Posts Tagged ‘Costs’

Spiraling Health Care Costs

May 3rd, 2011

Americans are deeply unhappy with the country’s health care programs and costs. And rightly so. As one author observed, “A recent survey showed that only 17 percent of respondents in the United States were content with their health-care system . . . Why the discontent? The superficial reasons are simple enough to describe: the system is hugely expensive, very bureaucratic, and extremely patchy. The expenses first: U.S. health care costs a third more, per person, than that of the closest rival, superrich Switzerland, and twice what many European countries spend. The United States government alone spends more per person than the combination of public and private expenditure in Britain, despite the fact that the British government provides free health care for all residents.”

The United States pays more for health care per capita than any other industrialized nation — and even then, Medicare is not a comprehensive, pay-for-everything national health program like those of many nations and United States per capita health care costs continue to escalate rapidly.

Here’s what you need to know about health care costs as you plan for retirement.

Americans age sixty-five and over spend four times more on health care on average than do Americans under the age of sixty-five. At the outset of this decade, the average per capita health-care outlay for a person under the age of sixty-file was about ,800. For people over the age of sixty-five, it was ,089. And for Americans ages eighty-five and older it was ,001. Clearly, health care outlays are likely to get substantially larger as you age. You need to plan for them.

U.S. health care expenses have grown mightily. U.S. health care expenses have dramatically escalated each year as new medications, new treatments, diagnostic tools, and health care innovations have come onto the market.

For example, the median nationwide cost for a hospital stay — excluding physicians charges — was ,280 in 1997; by 2004 it was almost double at ,455. The average total cost for treating a heart attack climbed 40 percent in just seven years. All in, health care costs have escalated fast and the increases are gaining momentum.

Health care costs are likely to continue to grow unabated. Unlike in other countries, no laws meaningfully curb the continual climb of health care and drug costs in the United States. For example, many Americans continue to import drugs from Canada because Canadian prices are significantly lower. This is true even though the new Medicare Features introduced in 2006 offset the cost of pharmaceuticals for U.S. retirees. To curb the cost of medicines, Canada prohibits drug companies from advertising on its television channels. In the United States, on the other hand, the very legislation that created the new Medicare drug benefit (Part D) expressly prohibits the federal government from attempting to negotiate lower prices with drug companies.

Count on it: medical costs are sky-high and likely to keep climbing unless there is a radical overhaul of the system.

More and more corporations are cutting back on health care benefits as medical costs soar. Recent statistics show companies cutting health care benefits and requiring employees and retirees to pay more for them. As one survey of corporate benefit trends concluded, “[Benefit] reductions have become not just common, but expected, with the only question now being of how much more of a reduction in benefits and or an increase in cost will be directly placed on individuals . . . In the end . . . individuals, either as taxpayers or consumers, will need to pay the bill.

I believe this trend will gain greater momentum over the next decades. It will be part and parcel of the continuing erosion of employment benefits — like the demise of traditional pensions — that is taking place throughout the country. Just like pensions, more and more health-care expense is going to become a do-it-yourself responsibility because heath care insurance costs are simply becoming too great for companies to shoulder competitively.

Taken all together, you can count on: (1) higher and higher health care costs, (2) more health-care-benefit cutbacks by U.S. employers, (3) the need to factor large health-care expenses into your funding plans, and (4) the need to buy supplemental health-care insurance to shield your savings from cost attack.

Of course, these views will not come as a surprise to most folks. Recent polls show that — immediately after the foremost financial concern of having enough money for retirement — the next great concern of most Americans is health care. More than half of adult Americans are “very worried” or “moderately worried” about being able to pay for serious illness or catastrophic health-care expense.

Copyright © 2008 by Jim Schlagheck

The above is an excerpt from the book Cash-Rich Retirement

by Jim Schlagheck

Published by St. Martin’s Press; March 2008;.95US/.00CAN; 978-0-312-37740-3

Copyright © 2008 by Jim Schlagheck

Author

Jim Schlagheck is an author, banker, longtime advisor to the ultrawealthy, and the coproducer of the public television series Retirement Revolution. He has written numerous articles on investing, retirement, and finance, and is also an acclaimed speaker who describes better ways for retirement readiness to audiences of wealth-management professionals and lay investors nationwide.

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lowering your health-care costs

April 28th, 2011

Many of us are rightfully stressed out over the ever-increasing cost of health care. Here are some ways to hang on to more of your dollars: Easy To Insure ME has the answers

— Shop around for the best prices on prescriptions, as pharmacy prices can differ. Ask your doctor if generic versions are available. Elderly or low-income folks can look into drug company discounts.

— Find the best-value health plan. An HMO may meet your needs sufficiently while costing less than your current plan. High-deductible plans are great for many young and healthy people. In exchange for deductibles of ,500 or more, they offer much lower premiums. Once you have your plan, use it. Regular checkups can catch problems before they get dangerous or costly.

