Are US hospitals in trouble?

Many hospitals, especially more rural ones, have been in trouble for some time. More on the rural hospitals later.

“More than 33% of all hospitals are operating on negative margins, according to the American Hospital Association,” per Michael Popke of Benefits Pro in a piece called “America’s hospitals facing ‘massive growth in expenses’.” Here are two select paragraphs from the piece that tell the gist of the story.

“Hospital employment is down approximately 100,000 from pre-pandemic levels, while hospital labor expenses per patient through 2021 were more than 19% higher than pre-pandemic levels. A new report from the American Hospital Association highlights the financial and operational toll the pandemic and inflation has taken on hospitals — concluding that more than one-third are operating on negative margins.

‘Hospitals and health systems have been nimble in responding to surges in COVID-19 cases throughout the pandemic by expanding treatment capacity, hiring staff to meet demand, acquiring and maintaining adequate supplies and personal protective equipment to protect patients and staff, and ensuring that critical services and programs remain available to the patients and communities they serve,’ notes the nine-page report released this month. ‘However, these and other factors have led to billions of dollars in losses over the last two years for hospitals.’”

Per an article called “The South’s health care system is crumbling under Covid-19. Enter Tennessee” by Daniel Payne of Politico, the demise of heath care in more rural areas has been exacerbated by COVID-19.

“Rural hospital closures have been accelerating, with 181 since 2005 — and over half of those happening since 2015, according to data from the University of North Carolina. But that may be just the beginning. Over 450 rural hospitals are at risk of closure, according to an analysis by the Chartis Group, one of the nation’s largest independent health care advisory firms.”

The rural hospital concerns predate the advent of the Affordable Care Act. Too many hospitals had high percentages of indigent health care costs, meaning people without insurance. If they were not funded by a county, the hospital was at severe risk of closing. Since fourteen states have still not expanded Medicaid under the ACA, the opportunity for getting paid did not increase and many have closed. And, the patients, employees and communities suffer.

Yet, a major part of this cost dilemma existed before COVID-19. The US has the most expensive health care system in the world, but we rank around 38th in health care quality. That is a pretty poor rate of return on one’s spend. Hospitals spent too much on technologies that need to be used. There exists a correlation between the ownership of a technology and its higher frequency of use. Yet, with COVID-19 and its aftermath, fewer elective procedures and tests were done in hospitals.

These issues need to be evaluated outside of the political lens and with data. Yet, that is not bound to happen. It would at least be helpful to see more people covered with full Medicaid expansion, but that has been politicized for zero-sum game reasons, not to actually help people. It would be helpful to see Medicare expanded, at least down to age 62 from 65. As Medicare works reasonably well, I would like to see it go lower, but whatever we do, it should be evaluated on its results, not a politician’s beliefs.

If people think I am unfairly picking on politicians, it would not be a stretch to say most politicians do not know a whole lot about health care. We saw this with the atrocious “throw stuff against the wall” repeal and replace discussion in 2017 by the thirteen Republicans, which came within one vote from passing the Senate. That would have screwed about 20 million Americans. Senator John McCain gave it a thumbs down vote for its lack of veracity and its poor protocols on evaluation.

And, we saw it with the discussions and passing of the ACA, which Republicans refused to vote for which is strange since it has several Republican ideas in it from Romneycare in Massachusetts, when Mitt Romney was governor there. The ACA is not perfect, but at least we should fully implement it and shore up its deficiencies. It is only people’s lives.

Rural Health Care is suffering (and COVID-19 has made it worse)

In an article called “The South’s health care system is crumbling under Covid-19. Enter Tennessee” by Daniel Payne of Politico, the demise of heath care in more rural areas has been exacerbated by COVID-19.

A key reason is the closing of rural and small town hospitals that has severely impacted immediate health care. A key paragraph from this article is telling:

“Of the 50 counties with the highest Covid deaths per capita, 24 are within 40 miles of a hospital that has closed, according to a POLITICO analysis in late January. Nearly all 50 counties were in rural areas. Rural hospital closures have been accelerating, with 181 since 2005 — and over half of those happening since 2015, according to data from the University of North Carolina. But that may be just the beginning. Over 450 rural hospitals are at risk of closure, according to an analysis by the Chartis Group, one of the nation’s largest independent health care advisory firms.”

