Medicare Claim Costs Growth Under 1% in 2013??? Why?

All nine of S&P Healthcare Economic Indices showed slower annual growth rates for February 2013 compared to January 2013. As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance plans rose by 4.62% in February, down from +5.41% reported for January. Annual growth rates in Medicare claim costs increased by 0.78%, according to the S&P Healthcare Economic Medicare Index, down from +1.40% recorded last month. Annual Growth Rates Decelerate in February 2013   https://www.spice-indices.com/idpfiles/spice-assets/resources/public/documents/11477_sphealthcare-press-release.pdf?force_download=true

 

heathcare

Click on the Graph to bring up a clear image.” 

While many economists such as Tyler Cowen and Congressional leaders such as Ryan and McConnell are calling for cuts in Medicare, and Medicaid;  Medicare and its associated programs have dropped below 1% cost claims growth. According to Glen LaFollette and Louise Sheiner, healthcare in the US is sustainable at 1% growth and will not crowd out the other necessities. “An Examination of Health-Spending Growth in the United States: Past Trends and Future Prospects”  http://www.bancaditalia.it/studiricerche/convegni/atti/fiscal_sustainability/session_3/Follette%20Sheiner.pdf

What gives?

For partisan reasons and the give Barrack Obama no-quarter reasoning, politicians claim the PPACA will have no or little impact on healthcare costs. Hoping for pie-in-the sky universal health care today, some rather reasonable writers and blogs have joined the bandwagon of claims against the PPACA (or Barrack Obama) and are advocating the same lack of impact. Train-wreck Baucus successfully scuttled single payer healthcare insurance (with the help of Lieberman) keeping advocates away from the bargaining table and having prominent protestors arrested now advocates backing away from the PPACA. Maybe the last couple of years of decreasing cost growth are the result of the healthcare industry and the healthcare insurance companies taking heed to the needs of the population and developing a heart??? Naaaawwwwwww, I don’t think so. It is still the same industry; but as a result of the PPACA, they are rapidly preparing for the implementation of the PPACA.  Some answers:

hard times or recession, accounted for only about 1/3 (37 percent) of slower growth in the nation’s health care bill.  My guess is that most of the effect was felt in the private sector. Maggie Mahar

“During 2009–11 per capita national health spending grew about 3 percent annually, compared to an average of 5.9 percent annually during the previous ten years. job loss and benefit changes that shifted more costs to insured people. We found that these enrollees’ out-of-pocket costs increased as the benefit design of their employer-provided coverage became less generous in this period. We conclude that such benefit design changes accounted for about one-fifth of the observed decrease in the rate of growth. However, we also observed a slowdown in spending growth even when we held benefit generosity constant, which suggests that other factors, such as a reduction in the rate of introduction of new technology, were also at work.” The Independent Payment Advisory Board and Medicare Spending: New Research Suggests a Change in Our Medical Culture Maggie Mahar, Healthbeat Blog, http://www.healthbeatblog.com/2013/05/the-independent-payment-advisory-board-and-medicare-spending-new-research-suggests-a-change-in-our-medical-culture/

and the chief Actuary of Medicare?

Paul Spitalnic, sees the recent past as prologue – at least to the near future. On April 30, he sent a letter to Marilyn Tavenner, acting Medicare administrator, saying that based on the most recent numbers, the projected 5-year average growth in Medicare per capita spending ia 1.15% , and the 5-year average growth target is 3.03 percent.” As a result, he advised Tavenner that we won’t need the IPAB until 2016—at the earliest. 

If Spitalnic’s and the S&P Healthcare projections prove true over the next few years, Medicare will not be growing faster than GDP. Healthcare would not be adding to the deficit or crowding out spending on education, infrastructure or the environment as predicted. There is no evidence the trend will not continue and Medicare cost growth is at the lowest level since its beginnings.

Health Beat Blog: Michael Chernew, a Harvard health policy professor and co-author of the paper, told Modern Healthcare that slower growth was due to more than the weak economy or increases in out-of-pocket spending as employers shifted costs to employees. Instead, the results appear to point to a shift in culture among hospital officials and physicians who have grown more focused on a greater efficiency in the last five years. Economy is less of a factor in slow growth for healthcare spending, new studies say.  Modern Healthcare

Or perhaps it is what many have said with the advent of the PPACA, a change has and is being brought about in how we are being treated. The overall model if moving from a services for fees treatment scenario to a better outcomes and efficiencies for fees scenario.

The cost saving measures within the PPACA appear to be keeping medical expenses flat during the implementation of efficiencies. For example, in 2012, the average price paid for medical care, doctor visits, operations, glasses, etc. rose at about the same rate as other prices in the economy or less than 2%. Healthcare share of the economy in 2011 shrank from 17.12% to 17.04% due to other aspects of the economy growing faster. BEA Analysis;  Health care spending is transferred out of ICU

“‘Until now, the government has paid on volume. Now, it’s trying to pay more on quality,’ says Person, a doctor of internal medicine, as well as CEO of Essentia, which has 18 hospitals and 68 clinics.” For example: “Essentia now provides 300 of the sickest congestive heart failure patients with electronic home scales that relay information, such as weight and symptoms, to a nurse several times a week. The steady monitoring of small things has cut 30-day admissions to less than one-tenth of the national average and saved millions of dollars.”  Health care spending is transferred out of ICU;  http://www.usatoday.com/story/news/health/2013/03/04/health-care-spending-growth-slows/1963165/

This is precisely what was provided to me by the Great Lakes Home care nurses. Each morning I would weigh in and take my blood pressure three weeks after my open-heart surgery. The nurse would come once per week to my home to which I was confined and check on me. These type of visits by nurses also gave me an early exit from the hospital initially even though the visits were 2-3 times per week and at a far lower cost than keeping me confined to the hospital (I was bouncing off the walls and wanted out).

“One big change is the government’s revived push toward managed care. The government wants to pay a lump sum for a patient or diagnosis, demand higher standards and expect the medical provider to get the job done for that cost. Rather than cutting reimbursement rates, the government is raising the bar for what it expects for every dollar it spends.”

says Person, the hospital chief: It is now the law, and it has teeth. We’re getting paid less,” he says. “We have to be more productive and efficient.”

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