As a hospital CEO, I spend a good part of most days worrying about the cost of health care and specifically how the rising costs affect my hospitals.
The cost of health care is something everyone, from patients to providers to payers, need to be concerned about. As an employer, I also know the impact that costs have on our insurance premiums and utilization. We understand that an aging population, and pressures by insurers to hospitalize only the sickest patients, means today’s patients are sicker, older, and have conditions that require more sophisticated and increasingly expensive care. So, what is the answer? There are no simple ones.
Let me give you a sense of what goes into a “hospital dollar”. Almost two thirds, 65 percent, of the cost of running a hospital is spent on labor – physicians, nurses, and the scores of support personnel who make up the hospital staff. We couldn’t provide care without them. Massachusetts has a high cost of living and has one of the highest labor costs of any state in the country. A higher living cost, coupled with a growing workforce shortage, helps drive up the cost of the health care we provide.
Another nearly 20 percent is spent on drugs and medical supplies. Again, both are essential to the operation of a quality hospital. Our country’s increasing dependence on the use of medications, numerous new medications and procedures, and the fear of liability for not offering state-of-the-art practice push our costs even higher.
That’s just a snapshot. Read more…
My entry today picks up on the issue raised by Secretary Kirwan at the end of her recent post, in the hope of generating some informed exchange on the issue of cost containment. No one disputes the imperative of bringing health care spending under control; this is necessary for the continued viability of both the Chapter 58 coverage expansions and the U.S. health care system overall.
How do we do it? To be sure, cost containment is not an issue that has been ignored until now; many recent innovations in health care delivery and financing have this explicit goal. But let me offer these two pieces of information and then pose some questions:
1. At the annual meeting of the Health Care Quality and Cost Council last Friday, Stuart Altman presented a list of techniques for limiting growth in health spending, in ascending order (by his estimation) of impact:
Very limited impact
• Encourage greater use of preventive services
Limited impact
• Provide better price and quality information
• Require patients to pay more
• Restrict use of harmful care
• Create a governmental “high cost reinsurance system” with effective case management for chronic conditions
• Reduce expense and waste of medical malpractice system
• Pay-for-performance reimbursement Read more…
ONLY A HALF DOZEN MUNICIPALITIES HAVE SIGNED UP FOR THE COMING YEAR TO A STATE HEALTH INSURANCE PROGRAM…AN OPTION CREATED TO SAVE CITIES AND TOWNS MILLIONS OF DOLLARS. A LAW PASSED IN JULY LETS CITIES AND TOWNS JOIN THE STATE’S GROUP INSURANCE COMMISSION, OR GIC, WHERE PREMIUM INCREASES ARE TYPICALLY HALF OF WHAT MOST EMPLOYERS PAY. MUNICIPALITES CAN NOT JOIN UNLESS 70% OF UNION LEADERS APPROVE THE MOVE. GIC DIRECTOR DOLORES MITCHELL SAYS SHE EXPECTED A SLOW START.
This has been a very strenuous effort that the communities have to make, not only educating their board of selectmen, but also the union people who have to make a big decision. And the time frame was very very brief.
ON FRIDAY, HOUSE SPEAKER SAL DIMASI IS EXPECTED TO ANNOUNCE A ONE MONTH EXTENSION OF THE OCTOBER FIRST DEADLINE FOR JOINING THE GIC …WHICH COULD GIVE ANOTHER DOZEN OR SO COMMUNITIES TIME TO GET APPROVALS NEEDED TO ENROLL. BOSTON MUNICIPAL RESEARCH BUREAU PRESIDENT SAM TYLER IS DISAPPOINTED WITH THE RESULTS SO FAR. Read more…
Last week, the Board of the Commonwealth Health Insurance Connector Authority met for the first time since early July. The meeting was a kick-off to a busy Fall and then 2008 for the Connector, as it continues to complete initial policy and operational tasks related to health reform and commences “round two” of addressing some recurring issues.
For those who weren’t able to attend the Connector’s Board meeting, here are some of the challenges that were flagged on a draft calendar discussed at the meeting (note: these are surely not the only issues the Connector will focus on – just some of the most obvious and pressing ones).
• Commonwealth Care: the related tasks of evaluating experience under the program so far, considering program design moving forward, and negotiating new contracts with the managed care organizations which provide health insurance under this program.
• Commonwealth Choice: renewing the Seal of Approval for health plan contracts (six private health plans currently provide health insurance under this program); also, working towards allowing small businesses that contribute to health insurance to offer Commonwealth Choice plans.