These hospital closings are not new nor did they just happen. The financial difficulties predate the passage of the Affordable Care Act. In essence, a significant portion of the cost of running these hospitals went toward indigent care, meaning people without insurance. In some cases, it was over 50% and even as high as two-thirds of the hospital budget. This meant some of the revenue may be reimbursed by the local county, but if the county was in financial trouble or this was a private hospital, the hospital was out of luck.

The ACA brought with it the expansion of Medicaid, should a state opt in to cover people. The federal government would reimburse the state those costs for three years and then drop to 90% thereafter. All but fourteen states have so expanded. Per the non-partisan Commonweath Fund, Medicaid expansion helps the state economy, rural health care and the people in those locations. Former Republican presidential candidate John Kasich called Medicaid expansion a “no brainer” when he was governor of Ohio.

And, these hospitals are usually a major employer in these towns. So, when one closes, a lot of revenue leaves the town budget and economy. Belhaven, NC Mayor Adam O’Neil, a Republican, pleaded with the state leaders to expand Medicaid, but to no avail. So, he walked to Washington, DC to plead his case there. It should be noted that North Carolina remains as one of the fourteen states who have not expanded Medicaid.

As a retired benefits consultant, manager and actuary, I know the ACA is not perfect and could use some shoring up. But, a key reason for the ACA is patients need access to care and hospitals need to get paid for services rendered. If a patient has health care insurance, he or she will seek more preventative measures to stave off problems. Plus, he or she will seek care if needed, rather than avoiding it.

All of the above greased the skids for a problematic response to COVID-19. Without hospitals close by, people would forego care until it was too late. Plus, coordination of care with doctors to do triage and offer vaccines is hindered.

The ACA is not perfect, but it has improved access care for many people. I have written before about some suggestions to improve it. Yet, in fourteen states, the ACA still has not been fully implemented and in many of those states, they lag other states on health care results per the Commonwealth Fund. Expansion of Medicaid could be a major step.

https://news.yahoo.com/public-health-disaster-shuttered-hospitals-110000044.html

Our children deserve better – a repeated pre-pandemic clarion call

The following post was written a couple of years ago. Although the pandemic has rightfully gotten our attention, this story bears repeating.

Two time Pulitzer Prize winner Nicholas Kristof wrote an editorial earlier this week in The New York Times called “Our children deserve better.” It is a clarion call to our nation showing the plight of kids in America.

Here are a few quotes to frame the issue:

“UNICEF says America ranks No. 37 among countries in well-being of children, and Save the Children puts the United States at No. 36. European countries dominate the top places.

American infants at last count were 76 percent more likely to die in their first year than children in other advanced countries, according to an article last year in the journal Health Affairs. We would save the lives of 20,000 American children each year if we could just achieve the same child mortality rates as the rest of the rich world.”

“Half a million American kids also suffer lead poisoning each year, and the youth suicide rate is at its highest level on record….The Census Bureau reported this week that the number of uninsured children increased by 425,000 last year.”

These are different views and sources of the threats to US children that note we have a problem. Another source I read a couple of years ago noted America has a much higher maternal mortality rate at child birth than other civilized countries, which further endangers children as well as the mothers.

Yet, these issues are not being discussed in the halls of government. We have a poverty problem in our country with too many living in or just above poverty levels. We have not expanded Medicaid in fifteen states* whose numbers are worse than these national numbers per capita. We have not addressed our national water crisis which has a Flint, MI like exposure to lead in too many cities and a volume of available fresh water issue in other places. We have not invested as we should to diminish crime and provide more opportunities for jobs in disenfranchised areas. There are several pockets of success that can be emulated in more cities.

We also need to address better gun governance, especially with the number one gun death cause by far being suicide and a non-inconsequential accidental gun death rate. And, we have not dealt with the continuing and rising exposure to technology and artificial intelligence which have taken and will take even more jobs in the future. Finally, there is that climate change thing we need to deal with.

