Archive for January, 2014

Dropping Spouses from Healthcare May Increase Employer Costs

Monday, January 27th, 2014

The Employee Benefit Research Institute published a study in this month’s issue of their Notes that suggests that the employer trend of excluding spouses from health care coverage may cost them more in the long run.

As many as 15 percent of employers nationwide have already eliminated spousal coverage in cases where the previously-covered spouse has access to health care through his or her own employer. NPR reports that a continuing trend of such cuts may offset any short-term savings as their own employees lose spousal coverage picked up by other companies.

A simple example: Company A and Company B both offer spousal health care coverage. Company A currently covers Employee A and Spouse A, who works for Company B. Company B covers Employee B and Spouse B, who works for Company A. If both companies eliminate spousal coverage, Spouse A and Spouse B will return to their own company’s health care plan, which means that at the very least the companies have not saved any money.

Further, if the companies have traditionally subsidized a lower amount for spouses then each will face higher health care costs by covering two of their own employees.

Situation: Each Company Covers Spouses (cost to company)

Company A

Company B

Employee A: $5,000/year

Employee B: $5,000/year

Spouse A: $3,500/year

Spouse B: $3,500/year

Situation: Neither Company Covers Spouses (cost to company)

Company A

Company B

Employee A: $5,000/year

Employee B: $5,000/year

Spouse B: $5,000/year

Spouse A: $5,000/year

*The figures above are purely hypothetical and are only meant for illustrative purposes.

According to a weekend report in Forbes, meanwhile, more full-time employees are enrolling in employer-provided health care to take advantage of better coverage at lower costs than the plans provided on the health care exchanges. These new enrollees may also contribute to rising employer costs, even without an influx of employees who have lost coverage under their spouses’ plans.

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Does Medicaid Expansion Increase ER Visits?

Wednesday, January 22nd, 2014

A study of Oregon’s 2008 Medicaid expansion has been touted as a huge blow to President Obama’s claims that Medicaid expansion through the ACA would reduce ER visits, but a parallel study of California’s 2010 Low-Income Health Program suggests that the situation is not so simple.

Medicaid expansion

Oregon: Medicaid expansion drives up costs

The Oregon study, published in Science by economists Amy Finkelstein of MIT and Kate Baicker of Harvard, measured emergency room visits of more than 20,000 residents living in the Portland area – one group of patients without insurance, and one group newly enrolled in Medicaid. Researchers determined that the Medicaid patients visited emergency rooms 1.4 times over 18 months, while the uninsured group visited 1.02 times in the same period. They further determined that nearly half of the increased visits were for complaints that could have been treated by a primary care physician (PCP), or were for emergency complaints that could have been prevented by PCP care.

Overall, ER spending in the Oregon study was estimated to have increased by $120 per covered patient. The researchers attribute this to a structural flaw in Medicaid’s design that reduces cost-sharing for covered patients to zero or near-zero, encouraging more unnecessary visits and raising state spending for Medicaid claims. State governments have responded by drastically reducing their reimbursements to medical providers, and PCPs have further responded by turning away new Medicaid patients.

Their conclusion is that Medicaid patients are more likely to visit the ER than to search for a PCP who will accept them, which then raises the cost of care even more.

San Diego: ER visits appear to be falling – with patient education

However, Paul Sisson of the San Diego Union-Tribune reported yesterday that a similar expansion of California’s Medicaid programs in 2010 has resulted in a two percent decrease of emergency room visits from July 2011 to September 2012. Nearly 50,000 San Diego-area residents enrolled in California’s Low-Income Health Program from mid-2011 to the end of 2013. There is only about a year of available data, and ER administrators have not noted significant changes in visits, but the results thus far are encouraging to doctors and health care researchers in the state.

A key difference between San Diego’s program and Portland’s is the access enrolled patients have to PCPs. In San Diego, new patients in the LIHP were counseled about their healthcare options and connected to a local PCP with whom they had a preliminary visit. These visits were designed to build a relationship so the patient would visit their doctor instead of the emergency room in the event of an illness.

In addition, county employees reached out to the community clinics where they sent their patients to make sure they were able to make same-day appointments. The UCLA Center for Health Policy Research studied ER use by LHIP participants and noted that their ER visits decline as they become accustomed to having insurance.

In Oregon, on the other hand, there is no record of patient education to suggest that patients knew about or had access to alternative healthcare options. As stated by UCLA Center for Health Policy Research director Gerald Kominski,

That behavior of seeking primary care in the ER has been reinforced for a period of years,
and it doesn’t change immediately just because you give somebody an insurance card.

Long-term effects of Medicaid expansion remain to be seen (as do short-term effects in states that have just implemented their own expansions), but these two contrasting studies make a compelling argument that patient education is necessary to fully reap the potential benefits of expanded low-income insurance programs.

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Did Healthcare Employment Decline in 2013?

Wednesday, January 22nd, 2014

Although the healthcare sector continued to create jobs throughout the recession, the industry encountered significant drops in employment throughout 2013. In December 2013 alone, 6,000 jobs were lost from the healthcare industry, with substantial payroll decreases among hospitals and ambulatory care.

According to new research released by the U.S. Bureau of Labor Statistics, the recent decline in healthcare employment capped off a year where the amount of healthcare-related jobs added was far below average. In 2013, the healthcare sector brought on 271,000 more jobs, resulting in an overall industry total of 14.57 million. Additionally, hiring rates dropped about 2 percent below the annual average since 1990.

Aside from the demise in healthcare employment, the U.S. economy only added on 74,000 jobs throughout last year. Meanwhile, unemployment rates were directly impacted by job seekers choosing to withdraw from the workforce. As a result, unemployment dropped to a five-year low of 6.7 percent.

In 2013, hiring trends varied across healthcare sectors. Although job growth was down among nursing homes and hospitals, hiring rates within ambulatory care remained promising in spite of December’s decline.

Regardless, hiring rates stayed sluggish for both hospitals and nursing homes last year. Throughout 2013, hospitals added 40,000 jobs. However, this number reflected a 30 percent decrease from the annual average since 1990, which amounted to 57,300. Nursing and residential homes also encountered a significant decline in employment from the annual average. The sector added on 24,600 employees last year, which reflected a 40 percent drop from the annual average of 43,200.

Conversely, hiring rates among the ambulatory care sector were on the rise last year, and were up by nearly 30 percent. In comparison to the annual average of 160,100 since 1990, the sector added 270,000 jobs throughout 2013. In addition to doctors’ offices and home health agencies, the ambulatory care sector encompasses a wide range of settings, ranging from dental offices and chiropractors to diagnostic laboratories.

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