— A high-deductible plan may let you set up a Health Savings Account (HSA), where you sock away tax-deductible dollars that will grow tax-free until spent on qualifying health-care expenses. If you don’t qualify for that, look into Flexible Spending Accounts (FSAs), which are somewhat similar, but require you to use up the cash you put into them each year — or lose it. These accounts can help you save hundreds of dollars per year in taxes.

— Coordinate health insurance benefits with your working spouse. Consider opting out of one plan and choosing the family option on another. Maintaining coverage with two providers can make sense if one fills the other’s gaps.

— If you incur hefty medical expenses in one year, those that exceed 7.5 percent of your adjusted gross income (AGI) are often deductible on your federal tax forms (and your state laws may be even more generous). See IRS Publication 502 or a tax pro for more information.

— Take advantage of free and discounted services offered by your health plan. Many will subsidize flu shots, gym memberships, nutrition or quit-smoking classes, and other preventive care.

— Finally, check your bills from hospitals and doctors. They often contain errors.

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Occupational health management is paramount to managing costs

April 4th, 2011

A recent survey produced by the Chartered Institute of Personnel and Development (CIPD) makes it is clear that occupational health management will have a vital part to play in helping public bodies to reduce their spending and manage the impact of these changes on the wellbeing of the workforce.

The report cites that occupational health management is the most effective system for managing long term absence. It also comes in the top three methods for managing short term sickness absence.

For employers based in the public sector where they have heightened pressure of managing dramatically reduced organisational costs it could be an essential tool in their armoury.

In line with the previous years research findings, the average level of absence remains highest in the public sector at 9.6 days per employee per year. The average cost of absence is £239 higher in the public sector and more than double the manufacturing sector average.

It would be easy to attribute these costs to more generous occupational sick pay schemes in the public sector. For instance, over two-thirds of public sector employers provide full pay for more than 20 weeks compared with just over a fifth in private sector services. The report also says that the public sector is less likely to use disciplinary procedures for unacceptable short-term absence than in the manufacturing sector.

But this would not be the full picture as the proportion of public sector employers using these procedures has increased compared with last year. This may be a reflection of reduced budgets and the pressure now being applied to the public sector to reduce costs.

Traditionally the public sector is far less likely to restrict sick pay than the private sector. They also adopt procedures designed to reduce sickness absence through promoting good health and flexibility.

The managers contributing to the report predict that the public sector is the most likely sector to reduce spending on occupational health. Lesley Tomlinson, Connaught Compliance’s, Director of Occupational Health comments:

“This could have fundamental problems as the role of occupational health during the restructuring process plays a valuable part in ensuring a more positive outcome for both employee and employer.”

The research showed that about half of organisations use employee absence records as part of the redundancy selection process. This has to be done appropriately and within the legal framework. According to nearly a quarter of employers the threat of redundancy has led to an increase in people coming to work ill in the last 12 months. Where organisations had made, or were intending to make redundancies, they were more likely to report an increase in mental health problems.

Ms Tomlinson continued:

“With all of the above problems being heightened when an organisation embarks on a change management process it would be unwise to neglect on investment in occupational health management – by helping employees through the process you assist with maintaining employee engagement and productivity and also limit your exposure to potential risks.”

There is considerable evidence to demonstrate that a proactive, business-focussed occupational health service can have a considerable impact on employee productivity and sickness absence management. This can lead to significant cost savings, with improvements to productivity and reduced absenteeism. Our sickness absence management reports are clear and unambiguous and provide an opinion on fitness to work, we do not ‘sit on the fence’.

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health insurance Uninsured drive up hospital costs

March 7th, 2011

The number of uninsured hospital admissions in Hamilton County more than doubled between 2004 and 2008, leaving local hospitals with barely three in 10 patients who have private insurance to pay for their care, according to a new report on health in the Chattanooga region.

The loss of commercially insured patients, whose insurance payments are significantly higher than those of government-sponsored insurance for the same services and treatments, has contributed to hospitals’ staggering losses to charity care.

In Hamilton County, hospital charity care losses totaled nearly million in 2008, compared to million in 2004.

More than million of the losses that year were absorbed by Erlanger Health System, Chattanooga’s safety net hospital.

Hospitals have felt the pain of providing more and more uncompensated care, said Craig Becker, president of the Tennessee Hospital Association.

But the pain doesn’t stop there. Employers and individual consumers are feeling it in the wallet, too.

As providers are forced to cost-shift their losses from uninsured patients to commercially insured patients, private insurers have raised their monthly rates to customers, contributing to more employers and individuals being unable to afford private insurance, Becker said.

“The big problem we’ve seen is nobody wants to pay for health insurance,” he said. “It’s kind of a death spiral of, the more people dropped (from insurance), the higher the commercial rates go, the more people dropped.”

Even as total hospital admissions declined by a few percentage points, uninsured admissions grew 123 percent between 2004 and 2008, driven by both cuts to TennCare and recent losses in employer-sponsored health care due to the economic recession, according to the report compiled by the Ochs Center for Metropolitan Studies and released today.

