Life Expectancy Drops First Time Since 1993

The Centers for Disease Control and Prevention (CDC), a federal agency, has reported the remarkable news that U.S. life expectancy has dropped for the first time since 1993. According to Mortality in the United States, 2015 (NCHS Data Brief No.  267, December 2016):

• Life expectancy for the U.S. population in 2015 was 78.8 years, a decrease of 0.1 year from 2014.
• The age-adjusted death rate increased 1.2% from 724.6 deaths per 100,000 standard population in 2014 to 733.1 in 2015.
• The 10 leading causes of death in 2015 remained the same as in 2014. Age-adjusted death rates increased for eight leading causes and decreased for one.

The one death rate which improved was for cancer. So, we are “winning” that war, at least relatively speaking. The entire decrease was for life expectancy at birth. Life expectancy at age 65 was unchanged from the previous year. In other words, children and working-age people are bearing the burden of this decline.

Obamacare Repeal Has Already Begun For Small Businesses

(A version of this column was published by Forbes.)

My previous column suggested the 21^st Century Cures Act, which President Obama signed on December 13, demonstrated Republicans can lead on health reform. Promoted as a pro-innovation bill, the new law will improve the Food and Drug Administration’s regulatory processes; as well as fund Vice-President Biden’s Cancer Moonshot, the National Institutes of Health, and steps to reduce the opioid epidemic.

However, the final version of the bill also included an important payment reform, which takes a small but significant bite out of Obamacare. Tacked onto the end of the bill, section 18001of the 21^st Century Cures Act expands the use of Health Reimbursement Arrangements (HRAs) by small businesses. This is a win for small businesses which were harmed by Obamacare. Indeed, given the overwhelming bipartisan support for the 21^st Century Cures Act, section 18001 could be defined as Democrat politicians’ first real step towards conceding Obamacare needs to be repealed and replaced.

GDP: Health Spending Almost Flat

For those (like me) concerned about how much health spending continues to increase after Obamacare, the third report of third quarter Gross Domestic Product confirmed good news. Although GDP growth was revised up $14.5 billion from the second report, spending on health services was revised downward. It is good to have a breather from the second quarter, which was dominated by growth in health services spending.

Overall, real GPD increased 3.5 percent on the quarter, while health services spending increased only 0.6 percent, and contributed only 2 percent of real GDP growth. Growth in health services spending was also significantly lower than other services spending and personal consumption expenditures (PCE). However, the annualized change in the health services price index increased by 1.8 percent, lower than the price increase of 2.8 percent in non-health services, slightly more than the 1.4 percent price increase in non-health PCE, and non-health GDP.

(See Table I below the fold.)

Obamacare’s Effect on Employers’ Health Costs

The Bureau of Labor Statistics has published a chart showing how health benefit costs among private employers have increased over the past decade. The chart shows health benefits increased from 6.9 percent of total compensation in September 2006 to 7.6 percent last September. The 0.7 percentage point absolute increase is a relative increase of ten percent.

21st Century Cures Act Shows Republicans Can Lead on Heath Reform

(A version of this column was published by Forbes.)

Since the election, there has been a lot of sturm und drang around what the alternative to Obamacare will look like. It looks like we can be highly confident the Republican-majority Congress will repeal Obamacare very quickly starting in January. However, there is some question about what exactly will be repealed.

Last year’s repeal bill, H.R. 3762 repealed Obamacare’s spending and taxes, but not its over regulation of health insurance. Further, Republican politicians have promised not only to repeal Obamacare, but replace it with a better payment system than existed previously. People’s primary concern about the previous system was that people in the individual market could be denied coverage for pre-existing conditions or charged higher premiums as a result of underwriting.

Zeke Emanuel, Obamacare Architect, Visits Trump To Urge One-Term Presidency

Last Wednesday, the Trump transition team disclosed the remarkable news that Ezekiel Emanuel, MD, an architect of Obamacare, was Mr. Trump’s first official guest of the morning. The spokesman demurred with respect to the details of the conversation, but I can guess: Dr. Emanuel was urging Mr. Trump to remain in office only one term, in accordance with Dr. Emanuel’s principle that people should be cut off at age 75.

CPI: Dramatic Drop in Prescription Prices

The Consumer Price Index rose 0.2 percent in November. Remarkably, medical prices were flat overall. This is the third month in a row we have enjoyed medical price relief. Prices of prescription drugs dropped by 0.6 percent. Even the prices of health insurance and hospitalization dropped a smidgeon!

