Understanding Healthcare Economics

Managing Your Career in an Evolving Healthcare System, Second Edition

Jeanne Wendel, PHD, Teresa D. Serratt, PHD, RN, William O'Donohue, PHD

• Verlag: Productivity Press
• Jahr: 2017
• ISBN:
  9781351757614
• Auflage: 2
• Thema: Business
• Thema: Management

Healthcare economics is a topic of increasing importance due to the substantial changes that are expected to radically alter the way Americans obtain and finance healthcare. Understanding Healthcare Economics, 2nd Edition provides an evidence-based framework to help practitioners comprehend the changes already underway in our nation's healthcare system. It presents important economic facts and explains the economic concepts needed to understand the implications of these facts. It also summarizes the results of recent empirical studies on access, cost, and quality problems in today's healthcare system.

The material is presented in two sections. Section 1 focuses on the healthcare access, cost and quality issues that create pressures for change in health policy. The first edition was completed just as the Patient Protection and Affordable Care Act (PPACA) was debated and passed. This new edition updates the information about access, cost, and quality issues. It also discusses the pressure for change that led to the passage of the PPACA, evidence that shaped the construction of the act, evidence on the impacts of the PPACA, and evidence on the pressures for future changes.

Section 2 focuses on changes that are underway including: changes in the Medicare payment system; new types of healthcare delivery organizations such as ACOs and patient-centered medical homes. It also discusses the current efforts to help patients build health such as wellness programs and disease management programs. And finally, health information technology will be discussed.

The new edition will maintain the current structure; however each chapter will be updated to discuss post-PPACA evidence on each type of type. In addition to the updates previously mentioned, the authors will present a series of data explorations to several chapters. Most of the new data explorations present summarized statistical information based on de-identified data from one hospital electronic data system. These data explorations serve two purposes. First, they illustrate the impacts of the pressures for change – and some of the changes – on healthcare providers. For example, the data illustrates the financial impact of pre-PPACA uncompensated care. Second, explanation of the data will require explanations of standard coding systems that are used nationwide (DRGs, CPT, ICD) codes. Other data explorations provide detail about other sources of data useful for health policy analysis, and for healthcare providers and insurers.

PRESSURES FOR CHANGE	I

Introduction

There are no solutions … there are only tradeoffs.

Thomas Sowell (1995, p. 142)

What Is Causing All These Pressures to Reform the Healthcare System?

We frequently hear that “the healthcare system is broken.” What exactly does this mean? Why is the debate about healthcare reform so complex, lengthy, and vehement? What changes were triggered by the Patient Protection and Affordable Care Act (PPACA)? What problems still remain?

To understand the system-wide changes that are underway, we begin by examining detailed evidence about the problems that triggered the enactment of the PPACA and the ongoing issues that remain to be solved. The specific problems are relatively well known:

Employers, who pay healthcare premiums for many Americans, complain about the escalating cost of premiums. With mandated benefits and other requirements, employers have little room to maneuver; hence, they pass on cost increases to their employees.

Despite the increase in healthcare coverage brought about by the PPACA, 28.5 million individuals in the United States did not have health insurance at the end of 2015 (Kaiser Family Foundation, 2016). Yet they need healthcare: they either access healthcare inefficiently (by, e.g., using emergency rooms), declare bankruptcy because they can’t pay their bills, or postpone—or forego—care. The uninsured individuals face unnecessary health issues due to the fact that they obtain less ­healthcare than insured people, while society must address the issue of paying for the “uncompensated” care that uninsured individuals do utilize. PPACA’s health insurance mandate and Medicaid expansion reduced the magnitude of this problem, but they did not eliminate it.

High costs of health insurance are causing employers to shift those costs to the employees through higher premiums, deductibles, and copays—raising access and cost issues even for those with insurance (Kaiser Family Foundation, 2017).

Low-income individuals still struggle to afford insurance premiums, copayments, and deductibles.

The proportions of individuals who are uninsured dropped in states that expanded Medicaid eligibility. In states that did not expand Medicaid, individuals can be caught between the low-income ceiling for Medicaid eligibility and the higher threshold for eligibility for subsidies offered through the health insurance exchanges (HIXs).

Additionally, undocumented immigrants are not eligible for the subsidies offered through the HIXs and are not eligible for Medicaid coverage.