The annual Ochs report focuses on health in the six-county metro region including Hamilton, Marion and Sequatchie counties in Tennessee, and Catoosa, Dade and Walker counties in Georgia.

The 2010 report provides a sobering overview of local health statistics, from high smoking and obesity rates, to an age-adjusted death rate that exceeds the national average, and one of the state’s highest infant mortality rates, in Hamilton County.

“We tend to focus on those areas where it appears Chattanooga and Hamilton County lag, because from our perspective that means there’s an opportunity” for improvement, said David Eichenthal, president and CEO of the Ochs Center.

The report gives a detailed picture of the local health care system on the eve of the implementation of federal reforms, and on the heels of a severe economic downturn. A breakdown of who is paying for hospital patients’ care shows patients’ heavy reliance on government-funded health insurance.

Nearly two-thirds of 2008 hospital admissions were covered by government-sponsored health care: either TennCare, the state’s Medicaid program; Medicare, the federal program for the elderly; or Cover Tennessee, the report said.

Across the six-county metro region, 16.3 percent of people were enrolled in the state’s Medicaid program. One in four people in Sequatchie County get their health care through TennCare.

Emergency rooms locally also are experiencing a shift as the number of uninsured emergency department visits rose from 24,797 in 2004, to 40,140 in 2008, an increase of 61 percent. Visits from those with private coverage dropped from 70,534 to 67,605 in the same period.

Local emergency physician David Seaberg pointed out that total emergency room visits increased by 7.8 percent in that time period. However, the disproportionate rise in uninsured ER visitors could indicate that more uninsured people are skipping routine care and allowing illnesses to worsen into true emergencies, he said.

“You’re seeing the uninsured are often probably sicker when they go in, because they don’t have insurance and they do wait” to see a doctor, said Seaberg, who is dean of the University of Tennessee College of Medicine in Chattanooga.

The hospital industry supported the health care legislation passed into law in March, which is expected to bring millions of people into the private or public insurance marketplace, Becker said. But even if more people get covered, hospitals are still worried about low reimbursement rates from public programs like TennCare, which already play a major role in community hospitals’ budgets, he said. Today TennCare only pays 64 percent of a hospitals’ costs to provide care, he said.

“While it’s coverage, it’s problematic in terms of we still would have to do cost shifting,” he said.

DEATH TRENDS

Many of the major killers in the county are related to lifestyle factors, such as smoking and maintaining an unhealthy body-mass index. Of the 3,239 Hamilton County residents who died in 2008, the leading causes of death were heart disease, cancer, chronic lower respiratory disease, stroke, Alzheimer’s disease and diabetes, much like the national trends, the report said.

Obesity is a risk factor for almost all of those conditions.

In Hamilton County, half of people ages 18 to 34 were obese or overweight, compared to 74 percent of people 55 to 64. Sixty-three percent of people with a high school education or less were overweight, compared with 60 percent of college graduates. And 70 percent of people earning more than ,000 were overweight or obese, compared to 65 percent of those earning less than ,000.

Statistics notwithstanding, local residents have an optimistic view of their health, according to the report. Nearly two-thirds of Hamilton County residents reported that they are in excellent or very good health.

But black residents of Hamilton County were one-third less likely than whites to report being in excellent or very good health, and more than one-quarter reported they were in poor health.

Responses also varied by income level: 75 percent of people earning more than ,000 reported they were in excellent or very good health, compared to just 53 percent of those earning under ,000.

Racial disparities persisted in the report, as deaths from diabetes were 2.5 times higher among blacks than whites in Hamilton County, and heart disease-related deaths were 61 percent higher among blacks.

Other disparities were worrisome, and confusing, to researchers: Although cancer mortality rates were almost equivalent to the national rates, the Alzheimer’s death rate in Hamilton County was almost double the national rate.

Mortality from Alzheimer’s locally is also 31.4 percent higher than the statewide rate, and the reasons are unclear.

That disparity has been persistent since the Ochs Center first reported it in 2006, and warrants serious investigation, Eichenthal said.

“The reason we keep highlighting it is that it’s either a really interesting reporting issue, or a really serious health issue,” he said.

More elderly people moving to the area, as well as local doctors that are more attuned to a diagnosis of Alzheimer’s, are the likely reason for the statistic, said Dr. John Standridge, director of the geriatric medicine fellowship at the University of Tennessee College of Medicine in Chattanooga.

“Instead of a disease cluster in the area, I think doctors are just better at listing it” on death certificates, he said. “For a while, doctors wouldn’t even diagnose Alzheimer’s because they thought there wasn’t that much they could do about it, so they kind of brushed it under the carpet.”

BIRTH TRENDS

The health of babies born in Hamilton County is not equal across racial lines: Nearly 20 percent of babies born to black mothers weighed under 5.5 pounds, compared to about 7 percent for whites and Latinos.

Babies born underweight, typically those born premature, are at high risk for complications that can result in disabilities or death.

