Checking Up on Health

By Benita M. Dodd

June 12, 2012


Benita M. Dodd, Vice President, Georgia Public Policy Foundation

Medicaid spending growth outpaces education spending: State revenues are finally returning to pre-recession levels, but the growing cost of providing health care for the poor is leaving most governments in dire fiscal straits, according to a report released today by the National Governors Association and the National Association of State Budget Officers. Medicaid is the single largest portion of total state spending, estimated to account for 24 percent in fiscal 2011, the last year for which data are available. State funds directed towards Medicaid increased dramatically in Fiscal Year 2012, while federal spending rapidly declined because the 2009 temporary federal stimulus funds expired.  State spending on Medicaid increased by 20 percent in FY 2012 (following a 23 percent increase in 2011) while federal spending declined by 8 percent. Although overall governors’ proposed budgets for fiscal 2013 project a 4 percent rate of growth in state Medicaid spending, Medicaid continues to outpace overall general fund expenditure growth in governors’ recommended budgets. Over the past 10 years, the growth in state spending on Medicaid has exceeded the growth in all other categories of spending, and has been twice as much as the growth in education spending. (And that’s BEFORE the increase in Medicaid rolls if the federal health law kicks in!) Read the report

– Efficiencies of Georgia’s Medicaid Care Management Organizations: Between fiscal year 2007 and FY 2012, the state’s three Medicaid CMOs produced $2.4 billion in
benefits and savings to the state compared with the projected cost of regular fee for service. But expect the cost of Medicaid to rise: The Department of Community health expects at least 650,000 more Georgians will be covered by Medicaid’s expansion unless the U.S. Supreme Court strikes down the federal health care law.  (A ruling is expected by the end of this month.) And physicians, already paid lower rates when government reimburses them for Medicaid patients will have a tougher time offsetting those lower rates through commercial payer patients.

– Mandate update: In case you haven’t already heard, three of the biggest U.S. health
insurers said they plan to keep offering some benefits now required under the federal health overhaul legislation, even if the U.S. Supreme Court strikes down the entire law referred to as ObamaCare. Humana Inc., Aetna Inc. and UnitedHealth Group Inc. all said they would continue to allow young people to stay on their parents’ plans until the age of 26, offer a third-party appeals process for coverage denials, and provide preventive benefits such as immunizations without any out-of-pocket expense for consumers. Source: Wall Street Journal

– Health care policy isn’t about job creation: The loss of health care jobs shouldn’t be a factor when designing strategies to cut health care costs, according to two Harvard economists. Politicians often label reform efforts as either job-creating or job-killing, but economists Katherine Baicker and Amitabh Chandra maintain that such a sharp focus on jobs is “misguided” and does not belong in conversations about health care reform. “The goal of improving health and economic well-being does not go hand-in-hand with rising employment in health care. It is tempting to think that rising health care employment is a boon, but if the same outcomes can be achieved with lower employment and fewer resources, that leaves extra money to devote to other important public and private priorities such as education, infrastructure, food, shelter and retirement savings.”Source: New England Journal of Medicine.

 Consumer-driven health care changing the game: There are a number of trends stemming from a shift toward consumer-driven health care, writes Bob Spoerl in Becker’s Hospital Review. He suggests, “Hospitals that ride the waves of these changes may be in a better position to stay financially sustainable in an era when competitive pricing and patient satisfaction can make or break a hospital’s chances of succeeding.” He notes that patients are becoming informed consumers. The changes he cites:

Legislation is providing health consumers with more options and transparency.  Private companies and payors are also promoting cost of care transparency.  It’s still unclear how many consumers are using online and mobile cost of care tools, but a Utah study put the number at about 28 percent of consumers.  Hospitals are already striving to promote themselves to more consumer-minded patients.

Hospitals and physicians with a focus on prevention to curb patient health care costs may promote that to consumers.

The influx of online tools and mobile apps means patients have less of an excuse to be in the dark; they now “can understand the financial implications of their care decisions, more credibly request discounts from high-cost providers, and direct themselves towards more affordable providers,” says Adam C. Powell, President of Payer+Provider Syndicate, a health care consulting company.

A healthier insurer: The Foundation’s Mike Klein writes in The Forum of insurer Kaiser Permanente’s journey to become stronger in the metro Atlanta area with an eye to once again become competitive for the state contract that it lost four years ago.  “Kaiser Permanente has invested $150 million to open and upgrade Georgia facilities since 2008,” Klein reports.

– Quote of Note: “Salaries for health care jobs are not manufactured out of thin air — they are produced by someone paying higher taxes, a patient paying more for health care or an employee taking home lower wages because higher health insurance premiums are deducted from his or her paycheck. Additional health care jobs leave Americans with less money to devote to groceries, college tuition, and mortgage payments, and the U.S. government with less money to perform all other governmental functions — including paying teachers, scientists, and social workers. That trade-off can be justified if it goes along with improved health outcomes, but not if those jobs do not generate benefits that exceed those of alternative uses.” – Katherine Baicker and Amitabh Chandra

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