underinsured

Healthcare Costs Top $20K Per Family

J Roberts

Here’s some more discouraging news: Healthcare for a family of four now costs as much as small family sedan. For many consumers the price to pay is too much. Even employers are grappling with rise in costs as they struggle to provide healthcare benefits to employees. Read the below article to learn just how much the cost of healthcare has risen in the past few years.

 

Margaret Dick Tocknell, for HealthLeaders Media , May 16, 2012

The national annual cost of medical care for a typical family of four with PPO coverage has edged up over $20,000 for the first time, according to the actuarial and consulting firm, Milliman.

The 2012 Milliman Medical Index estimates the annual cost at $20,728. That’s a record $1,335 increase in the total cost of care compared with 2011, and the first time the cost has notched above the $20K mark since Milliman started reporting on these costs twelve years ago. Through a combination of copayments, deductions, and premiums, the prototypical family of four will be responsible for a record share—42%—of its medical costs.

A combination of factors is driving the increase, including the comparative lack of control insurers exert on outpatients costs, a slowdown in hospital bed utilization, and the cost of technology in patient care, explains Chris Girod, principal and consulting actuary in Milliman’s San Diego office and a co-author of the report.

The good news? The pace of the increase is slowing. The 6.9% increase in total costs is the lowest annual rate of increase in more than a decade.

The MMI is comprised of five components: inpatient facility care, outpatient facility care, physician services, pharmacy, and miscellaneous other.

Among the MMI findings:

Outpatient facility costs posted its first single digit increase, 8.6%, in four years, but for the fifth year that increase outpaced all the other MMI components.

Outpatient facility care costs totaled $3,699, or 18% of a family of four’s annual healthcare bill. Girod explains that the level of insurer control is improving under contractual discount arrangements, but still isn’t on par with inpatient controls.

Inpatient facility utilization or the number of inpatient days for a covered population in a year has remained unchanged for several years. However, the patients who are hospitalized tend to require more intensive and expensive services that have helped boost the cost of treatment contributing to a 7.6% increase in the average charge per day costs.

Physician care costs reversed a four-year trend and increased by 5%. Girod says a number of things may have contributed to this cost bump, including evidence of some pushback by physicians in their contract negotiations with health plans.

Hospital inpatient costs ($6,531) and physician costs ($6,647) each account for 32% of a family of four’s total annual healthcare bill.

Pharmacy costs continued their roller coaster ride of cost increases and exceeded $3,000 for the first time. The 7.3% increase is down slightly from 2011’s 8%, but a significant increase over 2010’s 6%. Pharmacy costs totaled $3,056 or 15% of the family’s total annual healthcare bill. Girod says that while the shift to generics has helped slowed the growth in pharmacy costs, the expense of specialty drugs will have a growing impact on this cost trend.

The cost of miscellaneous other services such as durable medical equipment, ambulance services and home health posted a 6.7% increase to $795.

In addition to looking at costs on a nationwide basis, for the last five years the Index has looked at comparative healthcare costs in the same 14 cities across the country, including Chicago, Denver, and Los Angeles.

With a current annual cost of $24,965, Miami has topped the list for five years. Girod explains that Miami has a large number of healthcare practitioners and capacity helps drive the demand for healthcare services. Also, the practice of defensive medicine is more prevalent in the Miami area.

Phoenix was the least expensive with a cost of $18,365 for a family of four.

For the 2012 study, healthcare costs in 11 of the 14 cities exceeded $20,000 annually for a typical family of four. In 2011 only six of the 14 cities posted costs in excess of $20,000. While that could suggest an easing in the geographic differences in the cost of healthcare, Girod says a more likely explanation is that “the entire scale is shifting up, both at the bottom and the top, so we just ended up with more cities over that $20,000 threshold.”

The report notes that so far the Patient Protection and Affordable Care Act has had “only a limited effect on total healthcare costs for the illustrative family of four.”

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Too Little on What Controls Costs

J Roberts

Robert Reich’s comment stating the President’s speech should have been clearer about how his plan will contain future costs was right on the mark. See his blog posting below.

More than a week after the Presidential speech to Congress there still has not been any indication or revelation on how the administration intends to reign in the high cost of care that continues to grow at an unacceptable level.  While President Obama wasted no time bashing insurance companies for their unjust practice of dropping coverage for preexisting conditions or other catastrophic illnesses, he failed to touch upon or address the crux of healthcare reform: containing cost.

