Archive for February, 2018

Big-news announcement from Jeff Bezos, Jamie Dimon & Warren Buffet concerning their firms aligning to solve the healthcare crisis. Can they make a difference.

February 22, 2018

Recently the heads of Amazon-Citibank-Berkshire Hathaway announced that their three firms are planning a joint venture attempt to provide appealing lower cost health care benefits for their employees. This announcement could actually affect dozens of firms, if they include all the companies they own, and provide coverage for nearly one million people. 

With that many members in a covered population the results would be actuarially credible and provide statistics upon which the partnership could rely. These are three pretty smart business people, who can afford to hire the expertise required, and I believe their objective would be to lower cost but not  do so at the expense of their member’s benefits or access to care. It dose make one ask:

  • Will they be able to build a health care program or system that improves delivery at lower cost? 
  • Will they be able to make a difference for the million lives covered?

The answer can easily be YES, but the process, in the beginning as well as for years to come, will need to remain “OCD like” focused on a few basics.

In previous Posts we’ve discussed how to lower cost (both premium and OOP) while improving benefits and access to those benefits. A single set of members covered under the same focused effort can achieve better outcomes than we’ve witnessed from the ACA over the past 7 years. It’s especially possible when there are a million member lives involved, managed by the brilliance of these three firms/CEOs.

Plan offerings, PPOs, HMOs, managed care, pre-service review, post service review and value based payments will all be included but will that be enough? We should expect major innovation and reliance on technology.
But, unless there is innovation involved in a number of “human'” areas the probable outcome is predictable. As the plans are offered and members make their selections utilization then occurs. That’s a big component.

Remember, the overall cost of healthcare is equal to unit costs times number of units consumed. Controlling unit cost is far easier than controlling the number of units consumed.
How can a plan affect utilization?
How can a plan affect the choices members make?

So let’s ask – What are the two biggest factors impacting the cost of healthcare in America? Don’t say political stupidity, selfishness, or laziness although you would not be far off. If you suggest the seemingly unrestricted increase in Rx cost or the high cost of other treatments you would be closer, but it’s simpler than that.
 
The two issues that impact our health care finance and delivery system are: smoking and obesity. I’m not trying to be insulting, critical or overly clever here. The fact is that more health care dollars are spent on members and by members as a result of these two factors than any other five factors combined.

So, how will the new health care partnership of Amazon-Citibank-Berkshire Hathaway address these issues? Don’t be a cynic about this because these issues can be addressed and outcomes improved with plans designed to encourage change.

Can these two factors be mitigated without appearing too mean-spirited?

  • If you’ve ever smoked two or more packs of cigarettes per day or know someone who has then you know this habit is a killer to overcome. (Pun intended)
  • How can obesity be addressed when 40%+ of the American population is classified “morbidly” obese.

I am looking forward to watching the efforts by these three corporate giants and the plans, policies, and promotional output they make.  There is real potential that, if successful, these efforts by “Private Enterprise” could be a turning point away from the Liberal’s focus on “single payer” plans as the only solution for health care finance and delivery.

You know this can be done, especially if you read our previous Posts, so let’s be attentive and supportive as these three behemoth conglomerates set forth their ideas into reality.

We’ll watch together because, well, you know why!

Until next week.

Mark Reynolds, RHU
559-250-2000
mark@reynolds.wtf

Healthcare utilization drops but healthcare costs increase. What’s up with that? That’s right, Americans used less healthcare but costs increased?

February 15, 2018

As you can imagine (or at least hope) there are groups that closely study the results of American’s consumption of healthcare and the cost of delivering that care. The Health Care Cost Institute (HCCI) is one of those groups. The following is a short summary of HCCI’s recent study as well as facts about healthcare. It’s very interesting and supports the ideas and actions supported by your humble author in earlier Posts.

HCCI’s annual Health Care Cost and Utilization Report analyzes health care spending and utilization from 2012 to 2016 for people up to age 65 with employer-sponsored health insurance. That means HCCI analyzed actual utilization data from employer group plans.