• 2008 Penalties: in consultation with the Department of Revenue, reviewing the schedule of penalties in 2008 for those who can afford health insurance but fail to purchase it (as we near year two of the individual mandate, we hope to have a 2008 penalty schedule that is fair, workable and provides a meaningful incentive for those who can afford insurance to get it). Read more…
When is it a crisis?
Here’s a snapshot of some recent headlines:
“Health insurance costs outpace wage increases,” AP, 9-12-07
“Health coverage rates will rise again,” Boston Globe, 9-13-07
“Dire prognosis: Health insurance costs continue to soar,” Worcester T & G, 9-17-07
“Health care spending highest in Northeast,” AP, 9-18-07
“Rising costs have attention of State Budget Chief, Connector Officials,” State House News Service, 9-20-07
And those are just a few…
The stats and figures come at us on almost a daily basis now. We’ve all seen them so it makes no sense to regurgitate them again here. Something simply needs to be done now about the costs of health care and our skyrocketing health insurance premiums. It should be clear to most from reading these articles that the answer cannot be to simply shift more of the cost burden onto employers and employees especially in light of the fact that employers are now looking at new, more expensive plan designs just to comply with the forthcoming stricter standard of minimum creditable coverage.
The housing market is down. Retail sales are down. Consumer confidence is down. And big health care just keeps on getting bigger, more profitable, and more powerful. They are consuming more and more of our disposable income, our tax dollars and our private sector profitability each year. We are staring at a potential 8th year in a row of double digit premium increases. If that occurs, many small businesses will see family premiums in Massachusetts rise above $20,000 next year. Where has all this money gone, and where in the world will the future money come from?
It’s time for answers and accountability. It’s time for all payers of health care dollars (employers, consumers and taxpayers) to put big health care under the microscope and stop accepting this money grab from our pockets to theirs. We must stop putting them in positions of public policy authority and labeling them as the “experts” on health care policy, or as “important parts of the employer community.” They have taken advantage of the payers for long enough, and our future economy demands that the dollars start flowing back in the other direction.
Jon B. Hurst, President
Retailers Association of Massachusetts
Enrolling eligible Commonwealth residents in high-quality, subsidized (Commonwealth Care) insurance plans has been a major thrust of our first-year health reform efforts.
In addition, the push has been to increase MassHealth enrollment based on new “expansion populations” (the largest of these being kids who are now eligible up to 300 percent of the FPL).
Before the launch of health care reform, an estimated 372,000 Massachusetts residents had no health insurance. Today, more than 120,000 residents have insurance as a result of reform. Getting qualified residents coverage is only part of our challenge. We must also ensure they stay covered as long as they remain qualified.
The unfortunate reality is many qualified individuals end up without health insurance coverage for segments of time. This phenomenon – one aspect of “Medicaid churn” – ultimately is not about a recipient’s loss of Medicaid eligibility.
A recent analysis of Network Health’s MassHealth membership shows that 58 percent of people who were involuntarily disenrolled (code for kicked off the Medicaid rolls) were subsequently re-enrolled in MassHealth. Read more…
Polls show that health care will be one of the top domestic issue for voters in the next presidential election. With many of the leading Democratic candidates drawing on the Masachusetts model to cover the uninsuredl…we ask…why… and would the plan work on a national scale? WBUR’s Martha Bebinger has some answers.
When Hillary Clinton answered questions about her health plan during a campaign webcast last week…she could have been describing much of the Massachusetts health care law.
Individuals have to do their part just like employers just like the providers who take care of us. The drug and insurance companies have to change the way they do business and of course the gov’t has to participate. So its shared responsibility, but it really does rest on the individual.
Clinton and one primary opponent, Senator John Edwards, support mandatory health insurance. Barack Obama does not. All three would offer the uninsured subsidized coverage and more affordable insurance options, as does Massachusetts. And like the Commonwealth, these candidates would require that most employers insure workers or pay to help cover the uninsured. None of the candidates’ plans mirror Massachusetts. But whether the leading Democrats adopt a little or a lot of what is being tested in the Bay State, MIT health economist Jon Gruber says the Massachusetts law, unlike more sweeping single payer options, is viable.
They realize that the kind of rip it up and start over again approach is not going to work with the American voter and that this approach we started here in Massachusetts, which I call universal incrementalism, which is get there in pieces, but get there, is doable.
More than 47 million Americans lack health insurance…but Massachusetts is stepping up to the plate
The state may be catching the candidates’ attention in promotional videos.
With MA health care reform, more than 170-thousand people now have the health insurance they need.
But not everyone supports the law and how much backlash it will create is still an open question. There is little organized opposition, but there are many cynics. Nicholas Manousos, a 47-year old uninsured carpenter, stops work on a bar in Watertown to talk about his frustration with the requirement that all adults must have health insurance.