Prices for physician services rose the most, by 0.6 percent, followed closely by other medical professionals (0.5 percent).  

Over the last 12 months, however, medical prices have increased 2.7 times faster than non-medical prices: 1.5 percent versus 4.0 percent. Price changes for medical care contributed 20 percent (one fifth) of the overall increase in CPI.

Many observers of medical prices decline to differentiate between nominal and real inflation. Because CPI is has been low until recently, even relatively moderate nominal price hikes for medical care are actually substantial real price hikes. More than six years after the Affordable Care Act was passed, consumers have not seen relief from high medical prices, which have increased over twice as much as the CPI less medical care since March 2010, the month President Obama signed the law.

(See Figure I and Table I below the fold.)

PPI: Health Prices Tame, Inflation Picks Up

November’s Producer Price Index rose 0.4 percent. However, prices for most health goods and services grew slowly, if at all. Nine of the 16 price indices for health goods and services grew slower than their benchmarks.* The major exceptions were prices for pharmaceutical preparations, which increased 0.4 percentage points more than prices for final demand goods less food and energy; and nursing homes, for which prices increased 0.3 percentage points more than prices for final demand services less trade, transportation, and warehousing.

Prices of health goods for intermediate demand, were lower than their benchmark. Perhaps slow price increases for medicinal and botanical chemicals, and biological products will flow through to prices of pharmaceutical preparations but that has not previously been the case.

Over the last twelve months, prices of nine of the 16 health goods and services have increased slower than their benchmarks. Three stand out as having increased significantly more than their benchmarks: Pharmaceutical preparations (7.0 percentage points), biological products (1.8 percentage points), and dental care (1.7 percentage points).**

(See Table I below the fold.)

Health Savings Accounts Continue To Grow

One of Donald Trump’s campaign promises is to make Health Savings Accounts more widely used. The purpose of HSAs is to give patients more directly control over health spending, and reducing the share of spending controlled by insurers. Unfortunately, the 2003 law which established HSAs requires they be linked with a highly regulated type of health insurance policy.

These policies, like all health insurance today, give insurers power to dictate prices instead of allowing prices to be formed through interactions between patients and providers (that is, a normal market process). So, these health insurance policies are not as popular as truly consumer-driven plans should be.

Nevertheless, HSAs (which are bank accounts, not health insurance policies) are growing like gangbusters, according to new research from the Employee Benefits Research Institute (EBRI). As I wrote previously, EBRI is a rock-solid member of the health-benefits establishment.

Puzder Pick A Second Win on Health Reform

Soon after announcing his intention to nominate Tom Price, MD as U.S. Secretary of Health & Human Services, Donald Trump announced his intention to nominate Andrew Puzder Secretary of Labor. This is yet another good sign for the repeal of Obamacare.

Since the election, the media have asserted repealing Obamacare will yank health insurance from over 20 million people. This refers to Obamacare’s having increased welfare dependency (via expanding Medicaid) and the expensive individual policies offered in its exchanges, subsidized by tax credits.

This has sucked oxygen out of another important part of the debate, which is Obamacare’s regulations on employment. The Congressional Budget Office projects Obamacare will shrink the workforce by 2 million full-time equivalent (FTE) jobs in 2025.

The CEO of CKE Restaurants, which owns the Carl’s Junior and Hardee’s brands, Mr. Puzder warned of the harm to jobs in chain restaurants from Obamacare’s mandate to offer employees overpriced health insurance as far back as July 2013:

Banning Organ Sales in Free Countries Enables Harvesting Prisoners’ Organs In Unfree Ones

Two new films, one a documentary and one a drama based on the same facts, expose one of the most horrific markets operating today: Communist China’s selling of organs harvested from prisoners of conscience.

Ten thousand “transplant tourists” travel annually to communist China, where they pay top dollar to get organs transplanted on demand. The Boston Globe’s Jeff Jacoby summarizes how China became the go-to destination for desperate patients on waiting lists:

Health Services Revenue Slides, Hospital Profits Drop in Q3

This morning’s Quarterly Services Survey (QSS), published by the Census Bureau, showed a decline in revenues for most health services. Overall, revenue shrank 1.5 percent in the third quarter. However, growth versus Q3 2015 was a strong 5.4 percent and YTD growth is up 5.7 percent.