One of the many interesting facts identified by HCCI’s analysis is, Americans consumed (used) the same amount or less health care in 2016 than they did in 2015. However, rising prices caused overall spending in 2016 to grow faster than any time in the last five years. 

Niall Brennan, president of HCCI, states;
“It is time to have a national conversation on the role of price increases in the growth of health care spending,” said Niall Brennan, MPP, president of HCCI. “Despite the progress made in recent years on value-based care, the reality is that working Americans are using less care but paying more for it every year. Rising prices, especially for prescription drugs, surgery, and emergency department visits, have been primary drivers of faster growth in recent years.” (HCCI Press release)

Here are some of HCCI’s facts & conclusions:

  • While the number of emergency room visits rose just slightly, the average price for an emergency room visit grew steadily over the five-year study for a 31.5 percent cumulative increase, driving the increase in outpatient spending.
  • The average price of surgery went up as well, pushing up spending for both inpatient and outpatient care.
  • The average price for surgical admissions increased by nearly $10,000 or 30 percent over the five-year study period, despite a -16 percent cumulative decline in utilization.
  • The price for outpatient surgery rose more than 19 percent.
  • Over the five-year study period, prescription drug spending had cumulative growth of 27 percent, despite a flat or decreasing trend in generic drug prices and despite a decline in utilization of brand prescription drugs.
    *The increased spending was driven by double-digit price increases from 2012 to 2016 for brand prescription drugs.
  • Total spending on primary care office visits fell by almost 6 percent over five years due to a decline in the number of visits.
    *This was offset by a 31 percent spending increase on office visits to specialists and a 23 percent increase in visits for preventive care, changes that could be partly attributable to changes in billing practices or in the way people seek care.

“While consumers, especially those with employer-sponsored insurance, may not feel the direct impact of these charges via out of pocket payments, they ultimately pay through increased premiums and decreased benefits,” added Mr. Brennan.

Are these conclusions realistic – Yes!

  • Since 2011, HCCI has tracked, independently analyzed, and reported health care spending, utilization, and prices each year in its Health Care Cost and Utilization Report using de-identified claims data of people up to age 65 with employer-sponsored health insurance.
  • For this report, HCCI analyzed data from roughly 4 billion claims of nearly 40 million individuals. Claims data came from four of the largest health insurance providers in the U.S. representing about 26 percent of the employer-sponsored insured population. 

Isn’t it interesting that as utilization of healthcare services goes down the overall cost of health care goes up for both employees and employers?

Makes one ask: Why is it that when the Government gets involved costs go up and its the average tax-paying premium-paying citizen who bares the brunt of that cost increase.

  • It happened with Medicare and Medicaid.
  • It happens with military costs.
  • It happens with roads, bridges and all other infra-structure costs.

Why would we be surprised that the Government mandated Affordable Care Act would increase the costs on that which it sought and still alleges it controls?

It almost makes me want to re-print a couple dozen of our previous posts that describe how to lower cost while increasing coverage and access to healthcare. But, I won’t.

We want to thank the Health Care Cost Institute for its reporting and for the effort it makes to gather the information it reports. Americans would be doomed were it not for organizations that watch over our nation to report back to us.
Lord knows we can’t depend on the Press  any more, to do that! Sorry, that’s the cynic in me!

In the weeks to come, as we look at various efforts to create alternatives to the ACA, we will include additional statistics concerning healthcare utilization and spending. The statistics and utilization figures we have captured for years could help build solutions that lower costs to employers, employees and members while increasing benefits and access.

It isn’t that hard!

Let me know if the stats above shock you or infuriate you. I look forward to seeing what comes out of the many States that are trying to overcome the ACA. We’re in this together so let’s shout out when we see something that makes sense.

Until next week.

Mark Reynolds, RHU
559250-2000
mark@reynolds.wtf

Some States are taking steps to “develop” lower cost health plans that will help lower costs and improve access. But, they face opposition!