These are real problems. And, they will get worse. Data driven analysis of causes and solutions are needed. They are both multi-faceted. Investing more now, will save huge amounts later. This is not just an urban issue, it is rural one as well. The opioid crisis is rampant in these impoverished rural areas, for example.

None of the solutions will fit on a bumper sticker. And, political attempts to oversimplify issues should be questioned. Here is an easy contradiction to spot – if people believe gun deaths are a mental health issue, then why the effort to eliminate or not expand mental health benefits?

Please make your legislators aware of these issues and ask pointed questions. These questions deserve answers, not bumper sticker slogans. These concerns deserve to be talked about, studied and acted upon.

*Note: The number of states who have not expanded Medicaid is now twelve. Here is a link to a tracking of the states who have and have not. What puzzles me is this change would help people in rural areas, which tend to vote more conservatively. So, not expanding Medicaid hurts health access, but also rural hospitals and economies, with the federal government funding 90% of the cost. As former Republican governor of Ohio and presidential candidate John Kasich said, Medicaid expansion is a “no brainer.”

Near universal health coverage achieved in six states and DC

An article by Michael Rainey of The Fiscal Times (see link below), called “How six states achieved near universal coverage” noted the success of covering at least 95% of their people. These six states are Hawaii, Iowa, Massachusetts, Minnesota, Rhode Island and Vermont. The District of Columbia also fits the bill. Per the article:

“A half-dozen states and the District of Columbia have health care insurance rates of over 95%, achieving near-universal coverage. Three researchers at the University of Pennsylvania — including Ezekiel Emanuel, a key architect of Obamacare — said Monday that the Affordable Care Act has everything to do with those results.

Here’s how the states achieved such high insurance rates, according to the authors:

Expanding Medicaid: States that expanded their Medicaid programs as allowed under the ACA had about half the uninsured rate (6.6%) in 2018 as states that did not do so (12.4%). ‘Nearly 5 million people would gain health insurance if the remaining 14 states expanded Medicaid,’ they write.

Extending enrollment periods: High-coverage states countered the Trump administration’s efforts to shorten enrollment periods and reduce informational assistance.

Lowering premiums: States enacted additional subsidies and reinsurance programs to keep premiums low, a crucial factor in maintaining insurance coverage from year to year.

Simplifying options: Some states limited the number of options available to counteract “choice overload,” which can reduce signups through consumer paralysis.

Maintaining individual mandates: Five low uninsured states maintain some kind of individual and employer mandates, which may help persuade healthy people to sign up.

The lesson, the authors say, is that near-universal health coverage can be achieved without national legislation. ‘While it is easy to dismiss the ACA and focus on the promise of Medicare for All, there is a more straightforward path to universal coverage,’ they write, ‘adopting a handful of relatively simple policies and programs at the state level can ensure health insurance coverage for nearly all Americans.’”

This article echoes what can be achievable if Medicaid is expanded and the other above steps are taken. The three states who drag the results down for the country – Texas, Florida and Georgia – did not expand Medicaid nor run their own Healthcare exchanges. Of the six states over 95%, it should be noted Iowa and Hawaii use the federal Healthcare Exchange, while the other four run their own exchanges.

I have long said Medicare for All is something to be explored, but it requires detailed analyses (and time) of its costs and impact. In the interim, I have strongly advocated improving the Affordable Care Act. The goal is access to care, in my view. The employment paradigm has been changing for some time, where fewer full-time workers are being used than before. We are seeing several industries move to a largely part-time workforce, such as in the retail, restaurant, and hospitality industries. We have seen contractual employment continue as well as the growth of gig economies. Health care access needs to come from somewhere.

What I do not care for is the hyper-politicization of this topic. Republicans (including the president) have actively sabotaged the Affordable Care Act, cutting funding to insurers, not mentioning the negative talk about it. It has still survived. Some Democrats choose to throw progress out and go full bore with Medicare for All. Again, that is a detailed undertaking and no candidate can accomplish this without buy-in from both parties.

So, let’s improve what we have. States who have not expanded Medicaid have been economically short-sighted and harmed their citizens. I have argued for repaying insurers who were harmed by the reneging on funding commitments, inviting them back into markets. Where choice is not available, introduce a Medicare option. I would also lower the eligibility for Medicare to age 60 or 62.

