Recently the President convened a group of insurance executives and business owners to the White House to discuss the current state of healthcare and to reinforce his desire to provide healthcare to more Americans. In a recent post on June 22
nd by Inside Health Reform stated:
"All sides in Monday's meeting involving President Barack Obama, health insurance executives and state regulators agreed that more needs to be done to confront rising health care costs, including addressing pharmaceutical costs, but the conversation did not produce concrete plans, participants said. One participant said the president balanced promises to hold insurers accountable for their rates with acknowledgments that some cost drivers are outside of their control."
Now reality is starting to hit. Renewal rates for 2010 are starting to surface, and again we will be facing double-digit increases. We can yell and scream at the insurance companies for increasing their rates but if we step back and see the big picture the insurance companies are in a no win situation. If providers continue to increase their billing rates the insurance companies have to increase rates to cover the increase in billing costs. When this happens guess who gets the blame - the insurance company, not the healthcare provider.
If we are going to truly have health reform we need to have the employer, payer AND provider at the table to discuss what a RATIONAL reimbursement should look like. Until we establish a rational reimbursement approach, we will never "bend the curve" in healthcare. We will continue to view insurance companies as the evil empire while increases in healthcare charges go unchecked.
As NCN we believe you must have a rational reimbursement that is fully transparent to the provider, patient and payer. Until this is fully adopted there will be more meetings with the president at the White House scolding the insurance carriers who have little control on cost drivers.
Over the last few months we have been bombarded by numbers. We can't escape numbers being quoted in the 24-hour news cycles. If you are like me, after a certain amount of "number discussion" I start to get immune to the enormity of the numbers. A quote that was originally attributed to the late Illinois Senator, Everett Dirksen (1896-1969) which he denied saying, "A billion here, a billion there, and pretty soon you're talking real money." This phrase about government expenditures has been resurrected as we debate the validity of government bailouts and proposed healthcare reform.
As I was reading the January 2010 issue of "Managed Healthcare Executive" there was an article by Julie Miller titled, "Healthcare's big numbers difficult to put in perspective"
The phrase attributed to the late Senator Dirksen echoed in my mind. Ms. Miller quoted the following statistics in her article:
- Healthcare accounts for a dramatic portion of the national economy - 16% of GDP
- U.S. Census Bureau, 2008 revenue totals for healthcare services, not including pharmaceuticals, reached $1.75 trillion, up from $1.66 trillion in 2007. That's a 5.7% gain.
- Physicians' offices earned $185 billion from private insurance, $74 billion from Medicare and $18 billion from Medicaid.
- Hospitals earned $307 billion from private insurance, $184 billion from Medicare, and $70 billion from Medicaid.
- In 2008, the American Hospital Assn. reported that Medicare and Medicaid underpaid hospitals and physicians by $88.8 billion.
- In the insured population, 14.3% were enrolled in Medicare, and 14.1% were enrolled in Medicaid.
- Based on these numbers, roughly one-third of the insurance payment received by providers in 2008 came from sources that underpay.
So what happens to the $88.8 billion that is underpaid to providers? (Remember it's BILLION, not million). You're right, it gets shifted to employers and private pay patients. Think of it as a hidden tax.
As our elected officials continue to discuss how to provide access to all Americans, (remember a key funding element for this access is through cuts to Medicare and Medicaid) deductibles and coinsurance continue to rise for individuals.
A billion here, a billion there and pretty soon there is no money left.