Despite the inclusion of two insurance reforms that enjoyed broad support (coverage expansion of adult children up to age 26 and the prohibiting of insurance coverage denials due to preexisting conditions), no one seems satisfied with the changes created by the passage of the PPACA; policy makers, employers, consumers (and remember, we all are consumers sooner or later), and providers express dissatisfaction. Fundamentally, it means there are still problems with access, cost, and quality (issues often targeted by the Triple Aim^*).

We explore these three issues in the coming chapters, from both a pre- and a post-PPACA perspective. Chapter 1 examines access issues, with a particular focus on health insurance. We look at the characteristics of people who are not insured, and we explore the reasons for the lack of insurance and significant implications of the demographic incidence of uninsurance. We also consider the early evidence of the effects of the PPACA health insurance mandate, Medicaid expansion, and HIXs. We follow the discussion on access with a look at healthcare costs in Chapter 2. It is common knowledge that healthcare costs are rising faster than the rate of inflation, and these cost increases are creating stress on private and public insurance systems (the government pays for more than half of all healthcare through Medicaid, Medicare, the Veterans Administration, military treatment facilities, and other programs). Finally, we explore the issues related to healthcare quality in Chapter 3. Media stories continue to highlight the failure of the U.S. healthcare system, and in this chapter, we look at the evidence that our current quality is inadequate, analyses of the underlying issues, and strategies to increase quality of care.

By the time you have finished reading Section I, you will have gained a sense of the complexity of the issues facing our healthcare system. You will see that it is impossible to solve any one of these problems in isolation. Instead, a complex web of interactions links the three problems:

Poor access often means poor-quality treatment. (The rural health provider is necessarily a generalist, but often the best care is provided by specialists, or episodic treatment at an emergency room does not generate the coordination needed to ensure a good outcome.)

Low quality can generate unnecessary costs.

High costs often spur efforts to contain cost—which frequently limit access.

Because we focus on evidence-based analysis, each chapter utilizes standard problem-solving procedures: (1) organize background information, (2) diagnose the problem, and then (3) examine solution options—past and present.

Notes

*The Triple Aim is the goal of improving the patient care experience (quality and satisfaction), improving the health of populations, and reducing the cost of healthcare (Institute for Healthcare Improvement, 2017).

Chapter 1

Access

Introduction

The term access to healthcare focuses on the ability of individuals, groups, and communities to obtain needed medical services. While problems with accessing healthcare can be attributed to many factors, such as the ­availability of providers in a geographic area, language barriers, or cultural differences, it is most often associated with low household income or lack of citizenship or documented immigration status. Low-income people have difficulty paying for health insurance, and—if they are uninsured—they have difficulty paying for healthcare out-of-pocket. Despite the availability of publicly provided coverage through Medicaid and subsidies to help low-income people purchase insurance in the state health insurance exchanges (HIXs), 8.8 million non‑elderly people who are eligible for these programs remain uninsured. Of these, 3.2 million are children (Rudowitz et al., 2016). In addition, undocumented individuals are not eligible for public assistance. Lack of insurance coverage is a serious issue, because it is associated with lower healthcare utilization. This in turn can be associated with poorer health and subsequent high costs.

In addition, insured people worry that they could become uninsured due to regulatory changes, changes in employment status, or escalation in the cost of health insurance premiums.

Ongoing debates about state and federal health policy address a wide array of issues. Issues that specifically impact financial access to health insurance include

The concept of “affordable” expenditures for health insurance is ­currently defined as any amount up to 10% of income for middle- and upper-income individuals, and 7% for low-income individuals (Collins et al., 2015). Policy analysts debate the merit and details of this definition.

Disparities in access to healthcare pose salient issues because some aspects of healthcare are lifesaving (e.g., appendectomies) and life extending (e.g., insulin for diabetics), while others increase ­comfort or reduce pain (e.g., analgesics for arthritis). As a progressive society, we also worry about equitable access to housing, ­computers, and education, but access to these goods does not raise the same level of passion as access to healthcare, because the potential impact of healthcare on our quantity and quality of life is uniquely direct and personal. This idea generates important but ­sometimes ­acrimonious debates about strategies for accomplishing this goal.

The cost shifting necessary to finance uncompensated car...