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During the course of 2009, an alarming trend line was broken. For the first time ever, more employers under 50 employees were not offering medical insurance to employees than those who continued to provide employer sponsored healthcare.
Unfortunately, achieving affordability is often a zero sum game and the current system often fails the weakest and most disenfranchised of its stakeholders. While the burden of spiraling healthcare costs has effected virtually every employer, the weight of cost increases has been borne disproportionately by individuals and smaller employers (1-250 employees). The opaque science of risk pooling, cost shifting and risk selection has as much to do with unacceptable increases as poor consumerism, over treatment and inefficiency. As we march toward insurance exchanges and pooled purchasing for employers in 2014, we will continue to witness a game of pass the parcel leaving smaller employers holding the bag.
Healthcare cost shifting begins at the highest levels with federal and state governments routinely cost shifting to the private sector by serially under-reimbursing specialists and hospitals for the cost of their services. Doctors and hospitals, in turn, shift cost to the private sector charging higher fees for services to make up for underfunded Medicare and Medicaid rates. Health systems have consolidated along with multi-specialty medical groups gaining critical bargaining power that results in higher contracted rate increases negotiated with insurers. Insurers, attempting to keep rising medical trends down, must exact concessions from less well leveraged providers such as community based hospitals and primary care doctors. The result is an Darwinian landscape where only the large survive.
As core medical trends hover between 7%-8%, insurer insured book of business medical trends have climbed into and remain in double digits. Larger employers remain more immune from peanut butter spread book of business trends due to their own unique claim credibility and in many instances, due to the simple act of self insurance. Lack of size and actuarial credibility leaves smaller employers and individuals to be underwritten within pools of risk — pools that continue to pass on the rising costs of care at an alarming rate. To add insult to injury, as states and the Federal government become increasingly larger medical payers (already representing over 50% of all medical spend in the US), cost shifting will only accelerate in the private sector resulting in higher medical trends impacting smaller employer pools.Continue reading…
“In the long history of humankind (and animal kind, too) those who learned to collaborate and improvise most effectively have prevailed” Charles Darwin
As the legislative reform volcano rumbles and angrily spews magma into the Washington night, nervous industry stakeholders competing for survival on this unstable island of American healthcare are still betting that the seismic activity is merely a false eruption.
Survivor contestants are using every possible means to ensure they are not voted off the island. The stakeholders are a veritable who’s who of personalities – the powerful, the wealthy, the prima donnas, the tough love advocates, the national health zealots, the well-intended academics, the bellicose politicians, the under-employed, the overweight, and the disenfranchised. It remains to be seen whether Congress, market forces or the American people will be the ultimate judge of who stays and who goes.
If the contestants cannot change in the next five years, 2015 will find them staring at a terrifying wall of regulation and governmental intervention that will be more destructive than the changes from the 2010 proposed legislation.Continue reading…
It’s high noon for private healthcare. Over the last decade, large, medium and small employers that procure and manage over $1T of private healthcare spend for an estimated 180M Americans have been engaged in an expensive game of Texas Hold ‘Em – – wagering with and against a continuum of stakeholders that all seem to possess more powerful hands. As providers consolidate, insurers retrench and the government wrestles with obligations of an uncontrolled fee for service Medicare, the costs of staying at the final table are taking its toll.
To many veteran observers, it appears that employers may be on the brink of folding their cards. As finance and HR professionals consider the table stakes and costs to remain in the game, the Affordable Care Act (ACA) has suddenly provided a potential golden opportunity to step away from a fifty year obligation without incurring onerous near term financial consequences.
As individuals and small business have continued to lapse into the ranks of the uninsured, those small and mid-sized businesses choosing to continue to offer health insurance are coming to the realization that the Affordable Care Act will not result in the moderating of double digit medical trends. In the near term, some contend costs will continue to rise by much as 25-40% before the launch of 2014’s guarantee issue health exchanges.
Larger employers are already cynical to whether reform will actually work for them or against them. Bigger firms and collectively bargained plans are beginning to understand that if small and mid-sized employers drop out of offering private healthcare, the decline of employer plans will leave them as the sole remaining source for private insurance cost shifting. As the cards are turned, the outcomes are far from certain – – and as we have come to discover, business hates uncertainty.
Christmas is the time when kids tell Santa what they want and adults pay for it. Deficits are when adults tell government what they want and their kids pay for it. ~Richard Lamm
The day after a mid-term tidal wave of anti-incumbency sentiment swept through Congress resulting in the GOP reclaiming a controlling majority in the House and closer parity in the Senate, a seemingly contrite President Obama took personal responsibility for his party’s dismal showing at the polls. In a carefully worded conciliatory message, the President shared that, “the American people have made it very clear that they want Congress to work together and focus their entire energies on fixing the economy.”
Newly minted House Majority leader, John Boehner, subsequently reconfirmed that the GOP would not rest until Congress had reined in government spending. This would be partly achieved by deconstructing the highly unpopular and “flawed” Patient Protection and Affordable Care Act – a “misguided” piece of legislation that would actually increase costs for employers thereby reducing the nation’s ability to jump-start an economy that relies on job creation and consumer spending. In Boehner’s mind, government is not unlike the average American, overweight – it’s budget deficits bloated by the cost of financial bailouts, Keynesian stimulus spending and failure to discuss the growing burden of fee for service Medicare.
