Much of the impressive 2013 run for hospital stocks has been optimism about the sector's 2014 prospects, when large numbers of uninsured people will make their way into the system. But Fitch Ratings analysts on Thursday said the benefit won't be instantaneous.
The health insurance expansion mandate of the ACA will provide a boost to the industry's weak patient utilization trends in starting in 2014. However, given the slow progress in the development of some of the key elements of the legislation, it will be a transitional year. The benefits to the hospital industry, including higher patient volumes and a lower level of uncompensated care, will occur gradually.
Editor's note: This is the third post from the Nashville Health Care Council's 2013 Leadership Health Care Delegation to Washington. Click here for other entries from this year and last.
Attendees of Leadership Health Care’s 2013 Delegation to Washington, D.C., were treated to a keynote speech by David Wasserman, house editor for The Cook Political Report. Founded in 1984, The Cook Political Report provides analyses of Presidential, U.S. Senate, House and gubernatorial races. In addition to his current role, Wasserman served as an analyst for the NBC News Election Night Decision Desk in 2012, 2010 and 2008, and has appeared on a number of networks.
Wasserman hosted a lively discussion with the group on political forecasting trends and gave the audience insight on the current political landscape and what’s in store for the 2014 and 2016 elections. After the event had wrapped up, Wasserman took a few minutes to further discuss health care policy, including the big choices many Republican governors need to make in the next year and a half.
Editor's note: This is the second post from the Nashville Health Care Council's 2013 Leadership Health Care Delegation to Washington. Click here for other entries from this year and last.
On the second day of the Nashville Health Care Council’s 11th annual Leadership Health Care delegation to Washington, D.C., Tennessee’s Congressional Delegation spoke to LHC members about the health care challenges facing the nation and its policymakers, and the steps that legislators are pursuing to move those issues toward favorable resolution.
The meetings occurred just hours before Senate Republicans were scheduled to meet with President Obama on Capitol Hill. Sens. Bob Corker and Lamar Alexander said that among the topics they hope to discuss with the president — in addition to the prospects for a “grand bargain” fiscal deal — is the need for a 75-year fix on Medicare benefits payment structure to ensure the program remains solvent for America’s seniors.
“This is the biggest issue facing our nation, and there’s no way to solve it without [the President’s] leadership in making the tough decisions we need to make, and I hope he takes us up on that,” Corker said. “I think we have the environment set to do something really great for our nation.”
The senators also discussed the continued challenges for health care reform implementation facing Americans in the years ahead. Alexander, who has voted several times to repeal the Patient Protection and Affordable Care Act, said he expects the country will experience “rate shock” at health care premium costs, that some employees will lose employer-based health insurance and more and more individuals will move onto Medicaid rolls.
“There are a lot of things we could do to change that law,” Alexander said. “But fundamentally what we need to do is focus on the real problem, which is the total cost of health care, and then focus on ways to involve consumers as a way of bringing that down.”
According to Rep. Jim Cooper of Nashville, health care costs are two thirds of the problem when it comes to deficits and debt. He noted that the Affordable Care Act is a focused law trying to reduce some of the drivers behind ballooning health care costs via the Independent Payment Advisory Board and so-called “Cadillac tax” on the most expensive health insurance plans.
Digging deeper into the various Affordable Care Act programs under development and implementation, Director of the Office of Health Reform in the U.S. Department of Health and Human Services Michael Hash provided delegates with a point-by-point walk-through of his office’s activities. Among the work he discussed was the status of health insurance marketplace development in states across the country, the creation of a streamlined application process for individuals who want to purchase insurance through these marketplaces, and implementation of programs designed to improve the health care delivery system, such as the Accountable Care Organization initiative and the Hospital Value-Based Purchasing Program.
Without delivery system reform that looks at lowering health care cost increases over time, “much of the promise of the Affordable Care Act will not become a reality,” Hash said. “We’ve been laying what we think is the groundwork for delivering on the promises of the ACA.”
Looking ahead, Rep. Marsha Blackburn provided some insight into the future of what could happen with regard to a fix for the Sustainable Growth Rate — the so-called “Doc Fix” — which was not addressed in the Affordable Care Act. She said that she and her colleagues on the House Energy & Commerce Committee, as well as those on the House Ways & Means Committee, are working toward a long-term solution, which will help remove one driver of perpetual financial uncertainty in the health care market. She said to expect to see action on the doc fix to move forward before the August congressional recess.
Cooper also argued that, in addition to making changes to improve the financial side of our health care system, more must be done on the behavioral side of the equation to help individuals live healthier lives. He suggested LHC members and other Nashville health care leaders could help attack both behavioral and cost challenges by developing solutions that are not focused solely on growing profits and stock prices, but at improving efficiency and making people healthier.
Cooper, Alexander and the other speakers all congratulated LHC delegates for the work they’re doing in Nashville to improve the health care system.