Single motherhood is also on the rise in Hamilton County. In 2008, 45.4 percent of Hamilton County births were to single mothers, compared with 39 percent in 2001. Nearly 82 percent of black mothers who gave birth in 2008 were unmarried.cq

On a national level, most of those single moms aren’t teens, said Julie Baumgardner, of First Things First, a nonprofit focused on strengthening families in Hamilton County. Unwed mothers tend to be women between the ages of 19 and 29, she said.

(In Hamilton County, births to teens between the ages of 10 and 19 declined from 14.8 percent in 2002 to 12.5 percent in 2008, following a steady increase in the earlier part of the decade.)

Much of the increase in unwed motherhood has to do with a growing cultural acceptance of the practice, Baumgardner said.

“People are definitely choosing to live together and have children together,” she said.

However, many are living in poverty without the help of the baby’s father, she said. All babies born to unwed mothers face greater risk for a slew of dangers: the risk for being abused, living in poverty, becoming an abuser or ending up in jail, she said.

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Health Care Bill Would Bring Higher State Medicaid Costs

February 6th, 2011

The health bill passed by the House of Representatives Sunday would cost Nevada taxpayers an extra 3 million from 2014-2019, to provide health care to the needy.

According to early state estimates, the bill would make an additional 70,000 residents eligible for Medicaid. The state would be mandated to cover another 8,000 individuals who are now eligible but have not applied to be covered by the state health insurance program for the poor.

About 209,000 Nevadans are currently covered by Medicaid.

Including state and federal money, “the total cost of reform is .3 billion,” said Mike Willden, director of the state Department of Health and Human Resources.

Willden went through the numbers for the Nevada Vision Stakeholder Group, formed to develop a plan for the future, looking ahead as much as 20 years.

Meanwhile, Gov. Jim Gibbons railed against the costs of the bill in a written statement Monday: “The bill disguises its true cost by shoving Medicaid expansions down to the state level and shuffling Congressional Budget Office estimates into later years so it appears to save federal tax dollars. It is an insult to those who truly care about meaningful health care reform.”

But Jon Sasser of Washoe Legal Services said during the Vision Stakeholder meeting the bill will expand the number of people eligible for Medicaid and that should put less stress on counties, which handle medically needy cases. “It means extra millions of federal dollars coming into our state,” Sasser said.

Most of the health care bill doesn’t kick in until 2014, Willden said. Some states are starting early, but Willden said he doesn’t see Nevada doing that because of its budget shortfall.

The federal-state dollar match for Medicaid is 50-50. Federal stimulus funds pushed that to a 64 percent federal match, saving the state million to million a quarter. But after the stimulus money expires Nevada will be back to picking up the 50 percent share, Willden said.

Willden said only 8 percent of the population is covered compared to 14 percent in other states. The state spends 5 per capita compared to the national average of ,021.

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Health Care Costs And Bankruptcy Amongst The Elderly

January 14th, 2011

The rise in bankruptcy filings among the elderly isn’t a recent phenomenon or a reflection of the current recession. Limited incomes and high out of pocket costs have contributed to the increase in bankruptcy rates. Medicare coverage is fairly comprehensive but does not cover everything and does not have an out-of-pocket cap. If you have a serious illness or need nursing care the medical bills can add up fast.

A University of Michigan Law School study found that the fastest growing segment of the population filing for bankruptcy is age 65 or older. According to AARP, the percentage of those aged 65 to 74, filing for bankruptcy, rose 178 percent between 1991 and 2007 but the biggest rate increase was for those between ages 75 and 84. The bankruptcy rates for this age group increased by 433 percent. Professor John Pottow author of the University of Michigan study says, “The findings are both striking and ominous.”

Lifetime uninsured health costs can be a staggering amount according to the Center for Retirement Research at Boston College. A married couple at age 65 will have spent 7,000 on insurance premiums, out-of-pocket and home healthcare costs and that figure excludes long term care. If nursing care is included the lifetime amount rises to 0,000.

Fidelity Investments research found that the average monthly cost for healthcare is 5 and is second only to the cost of food. Retiree expenses for 2010 are 4.2 percent higher than 2009 but have increased by 56 percent since 2002. Contrasting that rate is the fact that consumer prices are only up 1.1 percent for 2010.

According to Melissa Jacoby, a law professor at the University of North Carolina at Chapel Hill, “Chronic conditions, drug costs and nursing home costs are a big area of concern.” High out of pocket expenses and the cost of financing those expenses leads to increased bankruptcy filings. Research by Melissa Jacoby has shown that one-third of people filing bankruptcy for medical reasons have used a credit card for those expenses. Jacoby adds, “And when people put those expenses on a high-interest rate credit card, the financial burden of those costs escalate.”

The Affordable Care Act (ACA) aims at providing some relief to the health care costs afflicting the elderly. The gap in Medicare Part D prescription coverage for those with high expenses will be closed by 2020. The drug subsidy, Extra Help, which pays 100 percent of premiums for low income seniors will be improved by the ACA. Also, the ACA will add free preventive care to Medicare beginning in 2011. This early intervention will aid in preventing catastrophic health care costs.

