Look At CBO Report From Two Media Outlets

Yesterday the Congressional Budget Office issued a new report on the cost of the Affordable Care Act. What struck me as interesting was how the story was covered by different media outlets.

Over at CNBC the focus was on the report reducing the short term costs by about $ 50 billion.

At Fox News they took a look at the aspect of the report stating that the long term costs of the law are going to be higher.

The left and right blogs took the same kind of slant, the liberal ones focusing on the areas of the report that emphasized savings while the conservative ones looked at the higher costs.

The truth is both aspects of the report have grains of truth. The older reports did not include the year 2021 and beyond while the newer one does. The costs in the initial period through 2020 are smaller but the costs in 2021 and beyond are higher than previously estimated.

In addition some of the reports and projections focus only on the insurance costs and not on the other aspects of implementing the plan.

And of course number are easy to play with, so the figures are likely to change as time moves on.

But the interesting thing for me was how two people could look at the same report and reach totally different conclusions.

         

Author: PATRICK EDABURN, Assistant Editor

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22 Comments

  1. The numbers will change and no one can really predict by how much so far out. One thing I’m convinced of is that entrepreneurial wannabes like my daughter (who like so many is in a dead end job just for medical benefits) will instigate so many start up companies that overall revenue will explode.

    Nor can anyone predict how much savings will be forthcoming from the standardization and modernizing of just the records control let alone of the actual procedures done. As a medicare patient, I’m already seeing the slow down of unnecessary testing which has been one of the big cost factors.

  2. One might want to relate this situation to all other cost projections over a long period of time by the government. After researching projected cost for Medicare, Medicaid and Medicare Part D when they were first passed, you can then decide what will happen with the current program.

    But not until wage controls for medical providers are in place to control 60% of the current medical cost and price controls are in palce to control the cost of drugs and supplies will any healthcare program work in the US. Look at most all countries with government regulated healthcare systems and they all have some sort of wage and price controls.

  3. Samuel Clemens (Mark Twain)had it right one hundred plus years ago, “There are lies, there are damn lies and there are statistics.”

  4. To RP: payments to providers only make up 13% of Medicare spending, nowhere near the 60% you cite (pdf alert):

    http://www.kff.org/medicare/upload/7305-06.pdf

    Since this 13% is the total payments the physician’s “wage” would be this amount minus overhead. In addition there are already reimbursement caps on many drugs and supplies. For some medications administered in office the Medicare reimbursement is actually less than the direct cost to the physician. Most of the profit goes to the manufacturers.

    Anyway sorry to get off track. With respect to Patrick’s post long as the SGR charade remains active these numbers are all just BS anyway.

  5. Da Goat..You need to do some research yourself before accepting information that appears to come from government records.

    I was a controller in a hospital for 35 years. The number one cost in the hospital that had a 250 million dollar expense budget was salaries and benefits. They were 60+% of the cost. Drugs and Supplies were another 25% with the remaining cost in depreciation expense and services. We had physician offices and more than 80% of the cost for physisian offices was the physician and nursing salaries. The rest was building maintenance, services and supplies.

    Now you can quote Medicare statistics and they are correct for Medicare payments since they only pay a portion of cost. But there is a little known item called cost shifting. Medicare pays less than 50% of cost to provide services to the providers, Medicaid pays less than 30% of cost to providers, so where do you think the revenues come from than cover the rest of the cost and the profits required for new equipment? It is the private insurance and self pay patients.

    For most providers, you will see information in their yearly financial statements where gross revenue is one figure and net revenue is another figure. For most providers, for every $100 billed gross, then net will be less than $50. That is the amount not paid by medicare, medicaid or other contractual providers. Its like selling a car with a sticker price of 20K and selling it for 10K. Someone else is paying the other 10K plus another 5K for the dealer profit.

    Now I still say wage and price controls will have to be put into place to reduce the cost that everyone pays. Don’t just look at a portion of patient records to deteremine what the cost of healthcare is nationally and don’t just look at what the insurance industry provides. And last, then Medicare quotes a cost, it is not true cost since there are many things in the yearly cost report filed to CMS that they do not recognize, one being depreciation of equipment if the provider has income from investments.

  6. Wow, thanks, RP for lifting the rose colored glasses from our eyes. Statistics do lie, almost as much as politicians.

  7. RP you are right on the cost-shifting, but I still don’t see where that supports your contention that somehow wage controls on providers will control 60% of the medical cost. There are plenty of geographical areas where Medicare is one of the better payers and even in the ones that are not insurance doesn’t pay enough to bring provider salaries up to 60% of medical costs. The total of payments to nursing homes, hospitals, durable goods, Part D, home health, dialysis, etc is going to be way more than provider salaries.

    Don’t get me wrong, I think provider salaries are a part of the problem, but I would focus on control of over-utilization, inappropriate overuse of procedures, physician-owned imaging and the like as opposed to caps on salaries.

  8. Perhaps in the spirit of the ex GS guy, Smith, RP could report on the abuses some hospitals perpetrate.

  9. Da Goat..True over utilization does increase cost for healthcare. But one of the reasons for this happening is the risk of doctors and hospitals being sued. If you come into the office or the hospital, the doctor may know that you have a virus that is causing your stomach to hurt. Now he can prescribe a drug, send you home and expect you to get better. Or he can be cautious and send you to the hospital for a series of test. Under the first option, if you go home, have a more serious problem and end up in the hospital, you sue the doctor and get rewarded for many millions. Under the second, even if you are sent home and still ahve a problem, the odds of you winning a case is much less since all possible test were run and nothing showed up. If the liability laws were changed where the loser pays all cost, then when someone sues and they loose they would be much less likely to bring the case to court.

