Tag Archives: health care

North Carolina’s $51 Billion Gamble

Brad DeLong has some thoughts about Obamacare and here in NC this one bites:

The willingness of state-level Republican politicians to hurt their own people–those eligible for the Medicaid expansion, those who would benefit from a little insurance counseling to figure out how to take advantage of subsidies, those hospitals who need the Medicaid expansion to balance their finances, those doctors who would ultimately receive the subsidy dollars–is, as John Gruber says, “awesome in its evilness”. The federal government has raised the money, and all the state has to do in order to get it spent is to say “yes”. Especially in contrast with the extraordinary efforts state-level politicians routinely go through in order to attract other spending into their state, whether a BMW plant or a Social Security processing center, this demonstrates an extraordinary contempt for a large tranche of their own citizens. And when I reflect that a good third of that tranche reliably pull the lever for the Republican Party year after year…

To that point, here’s some encouraging news about North Carolina’s non-participation in Medicaid expansion:

North Carolina’s decision not to expand Medicaid coverage as part of Obamacare will cost the state nearly $51 billion in federal funding and reimbursements by 2022, according to research funded by theRobert Wood Johnson Foundation

It notes that North Carolina stands to lose $39.6 billion in federal funding between 2013 and 2022…

“States are literally leaving billions of dollars on the table that would support their hospitals and stimulate the rest of their economies,” says Kathy Hempstead of the Robert Wood Johnson Foundation.

The report notes that for every $1 a state invests in Medicaid, it will receive $13.41 in federal funds.

And here’s the real kicker:

The decision not to expand Medicaid coverage will leave 6.7 million U.S. residents uninsured in 2016. That includes 414,000 people in North Carolina.

Of course Obamacare isn’t perfect and Medicaid isn’t the end-all, be-all of health care insurance — DeLong himself says in his thoughts about Obamacare that “Where the Medicaid expansion has been allowed to take effect, it has taken effect. People are going to the doctor more, people are finding doctors to go to, and the only minus is one that we already knew: that Medicaid is not a terribly good way to spend our money in treating people with chronic conditions” — but it is still a better option than nothing and an improvement over the Emergency Room as primary care provider system that we’ve had.

What’s truly frightening to consider is where we’ll go from here. Without the funds our doctors and hospitals will be missing out on literally billions of dollars of reimbursement, almost 1/2 million citizens will be uninsured and will continue to use the emergency room as their primary caregiver, the hospitals will have to eat the cost and downward we spiral.

Health Care Rights

Have you heard about the SCOTUS decision in the Hobby Lobby case? If you live in American and haven’t heard about it then you might live in a cave, but here’s the gist of it:

The U.S. Supreme Court has upheld a decision whereby closely-held companies can request exemptions the Patient Protection and Affordable Care Act (ACA) coverage provision for some contraceptives because of the corporations’ founding family’s religious beliefs…

Much of the controversy over today’s decision derives from the fact that Hobby Lobby and Conestoga are not in the business of conducting religious services or overseas humanitarian missions as their primary business. They are for-profit companies. The ruling allows the corporations to refuse coverage because of the religious beliefs of individual leaders.

Beyond selectively singling-out women’s reproductive care, the decision raises the question of whether corporate leadership elsewhere might refuse coverage of other drugs due to religious beliefs.

A lot of the reaction I’ve seen online has focused on a couple of points: the weirdness of bestowing religious rights on closely held corporations using the argument that the corporation is an extension of the owners (that’s simplistic but I think gets to the heart of it); that the religious rights of the corporation/owners trumps the reproductive rights of their female employees.

I’d like to focus on the second point for a minute because I think the argument is a bit off and, quite frankly, misses the larger point. While it is regrettable that employers like Hobby Lobby would refuse to pay for insurance that covers all of their female employees’ contraceptive choices it doesn’t mean that those same employees can’t go out and get those contraceptives if they’re willing to pay for it themselves. Thus they aren’t denying them anything, they’re just not paying for it. That might seem like semantics, but I think it’s important because what it exposes is that corporate health insurance in this country is not a right for anyone.

