Healthcare in a Minute – June 2017

By George W. Chapman

Understanding Trumpcare

It took over seven years, but the House finally managed to get enough votes, barely, to repeal the Affordable Care Act (Obamacare) and replace it with the American Health Care Act (AHCA or Trumpcare). The fate of the bill now is in the hands of a much more moderate Senate. Once enough votes were pledged, the bill was intentionally sent to the floor for a House vote before the Congressional Budget Office could take a look at the bill and figure out what the financial and coverage consequences would be. If you recall, the CBO estimated that the original version of the AHCA would cause 24 million people to lose coverage.

The revised bill sets aside $8 billion for pre-existing conditions or for high-risk pools. That sounds like a lot, but it is only $1.6 billion per five years. According to industry experts, about 226,000 people had pre-existing conditions covered by the ACA at a cost of $2.5 billion in 2011. So the $8 billion proposed by the AHCA would only cover about half the 226,000 people with pre-existing conditions. Employer plans could be impacted by the AHCA by a provision that could jeopardize the current cap on out-of-pocket expenses. The bottom line is sicker people will pay a lot more for their insurance or go without.

The latter option means hospitals and physicians will once again be faced with providing uncompensated care to the people who are the sickest and most vulnerable. Almost all of the industry’s major trade associations have expressed their concerns over potential reductions in insurance subsidies (cost-sharing reductions) including American Medical Association, American Nurses Association and American Hospital Association. The CBO analysis of the AHCA sent to the Senate should be out by the time you read this.

AHCA pre-existing conditions

The list is far more extensive and pervasive (ridiculous?) than you think. The AHCA would allow all commercial insurers to charge more to all their customers for the following: cancer, chronic obstructive pulmonary disease, Crohn’s disease, cystic fibrosis, depression, diabetes, Down syndrome, eating disorders, epilepsy, glaucoma, gout, heart diseases, heartburn, high cholesterol, hypertension, kidney problems, mental health issues, sleep disorders, TB and tooth disease, among others. This issue, along with cost sharing reductions, will get the most attention when the Senate takes a look.

Healthcare Dilemma

The healthcare industry has added a lot of jobs to the economy over the last 10 years and most of the jobs are good-paying jobs. The increase in hospital staffing has been in response to an aging population, increased regulatory burdens and increased demand for services as more people are insured. Reimbursements that have not kept up with increasing costs and the uncertainty over the AHCA (Trumpcare) have caused even the largest hospital systems to reduce staff. Brigham and Women’s Hospital in Boston announced plans to offer buyouts to 1,600 employees. Catholic Health Initiatives will cut 900 positions through layoffs and buyouts. The Anderson Cancer Care Center in Texas plans to cut 1,000 jobs. NYC Health & Hospitals announced organizational restructuring that would eliminate 600 positions across its system. Before the ACA was repealed, the Urban Institute estimated even a partial repeal of the ACA, let alone a full replacement, would increase uncompensated care to providers by about $1 trillion a year for the next 10 years. Many hospitals will face credit downgrades if the AHCA causes millions to lose their insurance. To make matters worse, as staffing cuts are made, hospitals must deal with increasing physician and nurse burnout.

Drug Prices

Americans use more drugs per capita than any other country. We also pay more for drugs than other country. Drugs now account for 10 percent of total healthcare spending. Recent accounts of price gouging by drug companies has brought the issue to the forefront. Even drugs made right here in the USA are cheaper in most other countries. The simple solution is already on the books. The FDA is empowered by the 2003 Medicare Modernization Act to allow drug imports to the USA, if they are deemed safe and less expensive. The drug lobby has been very effective at preventing anyone in the FDA or HHS from employing this provision. It is ultimately up to the president, who oversees HHS and the FDA, with one executive order.

VA Closures

The VA is contemplating closing more than 1,100 vacant and underutilized facilities in order to save $25 million a year and to shift more care to the private sector. President Trump recently signed a bill extending the period in which vets can seek medical care from private physicians and hospitals. The move toward privatization was recently accelerated by reports of long, often fatal, waits for care at certain VA facilities.

We’re No. 37

The World Health Organization ranks the healthcare systems in 190 countries. The rankings are based upon several factors including the overall health of the population; health disparities within the population (poor vs. rich; public insurance vs. private insurance); system responsiveness/patient satisfaction; distribution of responsiveness within the population (uninsured vs. insured; urban vs. rural); distribution of financial burden (who pays: government, employer, self). All things considered, the WHO ranks the U.S. No. 37. The top five countries are: France, Italy, San Marino, (an independent sovereign country within Italy); Andorra, (an independent sovereign country between Spain and France) and Malta. Other notables are: UK, No.18; Germany, No. 25; Canada, No. 30; Russia, No. 130; China, No. 144. In last place at No. 190 is Myanmar. The U.S. remains firmly entrenched as the No. 1 country for highest cost per capita at about $10,500 and percentage of GDP at about 18 percent. In the 1960s, healthcare was 5 percent of the U.S. GDP

George W. Chapman is a healthcare business consultant who works exclusively with physicians, hospitals and healthcare organizations. He operates GW Chapman Consulting based in Syracuse. Email him at gwc@gwchapmanconsulting.com.

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