Newtown, CT – December 4, 2015
In Hans Christian Anderson’s tale The Emperor’s New Clothes, political correctness was taken to the absurd, preventing the telling of the truth. We’re getting closer to that line every day – A report by the CMS Office of the Actuary reveals that health spending is rising again at twice the rate of inflation. Several explanations were quickly posted to explain that the rise isn’t really a rise because more Americans are now covered by insurance, playing into the popular narrative that this increased spending is perfectly expected and good. Of course, we must observe that the increase is stated in “per capita” terms, not just in absolute terms. In other words, premiums and premium equivalents are growing, and that’s a problem because it goes against the weave that delivery system reform is working thanks to new payment models, that growth in spending is simply because of the newly insured, or one-time aberrations such as the Hepatitis C vaccine. It’s time for a dose of the truth.
What this means to you – When United Healthcare recently announced that it had lost close to half a billion dollars in the new exchanges, few seemed concerned over a bit of spilt milk, but that loss is like the boy in Anderson’s story, it’s telling a politically incorrect truth. The exchanges are living through an adverse selection problem that has been inflicted by the Administration in allowing continued delays in the employer mandate that is essential for the markets to function. Barring that mandate, the exchanges only attract the sicker patients, losses mount and premiums soon follow, along with further reductions in coverage. Already, as reported by RWJF, many plan members’ out-of-pocket expenses are rising dramatically all the while networks and coverage are being reduced. In the meantime, the much-touted cost savings from Medicare’s readmission policy seem increasingly illusory, and that has been seen as the most effective of the payment policy changes since the passage of the Affordable Care Act. The narrative of ACOs that magically weave integrated care that is more efficient and higher quality is, instead, mostly leading to higher prices. The narrative about vibrant exchanges offering affordable coverage is, instead, leaving many with care that’s just about as unaffordable as before. The net result is that consumers are angry and losing confidence by the day. They know a scam when they see one, much like they know a terrorist when they see one, even if the Emperor and his Court are still pretending that the clothes look awesome. And the really sad part is that it doesn’t have to be this way if we all start telling the truth and facing into it instead of away from it.