Imagine attending private lectures and taking all your college exams in your professors’ offices individually, one-on-one. Your instructors lecture you, then pepper you with questions, grading your answers and recording your scores. This is not unlike traditional physician visits. Contrast this to attending classroom lectures and taking online multiple choice exams where a computer algorithm or Scantron tallies your answers and calculates your grade. Classroom instruction with standardized testing is much more efficient that private tutoring. Hundreds of students can learn and take their online exams simultaneously. What if medical productivity could be similarly improved?
Inefficient Physician Communication. When you visit your doctor you are engaging in what’s known as synchronous communication. You queue up in a waiting room and later both you and your doctor meet one-on-one in an exam room (at the same time). You may spend five minutes talking to a nurse and then 10 minutes talking to a doctor. A survey found with waiting and travel time, the whole process takes patients about three hours, on average. Furthermore, many doctors see only about 20 to 25 patients a day. The amount of information conveyed during an office visit is limited — as is the amount of information patients retain. Doctors also must take notes and update medical records during the exam. Fiddling with electronic health records further reduces the amount of useful information exchanged during a 10-minute encounter while your doctor hunts for pull-down menus. The way medicine is practiced is inherently labor intensive, not to mention inconvenient for patients.
Synchronous telemedicine is where you call your doctor or he/she calls back and you talk one-on-one. That may be a little more convenient for patients, but it’s still labor intensive. Asynchronous telemedicine is like email (or snail mail for that matter). You email your doctor or call your doctor and leave a message. Your doctor replies via email or by leaving voicemail. Asynchronous communication doesn’t require both parties to be present at the same time to communicate, but the information flow back and forth can be slow and inhibited compared to talking.
The 2010 health care law, the Patient Protection and Affordable Care Act (PPACA), hits small business with a barrage of inequities. Among the most egregious is the health insurance tax (HIT) launched by the law’s Section 9010. Ostensibly a tax on insurers, its real effect will be hundreds of billions of dollars of taxation on people who purchase coverage in the fully-insured market – mostly small business employers and employees and the self-employed. These are the people who usually generate around two-thirds of America’s new jobs.
In contrast, the HIT bypasses those who have coverage through self-insured plans – mostly big business, labor unions, and governments. Like PPACA’s essential health benefits and longstanding state benefit mandates, the HIT puts an anchor around the neck of small business while leaving larger organizations free to swim unburdened. And the anchor is a heavy one.
Over the first decade, the HIT will hit the fully-insured market with an estimated $87.4 billion tab, but that figure greatly understates the long-run financial impact. The tax is not implemented until the fourth year of the decade (2014) and is only fully implemented in 2018. The tax rises from $8 billion in 2014 to $14.3 billion in 2018 and in later years, even higher according to a complex (and at this point opaque) index, discussed below.
To put this in perspective, that $14.3 billion equals around 15 percent of the total small business expenditures on employee benefits in 2007. According to IRS data, proprietorships, partnerships, and corporations with up to $10 million in annual receipts deducted $96.8 billion that year for Employee Benefit Programs. An extra 15 percent or so constitutes an enormous blow to the ability of small businesses to compete against larger entities.
The HIT’s full magnitude will only become apparent in the second decade (2021-2030), when businesses and consumers experience 10 years of a premium-indexed, fully-implemented HIT. The second-decade cost is difficult to forecast, but may exceed $200 billion or even $300 billion. It all depends on how rapidly the law’s arcane index lifts the HIT beyond its $14.3 billion base in later years. There are two major sources of uncertainty in that index.Continue reading…
Beginning in 2014, the Patient Protection and Affordable Care Act (PPACA) hands the Secretary of the U.S. Department of Health and Human Services a joystick – the Essential Health Benefits (EHB) package – with the potential to rocket small-business health insurance premiums skyward. EHB is the menu of goods and services that must be covered under all exchange-purchased insurance plans and non-grandfathered small-group and individual insurance plans. By vesting one set of hands with control over EHB, small business faces permanent administrative uncertainty. At the same time, the brunt of EHB appears largely to bypass big business, unions, and governments.
The EHB requirements apply to policies purchased both in exchanges and in non-exchange small-group or individual markets. In the small-group and individual markets, annual or lifetime coverage limits on all EHB items are forbidden. And plans must have an actuarial value (AV) of at least 60 percent, meaning the plan’s total reimbursements must be at least 60 percent of the total qualifying health care costs incurred.
Section 1302 empowers the Secretary of HHS to define EHB, but gives little specificity beyond requiring that EHB include 10 general categories (e.g., ambulatory patient services) and “the items and services covered within the categories;” the Secretary is to also assure that EHB includes “benefits typically covered” by a “typical employer plan.” The meaning of these words in quotation marks is left to the Secretary (and future Secretaries) to define and redefine. The fluid definitions and concentrated discretion mean uncertainty, which carries a financial cost for small business.