“We’re very proud of Nashville and entrepreneurial health care,” Alexander said. “Nashville has always been the entrepreneurial center for health care, and it should help us with innovation and help us as we go through the next decade look at lowering the total cost of health care.”
Sen. Bob Corker, Rep. Marsha Blackburn, Sen. Lamar Alexander and Mike Hash, director of the Office of Health Reform at U.S. Department of Health & Human Services
Editor's note: This is the first in a series of posts from the Nashville Health Care Council's Leadership Health Care Delegation to Washington. Look for more information from the trip in the coming days.
The prospects for reforming entitlement programs led the conversation during the first day of sessions in the Nashville Health Care Council’s Leadership Health Care 11th annual delegation to Washington, D.C. Health care policy and political experts spoke to 80 delegates from Nashville and across the country about the budgetary dynamics that are creating pressure for long-term entitlement reform and what, if any, changes we might expect in the coming years.
“There’s no way you can look at the long-term fiscal health of the country and think you can avoid taking on entitlements,” said Gail Wilensky, economist and senior fellow with Project Hope and the former administrator of the Health Care Financing Administration.
Wilensky, pictured above, said the country spent 5.6 percent of GDP on entitlement programs last year, which is nearly three times what we were spending in 1985, and projections show that by about 2030 or 2035 entitlement program spending will grow to between 9.5 percent and 10.5 percent of GDP on Medicare and Medicaid alone. When you add in Social Security, entitlement programs will account for about 17 percent of the U.S. economy.
The main challenge of entitlement reform, Wilensky said, is Medicare. She and members of a later panel discussion about entitlement reform agreed that any reforms to Medicare will need to do more than simply reduce reimbursements to health care providers. Reforms will need to include changes that affect the actual Medicare beneficiary, such as increasing the eligibility age from 65 to 67.
“It’s pretty straightforward” why entitlement programs have not had any meaningful reform to date while other programs have seen obvious funding reductions, said Joseph Antos, the Wilson H. Taylor Scholar in Health Care and Retirement Policy with the American Enterprise Institute. “Other programs tend not to provide direct income support to individual voters.”
In the near term, cuts will probably continue to be more “hidden” within reduced payments to providers, said Stuart Butler, Distinguished Fellow and director of the Center for Policy Innovation at the Heritage Foundation. “But the fact is, that does have an effect, and over the long haul it will start to hollow out those programs,” Butler said. “And that may be the only way you can do it, rather than an explicit decision to make fundamental change to the program.”
Some of the larger, more fundamental changes that should perhaps be on the table, according to the panelists, include income-related premiums for Medicare, restructuring Medicare cost sharing, repositioning Medicare as more of a “true insurance program” where individuals with the highest incomes pay the full cost of premiums and individuals only get a benefit when something goes wrong.
In a separate presentation on the state of affairs in Washington, Michael Ramlet, principal of public affairs firm Purple Strategies, said a lot of the discussions about changes to Medicare are purely hypothetical.
“I don’t think there will be any major moves in the Medicare environment; it’s not a place right now where there’s a lot of compromise.”
Ramlet explained that discussions in Washington are instead focused on issues such as the nuts and bolts of how to run insurance exchanges — the number of individuals who will be enrolled, the levels at which they will participate in exchanges, how much premiums will cost, how to make the “Herculean lift” of allowing multiple federal agencies share the data necessary to make exchanges work.
“This is where 2014 will be really interesting,” he said. “We’re trying to do a big technical lift, where at the same time you know insurance plans are changing a lot, and no one really knows what’s going to happen.”
From left: Joseph Antos of the American Enterprise Institute, Stuart Butler of The Heritage Foundation and Paul Van de Water from the Center on Budget and Policy Priorities
Man, we're telling you, 2014 is setting up to be a monster year for hospitals.
Analysts at debt ratings agencies Standard & Poor's and Moody's last week said they see profit margins going nowhere this year but improving after that because 27 million people will enter the health insurance market. In the meantime, profit margins are going to be under pressure as hospitals continue to invest in technology, physician recruitment and acquisitions. Oh, and reimbursements are being cut, too. But just you wait until next year...
John Commins at HealthLeaders has more details.
Writing at the Times' Economix blog, Uwe Reinhardt shares some thoughts on how those looking to find better ways to measure quality in health care environments should take heart from the pioneers of aviation who fought against the preconceptions of humans taking to the air. One thing that might help: Have insurers publicly share their metrics and the weights they give them.
A wise thing to say in casual conversation is that “outcome” is all that matters in measuring the quality of health care. Presumably, “outcome” includes clinical outcome and patient satisfaction. Experts in quality measurement agree in principle. In practice, however, they warn that “outcome” is a complex metric.
POSTDATA: WARRANTY DEEDS