Friday, April, 06 2012
The Patient Protection and Affordable Care Act (PPACA) has the potential for nothing less than revolutionary changes in how health care is paid for and is delivered. Parallels can be found in the passage of the Social Security Act of 1935 and the Employee Retirement Income Security Act of 1974, which created similar changes in how old-age, health, welfare, and retirement benefits were administered and financed. Regardless of how the Supreme Court rules on PPACA, its passage is impacting the administration of health care and the practice of medicine.
Kelly Kennedy, writing for USA TODAY, reports that costs for preventative screenings such as colonoscopies and other preventative procedures vary widely. The passage of PPACA required that most health care plans offer such screenings with no co-payment or co-insurance requirements. Quoted in the same article, Doug Ghertner, Change Healthcare’s president, stated that “consumers will see a direct correlation between premium increases and their choice of health provider.” While the public may perceive that having no co-payment or co-insurance translates into free health care, costs not covered by those payments are transferred directly into next year’s rate increases. HHS estimates that preventative screenings with no co-payment or co-insurance payments will raise insurance premiums by 1.5%.
In its 24th National Health Care Trend Survey, Buck Consultants, a human resource and benefits consulting firm, predicts health care costs to increase by 9.9%, down from a 2011 trend rate of 11%. Daniel Levin, an FSA and Buck’s principal and consulting actuary stated that, “The reduction also reflects lower expected costs as a result of the economic slowdown.” While the decrease in the health care cost trend will be welcomed by employers and employees alike, the rate at which health care is increasing is still several multiples of general inflation. One distributing factor of the survey was that the cost trend for all plans, PPO, POS, HMO, and high deductible plans were all 9.9%, possibly indicating that plan design has little to do with costs. To determine the cost trend in health care, analysts generally include factors such as; medical inflation, benefit utilization, changes in medical technology, the mix of services utilized, changes in pharmaceutical costs, and governmentally mandated benefits.
It is an axiom of economics that when demand, in the form of increased utilization of preventative services increases, all other variables being held constant; costs has to increase. Where and how the health care consumer chooses to receive health care preventative and other services does and will impact the cost to both the plan and the consumer. Price is not always an indicator of quality. If price comparison shopping is appropriate for a new car, surely it is appropriate for a colonoscopy. While no one can argue the value of appropriately timed preventative screenings; nevertheless, it is important that health care consumers understanding that noting is free.
It is an axiom of economics that when demand, in the form of increased utilization of preventative services increases, all other variables being held constant; costs has to increase. Where and how the health care consumer chooses to receive health care preventative and other services does and will impact the cost to both the plan and the consumer. Price is not always an indicator of quality. If price comparison shopping is appropriate for a new car, surely it is appropriate for a colonoscopy. While no one can argue the value of appropriately timed preventative screenings; nevertheless, it is important that health care consumers understanding that noting is free.
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