February 8, 2018

In previous Post, we discussed President Trump’s Exec Order allowing health plans to be created that would lower cost with benefits people really want but not be compliant with the ACA. A few states are moving in that direction. The plan development from these states is just getting started, for sure, but already there are promises from pro-ACA advocates to sue any State or Insurer that implements such plans.

We’ve seen litigious threats and real lawsuits, in other efforts to bring common sense ideas back to life. Limiting “immigration” or “visa” permits from certain countries, increasing border security, and even lowering taxes have all come under siege and litigation by the left. The Left continually tries to thwart  President Trump’s  efforts to improve the economy, increase jobs available, improve security, and well, Make America Great Again.

So, why should we be surprised that the pro-ACA advocates would threaten lawsuits against states when the State’s leadership is trying to increase health plan alternatives, lower cost and improve access to providers.

The good news should be reported that the various state leaders out in front in these attempts to improve healthcare delivery and finance are doing so with the right ideas and ideals in mind.

These state leaders are seeking plans and ideas that:

  • Include complete transparency. Transparency where the consumer could see the actual cost of treatment. Patients and their Doctors should be able consider the effectiveness as well as the cost to benefit of any treatment.
  • Change the treatment practice of ordering multiple tests to avoid potential liability. Treatment should focus on healing the patient not avoiding lawsuits.
  • Create a free market environment that allows providers and pharma to make a profit but avoid the outrageous pricing scenarios we see today.
  • Allow small employers to “partner” with insurers. This means allow employers to purchase coverage for catastrophic events and self insure the healthcare under a certain value, for example $10,000. This can be done using currently available HRAs.
  • Allow for employers to “incentivize” their employees to make better choices. Today employers fear being sued if they encourage their folks to stop smoking or lose 20 lbs. with a health plan that gets richer as the employee gets healthier.
  • We must stop federal government interference in the local marketplace. The rules and restrictions of the ACA are driving up the costs and the one-size-fits-all policies just don’t work.
    * For employers in some states, such as California, we might need some Federal assistance in the form of ERISA.
  •  Most agree that it is important to develop ways to help insurers provide coverage to the individuals who are driving the majority of the costs.
    * Let’s face it, the statistics prove that less than 5% of any group will incur more than $5000 (or even $10,000) in medical charges each year.
    * But, in that 5% of the population, the medical charges can be huge, catastrophic as they say, and there is little the citizen-patient can do about the cost of his/her treatment. So, insurers honestly need assistance to finance these charges.

The point is that we are watching state regulators look at realistic ways to improve access and lower cost without penalizing our citizens for their healthcare usage.

Remember this fact, the enrollment in ACA individual plans at the close of this year’s open enrollment is only about 8 million enrollees. The plans we’re discussing above could be considered as alternatives by 50 to 100 million employees currently in small group plans around the country.

But, these new ideas will be criticized and litigated simply because they conflict with and/or weaken the ACA. If 50 million of our fellow citizens could get access to enroll in these lower cost plans, would that not be a good deal. We might make America’s healthcare great again. Sorry for that.

Anyway, we should be glad that there are creative people developing ideas and even real plans that will increase access to more providers, provide the benefits people really want, and lower cost in both premium and out of pocket. As we said in previous Posts, you won’t see or hear much about it in the Media so we’ll have to watch for it ourselves.

But then, we’re all in this together, so let’s keep watching together.
Let me know what you think.

Until next week.

Mark Reynolds, RHU
559-250-2000
mark@reynolds.wtf

Alex Azar is sworn in as our new Secretary of Health & Human Services. Who is Mr. Azar and what can we expect.

February 1, 2018

Alex Azar is a Yale educated attorney who just may be uniquely qualified to lead the HHS at this time with the objectives laid out by President Trump.  Mr. Azar has practiced law in the real world as well as being the General Counsel for the HHS under President George W. Bush from 201-2005.

Mr. Azar was Deputy Security of HHS from 2005 until leaving in 2007 toward the end of the Bush administration. After serving at HHS for nearly 7 years, he was hired by Eli Lilly Co in 2007 to be a spokesman and lobbyist before ultimately being named Vice-President of US Managed Healthcare Services organization for Eli Lilly.

