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Response to Essential Health Benefits Bulletin

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SUMMARY

Health and Human Services (HHS) Bulletin sets guidelines for defining Essential Health Benefits (EHB). It ingeniously allows each State to have a say in its own EHB definition, yet provides a method to bring closure to the process should any State not reach an agreement. It also allows States to add benefits, but at their own expense. With federally providing premium assistance to lower income enrollees, it is important that only minimum State EHB premiums be supported.

The bulletin will likely require every State to add or enhance some services that are not now offered to small groups and individuals. This may lead to a premium increase for small groups and individuals not eligible for premium assistance.  Until actuarial efforts identify these costs, this remains an unanswered issue.  Everyone is concerned about higher costs, but Insurers have added concerns about adverse selection. The Affordable Care Act (ACA) mitigates this concern by reinsurance and risk adjustment provisions in the act. Continue reading

Income Disparity and Sources of Income

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SUMMARY

Regardless of how one views the Occupy Wall Street (OWS) movement and “We are the 99 percent”, it has succeeded in raising awareness about wealth distribution. Also in October, 2011, the Congressional Budget Office (CBO) published an analysis of household incomes addressing that subject.

 CBO first grouped households by quintiles (1/5 in each) and clearly the top fifth have done far better than the bottom fifth. CBO then divided the top 20% (fifth) into 10%, 5%, 4%, and the highest 1% of households. The income disparity was even more striking with the highest 1% far greater than the others. 

This analysis further drills down within this top 1% and finds income disparity wider yet, and vastly greater than all other group comparisons. Pre-tax income for the top 1/100 of 1%, (or 12,000 households) totaled some $450 billion, greater than the combined pre-tax income of the 24 million lowest income households. To rephrase, income of just one of these richest households is more than 2,000 lowest income households. Continue reading

Worsening Inequality of Wealth and Incomes

SUMMARY

In October 2011, the Congressional Budget Office (CBO) released an analysis at the request of the Senate Committee on Finance. The analysis documents changes in household income distribution from 1979 to 2007. That analysis titled “Trends in the Distribution of Household Income notes that the share of average after-tax income for the top 20% gained, while the lower 80% declined seen in Summary Figure 2.

Further, within the top 20%, the share of after-tax income of the top 1% grew from less than 18% to over 30% of the top 20% income bracket. While actual incomes for all quintiles increased, only the share of total after-tax income of the top 1% increased. The 81-99% remained essentially flat while the lower 80% of all households declined over 28 years.   Continue reading

Senate Gridlock – the Filibuster Factor – Update

This Analysis has been replaced with a new version: Senate Filibusters Reveal Deliberate Obstruction

 

Government Medical Spend Forecasts

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Open Google Motion Chart >>> Total Public Medical Spend

Open Google Motion Chart >>> Medicare Spend

SUMMARY

There is a close relationship between the current concerns over government debt and prior years’ controversies over the Affordable Care Act (ACA) or health reform.  The link between them is that Medicare costs will rise significantly above current levels. That will put pressure on entitlement spending that will be nearly impossible to offset with other spending cuts.  Medicare itself will need significant reform.

However, the principal factor behind the enormous cost increases is the huge increase in the senior population.  The population for those 0 to 54 years is expected to rise just 16% between 2010 and 2050.  The population of those 55 and over is expected to grow nearly 70% over that same period and the older the age, the greater the increase.  This major shift in the aging population is the main cause of higher Medicare costs. Higher per-capita costs just add to the problem. Continue reading

Health Care Reform – Accountable Care Organizations

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SUMMARY

Kaiser health news recently came out with two documents providing clarification on Accountable Care Organizations or ACO’s that were included in the Affordable Care Act (ACA).

The mainstream media rarely  discussed this. It comprised only seven pages of the health care law and dwelt  with Medicare to which few critics paid serious attention.

For providers of health care, this offers a major change in the way Medicare operates. It delivers care at lower cost while maintaining quality.   The ACO model can also apply to all patients, not just Medicare.  Savings while maintaining quality care can run into the hundreds of billions of dollars.

A study of 4,272 hospitals found utilization levels at two of five most expensive hospitals more than 30% greater than at Mayo Clinics. The study covered Medicare patients who died. If that same service ratio held for all patients, those hospitals could generate annual savings of $170 Billion with no change in prices. The savings occur if they had hospital days and physician visits similar to Mayo. Continue reading