These are practical options that may move the needle upward like in those six states. Let’s talk about that.

https://finance.yahoo.com/news/6-states-achieved-near-universal-224827646.html

Former Arkansas surgeon general brags on Medicaid expansion

I have written often about the Affordable Care Act not being fully implemented since 15 states have not expanded Medicaid. Rather than repeat my arguments, let me reference the attached editorial written by Dr. Joe Thompson, the former Surgeon General of Arkansas, which I read in Friday’s The Charlotte Observer. The reason for their interest is North Carolina has a Democrat governor working with a Republican majority General Assembly and the issue of Medicaid expansion is of importance. The editorial is entitled “Medicaid expansion works in deep red Arkansas. It would work in North Carolina too.”

“My home state of Arkansas is unusual among Southern states in having adopted Medicaid expansion early and in our own fashion.

I was Arkansas’ surgeon general in 2013 when the state first faced the question of whether to expand Medicaid. Like North Carolina now, Arkansas then had a Democratic governor and a Republican-controlled legislature. Fortunately, we avoided an impasse; lawmakers on both sides of the aisle came together to approve an innovative alternative to traditional Medicaid expansion that provides private health insurance coverage to about 250,000 people earning up to 138% of the federal poverty level.

The effect on Arkansas’ uninsured rate was swift and dramatic. A 2015 Gallup report showed that since Arkansas’ Medicaid expansion program took effect in January 2014, the state’s uninsured rate had been cut roughly in half, dropping from 22.5% to 11.4% ― the biggest reduction in the nation.

According to the U.S. Census Bureau, Arkansas’ uninsured rate was 8.2% in 2018. North Carolina’s was 10.7%, the ninth-highest rate in the nation. Arkansas’ reduced uninsured rate led to a 55% reduction in uncompensated-care losses at hospitals. This has been especially important for rural hospitals, which treat many low-income patients.

Since January 2010, only one rural Arkansas hospital has closed for financial reasons. In the five neighboring states that have not expanded Medicaid, more than 50 rural hospitals have closed, according to the Cecil G. Sheps Center for Health Services Research at the University of North Carolina at Chapel Hill.

Expanding Medicaid also has helped stabilize Arkansas’ health insurance market, improve competition and control premiums. Since 2014, at least three insurers have offered plans through the Health Insurance Marketplace in each county in the state. The competition encourages low rates: In 2014, 38 states had marketplace premiums lower than Arkansas’; today, only six states have lower premiums.Medicaid expansion has brought billions of new federal dollars into Arkansas’ economy: $1.7 billion between January 2014 and June 2015 alone, according to the Kaiser Family Foundation. Arkansas also is saving money because some individuals previously covered under traditional Medicaid, which in Arkansas is 30% state and 70% federally funded, are now covered under Medicaid expansion.

The federal government currently is paying 93% of Medicaid expansion costs and will pay 90% in 2020 and thereafter. A consultant told a legislative task force in 2016 that Medicaid expansion would save Arkansas $757 million between 2017 and 2021.Thirty-six states have now decided to accept Medicaid expansion.

Arkansas has become a firmly red state, but it has reauthorized its Medicaid expansion program with a supermajority vote every year because of the demonstrated benefits to the working poor, the economy and the health care infrastructure. Last year, Arkansas added a work and community engagement requirement that currently is blocked by a federal judge’s order, but however that issue ultimately is resolved, it is clear that Medicaid expansion has had tangible, positive results. There’s a reason the number of states rejecting it continues to shrink each year.

Joe Thompson, MD, MPH, is president and CEO of the Arkansas Center for Health Improvement. He was Arkansas’ surgeon general under Republican Gov. Mike Huckabee and Democratic Gov. Mike Beebe.”

In spite of efforts to naysay it, hobble it and kill it, the Affordable Care Act is stabilizing some. It needs more stability and Medicaid expansion would help in the remaining 15 states. I have also advocated the US government paying back the money they withheld from insurers causing some to leave the market, inviting those companies back to the market. I have also advocated the reduction of the Medicare eligibility age from 65 to age 62 or even 60. And, where options don’t exist, Medicare could be offered as an option for younger adults.