One unique fact about Mr. Azar is that he has never been a politician. Dating back nearly 40 years, every appointed & confirmed Secretary at HHS has been a career politician either Governor or Senator. Obviously, being a career politician does not really prepare one to make the decisions and take the actions that are needed to give our citizens the best services from an organization called Health & Human Services. Let’s face it; for most politicians the primary goal always seems to be serving for themselves.

There in lies a unique factor that may prove positive since Mr. Azar has not been be-holding to anyone for an election, a trait he has in common with President Trump. In addition, Mr. Azar was employed at Eli Lilly, a big pharmacy and healthcare company for roughly 10 years. That is important to note because we all know pharmacy costs continue to increase dramatically and nobody seems to be able or willing to control them.

It is also critical to acknowledge that the delivery of pharmacy benefits is a complicated function. In the Rx delivery business you have AWP (Average Wholesale Price), MAC (Maximum Allowable Cost, public plans such as Medicare or Medicaid, private plans such as your Anthem or Aetna plan, dispensing fees, and don’t forget rebates all of which make delivering your Rx very complicated.

Plus, the retail cost of an Rx in the US is much-much higher than in other countries including our neighbors in Canada and Mexico. In fact, people in Canada and Mexico can often purchase their personal prescriptions for 10% of what we pay in the US.  That’s right, what you might pay $100 for in Oregon or Maine is available for $10 in Mexico.
Now, who can understand or make sense of that?

The Rx delivery business is more complicated and potentially more abused than any other aspect of healthcare in the US. With healthcare cost increasing double-digit and premiums increasing sometimes by triple-digit it may serve the public well to have the Head of HHS understand the Rx business as well as how the HHS works.

President Trump publicly tasked Mr. Azar ( directed him actually) to reduce Rx cost dramatically. President Trump also publicly instructed Mr. Azar to continue with the objective of replacing the ACA with a better healthcare financing and delivery system.

How’s that for directions from your boss on your first day on the job?

So, Mr. Azar:

  • Is not a politician.
  • Beholding to no one – except the President.
  • Understands big Pharma and its:
    • R & D processes
    • Patent protection and effect on Generic vs. Brand
    • Profit margins
  • Delivery of Rx through private and public plans.
  • Law & business experience
  • Works for a President that:
    • Wants to lower cost
    • Improve access
    • Make a difference in people’s lives
    • Doesn’t give a darn about the way it has always been done!

In 2010 through 2014 we heard from and about the Secretary of HHS constantly because she was continually making announcements about the rules or regulations being developed for the ACA. On and on it went with restrictive-obtrusive-costly and damaging rules to make the ACA be what the Liberals wanted.

I suspect that we won’t hear that much from or about Mr. Azar except when the Liberal cry out about the piece by piece incremental changes to ACA. If Mr. Azar can reduce Rx costs, which is a huge “if” due to the power in Pharma, then we will all benefit.
But, we should not be overly optimistic about seeing Rx cost drop too quickly.

Can you imagine how hard it would be to make Northrop Grumman, McDonald Douglas or Lockheed Martin  reduce their costs 40% to 50% for the guns, airplanes and missiles our military requires to keep us safe. Believe it or not, that is a reasonable example of the battle Mr. Azar will have as he tries to lower Rx costs in America.
And, I am not exaggerating.

I am optimistic, though, about Mr. Azar’s chances of making a difference. He is experienced with the HHS, understands how Big Pharma works, plus he has a Boss (The President) who is demanding lower cost, better access, and better efficiency. These factors could make it possible to see the changes America needs and deserves.

There is much more we could discuss about Mr. Azar such as his positions on AHPs, selling across state lines, insurer subsidies and so forth. But given that he was just sworn in 20 minutes ago, I think it would be wise to simply watch to see where he starts and what he can do.

The Department of Health & Human Services affects us all, more than most realize, so we are definitely all in this together.
But what do you think?

Until next week.

Mark Reynolds, RHU
559-250-2000
mark@reynolds.wtf