2017 Review, Part 1

By December 26, 2017Commentary

Lets face it, this has thankfully become a slow work week for the country.  People are entitled to take it easy the week between Christmas and New Years and enjoy themselves.  So I am going to just do a couple of posts on the year in health care from my perspective.  We can start with the highly-visible federal government actions.  We did not get a repeal or a replacement of the woefully misnamed Affordable Care Act, despite the new Administration’s best efforts.  We did just last week get a repeal of the individual mandate, which I think is a good step.  Most of the people being penalized don’t need health insurance, even it were subsidized.  We got a new secretary of HHS who had to resign because of over-fondness for private jet flying, which is a great way to fly, especially when taxpayers are footing the bill.  Even in hyper-regulated health care, we are seeing a slowdown in the flow of federal regulations.  I look at the Federal Register every day and the number of pages has dropped dramatically.  That is a good thing.  We are beginning to get some movement on the issue of unburdening doctors in particular from reporting on so many quality measures.

Looking at the health plan sector, two large proposed mergers, Humana and Aetna, and Anthem and Cigna, were rejected by federal antitrust authorities and courts upheld these decisions.  An excellent outcome, but continued vigilance is necessary to maintain some semblance of a competitive health plan market.  It was a year of member and profit growth for the majority of the country’s health plans.  In the provider sector, unfortunately hospital concentration continues unabated and will lead to no good.  In addition to horizontal mergers, hospitals continue to gobble up all kinds of other providers, which is also bad for the health system and patients.  And at the end of the year, we saw new proposed mergers, like that of CVS and Aetna, that will do nothing to help with issues of quality and cost, and hopefully will also be rejected.  Among other things, it is simply not good in our political system to allow ongoing creation of so many powerful mega-companies.

Looking at payer types, Medicare sees an ongoing trend of beneficiaries moving to Medicare Advantage.  Going into 2018, it seems like that at least 35% will be in MA.  Fee-for-service Medicare saw muted spending growth, but stress levels at providers from Medicare reimbursements are going up.  Access issues may result.  The new Administration is giving states more flexibility on Medicaid programs and we are beginning to see more work requirements and other conditions that force more responsibility onto Medicaid recipients.  The cost of Medicaid, however, has reached a point where states are going to have to take even more dramatic steps to control costs.  Medicaid reimbursement levels result in many providers not seeing these patients and that may also reach a crisis point.  Commercial group insurance saw muted premium growth, so employers are relatively happy, but many are still expressing apprehension about potential faster spending growth.  The individual exchange market is in crisis, with absurd premium rises in most states.  Removal of the mandate may exacerbate this.  More in the next post.

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