Gross Domestic Product: Health Services Grew Almost 12 Times Faster Than Non-Health GDP

The media noted today’s third estimate of second quarter Gross Domestic Product was revised upward from the second estimate. It was a sharply revised estimate of health spending that led to the higher overall estimate. While the estimate of GDP was revised up by $12.9 billion, the estimate of health services spending was revised up by $16.2 billion. Spending on services other than health services was revised down.

In real (inflation-adjusted) dollars, services grew 2.9 percent (annualized, seasonally adjusted) from the first quarter. As a large component of services, health services grew 7.1 percent.  While real GDP growth was 1.4 percent, once health services is stripped out, non-health GDP grew just 0.6 percent (Table I).

A Modest Proposal To Reduce The Price Of EpiPens

(A version of this Health Alert was published by Forbes.)

Posturing politicians on Capitol Hill conducted a hearing a few days ago, in which they grilled Heather Bresch, CEO of Mylan. N.V., which makes EpiPens. Prices of EpiPens have skyrocketed in the last few years. According to Aaron E. Carroll, writing in the New York Times, the real (inflation-adjusted) price of EpiPens has risen 4.5 times since 2004.

The politicians were more interested in wagging their fingers and tut-tutting at Ms. Bresch for the amount of money she has made, than actually figuring out a way to lower the price of EpiPens. (By the way, Ms. Bresch testified she has no intention of reducing prices in response to their badgering.)

Premiums For Employer-Based Family Health Insurance Up One Fifth Since Obamacare

The Kaiser Family Foundation/Health Research Educational Trust has released its 2016 Employer Health Benefits Survey. The survey covers almost 1,900 private and public (non-federal) employers. The results show Obamacare has not reduced premiums, which have increased by one fifth for family plans since 2011.

The good news is the proportion of beneficiaries with “High-Deductible Health Plans with a Savings Option” (HDHP/SOs) has increased from 20 percent to 29 percent in two years. Only four percent of covered worker were in such plans in 2006, and 17 percent in 2011. (In 2015, a HDHP had to have a minimum deductible of $1,300 for single coverage and $2,600 for family. The “Savings Option” would be a Health Savings Account or Health Reimbursement Arrangement.)

These plans were first available in 2005, and correspond with an immediate slowdown in the rate of growth of employer-based benefits. In real terms (adjusted for changes in the Consumer Price Index), dropped from double digits in the early 2000s to single digits after 2005 and bottoming out at an increase in premium of just two percent in 2009. There was an immediate jump of 11 percent in 2011, Obamacare’s first year. Since then, both High Deductible Health Plans and the burden of Obamacare have continued to grow. This struggle has resulted in mid-single digit premium growth.

(See Figure I below the fold.).

Health Technology Forum: DC September 28 - 3rd Speaker Announced

I am very proud to announce our final speaker is Whitney Zatzkin, Managing Director of Flip the Clinic.

A passionate community architect obsessed with connecting the dots inside health care to provoke change for the greater good, Ms. Zatzkin will share the latest from inside the world of Flip the Clinic.

Launched in 2013, Flip the Clinic is built on the idea of open experimentation to transform the healthcare experience for everyone - clinicians, patients, employers, and towns. We've all been there - the orthopedist that tells you to elevate your leg after surgery but has no way for you to elevate it in his own waiting room.

Ms. Zatzkin completes our line-up of three great speakers. Learn more and RSVP at this link.

A Health Care Legacy Moonshot for Obama

(A version of this Health Alert was published by Forbes.)

President Obama has an opportunity to win a positive legacy in health care. Although his attempt at payment reform, Obamacare, has failed in public opinion, he is also encouraging important initiatives in medical innovation. The Cancer Moonshot and Precision Medicine Initiative represent investments in innovation that can bring big payoffs. However, they will not succeed fully unless the Food and Drug Administration allows patients access to new therapies. Legislation modernizing the FDA, the 21st Century Cures Act, is being fumbled inches away from the Congressional end zone. Presidential leadership is needed.

More Than One In Five Americans “Churn” Through Health Coverage Within A Year

The U.S. Census Bureau has just released the Current Population Report’s Health Insurance Coverage in The United States, 2015. This report sits alongside the Centers for Disease Control and Prevention’s National Health Interview Survey as a critical source of understanding changes in health insurance in recent years.

The report discusses coverage during the three years from 2013 through 2015, so it does not reveal the large increase in employer-based coverage since the great recession. During this shorter period, there was an insignificant gain in employer-based coverage, and a large increase in persons dependent on Medicaid, the joint state-federal welfare program that provides health benefits to low-income residents. The number of people dependent on Medicaid for at least part of the year increased from 55 million in 2013 to 62 million in 2015. (Almost the entire increase took place in 2014, Obamacare’s first year of implementation.)

Medicare Accountable Care Organizations Continue to Underwhelm

Medicare’s Accountable Care Organizations (ACOs), which launched in 2012, were supposed to introduce a significant shift away from paying for “volume” to paying for “value.” Critics of Fee-For-Service medicine claim this system causes physicians to do more to patients so they get paid more, notwithstanding benefits to patients. Those critics seldom identify the moral hazard associated with third-party payment (by insurers or governments) as a cause of too many medical tests or procedures.

So, they introduced ACOs, which would increase quality and cut costs by getting rid of straight Fee-For-Services and putting more financial risk on physician groups. If the physician groups pass certain thresholds of cost and quality, they can pocket some of the savings. This doctrine is also embedded in the 2015 Medicare physician payment reform legislation, which committed Medicare to sweeping away most Fee-For-Services payments within a few short years, in favor of new payment models designed by the Centers for Medicare & Medicaid Services.