There are some ways to plan for the health care expenses that will occur during retirement.

Purchase a Medigap policy. Medicare Part A covers the cost of hospitalization for up to 150 days with you being responsible for co-pays. A catastrophic illness or skilled care over the 150 days leaves you responsible for the additional costs. If you purchase a Medigap policy during open enrollment then insurance companies cannot refuse to provide insurance or charge higher premiums due to pre-existing conditions. This type of additional health coverage caps out-of-pocket expenses and protects you from any catastrophic expense.
Consider purchasing long-term care insurance (LTC). This insurance will protect you from nursing home expenses. On average, one-third of individuals turning 65 in 2010 will require three months of nursing home care and 24 percent will require nursing care for more than a year. In order to get reasonable LTC coverage rates and avoid being rejected for health issues, apply for coverage when you are in your late 50′s or early 60′s.
Research insurance plans and focus on out-of-pocket expense and understanding all of the benefits. Fidelity senior vice president Sunit Patel says, “The key question is, ‘What is my maximum out-of-pocket expense in any given year?”
When saving for retirement include the cost of healthcare in your savings. Patel says. “Just as you would save to finance college education or a general retirement goal, is there a percentage or a specific account earmarked for healthcare?”
Don’t plan on always being healthy. People who end up paying higher Medigap or LTC premiums are those who believed they would never need it. Plan for the worst but expect the best.

Health care costs are a major expense especially for the elderly whose options are limited when faced with a financial crisis. Planning for future health care costs by following the above suggestions will help ease the financial burden of retirement.

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How to Save on Health Care Costs

December 13th, 2010

In the long run, prevention is the key to both better wellness and lower health-care costs. The nation and each of us individually should put there energy and resources here. Over time, it is more important than addressing the high cost of new technologies and drugs or their incorrect overuse.

We focus on treating illness when it occurs and pay for nursing assistants but not on preventing it in advance. Which means today the U.S. basically has a medical system instead of a health care system.

According to a recent New England Journal of Medicine article, there are about 465,000 preventable deaths per year in the U.S. from smoking, 395,000 from high blood pressure, 216,000 from obesity, 191,000 from inactivity, 190,000 from high blood sugar, and 113,000 from high cholesterol.

These are for the most part due to our lifestyles: One-third of Americans are too heavy, another third are obese, and 20% smoke. We eat too much packaged and prepared food rather than nutritious foods, and we do not exercise. This issue makes for paying out money for health care, Nursing Asisstants and hospitalization. Even children’s physical activity now declinesOur own lifestyles are mostly to blame for needing care from nursing assistants or hospitalization: A third of Americans are overweight, another third are obese, and 20% smoke. We eat too much packaged and prepared food rather than nutritious foods, and we do not exercise. Even children’s physical activity now declines.

This helps explain why the U.S. ranks 39th for infant mortality, 43rd for female mortality, 42nd for male mortality, and 36th for life expectancy — but is first for per capita spending on health care, nursing assistants and hospitalization. Clearly, there is something frightfully wrong with this figure. There will be a diabetes epidemic, more heart disease, cancer, arthritis and other chronic illnesses. Life spans will shorten rather than lengthen unless we seriously start working on preventing these diseases.

I firmly believe that each of us must each take responsibility for our own preventive health care. That said, other players in society should assist us in the following ways:

Our government should insist that restaurants post calorie counts and fat content and schools restrict the accessibility of sodas and other non-nutritious foods in cafeterias. In addition, it can provide a food pyramid — recommended diets or eating plans — that is not influenced by vested interests. Something our government can do is insist that restaurants post calorie counts and fat contents. Schools should deny the availability of sodas and other non-nutritious foods in cafeterias. In addition they can provide a food pyramid, recommended diets or eating plans, that are not influenced by vested interests.

Second, our employers should provide wellness programs like Safeway’s, which encourage staff to utilize smoking-cessation, weight-reduction, stress-management, and nutrition counseling at no charge. Those who participate are given a decreaseIn a Wall Street Journal op-ed describing the program, CEO Steven A. Burd reported that over four years Safeway’s per capita health-care costs (including both the company’s and employees’ portions) did not rise while those for most American companies had increased 38%. In addition, the company had less absenteeism and higher employee productivity. Our employers should provide health programs like Safeway’s, which encourage staff to join smoking-cessation, weight-reduction, stress-management, and nutrition counseling at no charge. Those who participate are given a reduction.

Lower premiums should be offered by insurance plans to subscribers for not smoking, for being at reasonable weight, and for exercising.

Physicians, especially primary care physicians, should spend the time necessary to provide good preventive medicine, including counseling, screening tests (high blood pressure, weight , cholesterol, cancer), and immunizations.