What frustrates this retired benefits manager, consultant and actuary is the fact people getting harmed by decisions to harm the ACA is not a major factor. There is too much focus on winning an argument that people getting screwed does not seem to matter. Please help make it matter. Even as we speak, the eating away at the edges of the ACA could lead the Supreme Court to rule it unconstitutional. If this occurs it would be a damn shame.

Medicaid expansion is needed for NC says this retired benefits professional

As North Carolina continues its stalemate on Medicaid expansion, it might be interesting to heed the words of former Ohio Republican governor John Kasich. When Ohio moved forward with the Medicaid expansion, he called it a “no brainer.”

Now why would he say that? Kasich noted Medicaid expansion would not only help people, it would bring $13 billion to his state over several years. George Washington University did a study that said Medicaid expansion would help a state’s economy, help a state’s rural hospitals and help people. We should also remember NC Republican Mayor Adam O’Neal of Belhaven walking to Washington seeking the expansion of Medicaid after his colleagues in Raleigh turned him down as he tried to save his town’s hospital.

Rather than offer stale arguments, it would be nice if the Senate and House leaders figure out a way to get this done. Let me add the voices of The Commonwealth Fund, RAND Corporation and Economic Policy Institute that echo the results of the GWU study. NC is already in the minority on this. Please let’s find a way to help people.

Let me close with a truism about health coverage to think about. Those with coverage will see doctors earlier and will have access to prescription drugs to avoid future train wrecks. Preventive care and health maintenance are better paths forward for people and healthcare financing.

Note: The author of this post is a retired benefits professional who is a former actuary, former benefits consultant and benefits manager for a Fortune 500 company

The most realistic path to ‘Medicare for All’ says a former Insurance CEO

I said back in 2010 to a healthcare consulting colleague, we will eventually need to consider national health insurance, but it won’t happen. When he asked why, I responded the “Healthcare industrial complex is too powerful.” People forget the reason we have the Affordable Care Act is CFOs were tired of rising healthcare costs to their bottom line.

Healthcare is a complex topic and the ACA added to that complexity. It has since gotten better, but we need to shore it up to stabilize it more, rather continue to allow it to be diminished as its opponents have down for several years.

But, national health care under the banner of “Medicare for All” is worthy of consideration with data and analysis. This retired actuary, benefits consultant and benefits manager supports data driven analysis to improve what we have and consider more substantive changes. JB Silvers, a former health insurance CEO and professor of health care finance at Case Western University, penned an article called “The most realistic path to ‘Medicare for All'” in The New York Times earlier this month. Here are excerpts from the article:

“Much to the dismay of single-payer advocates, our current health insurance system is likely to end with a whimper, not a bang. The average person simply prefers what we know versus the bureaucracy we fear.

But for entirely practical reasons, we might yet end up with a form of Medicare for All. Private health insurance is failing in slow motion, and all signs are that it will continue. It was for similar reasons that we got Medicare in 1965. Private insurance, under the crushing weight of chronic conditions and technologic breakthroughs (especially genetics), will increasingly be a losing proposition.

As a former health insurance company C.E.O., I know how insurance is supposed to work: It has to be reasonably priced, spread risks across a pool of policyholders and pay claims when needed. When companies can’t do those fundamental tasks and make a decent profit is when we will get single payer.

It’s already a tough business to be in. Right now the payment system for health care is just a mess. For every dollar of premium, administrative costs absorb up to 20 percent. That’s just too high, and it’s not the only reason for dissatisfaction.

Patients hate paying for cost-sharing in the form of deductibles and copays. Furthermore, narrow networks with a limited number of doctors and hospitals are good for insurers, because it gives them bargaining power, but patients are often left frustrated and hit with surprise bills.

As bad as these problems are, most people are afraid of losing coverage through their employers in favor of a government-run plan. Thus inertia wins — for now.

But there’s a reason Medicare for All is even a possibility: Most people like Medicare. It works reasonably well. And what could drive changes to our current arrangement is a disruption — like the collapse of private insurance.

