Is it that simple? Perhaps health care spending really does reflect health differences. A recent study from the journal Medical Care Research and Review indicates health care spending tracks closely with the health status of local populations.
Prior studies based their results on cost of living and various regional adjustments but never health status. The new study explains that health differences around the country account for 75%-85% of cost variations. “People really are sicker in some parts of the country.” said Dr. Patrick Romano, one of the authors of the study. The Dartmouth Institute for Health Policy and Clinical Practice has long asserted that variations in regional spending are due to the aggressive practices of doctors and high rates of diagnosis in certain areas. The new research contests this by examining hip fractures, head injuries and heart attacks, in which there is little discretion in diagnosis. The geographic variations in spending for these conditions remained consistent with conditions that allow doctors leniency in diagnosis. According to this new data, cutting or placing spending caps on doctors and hospitals in higher spending areas may be detrimental. Some areas spend more money per beneficiary because…the people are sicker.
So, it’s not really that simple. But health status may account for more of the spending gap than we previously thought.
The full study is available by subscription to SAGE journals or for individual purchase here:
http://mcr.sagepub.com/content/early/2013/04/26/1077558713487771.full.pdf+html
Kaiser/HRET Employer Health Benefits 2011 Annual Survey
October 27, 2011
Kaiser recently released the results of its thirteenth annual Kaiser Family Foundation/Health Research & Educational Trust (HRET) Employer Health Benefits survey. Each year they conduct a survey of 3,184 “nonfederal private and public employers with three or more workers.”
This survey looks at many employer-sponsored health coverage trends including premiums, employee contributions, cost-sharing and much more. New for 2011 it also includes, “the percent of firms with grandfathered health plans, changes in benefits for preventive care, enrollment of adult children due to the new health reform law, and the use of stoploss coverage by firms with self-funded plans.”
The findings in this year’s survey show that the percentage of large employers (those with 200 or more workers) offering retiree health benefits in 2011 is 26%, which is the same percentage that was offered in 2010. The steep decline in employers offering retiree benefits seems to have moderated in recent years, and reached a plateau at least for the time being.
Here are a few key findings:
- 26% of large employers are offering retiree Health benefits – no change from last year.
- 72% of all firms have at least one grandfathered plan under ACA.
- 65% of small businesses haven’t checked to see if they qualify for ACA small employer tax credits.
- 56% of covered workers are in grandfathered plans.
You can access the survey online at
http://ehbs.kff.org
. You read the report online, or down load the full report, a summary, and presentation slides as well as various other documents and supplements.
Visit Extend Health – the nation’s largest private Medicare exchange.
Surprising Variations in Health Care Spending and Utilization
August 22, 2011
If you were to guess where people spend the most money on health care in the U.S. where would you pick? How about a big city like New York or Los Angeles? If you did, the results of a recent study by Thomson Reuters might surprise you.
If you went against your instincts and pick Anderson, IN you’d be right. People there with employer-provided insurance spent $7,231 on health care compared to Ogden-Clearfield, Utah where they spent only $2,623. That’s a pretty big variation compared to the national average of $4,104. Here are the ten highest and lowest spending MSAs according to the study.
Ten Highest Spending MSAs:
- Anderson, IN $7,231
- Punta Gorda, FL $7,168
- Racine, WI $6,528
- Naples-Marco Island, FL $6,312
- Ocean City, NJ $6,128
- Barnstable Town, MA $6,123
- Flint, MI $6,061
- Lake Havasu City-Kingman, AZ $5,977
- Ocala, FL $5,976
- Carson City, NV $5,931
Ten Lowest Spending MSAs:
- Ogden-Clearfield, UT $2,623
- Dubuque, IA $2,719
- Fayetteville-Springdale-Rogers, AR-MO $2,762
- Fort Smith, AR-OK $2,916
- Laredo, TX $2,919
- Amarillo, TX $2,942
- McAllen-Edinburg-Mission, TX $2,950
- Salt Lake City, UT $2,979
- Fargo, ND-MN $2,996
- Sioux City, IA-NE-SD $3,029
The Thomson Reuters study, titled Geographic Variation in Spending and Utilization Among the Commercially Insured utilized the Thomson Reuters MarketScan Research Databases to “examine variation in spending for enrollees with employer-sponsored health insurance (private insurance).”
Their research focused on three age groups
- Children (age 0-17 years)
- Adults (age 18-64 years), and
- Seniors (age 65 years and over)
The study analyzed 382 metropolitan statistical areas (MSAs) with at least 100 enrollees in each of the age categories. It looked at geographic variation across MSAs and age groups for spending on
Medical care
- Inpatient medical care
- Outpatient medical care
- Outpatient prescription drug, and
- Total spending
Not surprisingly, the study found that healthcare utilization and spending varied across geographic regions in the United States.
The general consensus seems to be that variations cannot be fully explained by age, gender and health status. Perhaps that is why adjustments for “demographic characteristics and health status” were not made in this study.
However, the data did show that within each MSA medical spending varied by age, which had an impact on overall spending and relative ranking compared to other MSAs. For instance, Medicare spending in Anderson, IN was lower than it was in Punta Gorda, FL. But total spending in Anderson was higher overall because more was spent on children and adults. So, while an MSA might have higher overall spending, that does not mean spending is higher for all age categories.
The study pointed out that current beliefs about the causes for geographic variation may need revising due the observed patterns for Medicare and the commercially insured. The study cites the following factors that seem to influence geographic variation:
- Regional differences in practice, training and financial incentives, as well as the availability of physicians and specialists.
- Basic health, health behaviors, and healthcare preferences
- Market structure, pricing and competition
- Fraud and abuse, such as fraudulent billing schemes.
The study concludes that more research needs to be done to fully understand the reasons for the variation. Future health care policy changes will need to take into account these causes if they are to be effective.