The President’s failure to acknowledge healthcare reform in his speech was interpreted by many as deliberate and only served to cement the perception that in Washington, it will impossible to have constructive dialogue around the imperfections and potential unintended consequences of PPACA. The White House’s resolve to defend its hard-fought healthcare legislation is likely to extend the polarizing partisanship that has come to characterize Congress. The impasse may very well spark a two-year period of bruising, bellicose finger-pointing over how to fix rising healthcare costs.
As the first snowflakes of change fall on the eve of health reform, HR professionals may soon wake up to an entirely transformed healthcare delivery landscape. The Patient Protection and Affordable Care Act (PPACA) clearly will impact every stakeholder that currently delivers or supplies healthcare in the United States.
While the structural, financial, behavioral and market-based consequences of this sweeping storm of legislation will occur unevenly and are not fully predictable, this first round of healthcare legislation is designed to aggressively regulate and rein in insurance market practices that have been depicted as a major factor in our “crisis of affordability” and to expand coverage to an estimated 30 million uninsured. However, fewer than 30 percent of employers polled in a recent National Business Group on Health survey believe reform will reduce administrative or claims costs.
Yet, it is unlikely that reform will be repealed. For all its imperfections, PPACA is the first in a series of storm systems that will move across the vast steppe of healthcare over the next decade resulting in a radically different system. Whether reform concludes with a single payer system or emerges as a more efficient public-private partnership characterized by clinical quality and accountability remains obscured by the low clouds and shifting winds of political will. One thing is certain during these first phases – inaction and lack of planning will cost employers dearly.Continue reading…
Why do they lock gas station bathrooms? Are they afraid someone will clean them?” Anonymous
Growing up in the era of “Walk It Off” parenting, I was never
allowed to get too in touch with my hypochondria. Occasionally, I might
get my hands on a National Geographic magazine that would feature
Amazon explorers, tribes that had never been touched by the outside
world or an expedition into the heart of darkest Africa. To properly
frame the perilous nature of uncharted corners of the world, the
articles would relate the hazards associated with indigenous people,
nasty flora, unpredictable fauna and myriad microscopic predators that
could all kill a man – often in bizarre and horrific ways.
I did not just want to know about the 1000 ways in which I could die
– – I wanted to witness them. The fact that most of these diseases,
parasites and insidious bacteria were transmitted through unclean
drinking water, monkey bites, and unnatural encounters in dark,
forbidden places did not matter to me. I was certain these germs were
“This gets back to the fundamental lesson of political survival that Bill Clinton taught me, which is if you make it about the American people’s lives instead of your life, you’re going to be okay.” — Paul Begala
It’s March, 2015. Healthcare reform has now been active for over five years with the majority of reforms kicking in as of January 1, 2014. Several amendments have been proposed and passed in the interim period including the All-Payer Act normalizing reimbursement rates for hospitals between Medicare, Medicaid and private insurance.
The American Family Practice Reimbursement Act promulgated minimum reimbursement levels for primary care providers acting as part of accountable care organizations and included a package of incentives for medical graduates and nurse practitioners to practice primary care. A particular emphasis was paid to establishing federally qualified health centers in urban and rural areas where Medicaid statistics reveal high rates of chronic illness and minimal levels of compliance with requisite preventive care to arrest the erosion of chronically unstable patients into catastrophic illness.Continue reading…
“If you think healthcare is expensive now, wait until it is for free.” – PJ O’Rourke
On the eve of sweeping health reform legislation, it is hard not to notice the glowing skyline in Washington as policymakers ignite their torches, grab their pitch forks and race as a mob toward for-profit stakeholders who many feel have created, perpetuated and benefited from our highly uneven, inflationary and inconsistent system of healthcare in America.
Over a quarter century, I have consulted with and led employers, consumers, hospitals, physician groups, attorneys, pharmacuetical manufacturers and insurers. My personal epiphany prompting me to become more vocal about America’s need for systemic change did not spark in the middle of an inflammatory contract negotiation with a major hospital or flash during a heated employee meeting as we announced yet another deductible, co-pay and contribution increase. My burning bush occurred on a gurney in the hallway of British National Health Service (NHS) hospital where I lay for 20 hours deathly ill with pneumococcal pneumonia.
After moving to London with my young family, we decided to opt for public care. After all, I was curious to experience the NHS and with three kids under eight, we were constantly under siege with myriad colds, earaches and symptomless fevers. Best of all, it was free. Our neighborhood NHS family practice clinic was always crowded but convenient. Other than the occasional drug co-pay, we never received a bill. Yet, something was not quite right. My doctor always looked as if wild dogs or the Inland Revenue Service was pursuing him. I broke down during one examination and asked him how much he received from the National Trust for each patient to provide basic care. ” Not nearly enough, Mr. Turpin. Not nearly enough” He said absently while peering into my ear with a pen light.
In the bleak midwinter of our first English February, one of my kids came home with a nasty flu that raged through the house, flattening even my indefatigable wife who I considered indestructible. I was travelling on the Continent and needed to return early to play Florence Nightingale to the family influenza ward. As everyone slowly recovered, rising like Lazarus from the dead, I took ill and within one day, was coughing up blood and bedridden with a raging fever. After a brief visit with my GP, he called an ambulance and I was taken to casualty (Emergency) in a local NHS hospital. I was admitted and deposited on a gurney in a hallway alcove as I waited to be transferred to a hospital room. There was one problem. There were no beds available.
The ER was utter chaos with sick elderly and acute care victims in every conceivable location. The doctors were tireless and clearly dedicated but overwhelmed. Through the haze of illness, I watched the trauma triage go on for hours. My wife briefly appeared with the kids to visit.Continue reading…