At no point was there mention concerning the myriad of components that contribute to the rise in health care costs such as physicians, hospitals, pharmaceutical companies and other entities all entrenched in our current health care system. It is true that insurance bureaucracies contribute to the rise in health care costs, they themselves are not the lone culprit. The fact is, there are so many moving parts to this byzantine system, all of which contribute to rise in costs. This is a fact that can’t be ignored by the Administration, Congress or anyone wanting to promote real change to the system. Without controlling the increasing rise in costs, any plan is doomed for failure.

Robert Reich, a professor at the Goldman School of Public Policy at the University of California at Berkeley, was secretary of labor in the Clinton administration. He is the author, most recently, of “Supercapitalism,” and he blogs at Robert Reich’s Blog.

The president’s rebuttal of the fear-mongers was strong and he made a compelling case for preventing insurers from denying coverage because of pre-existing conditions or dropping coverage because of a serious illness and for requiring all Americans to have health insurance. He clarified his goal of full coverage and his support for a public insurance option.

He should have been clearer about how he intends to pay for the coverage of Americans who can’t otherwise afford it.

But I thought he should have been clearer about how he intends to pay for the coverage of Americans who can’t otherwise afford it, and how he’ll contain future costs. A commission to look at health outcomes is a fine idea but how are its findings to be used and enforced?

Taxing high-cost insurance plans is worthwhile but won’t raise much money or dramatically reduce future costs. An optional public insurance plan that’s open to all would put competitive pressure on private plans to reduce costs while also pressuring drug companies and providers to do the same, but his version of a public option would be available only to a relatively small number of Americans who lack employer-provided care.

The proposed health care exchange could generate real savings if the federal government acts as gatekeeper and limits access only to private insurers that offer low prices and high quality, but he didn’t explain the government’s role.

Still, he recaptured the initiative on health care and provided some cover for conservative and Blue Dog Democrats who need it in order to vote for the plan — which, I assume, were his most immediate political goals.

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Insured, but Bankrupted by Health Crises

J Roberts 1 Comment

Health advocates warn of the dangers of the underinsured – the millions of Americans who have a basic form of health insurance, but not enough to cover a chronic or catastrophic illness. This group of people represents a “great hidden risk to our health care system” according to the below article published in the New York Times.  More and more people are facing financial hardship and burden due to the rise in healthcare costs and increased out-of-pocket expense.

New York Times

 

Health insurance is supposed to offer protection — both medically and financially. But as it turns out, an estimated three-quarters of people who are pushed into personal bankruptcy by medical problems actually had insurance when they got sick or were injured.


And so, even as Washington tries to cover the tens of millions of Americans without medical insurance, many health policy experts say simply giving everyone an insurance card will not be enough to fix what is wrong with the system.
Too many other people already have coverage so meager that a medical crisis means financial calamity.


One of them is Lawrence Yurdin, a 64-year-old computer security specialist. Although the brochure on his Aetna policy seemed to indicate it covered up to $150,000 a year in hospital care, the fine print excluded nearly all of the treatment he received at an Austin, Tex., hospital.


He and his wife, Claire, filed for bankruptcy last December, as his unpaid medical bills approached $200,000.


In the House and Senate, lawmakers are grappling with the details of legislation that would set minimum standards for insurance coverage and place caps on out-of-pocket expenses. And fear of the high price tag could prompt lawmakers to settle for less than comprehensive coverage for some Americans.


But patient advocates argue it is crucial for the final legislation to guarantee a base level of coverage, if people like Mr. Yurdin are to be protected from financial ruin. They also call for a new layer of federal rules to correct the current state-by-state regulatory patchwork that allows some insurance companies to sell relatively worthless policies.
“Underinsurance is the great hidden risk of the American health care system,” said Elizabeth Warren, a Harvard law professor who has analyzed medical bankruptcies. “People do not realize they are one diagnosis away from financial collapse.”
Last week, a former Cigna executive warned at a Senate hearing on health insurance that lawmakers should be careful about the role they gave private insurers in any new system, saying the companies were too prone to “confuse their customers and dump the sick.”


“The number of uninsured people has increased as more have fallen victim to deceptive marketing practices and bought what essentially is fake insurance,” Wendell Potter, the former Cigna executive, testified.


Mr. Yurdin learned the hard way.

(more…)

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