2012 Potpourri XIV

By April 20, 2012 Commentary

ADP released results of a survey of over 500 mid-sized and large employers on wellness program offerings.  About 80% of large employers and 44% of mid-sized ones offer such benefits.  Participation is usually voluntary but 15% of mid-sized and 12% of large employers make the programs mandatory.  Reasons for the programs include improving employee health, controlling costs and attracting and retaining employees.  Most of these companies have been offering the programs for five or more years and most say that the programs have met or exceeded their expectations, but only a small percent actually analyze return on investment.   (ADP Release)

Obesity has attracted attention as a major factor in health spending growth and several pieces of research have estimated its effect on need for health care and costs.  A new article in the Journal of Health Economics  produces a revised estimate using an instrumental variables approach.  Based on Medicare Expenditure Panel Surveys, the research finds that obesity adds $2741 to annual medical costs.  Over a third of Americans are obese, and therefore at risk for a variety of health conditions, including diabetes, heart disease, and high blood pressure, all of which add significantly to spending  However, the research also shows that almost all the excess spending is concentrated in a few very obese individuals. (Obesity Article)

A survey by Buck Consultants, a unit of ACS, which is now a unit of Xerox (whew!) looks at expected medical cost increases for  employers and health plans in the coming year.  It finds that overall costs are expected to be up by 9.9%, far over inflation or economic growth rates.  This is down slightly from the prior year, and the company opines that it may be due to health plans backing off on margins due to MLR requirements and more certainty regarding the effects of reform.  All types of plans reported similar cost increases.  The results would suggest no real effect of reform on reining in health spending.    (Buck Survey)

Hospitals are under fire for being a major source of fast-rising health spending.  An article in Becker’s Hospital Review suggests some areas where they can work to cut their own costs, which might result in lower prices.  The areas of focus include unnecessary labor expense, unnecessary testing and imaging, excess readmissions, inappropriate lengths of stay and avoidable patient safety events.  The article suggests that hospitals could save millions of dollars a year on these expenses if they were better managed, but many of these categories may actually result in increased revenue to hospitals under current reimbursement systems.   (Becker’s Article)

A Perspective in the New England Journal of Medicine examines implications for overall health spending from the Massachusetts experience.  As is well-known, while Massachusetts has achieved a low level of uninsurance, it also has about the highest level of per capita health expenditures in the country.  Over 50% of the state budget is now spent on health care, and both the amount and proportion are growing rapidly.  The state is having a fierce debate over a new payment system for providers that would encourage ACOs and then use a global payment for them.  This strategy is likely to be counterproductive as it will leave a few groups with immense market power and therefore the ability to demand larger reimbursement increases, kind of like hospitals today.   (NEJM Perspective)

A Viewpoint in the Journal of the American Medical Association looks at comparative incentives for physicians and patients in today’s health care and health care coverage systems, finding that they often have different incentives.  Using insights from behavioral economics, they find that physicians are generally more economically rational than patients and therefore more responsive to direct financial incentives.  If one issue to ensure less use of low-value services, an incentive could be designed that influences physicians, but if patients are not incented in the same direction, little change may occur.    (JAMA Viewpoint)

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