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Tag: Healthcare providers

Breaking the Curve of Health Care Inflation

The evidence is building: As we move toward making the Affordable Care Act a reality, Medicare spending is slowing, and even in the private sector, for the first time in more than a decade, insurers are focusing on reining in health care costs.

The passage of reform legislation two years ago prompted a change in how both health care providers and payers think about care. The ACA told insurers that they would no longer be able to shun the sick by refusing to cover those suffering from pre-existing conditions. They also won’t be allowed to cap how much they will pay out to an desperately ill patient over the course of a year –or a lifetime. Perhaps most importantly, going forward, insurance companies selling policies to individuals and small companies will have to reimburse for all of the “essential benefits” outlined in the ACA–benefits that are not now covered by most policies. This means that, if they hope to stay in business, they will have to find a way to ”manage” the cost of care–but they won’t be able to do it by denying needed care.

As for providers, they, too, will be under pressure. A growing number will no longer be paid “fee for service” that rewards them for “volume”–i.e. “doing more.” Bonuses will depend on better outcomes, and keeping patients out of the hospital–which means doing a better job of managing chronic illnesses. Meanwhile, Medicare will be shaving 1% a year from annual increases in payments to hospitals. If medical centers want to stay in the black, they, too, will have to provide greater “value” for health care dollars– better outcomes at a lower cost.

This summer the Supreme Court’s decision sealed the deal. The ACA is constitutional. Health care reform is here to stay.

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The Fallen Souffle Economy


It is increasingly clear that the United States’ economic troubles are far from over.

The stock market plunge that began in earnest last week reflects the market’s belief that we’re not going to recover fully from the recession that began in 2007. As a Wall Street Journal commentator said mid-Monday’s plunge:  “The market is pricing in a double dip recession”. In reality, the 2007 recession (caused initially by $150 a barrel oil) never really ended.

Past remedies for recession basically involved nearly free money and Keynesian pump priming to stimulate demand with either borrowed or freshly printed money. The most recent (bipartisan) stimulus effort, nearly a trillion worth of extended Bush tax cuts, unemployment extensions, payroll tax cuts, etc. which Congress and the Obama Administration negotiated in December, seems to have disappeared into thin air, producing a whopping 0.8% economic growth in the first half of 2011 and a July unemployment rate of 9.2%. This Economist analysis argues that the political system has exhausted its remedies for our economic problems.

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