There are two things insurers hate to do — take risks and pay claims. Before Affordable Care Act regulations, insurance companies cherry-picked for lower-risk customers and charged excessive rates for some enrollees…”

There is only one solution: pooling and financing many of the risks related to chronic and acute health care issues. A study by my former company noted generally 15% of participants drive 80% of the claims costs in any given year. It may not be the same 15%, but with major chronic issues, some could continue to be in the mix. The principle of insurance is to pool those risks, so that good risks can moderate the higher risks.

The ACA uses the private insurance system, exchanges and expanded Medicaid. Unfortunately, there are about 15 states who still have not expanded Medicaid. Medicare for All would consolidate the risk into one place, eliminating the profit load and reducing the relative administration cost of insurance companies. I have suggested for several years to do a pilot and expanded Medicare eligibility from age 65 to age 62, or even lower. This would let us measure the impact of such a change.

Yet, what we don’t need is this to become political. What people do not realize is the ACA has been sabotaged on several occasions by my former party which drove some insurers out of the market and increased premiums for everyone else more so than they otherwise would have been.

So, let’s cut to the chase and study options. And, politicians should let people who know what they are doing do the analysis. The ACA was made too complex and the exchange roll out was botched. On the flip side, what the GOP did in 2017 was sloppy and poorly staffed, so what was voted on woulf have been harmful to many.

Rural hospitals closing at an alarming rate

Rural hospitals in trouble is not a new topic, but the significant increase in closings and risk of such is finally getting some attention. The issue for years has been the large percentage of a rural hospital’s budget that went unpaid due to patient debt and indigent care. In some hospitals, the percentage of these two items is more than 1/2 of the budget.

Per a February, 2019 article in Modern Healthcare called “Nearly a quarter of rural hospitals are on the brink of closing” by Alex Kacik: “Twenty-one percent of rural hospitals are at high risk of closing, according to Navigant’s analysis of CMS data on 2,045 rural hospitals. That equates to 430 hospitals across 43 states that employ about 150,000 people and generate about $21.2 billion in total patient revenue a year.

Hospitals are often the economic drivers of rural communities. Per capita income falls 4% and the unemployment rate rises 1.6 percentage points when a hospital closes, a related study found. Ninety-seven rural hospitals have closed since 2010, according to the University of North Carolina Cecil G. Sheps Center for Health Services Research.

They also broke the impact down by state, revealing that half of Alabama’s rural hospitals are in financial distress, the highest percentage in the country. At least 36% of the hospitals in Alaska, Arkansas, Georgia, Maine and Mississippi are in financial jeopardy.”

Most of the states in trouble chose not to expand Medicaid, but there are some who did or are now doing so. Per several studies by The Commonwealth Fund, RAND Corporation, Economic Policy Institute and George Washington University, expanding Medicaid would help patients, state economies and rural hospitals. Why? It would allow these hospitals to get paid and paid closer to the time of service reducing accounts receivables. Getting paid has an echo effect on employees and consumers.

This issue was brought home by two Republicans pleading with their party to acquiesce in states like North and South Carolina that did not expand Medicaid. GOP Governor John Kasich of Ohio, who ran for President, said Medicaid expansion is a “no brainer” and would add over $13 billion to Ohio over several years. Yet, the most dramatic plea was from Adam O’Neal, a GOP Mayor of a North Carolina town called Belhaven.

After failing to get the GOP majority in Raleigh to help save his town’s Vidant Pungo Hospital that served 20,000 people, he walked 273 miles to Washington, DC over 14 days. “You can’t let rural hospitals close across the country. People die,” O’Neal, told Modern Healthcare in 2014. Unfortunately, Vidant Pungo closed later that year (note a non-ER clinic opened in 2016).

You can add my pleas for help back then (and now). Folks, this stuff is real. I do not care if your tribe is blue, red, purple are chartreuse, hospital closings impact people’s lives and people’s livelihoods. Closings also hurt their community’s economy. My strong advice is for legislators to stop political posturing and do something. I do not care who wins or loses a political game. Stop focusing on keeping your job and do your job. You could start by expanding Medicaid, joining the other 36 states.