It’s basically a PR stunt from my view. They did it politically so they can claim we are going to cover everybody and we’ll just pass a law and make em pay for it.
The first penalties for failure to have health insurance kick in next year, at the same time that Clinton, Edwards or Obama may be going head to head with a Republican nominee, defending their health care plans. Connector director Jon Kingsdale, who runs the state effort to cover the uninsured, says adopting parts of the Massachusetts plan, while it is in the test phase, is a gamble.
There is no underestimating the risk of trying to deal with national health insurance. We got all too many lessons about how it looks like it is within reach and then turns around a bites somebody who is trying to lead the way.
Kingsdale says a health insurance requirement could work nationally as long as there are affordable options. But he offers some warnings.
I think it can translate, but not if it’s just rammed down the throat of the country with a slim majority. One of the things we were able to do here, was get this enacted with very, very broad support. I wouldn’t want to try to implement this on a 51 to 49 vote.
In addition to the politics there’s the question of funding. Kingsdale says Massachusetts was spending more on care for the uninsured than any other state before the universal coverage law passed. Clinton, Edwards and Obama would all reverse tax breaks approved during the Bush administration to help fund national coverage for the uninsured. Stuart Altman, who teaches national health policy at Brandeis University says these candidates understand that most states don’t have any extra money for universal coverage.
They recognize that at the national level, the federal government has to do more because poorer states just can’t do what Massachusetts did.
Even though the Massachusetts law is still a work in progress… author, surgeon and Harvard Medical School Professor Atul Gawande says it holds the most promise on what Democrats hope will be a defining domestic issue.
The chapter in Massachusetts has not already been written, but it has shown more hope for the possibility of change and that’s why people have gravitated towards the ideas.
Although not Republicans. None, including former Governor Mitt Romney, who proposed the requirement that everyone have health insurance in Massachusetts, support that idea or a major government investment in universal coverage.
We knew the easy part of health reform was going to be the first part – giving free health insurance to people formerly covered by the free care pool who are very poor. As you might expect, this has been a big success.
We knew that the second phase – covering individuals above 150% of poverty by having them purchase health insurance offered through the Connector – was going to be more difficult, but the difficulty would be the issue of whether people who are required to pay for insurance would actually buy it, and, more important, if those who don’t have health problems would actually buy health insurance, thereby subsidizing the cost of those who need medical care. The jury is still out on this.
We are now entering the third phase of health reform. And this may be the most difficult part (except maybe figuring how to pay for this very expensive system after it’s fully implemented). It involves the redeployment of a much smaller Free Care Pool, now called the Health Safety Net, but I’ll still call it the Pool for old time’s sake. This was the subject of much political lobbying, and the end result has winners and losers. First off, the losers…
Each candidate will answer questions about his or her health care plan for one hour (press release and details below). John Edwards is up first on 9/24. Some of the leading candidates have not confirmed. I’m looking forward to hearing why some of the Democrats are so ready to adopt parts of the MA health care law.
Martha Bebinger
FAMILIES USA/FEDERATION OF AMERICAN HOSPITALS ANNOUNCE “HEALTH CARE 2008: PRESIDENTIAL CANDIDATE FORUMS”
WASHINGTON, D.C. – Two of Washington, DC’s most prominent health policy organizations announced today that they are organizing “Health Care 2008: Presidential Candidate Forums” – a series of Presidential Forums that will allow each Presidential candidate to discuss in detail his or her vision about health reform and the uninsured with a panel of leading health journalists from “The NewsHour With Jim Lehrer,” ABC News, National Public Radio, and The Wall Street Journal.
The Forums are being organized by Families USA and the Federation of American Hospitals, produced by MacNeil-Lehrer Productions and hosted by the Kaiser Family Foundation in its Barbara Jordan Conference Center. The Foundation’s health news and information site, kaisernetwork.org, will webcast each forum live and archive them for viewing.
Seating is extremely limited and is restricted to invited guests and members of the media.
The first Forum will take place on Monday, September 24th at 11am ET and will feature former Senator John Edwards (D-NC). The remaining Forums will take place through the end of the year. Read more…
Tomorrow the Connector Board meets and will update enrollment numbers. Here is the first significant tally on how many people are buying the new “affordable” insurance products. As of 9/1 there are 7, 164 (5, 337 members and 1,827 dependents). Blue Cross has the largest share (37%) followed by Harvard Pilgrim (23%) and then Neighborhood Health Plan (18%).
The update for the subsidized insurance program (Commonwealth Care) is here. As of 9/1 there were 115,418 members. 80.5% qualify for and are receiving free coverage.
Are these the numbers you expect at this stage?