The 2015 results for Medicare’s ACOs have been reported, and the results are underwhelming:

Health Technology Forum: DC MeetUp 9/28/16 2nd Speaker Announced: Anand Iyer of WellDoc

I am happy to announce our second speaker at our MeetUp on September 28 in Washington, DC will be Anand Iyer, PhD, Chief Strategy Officer of WellDoc.

Dr. Iyer will address Digital Therapeutics:  Getting Patients Engaged with Their Health. The burden of chronic conditions are at an all-time high.  Despite new drugs and devices, outcomes have not improved.  At the center of this conundrum are patients – who in many ways, if properly engaged, are the blockbuster drug of the 21st century!

To learn more and join us, please follow this link.

Medical Prices Rose 10 Times More Than Non-Medical Prices in August

The Consumer Price Index rose 0.2 percent in August. Medical prices, however, continued their upward march, increasing by one full percent – 10 times more than non-medical consumer goods and services. If prices for medical care had been flat, the CPI would have risen by just 0.1 percent.

Hospital services, prescription drugs, and health insurance stand out even within medical care. Price increases for medical care have contributed 42 percent of the overall CPI increase.
Over the last twelve months, prices for medical care have increased seven times faster than prices for non-medical items in the CPI. Price increases for medical care have contributed 26 percent of the overall CPI increase (Table I).

PPI: Health Prices Up Among Zero Overall Inflation

As with July’s Producer Price Index, health price inflation is no longer eye-popping, but still higher than overall PPI, which was flat in August. Hospital outpatient care stands out, with prices having risen 1.1 percent, monthly. Other price increases were moderate, but only prices of X-Ray machines and electromedical equipment declined.

This is also true over the last twelve months. Pharmaceutical prices especially stand out, even though they have risen moderately for a few months. It will take a while for the trend of high prices hikes from a few months ago to break down. Nursing homes, for which prices rose 3.0 percent, might replace drug makers as the whipping boy for high health prices, but they have a long way to go.

(See Table I below the fold.)

Obamacare Koan: What Is A Health Insurance Market Where No Insurance Is Offered?

(A version of this Health Alert was published by Investors Business Daily.)

Obamacare appears to be in a death spiral, with a shrinking pool of insurers offering coverage, far fewer individuals purchasing insurance than advocates had anticipated, and double-digit price increases making policies unaffordable -- not only to many individuals and families, but to taxpayers, who are required to underwrite the hefty subsidies Washington promised.

The law is not working and its condition is getting worse. The centerpiece of the program, the health insurance exchanges (misleadingly labeled "Marketplaces" by the administration), will pretty much cease to exist within a few more years.

EpiPen: A Case Study In Health Insurance Failure

I recently wrote a post describing EpiPen as a “Case Study in Government Harm,” describing how the government had made it possible for the manufacturer to increase prices of the life-saving drug multiple times without fear of retaliation. It is also a case study in how health insurance distorts our choices and increases their cost. I learned this by following an Internet advertisement for EpiPen down its rabbit hole.

The ad induced me to download my “EpiPen Savings Card” which would ensure I paid nothing for my EpiPens (up to six, according to the ad):

However, I had to answer a skill testing question first: What was my insurance coverage? As you can see from the screenshot below, when I answered I had no insurance, the EpiPen savings card was figuratively ripped from my hand:

Recent Rise In Health Coverage Due To Return of Jobs With Benefits

(A version of this Health Alert was published by Forbes.)

The best measurement of people who lack health insurance, the National Health Interview Survey published by the Centers for Disease Control and Prevention (CDC), has released early estimates of health insurance for all fifty states and the District of Columbia in the first quarter of 2016. There are three things to note.

First: 70.2 percent of residents, age 18 to through 64, had “private health insurance” (at the time of the interview) in the first quarter of this year, which is which is the same rate as persisted until 2006. Obamacare has not achieved a breakthrough in coverage. It has just restored us to where we were a decade ago. Further, the contribution of Obamacare’s exchanges to this is almost trivial, covering only four million people.

Quarterly Services Survey: Strong Health Services Revenue Growth

This morning’s Quarterly Services Survey showed strong revenue growth in health services. Overall, revenues grew 3.6 percent in Q2 versus Q1 and 6.7 percent versus Q2 2015. For the first half, revenues grew 5.9 percent versus H1 2015 (Table I).

Health Technology Forum: DC MeetUp September 28, 2016 - First Speaker Announced

I am very pleased to announce or first speaker for the Health Technology Forum: DC MeetUp on September 28 in Washington, DC. Please join us for great networking and learning.

Our first speaker is Sanya Sarma, CEO of Prosperata, headquartered in Vienna, VA.

Job Losses in Nursing Homes A Drag On Health Job Growth

This morning’s jobs report was somewhat weaker than expected, adding 151,000 jobs versus 180,000 expected. For the first time in many months, job growth in health services slightly lagged growth in non-health jobs (0.09 percent versus 0.11 percent).

However, there was a significant divergence within health services: Jobs in ambulatory care and hospitals jumped 0.16 percent and 0.21 percent, while nursing homes shed 7,000. That imposed a massive drag on health services overall, limiting growth to 14,000 jobs (Table I below the fold).

Significant Divergence in Private Vs. Public Health Construction in July

The divergence between private and public health facilities construction continued in July. Overall, health facilities construction starts increased 0.3 percent in July, versus zero for other construction (Table I).