Prevention is of value at any age. At the Erickson Retirement Communities, residents can opt for a program that includes health-promotion classes for all (similar to Safeway’s) and care coordination for those who do develop a chronic illness and need nursing assistance. The physicians limit themselves to about 400 patients (compared to about 1,300 to 1,500 for most primary care physicians) and offer same same-day visits and as much time as needed per visit. They use an electronic medical record system, nursing assistants assisting with care coordination, visits to each hospitalized patient, and an automatic office visit within 72 hours of a hospital discharge.

The results are striking: lesser hospitalizations, shorter lengths of stay for those who are hospitalized, and a drop in the “bounce rate” (i.e., unplanned readmissions to the hospital in the 30 days after discharge) from the national Medicare average of (an outrageous) 24% to less than 10%. Basically, better health, better care and reduced costs.

To sum it all up, a combination of nudges and incentives can help us in achieving our responsibilities for health promotion and disease prevention. These responsibilities commensurate with the new right of Americans to have insurance.

This would be a start toward a true health care system and away from a medical care system.

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Health Care Costs is Rising – What you Need to Know

December 10th, 2010

Americans pay more than one and a half trillion dollars for medical care each year and costs related to all manner of health care, such as prescription drugs, continue to skyrocket. While some of reasons behind this booming bill are understandable, Americans caught in a cash crunch might be surprised to find out some of the lesser-known causes of high health care costs.

The words health care might invoke images of doctors, nurses and hospitals, but the reality is that the medical field is a business and a ruthless one at that. Individual practitioners, researchers and participants may have wonderful intentions and a true desire to help people, but the structure of the American health care system ensures profit is the number one issue of importance.

Here are some facts that may help explain the high costs of American health care:

Pharmaceutical research and development companies spend roughly billion each year on R&D, and about the same amount on advertising and self-promotional marketing activities.

There is sure to be a grin on your face once you get to read this article on health insurance. This is because you are sure to realize that all this matter is so obvious, you wonder how come you never got to know about it!

Additionally, drug companies have as many sales people as there are doctors in the United States. One of the responsibilities of this sales force is to convince doctors to attend pharmaceutical company-sponsored seminars where drugs are showcased.

According to some economists, the purchase of new technology is responsible for more than 50 percent of new health care spending over the last three years.

Much of the money Americans pay for health care finds its way into the rising profits on health care-related products and services such as the provision of medical insurance. Even higher costs have been forecasted for the future, especially for prescription drugs.

For many Americans who are unable to afford the health care they need, rising costs represent an ever-increasing barrier to medical services and products. The financial burden is also felt on the larger national scale with about 15 percent of gross domestic product going toward health care costs. That is equal to about one quarter of the annual federal budget.

Comparatively, Canada invests around 10 percent of its GDP on its public health care program. Unlike the United States, Canada’s health care program is universally available to all citizens and permanent residents without cost. Other countries, such as Germany, where there is a public/private delivery system model for health care, manage to serve their populations for even less while still having better longevity than Americans. This proves that the quality of health care does not rise proportionally with the amount of money spent to attain it.

While many Canadians supplement their universal health care with added insurance to cover the cost of medication and perks such as semi-private or private hospital rooms, health care insurance is much more essential in the United States. Unfortunately, costs have been rising dramatically, making health care insurance out of reach for many Americans. Currently, more than forty million Americans do not receive any kind of health care benefit.

Developing a vision on health insurance, we saw the need of providing some enlightenment in health insurance for others to learn more about health insurance.

For employers, providing health care insurance for employees is also becoming more expensive, with increases dramatically outpacing inflation rates. Some years, the difference is four or six fold. Even if premiums were to remain static, offering health care insurance to employees still costs several thousand dollars per worker. For smaller companies, or for those who employ a large number of people, these costs can be prohibitive.

Measures to reduce health care costs are always under consideration, though many are not popular choices. Suggestions that have been put forward by various sources have included:

Increased drug awareness and education. Millions could be saved if health care insurance covered only generic versions of drugs that have been proven just as effective as their more expensive brand name counterparts.

Terminate expensive treatment options will only add a short amount of time to a patient’s life, particularly if it will not be quality time (i.e. patient is in a coma).

Promote preventative care such as smart lifestyle choices, proper nutrition and exercise.

Examine to ways to control drug advertising to consumers. There is speculation that advertising has led to prescriptions of non-necessary drugs.

Limit malpractice liability so doctors and medical professionals do not feel pressured to cover themselves by ordering unnecessary tests to substantiate conditions they already know to be present.

To view our recommended sources for health insurance, or to read more articles about health insurance, visit: http://www.insurance-quote-puppy.com

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Health care reform’s costs rankle states

October 7th, 2010

As Democrats in Congress work feverishly to meld separate House and Senate health care bills into a single blueprint for an historic overhaul of America’s health care system, state leaders are bracing against the potential costs to states that they say could devastate already battered budgets.

Some states also are protesting that the legislation’s efforts to set minimum standards for health insurance coverage across the country will “reward” low-performing states, while penalizing others that have already expanded their eligibility for Medicaid, the state-federal program for the poor that is the nation’s largest health insurance program, covering 60 million low-income or disabled Americans.