Only outpatient care centers, home health services, other ambulatory services, and specialty hospitals reported growth. Revenue at psychiatric hospitals has grown 16.3 percent, Q3 2016 versus Q3 2015, a remarkable growth which I cannot explain. General hospitals’ revenues have finally begun to shrunk, suggesting they have maximized their Obamacare business opportunities.

See Table I below the fold.

Repealing Obamacare Demands Deliberate & Thoughtful Process

The next Congress is likely to repeal Obamacare by “reconciliation,” a parliamentary maneuver that allows a simple majority in the U.S. Senate to pass a bill. With fewer than 60 Republican Senators in the next Congress, reconciliation is the only way to move quickly to solve the problems Obamacare created. Otherwise, we could expect Democratic Senators to filibuster a repeal bill.

However, not every jot and tittle of Obamacare can be repealed through reconciliation, which sets up a challenging couple of years (at least) for those who wish to repeal Obamacare and replace it with patient-centered health care.

Read this entire op-ed in The Hill.

Castro's Death and Cuban Health Care

The recent death of Cuban dictator Fidel Castro brought forth a grotesque encomium from the Canadian Prime Minister, Justin Trudeau, who asserted “Mr. Castro made significant improvements to the education and healthcare of his island nation.”

Michael Moore, producer of propaganda dressed as documentaries, made a film in 2007 called Sicko, in which he also praised Cuban health care. The reality was different. According to a U.S. intelligence cable published by WikiLeaks, a local person employed by U.S. intelligence covertly observed:

• Many young cancer patients reportedly have become infected with Hepatitis C after their surgeries. Contracting Hepatitis C after surgery indicates a lack of proper blood screening prior to administering transfusions. All blood should be screened for Hepatitis B, C, HIV and Syphilis prior to use. Patients have no recourse and are not fully informed of the seriousness of such an inadvertent infection.

• Patients had to bring their own light bulbs if they wanted light in their rooms. The switch plates and knobs had been stolen from most of the rooms so one had to connect bare wires to get electricity. There was no A/C and few patients had floor fans. Patients had to bring their own sheets, towels, soap and supplemental foods. Hospital food service consisted of rice, fish, rice, eggs, and potatoes day after day. No fresh fruits, vegetables, or meat were available.

• The laboratory equipment is very rudimentary - a simple CBC (complete blood count) blood test is calculated manually by a laboratory technician looking through a microscope and counting the individual leucocytes, lymphocytes, monocytes, etc.

Health Jobs Grow 1.5 Times Faster Than Non-Health Jobs

This morning’s jobs report maintained the trend of high growth in health services, which grew 1.5 times faster than non-health jobs (0.18 percent versus 0.12 percent). With 28,000 jobs added, health services accounted for almost one in six of 178,000 new jobs.

The disproportionately high share of job growth in health services is a deliberate outcome of Obamacare. While this trend persists, it will become increasingly hard to carry out reforms that will improve productivity in the delivery of care.

Ambulatory sites added jobs at a much faster rate than hospitals. This was concentrated in offices of physicians and other practitioners, and outpatient care centers. Physicians' offices alone added seven thousand jobs, more than the six thousand added by hospitals. This is a good sign because hospitals are high-cost locations of care versus doctors’ offices and other ambulatory sites.

See Table I below the fold.

Significant Drop in Health Facilities Construction in October

Construction of health facilities slowed in October, while other construction increased a little. Overall, health facilities construction starts declined 3.1 percent, versus an increase of 0.7 percent for other construction. Health facilities construction accounted for almost 6 percent of non-residential construction starts. However, while both private and public health facilities construction both declined, there was divergence between private and public non-health construction.

(See Table I below the fold.)

Surprise Medical Bills A Growing Problem Requiring Price Transparency

(A version of this column was published by Forbes.)

Donald Trump’s health reform proposal during the presidential campaign promised to deliver price transparency to health care:

Require price transparency from all healthcare providers, especially doctors and healthcare organizations like clinics and hospitals. Individuals should be able to shop to find the best prices for procedures, exams or any other medical-related procedure.

Doctors and hospitals are infamously terrible at sharing price information with patients. It is a problem for both scheduled procedures and visits to emergency rooms. 

The root problem is not that providers are unwilling to share prices, but that prices are not formed through a normal market process. Instead they are administratively determined between government, insurers, and providers.