    There are so many things that casue our healthcare to be high it is impossible to communicate in a setting like this and it it also impossible for the media to communicate the problems in any two column article in the paper or 3 minute piece on cable news.

    But it all starts with the provider cost to provide the services and the cost of supplies, equipment and insurance to provide the services.

  10. “The Hospital” movie with George C. Scott, is one of my favorites.

  11. Much the same can be said for pharmaceuticals. Way back when (1997 and prior), I was a pharmaceutical chemist. The cost for vaccines was around $10. $9.50 was for law suit insurance. Seriously, wtf?

    If a company is doing the best it can (or a doctor, hospital, etc.) and somehow misses something that SHOULD NOT BE liability. Imagine, if you will, and assuming you are not a doctor, that at your employment if you were to mess up in ANYTHING that someone could sue you for millions of dollars. I’d hate to be a professional football player under such conditions; I can assure you of that!

    Tort reform needs to be done. The problem is that the R’s idea of reform is to limit liability. The D’s idea of reform is to not do it. The rational way to reform would be to look at Hippocrates. First do no harm. If you have passed that test, the amount of liability should be very low, indeed.

    If a nurse gives a patient a drug that a doctor prescribed and a pharmacist issued, that nurse CAN STILL BE SUED!! WTF?

  12. Sorry, to follow on: the limit on liability should not be quantity, it should be rationality. The ‘deep pockets’ rule should not be applicable if the plaintiff is more liable than the person he is suing. In addition, if someone does screw up big time, there should not be limits (as there is not now). Just because some lawmaker wants to slap a price tag down does not make the liability less. If a doctor removes the wrong kidney of someone, insisting that a $100,000 limit is the law is beyond stupid–it is evil. Meanwhile, if a doctor removes someone’s diseased kidney, does the follow-up to the best of his ability and then the person dies of an infection that can only be marginally linked to the procedure–NO LAWSUIT!

  13. Right on, RC…………..

  14. Good points RC.

    Again with apologies for getting off track from the original post, there is a connection between over-utilization and inflated physician salaries. There are financial interests in cardiologists doing more cardiac caths, in gastroenterologists doing more endoscopies, in urologists doing more cystoscopies, in ENT docs doing more tympanostomy tubes, in opthalmologists doing more cataracts, etc, etc. It is always easier to decide to do a procedure instead of watchful waiting. One reason is legal as RC says – you are much more likely to be sued for not doing a procedure than you are for doing one. Nobody ever gets sued for doing the C-section, they get sued for waiting too long.

    The main reason though in my opinion is physicians are relatively rewarded for doing procedures, therefore physicians do more procedures. The method of determining payments is heavily skewed towards procedures as opposed to counseling patients, trying medications, observation, etc. This has its roots in the RBRVS, which I won’t go into but is a joint effort between the government and the AMA.

    Of course the cost of over-utilization is not limited to physician salaries, it trickles down to increased hospital, skilled care and surgery center costs. That’s why I say the key is not arbitrary wage controls, it is taking away the incentives for waste, starting with the RBRVS system.

  15. We haven’t heard from the under-utilization crowd on this. Don’t some people, like in Canada, and other places with some form of socialized medicine complain that that have to wait too long for some tests and procedures, or that they are rationed in some way.

    Just askin.

  16. How does the United States compare with other countries on patient-reported access problems, continuity of care, and waiting times?

    In a 2005 survey of sicker patients conducted in six developed countries, the United States ranked last on four measures of continuity of care and access problems reported by patients. The U.S. patients reported relatively longer waiting times for doctor appointments when they were sick, but relatively shorter waiting times to be seen at the emergency department, see a specialist, and have elective surgery.

  17. Which gets us to “The Cost of Care

    The United States spends more on medical care per person than any country, yet life expectancy is shorter than in most other developed nations and many developing ones. Lack of health insurance is a factor in life span and contributes to an estimated 45,000 deaths a year. Why the high cost? The U.S. has a fee-for-service system—paying medical providers piecemeal for appointments, surgery, and the like. That can lead to unneeded treatment that doesn’t reliably improve a patient’s health. Says Gerard Anderson, a professor at Johns Hopkins Bloomberg School of Public Health who studies health insurance worldwide, “More care does not necessarily mean better care.”

    NOTE: Click the “Click to enlarge graphic” below the cropped portion of graph to see a comparison of cost, visits per year, and average life expectancy at birth for both countries WITH and WITHOUT Universal Health Coverage.

  18. First attempt ‘awaiting moderation’

    How does the United States compare with other countries on patient-reported access problems, continuity of care, and waiting times?

    In a 2005 survey of sicker patients conducted in six developed countries, the United States ranked last on four measures of continuity of care and access problems reported by patients. The U.S. patients reported relatively longer waiting times for doctor appointments when they were sick, but relatively shorter waiting times to be seen at the emergency department, see a specialist, and have elective surgery.

  19. Second attempt ‘awaiting moderation’ I’ll try and post link in next comment.

    How does the United States compare with other countries on patient-reported access problems, continuity of care, and waiting times?

    In a 2005 survey of sicker patients conducted in six developed countries, the United States ranked last on four measures of continuity of care and access problems reported by patients. The U.S. patients reported relatively longer waiting times for doctor appointments when they were sick, but relatively shorter waiting times to be seen at the emergency department, see a specialist, and have elective surgery.

  20. Three attempts at posting waiting times and related data w/links are all waiting for something!

    Hopefully they are either moderated or deleted so I can post this information.

  21. Here’s some date regarding access problems, continuity, and waiting times:

  22. It would appear that our current system sucks.

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