“It is not reform to push more costs onto states that are already struggling, while other states are getting sweetheart deals,” California Gov. Arnold Schwarzenegger, one of the few Republican elected officials to have publicly supported the president’s health care reform efforts, said in his state of the state address earlier this month.

Schwarzenegger figures the legislation would cost California, which had already expanded its safety net, an additional billion to billion every year. At the same time, the state is currently looking to close a billion deficit in its current budget after plugging billion in shortfalls throughout last year.

“Health care reform, which started as noble and needed legislation, has become a trough of bribes, deals and loopholes,” said the action-star-turned-governor, who is in the final year of his term.

Tennessee Gov. Phil Bredesen (D) said he was “’moderately outraged” at the inconsistent treatment states could receive under the bill, the Nashville Business Journal reported. Bredesen, a former health care executive, estimated the Medicaid expansion could cost his state as much as .2 billion over five years at a time when the state is looking at a .5-billion budget gap.

Riling politicians of both parties are the deals brokered on Capitol Hill to secure passage of the bill in the Senate. Nebraska, for example, was promised that the federal government would pick up the full cost of expanding Medicaid there, even past the first few years of implementation, while Louisiana was assured an extra 0 million in Medicaid funding.

Alabama Gov. Bob Riley (R) said the Nebraska deal “reeks to me of legalized bribery,” according to the Montgomery (Ala.) Advertiser while attorneys general in more than a dozen states have threatened to sue, arguing the preferential treatment is unconstitutional.

And Republican Nevada Gov. Jim Gibbons also vowed to sue the federal government to stop the health care plan if it becomes law, calling it “ill-conceived” and “illegal.”

Meanwhile, Nebraska’s U.S. Sen. Ben Nelson (D), a former governor, announced Jan. 7 he is working with Senate leaders to change the pending health reform legislation to give all states the extra Medicaid funding promised to Nebraska in the health care bill. “Every state should be, and will be, treated the same,” he said.

If and when President Obama signs a bill, responsibility shifts to the 50 states to implement the changes to make medical coverage more affordable and more accessible to many of the 45 million Americans currently uninsured. Under both the House and Senate versions passed last year, at least 15 million could be added to the Medicaid rolls.

Besides expanding the Medicaid rolls, states also would be involved with helping other uninsured individuals who earn too much to qualify for Medicaid and who don’t get insurance through work by setting up “exchanges,” or marketplaces, where subsidized coverage would be offered to these individuals and small businesses. Under the Senate bill, states would set up their own exchanges, while the House measure would create a federal exchange, but allow states to set up their own — a major difference yet to be resolved.

The Congressional Budget Office estimates an overall pricetag for health care reform over the next nine years at billion under the Senate bill and billion under the House measure. The big question for states is how much of this burden will be passed along to them. Costs to individual states will vary widely. How much depends on how rich a state is, how many additional residents states will add to their programs, which funding formula Congress ultimately adopts and whether a state’s congressional delegation cuts a lucrative deal.

All of this comes as states try to weather declining revenues and growing demands for their services in the leanest budget years in a generation. States have already closed gaps of 0 billion from 2008 through 2010 and are facing deficits of at least billion for fiscal 2011, according to estimates from the National Conference of State Legislatures. Collectively, states and the federal government spent more than 5 billion on Medicaid in 2007and the costs are climbing.

Lawmakers in more than a dozen states are pushing legislation that would allow their states to opt out of federal health care reform, arguing that a key tenet of the health care reform — to require people to buy health insurance or face a penalty — is unconstitutional. The campaign is led by the American Legislative Exchange Council, which advocates limited government. Arizona lawmakers have approved a measure to do just that, but voters will first have to approve it this November. A similar ballot measure in Arizona was narrowly defeated in 2008.

Governors assail reform in `state of the state’ addresses

Schwarzenegger was not the only Republican governor to use the annual state of the state address this month to blast the federal health care legislation that Democrats were hoping to deliver to Obama in time for the president’s State of the Union address, typically delivered in late January or early February.

“Washington’s alleged solution will cost Arizona another half-billion dollars every year,” said Arizona Gov. Jan Brewer whose state is still grappling with a .4-billion deficit for the current fiscal year. “Only in Washington can they look upon massive federal entitlement programs bleeding red ink — and propose an even bigger new entitlement program,” she said in her state of the state address.

And in Idaho, Gov. C.L. “Butch” Otter estimated that the legislation would add as much as a half-billion dollars to Medicaid costs there. “Folks, that kind of unprecedented expansion would force us here at home to make even more difficult and painful decisions about what gets cut from public schools, higher education, corrections, public safety and other fundamental services,” he said during his annual address.

Governors of both parties started expressing concern about the costs federal reforms might have on states since last summer, but Republican governors have been the most vocal. Twenty GOP governors and governors-elect recently wrote in a letter to Capitol Hill that the current legislation “omits reform and saddles American taxpayers for generations to come,” while Mississippi Gov. Haley Barbour, chairman of the Republican Governors Association, had said in a statement that the health care reform legislation “would have a catastrophic impact on state budgets.”

