has gone down slightly. The 2012 averages are 6.9% higher than 2011. That's the smallest rate of increase since the Milliman study began five years ago. During that time, health care costs increased on average 7.6% per year.

The Milliman report, freely available as a PDF, contains a section analyzing the impact of the Affordable Care Act on health care expenses for employers, consumers and the government, including speculation on the impact the Supreme Court decision might have on costs.


Source: "2012 Milliman Medical Index," Milliman, May 15, 2012.

Source: "Health Care Costs To Exceed A Record $20,000 Per Year For Families With Insurance, Study Says," The Huffington Post, May 15, 2012.

Image courtesy of 401K used under its Creative Commons license.

Steve O'Keefe is a freelance writer, author and book editor.

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5-15-2012
Steve O'Keefe
Drop in Private Insurance Hurting Hospitals

Drop in Private Insurance Hurting Hospitals
In a preview of what is to come when the Affordable Care Act (ACA) goes into effect, hospitals in Ohio are seeing a shift in patients from private insurance to Medicaid, and it's costing them a fortune.

In a fine piece of investigative reporting, Ben Sutherly, the healthcare reporter for the Columbus Dispatch and Dayton Daily News, looks at four Ohio hospitals and the problems they're having with patients migrating to Medicaid.

Even a 1 percent shift in revenue from more-profitable private-pay sources to Medicaid can have significant consequences for a hospital or health system. At OhioHealth, for example, a 3 percent shift away from managed-care and commercial payers to Medicaid between fiscal 2007 and fiscal 2011 cost the health system more than $50 million annually.

Most hospitals lose money on every Medicaid patient they treat. On average, Ohio hospitals are reimbursed only 82 percent of what they spend on Medicaid patients (down from 95 percent in 2004). They "overcharge" patients who have private insurance to make up for the shortfall. If the mix of patients shifts even slightly to fewer private insurance billings, revenue for a hospital system can take a beating.

In 2008, the four hospitals in Franklin County, Ohio, together spent $111 million more caring for Medicaid patients than they were reimbursed by the government. In 2009, that number was $174 million. That's an increase of 56 percent -- or nearly $63 million -- in unreimbursed care in one year.

Sutherly interviewed Ohio Hospital Association spokesperson John Palmer who provided further evidence of the shift from private insurance to Medicaid:

Between 2007 and 2010, Ohio's hospitals saw the percentage of patients covered by private insurance slip from 35.3 to 31.4 percent. During that period, the percentage of Medicaid patients seen statewide grew from 16 to 18 percent.

The impact on hospital revenues of the insurance exchanges required by the ACA is uncertain. While the number of uninsured patients will drop dramatically, many of those patients will be covered through an expansion of Medicaid. That means a much higher percentage of a hospital's patients will be treated below cost.

If employers drop health care benefits, as many experts predict, Medicaid rolls could mushroom. Someone will have to pay the shortfall between the costs of treating Medicaid patients and what hospitals are reimbursed. That could come from increasing charges on those with private insurance. That, in turn, would lead to more expensive private insurance -- and to more employers dropping coverage. A vicious circle could push millions of people into subsidized insurance plans, thus significantly reducing hospital revenues.

Thanks to Sutherly for bringing this story to our attention. The facts he gathered from one Ohio county illustrate the financial burden facing hospitals all across the United States.---

Source: "Decline in hospitals' revenue from private insurance a reason for concern," The Columbus Dispatch, May 14, 2012.

Image courtesy of KOMUnews used under its Creative Commons license.

Steve O'Keefe is a freelance writer, author and book editor.

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5-14-2012
Steve O'Keefe
Study: Physicians Worried About ACA

Physicians Worried About Affordable Care Act
A new survey of physicians shows they are extremely concerned about the effects of the Affordable Care Act (ACA) on their practices.

More than half of the 20,000 physicians surveyed for the 2012 Physician Compensation Report published by Medscape News said they believe new Affordable Care Organizations will reduce their incomes.

According to a review of the report by the National Center for Policy Analysis, nearly half of the physicians believe that new quality measures and treatment guidelines will have a negative impact on patient care. Only 25% believe patient care will improve under the new guidelines.

The changes resulting from the ACA are taking their toll on physicians, whose job satisfaction is collectively plummeting.. The report notes:

Physician frustration is growing. The 2012 survey showed far more dissatisfaction among doctors across all specialties. In 2012, just over one half of all physicians (54%) would choose medicine again as a career, far less than in the prior year (69%).

At Forbes, career reporter Susan Adams reviewed the Medscape report and suggested that "many doctors worry that their reimbursements will come down under [Affordable Care Organizations], since they will no longer directly receive fees for services." Adams concluded, "many medical professionals are nervous that their jobs will be deemed unnecessary."

In speculating about why physicians are so much less happy with their work now than just last year, both the report and Adams at Forbes suggest "declining incomes, excessive paperwork, and vast uncertainty about changes dictated by the Affordable Care Act."

Source: "Physician Compensation Report 2012," Medscape News.
Source: "Why Do So Many Doctors Regret Their Job Choice?," Forbes, April 27, 2012.
Source: "What Physicians Think about Health Reform," National Center for Policy Analysis, May 9, 2012.
Image courtesy of Yuya Tamai used under its Creative Commons license.

Steve O'Keefe is a freelance writer, author and book editor.

 

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