Health insurance as we know it came into being in the World War II era as an incentive companies used to attract and retain employees who were in short supply at the time. As such, health insurance was never a “right” but was a benefit that came to be so commonplace that most employees started to view it as a right. Then something funny happened – companies realized they could shift the cost of health insurance back to employees and not suffer too many dire consequences and so they starting jacking up premiums and co-pays or simply doing away with health insurance all together. The result is a growing percentage of our population without access to health insurance, which means they forego preventive care and rely on ERs when they get sick, helping drive up health care costs for everyone.

The Clinton administration’s effort to deal with the rising health care problem twenty years ago was a notorious failure. ObamaCare started out as an ambitious plan to provide health care coverage for everyone, fought the “socialized medicine” stigma, went through a negotiation phase involving the health insurance cabal that resulted in the imperfect system being fought out in the courts today. You’d be hard pressed to find anyone happy with the system, except maybe for the millions of people who had NO access to health insurance pre-Obamacare and now at least have the option to buy it.

Long story short, while it’s easy to get hung up on the reproductive and religious rights arguments raised by the Hobby Lobby case, it would be a mistake to limit the scope of the conversation. The bigger question is why we can spend so much time and energy talking about our religious rights, women’s reproductive rights, our right to bear arms, etc. but we never seem to debate whether we should have a fundamental right to affordable, adequate health care and whether or not relying on private companies to provide it is the best way to approach it.

Health Care Offers Huge Investment Opportunity

Venture investor Fred Wilson sees the digitization of the health care sector as one of the great investment opportunities we’re likely to see:

Mary Meeker’s slide deck addressed this is bit. Here are a few of the big points from it:

  • Healthcare is now $2.8 trillion in the US, which represents 17% of GDP
  • Healthcare is being consumerized
  • Healthcare is being digitized
  • Digital Health Venture Investment was $1.9bn in 2013 (out of a total of $24bn)

We are looking for networks of users, patients, doctors, and other stakeholders in our health care who can transform the way health care is delivered. We only have one game plan at USV and look to play it in every market opportunity we see.

I am pretty certain the intersection of the Internet and mobile, the digitization of the health care system, and a desire for people to take more control over their health is going to be one of the biggest investment opportunities we will see in my lifetime. And its game on.

As we’ve seen here in Winston-Salem the process of digitization won’t always be pretty. We’ve seen a lot of news regarding the problems our large health care networks, particularly Wake Forest Baptist, are experiencing as they try to (finally) catch up with almost every other industry in the use of information technology. While these are very large problems, and people have lost their jobs as a result, they almost certainly have more to do with terrible implementation strategy from executives than with the technology itself. In the long run those providers should realize huge gains in efficiency, and the data they’re accumulating will provide untold numbers of opportunities for entrepreneurial companies to create products and services that benefit providers and consumers alike.

It’s about damn time and it’s great to see that some smart money people are ready to put their money behind some of these initiatives.

Ripple Effect

Rex Hammock has 10 Bold Small Business Predictions for 2014 and #9 is dead on:

This is a non-partisan prediction. If you love Obamacare, or hate Obamacare, this prediction doesn’t care. With the bungled launch of the Healthcare.gov online insurance market and the non-stop accusations slinging back and forth between the political parties, it’s been hard for small busines owners to separate fact from vitriol. But here’s one fact: millions of “nonemployee businesses” (a census bureau segment that are independent free lancers, developers, consultants, authors, artisans, etc., who, collectively, account for 4% of all U.S. sales and receipts, but represent the largest number business entities) are now able to obtain healthcare insurance at a competitive price, even if they have pre-existing health condition. Not having access to such insurance has held back lots of employees of lots of big companies from setting up their own shop. Here’s another fact: If a small business has less than 50 employees, the only requirement they have under the Affordable Care Act is to inform employees of the availability of private healthcare insurance sold through marketplaces administered through (depending on the option of a state) federal or state healthcare insurance marketplaces. As Mark Cuban recently told the Wall Street Journal, “As someone who owns chunks of small businesses, the one thing all those companies have in common is [that] buying and providing health care is not a core competency,” he says. “It’s expensive.” By removing the responsibility to provide coverage from these firms and giving it to the government, he says, “You’ve freed up money and time.”

