The impact of ObamaCare on doctors and patients, companies inside and outside the health sector, and American workers and taxpayers
United States health spending is projected to rise 5.3 percent in 2018, reflecting rising prices of medical goods and services and higher Medicaid costs, a U.S. government health agency said on Wednesday, an upward trend it forecasts for the next decade.
The increase represents a sharp uptick from 2017 spending, which the U.S. Centers for Medicare and Medicaid Services (CMS) now estimates to have been a 4.6 percent climb to nearly $3.5 trillion. It had previously forecast a 2017 rise of 5.4 percent.
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Galen Institute Senior Fellow Doug Badger has written a paper, published by the Taxpayers’ Budget Office of the National Taxpayers Union Foundation, in which he analyzes CBO’s expectation that the Center for Medicare and Medicaid Innovation (CMMI) would reduce Medicare spending by $45 billion over ten years. The forecast is flawed, Badger concludes, as CBO “ascribes unobserved and unobservable savings to projects that CMMI has not yet undertaken (and may never undertake).” He says the CBO’s judgements “are in some cases questionable, in others mistaken and in still others rendered obsolete.”
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Amazon is looking to turn its medical-supplies business into a major supplier to U.S. hospitals and outpatient clinics. The online retailer is pushing hard to expand its foothold in medical supplies, creating a marketplace where hospitals could shop to stock emergency rooms, operating suites and outpatient facilities.
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Congressional House leaders plan legislation this year to tackle deficits by curbing entitlements, just weeks after digging a deeper deficit hole with a tax plan that will add an estimated $1.5 trillion to the national debt over the next 10 years.
Entitlement reform is certainly needed. Even before the tax legislation, the Congressional Budget Office (CBO) forecast a major rise in federal deficits, from 2.9% of gross domestic product (GDP) in 2017 to nearly 10% within 30 years. Over that period, says the CBO, health spending, and in particular Medicare, will be one of the largest drivers of spending.
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Amazon announced Tuesday that it will join with J.P. Morgan Chase and Berkshire Hathaway to wade into the jungle of U.S. health care, and the news slashed billions in stock-market value from health-care companies in mere hours. American health care could benefit from creative destruction, though this would be Amazon’s toughest fixer upper to date.
The announcement offered no details—nothing on if the companies will set up provider networks or walk-in clinics or what. But an early red flag: The press release says the group will form an “independent company that is free from profit-making incentives and constraints.”
The problem with U.S. health care is not an incentive for profit, which has driven innovation and cures for diseases like hepatitis C. The fundamental problem is that the cost of a service is disconnected from underlying value. Patients don’t know the price of services and consume health care as if it’s free since government or employers are the third-party payers for most Americans.
Across plans and states, the expansion population experienced high disenrollment rates, indicating that, as in other Medicaid eligibility groups, there is substantial churn in this population.
• Even after adjusting for age and gender, claims costs increased steadily over time, suggesting that expansion enrollees have complex and/or chronic conditions.
— For some enrollment cohorts, average claims costs decreased modestly in the second half of the first year of enrollment, suggesting some initial pent-up demand for services, though claims costs increased steadily from that point forward.
• Across enrollment groups, per member per month spending on prescription drugs increased with enrollment duration.
— Among enrollees who remained enrolled the longest, inpatient claims initially made up the largest share of claims costs, but were surpassed by prescription drug claims by month 8 of enrollment, on average.
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Americans are familiar with the horrors of the opioid crisis, and government at every level has tried to respond with spending on treatment programs and more. But one area that deserves more scrutiny is how government programs may be contributing to the epidemic.
Wisconsin Senator Ron Johnson released a report this month from the Senate Homeland Security and Governmental Affairs Committee that connects the dots between Medicaid and the opioid epidemic. The report doesn’t claim too much, conceding that everything from too many prescriptions to drug marketing contributed to the epidemic.
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- Health care is at the top of a group of issues that voters want 2018 midterm candidates to talk about, but it’s a much higher priority for Democratic voters (39 percent) and independent voters (32 percent) than Republican voters (13 percent); and a lower priority than other issues among voters living in areas where there are competitive 2018 House, Senate, or Governor races.
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Democrats and activists fought off Obamacare repeal last year by stoking public outrage and stirring protests. Now they want to make the health law the defining issue in 2018 races at the congressional, state and local levels. The grassroots groups at the forefront of the Obamacare fight are expanding their focus to rally opposition to virtually all Republican efforts to alter the health care system, hoping to capitalize on the backlash to repeal and turn it into a wave of victories come November.
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War On Drugs: We recently speculated that ObamaCare might have contributed to the nation’s opioid epidemic, which has in turn driven down life expectancy in this country for the past two years. A new Senate report adds further support to this connection.
The report, produced by the Homeland Security and Government Affairs Committee’s majority staff, provides convincing evidence that ObamaCare’s Medicaid expansion is at least partly to blame for the recent opioid epidemic.
The Senate report notes that those with a Medicaid card can get prescriptions for opioids, such as oxycodone, for as little as $1 for up to 240 pills. Those pills, however, can be sold on the street for up to $4,000.
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