PwC distills the complexity down to three factors pushing costs down (deflators) and three factors pushing costs up (inflators) as follows (keep in mind that these are employer costs):
- Move to benefits designed to offload cost to employees in the form of higher deductibles, co-insurance and higher co-pays.
- Increased utilization of generics
- Reductions in COBRA benefits due to better economy and expiration of government subsidies
- Cost shifting to private insurers due to Medicare payment cuts to hospitals
- Consolidation of private practices from a “cottage industry” to large groups with significant bargaining power
- HIT Meaningful Use expenditures passed on to payers
With the exception of the perennial complaint of Medicare cost shifting, the “inflators” deserve our undivided attention, particularly since the net effects will be trickling down uninhibited directly to our cost-offloading, patient-driven “benefits”. Flying in the face of most luminaries’ published opinions, PwC projects that the anticipated demise of Dr. Marcus Welby will fail to deliver the much touted “economies of scale”, and instead will just drive health care costs up. Absolutely shocking! Since this particular report targets business leaders, it is silent on the effects of health care Walmartization on actual quality of care. Let your imagination roam freely here…..
The most surprising “inflator” is the cost of HIT adoption and Meaningful Use of EHRs, which PwC is expecting to be passed on from providers to payers. Not only that HIT is supposed to increase a provider’s efficiency and reduce costs of health care delivery, but I was under the impression that taxpayers already footed that bill to the tune of 20 or 30 billion dollars (who’s counting). Turns out that this was just a down payment and the monthly invoices are in the mail, attached to our brand spanking new premiums. Yes, I know, it will take several years to see the benefits. The premiums at Kaiser, which started its epic HIT journey in 2003, are not showing any signs of relief. So we wait…..
Here is the beauty of our health insurance system in its true magnificent simplicity: Both “deflators” and “inflators” are driving prices of health insurance up for working folks. And this, we are told, is very good for us. Well, we all know exercise is good for you, and at least one part of every American is about to get a vigorous workout – the wallet. Can you feel the burn?