Sweeping changes, costs

When it was created in 1965, Medicaid was designed for the uninsured poor, but not all poor people were eligible. The program targeted low-income pregnant women, uninsured children, low-income elderly, the blind and disabled and some parents in low-income families. States were left to determine how poor working adults qualified for Medicaid, but childless adults were left out completely, even if they were penniless, unless a state got a waiver from Washington to cover them.

Under both the House and Senate versions of the legislation, all states would be required, for the first time in Medicaid’s history, to offer coverage to childless adults, parents and others with incomes under a certain level. The cutoffs are calculated using the baseline of federal poverty-level incomes in the U.S., which are ,830 for a single person, for example, or ,050 for a family of four in 2009.  

In the House bill, all families of four earning up to ,075, or 150 percent of the federal poverty level, could now qualify for coverage, while the Senate puts the level at ,300 for families of four (133 percent of poverty).

About a dozen states, including New York, already cover working parents at these levels and some even higher, but other states cut off Medicaid eligibility at much lower incomes — for example, Texas at 27 percent of the federal poverty. Arkansas offers coverage to only those whose incomes are up to 17 percent of the federal poverty level, or about ,750. These states with lower cutoffs will have many new people who will be eligible for their states’ Medicaid rolls, under any new legislation.

“The big shift we will see if health reform comes to pass it to change eligibility” from a system that varies across states to “a national eligibility standard for adults and children alike, based solely on income,” said Diane Rowland, executive director of the nonprofit Kaiser Family Foundation’s Commission on Medicaid and the Uninsured.

“We are looking to health reform really leveling that field, especially for adults,” she said at a recent roundtable with reporters. The commission has a side-by-side comparison of key provisions of the House and Senate bill, current Medicaid eligibility levels for low-income adults, background information about expanding Medicaid and state-by-state health data.

Washington’s share of states’ Medicaid spending varies, and that will continue even after health care reform is implemented. Generally, the richer the state, the less it gets, since the federal match is based on states’ average per-capita income.

So California and New York, for example, typically receive the minimum 50 percent federal matching rate, while Arkansas, Mississippi and West Virginia get more than 70 percent. (The stimulus package temporarily increased all states’ matching rates until the end of this year.)  

Under the reform measures, the federal government would pick up most of the tab of covering people who would become newly eligible for Medicaid. The House proposal would pay entirely for Medicaid expansion until 2015 when states then would contribute 10 percent of the costs of adding this new group to their rolls. The Senate bill is more complicated, but generally, the Congressional Budget Office estimates that the federal government would pay about 90 percent of the costs for bringing newly eligible people onto state Medicaid rolls.

Generous states cry foul

But many states that for years have gone the extra mile and provided benefits to more people under Medicaid worry that they will be left out under the Senate bill.

The problem, these more generous states say, is that many people in their states who are already eligible for Medicaid have not signed up. Even if these people sign up after the health care bill becomes law, they won’t be considered “newly eligible,” and the states would continue to get reimbursed at their current, lower match rates, not the higher rates that the federal government will pay for newly eligible people.

Schwarzenegger said California is being penalized for expanding its safety net and has pulled his support for the bill. Under both the House and Senate versions, Schwarzenegger says the federal government will shoulder almost the entire cost for states like Texas, while California would have to pay for half the cost of covering newly eligible Californians. “Thus, states that made little or no effort to expand coverage to low-income families are rewarded … and states that did expand coverage, like California, are punished,” he recently wrote.

New York Gov. David Paterson (D) likewise worries his state will get hit financially for having already extended Medicaid to parents making up to 150 percent of the poverty level. New York also is just one of five states that currently provide coverage comparable to Medicaid to childless adults making up to 100 percent of the poverty level.

“In exchange for New York’s early commitment to coverage, [the Senate bill] denies New York federal funds extended to nearly every other state in the nation,” he wrote in letter with New York City Mayor Michael Bloomberg (I) to Senate leaders. Paterson said he figures the bill would add an additional billion a year in new Medicaid costs. New York faces a .2-billion budget gap in its current budget even after raising more than billion in new taxes and fees last year.

The Senate bill carves out special matching funding levels for Massachusetts and Vermont, which both in 2006 launched major health care reform efforts and would not have qualified for additional federal money under the bill’s formula. Massachusetts Gov. Deval Patrick (D) said in a statement he was grateful that “the progress that Massachusetts has already made is recognized and protected,” in the Senate bill and that he was “heartened that the nation as a whole is moving towards our model.”

But even states that will get generous amounts of federal funds are wary, especially state Medicaid directors who will be on the frontlines. Alabama Medicaid Commissioner Carol Steckel said that under the reform, states would have to track newly eligible people separately, since the federal government would pay a bigger match for new enrollees. States also have to process these new applications.

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