My long-besieged wife has heard me say this for years – if the health care system in the US was fixed there would be an explosion of entrepreneurialism. It's hard to overstate how many people have been tethered to a deadend job because they needed the benefits. Imagine what they would do if that wasn't hanging over their heads and I'm sure that thought is a big motivator in the fight against health care reform.

America – Home of Bizarro Health Care

Bizarro World is a fictional planet introduced by DC Comics where things are the opposite of what you expect, where Superman isn't super. That's an apt description for the health care system in the United States, which is likely the only place on Earth where this story in the Wall Street Journal would not be shocking:

A Better LA, a decade-old Los Angeles nonprofit, said last week it was signing up 50 low-income people for health plans in California's health-insurance marketplace. The charity, which said it has the blessing of the state agency overseeing the marketplace, will pay $50 to $100 a month to cover the share of the people's premiums not already financed by federal subsidies.

Those 50 people are at the vanguard of a push that could shift the balance between hospitals and insurers across the nation. Nonprofits, including some hospitals, say paying premiums would ensure coverage for people currently uninsured who can't afford even a small monthly payment for health insurance.

But insurers say they can't make a profit unless the health-insurance exchanges created by the Affordable Care Act draw a balanced mix of healthy and sicker customers. The law's rocky start, many insurers fear, has already skewed the mix toward people in worse health. Help from nonprofits or hospitals could speed the arrival of less healthy customers into the exchanges, outpacing the arrival of younger, healthier people who might not cross paths with hospitals…

But such plans have drawn criticism. "It is a conflict of interest for hospitals and drug companies to pay patients' premiums and cost-sharing for the sole purpose of increasing utilization of their services and products," said Karen Ignagni, head of America's Health Insurance Plans, the health-insurance industry's trade group.

Jesus.

BCBSNC Affordable Care Plan Rates

Blue Cross Blue Shield of NC released their premium rates for their various Affordable Care Act plans and while the numbers are very general, which makes it impossible to compare directly to your current plan if you have one, and there's also no way of knowing which subsidies you might qualify for until you can plug your income numbers into the formula. Those subsidies will be significant for some people:

Consumers can purchase the same BCBSNC ACA health plans, and access subsidies, from the Exchange or directly from BCBSNC. BCBSNC’s buy online tool facilitates the transaction for those who qualify for a federal subsidy (consumers purchasing their own coverage with income levels between 100 percent and 400 percent of Federal Poverty Level2). The subsidy impact will be significant for some. For example, a person earning 100 percent of FPL could pay $19.15 per month for a Silver plan.

And then there's this tidbit:

ACA health plans generally offer richer benefits than plans many BCBSNC customers choose today, according to the insurer. In addition to requiring richer benefits, the ACA eliminates the use of gender or health status in setting premiums.

At work we have BCBSNC's Blue Options coverage. It's age-banded so every five years the rates go up pretty significantly – for instance when I turned 45 I cost a lot more to insure than when I was 44 – but when I compare my individual rate with the chart of sample plans on the BCBSNC announcement page I see that my premium is more than a 40 year old's platinum plan, but my coverage (70% of cost) is about the same as the silver plan. This leads me to believe that, all things being equal, my individual coverage might be cheaper under ACA than with Blue Options. 

Another factor working against us at the office is that we have a very small group of three families so we have experienced some very steep increases over the last few years as we each breach those five-year age bands. We've been lucky in that our employer has covered our individual coverage premiums – family/dependent coverage is 100% out of pocket – but the only way to continue that each year has been by increasing co-pays and deductibles, and reducing the percentage of expenses covered from 80% to 70%. If the premiums continue to rise at the 10-30% annual rate we've been seeing the last few years then we're likely going to have to start paying a percentage of premiums out of pocket as well.  Combine those increased costs with access to potential subsidies and all of the sudden those ACA rates look more and more appealing, especially if our employer agrees to raises in lieu of health coverage. 

My prediction? Lots of small employers will decide to forego the headaches of administering a health plan and save some money in the process by prodding their folks to utilize the marketplace. That, of course, is exactly what the marketplace administrators want.