The Thomson Reuters study offers the following five main findings:
- There was significant geographic variation in healthcare spending by age
- Location of the highest & lowest spending MSAs varied considerably by age group, and the type of spending was different from past results for Medicare.
- Not including seniors with supplemental insurance, variation in drug spending was greater than variation in medical care spending
- There was a strong positive correlation between inpatient and outpatient spending, and a weak correlation between medical and outpatient drug spending.
- There was a weak correlation on medical spending between age groups, but a stronger correlation with drug spending.
In conclusion, the study found that the variation in spending by commercially-insured populations is significant, but the spending for seniors differed from previous results for Medicare. While the differences may be due to causes such as market structure, pricing and competition, more research is needed to determine if these variations would still be found after adjusting for demographic characteristics and health status.
If you would like to read the Thomson Reuters whitepaper you can find it here.
Additional Reading: The Cost Conundrum, by The New Yorker.
Visit Extend Health – the nation’s largest private Medicare exchange.
Costs drop for 8 of 10 most common drug classes
July 19, 2011
There is a very interesting study that was released recently that deals with the impact generic drugs are having on costs. According to the report, generic drugs are playing a key role in keeping drug costs down. As patents on brand name drugs expire, the trend toward using cheaper generic drugs is expected to continue through 2015. The study found that average daily prices for eight of the ten most common drug classes covered by Medicare Part D have fallen from $1.50 in January 2006 to $1.00 in December 2010, and are expected to reach 65 cents by the end of 2015. This trend should be good news for those worried about Medicare Part D costs. If you would like to read the entire article, “Medicare Part D sees falling drug costs: study” you can find it here.
Visit Extend Health – the nation’s largest private Medicare exchange.
2011 Health Plan Cost Trends
October 8, 2010
Benefits and human resources consulting firm The Segal Company has just published its yearly survey of health care plan cost trends. Based on responses from 60 insurance carriers, the report offers a wealth of helpful data on the outlook for plan costs in 2011 and compares 2009 actual results to forecasts. The 6-page report is chock full of data on medical plans for active employees, pre-65 retirees, and Medicare-eligible retirees, prescription drug carve-outs, and dental and vision plans.
The report projects cost trends for Medicare Advantage PFFS and PPO plans with prescription drug coverage to increase in 2011 by 7%, vs. an expected 9.5% for 2010. MA HMO plans with RX are projected to grow by 7.4%, vs. a projected 8.2% in 2010. Interestingly, forecasts in the past have erred on the high side, as ”…actual trend rates in 2009 for MA HMOs…were significantly lower than forecasted…” and “Actual prescription drug trend rates continue to be lower than forecasted.”
The latest Kaiser Family Foundation health tracking poll shows some interesting results. The number of people with an unfavorable view of reform has dropped to 35%, from 41% last month, but the number who have a favorable view has only increased by 2%, up to 50%.
This month’s poll took a closer look at the attitudes of seniors, who’ve been the most unfavorable group overall so far. This and an earlier survey by the National Council on Aging give an indication why: both show that a majority of seniors are misinformed about key components of the bill, with many believing that it cuts basic Medicare benefits, institutes so-called “death panels,” and will weaken the financial condition of the Medicare fund. A majority are unaware of new benefits for Medicare recipients such as free preventive screening and yearly checkups.
Another survey of the Extend Health retiree base shows that 67% of our Medicare enrollees feel they have health care independence. When asked to define “health care independence,” retirees’ top two responses were “I can find plans that let me go to the doctors I want to see,” and “I have choices about the health care plans I buy.” Read the rest of this entry »
- 88 percent of employers plan to pass on increases to employees.
- 74 percent plan to reduce health benefits and programs.
- 33 percent plan to absorb costs in their business.
- 20 percent plan to pass on increases to customers.
Welcome to the Extend Health Blog
March 19, 2010
I’m Bryce Williams, founder, president and CEO of Extend Health. My position at the helm of the largest private Medicare insurance exchange gives me plenty of opportunity to see first hand the challenges facing individuals who have long depended on their employer’s retirement benefits for health insurance but are being asked to take responsibility for their own health care decisions and coverage.
It also gives me a unique perspective on how health care policy and financial accounting rules affect the growing US retiree population as well as public and private sector organizations and ultimately the US economy.
When companies first decide to move from a group retiree plan, it may feel like a longstanding promise is being broken. In reality, making this move lets employers keep and sustain their promises.
I’m happy to report that most of the folks we work with end up with better coverage than they had under their old group insurance policy – most of the time for less money. Meanwhile their former employer is able to reduce the fiscal burden on the company while still taking care of its retiree population – a true win win situation for everyone involved.
And that’s what Extend Health is all about: removing wasteful spending on healthcare coverage so everyone benefits. Medicare recipients get the best value for their coverage dollar, while corporations improve their financial position and sustain the promise of helping subsidize retiree coverage for a far longer period of time. For our growing public sector clients, we taxpayers get more buying power to support retiree healthcare coverage for our city’s or county’s employees –all without breaking the bank or contributing to a potential bond default in a tough economy.
The Extend Health blog is a place for us to share our retirees’ and clients’ experience with a Medicare exchange, let you know what’s happening on the front lines of Medicare, and provide links to timely, interesting and useful news and information for all of our community. We’ll keep our finger on the pulse of developments in this field and offer our thoughts on ways to make things better.
We are excited about developing another way to talk to members of the Extend Health Community and look forward to beginning another dialog. We’re also interested in recruiting some of our retiree community to contribute to the blog– we’d love to hear your perspective and learn from your experience. Please feel free to leave a comment here, or email me, ceo@extendhealth.com, or my team, blog@extendhealth.com, if you’re interested in contributing.
