Blog

Hope everyone had a splendid Thanksgiving!

The Wall Street Journal published a lengthier piece outlining some of the struggles that the Indian Health Service (IHS) has had with recruiting physicians. While the vacancy rate for the industry is reported to be 18%, the vacancy rate for IHS was found to be 29%. It appears that in light of the recruiting challenges, IHS has hired physicians that it might not have hired otherwise: physicians that other hospitals and medical groups would not employ.

The article brings up many interesting issues. At a policy level, one question is whether the federal government (which pays out malpractice claims) is actually saving money by keeping salaries at the level that they are (the article lists several 6-digit malpractice claims that the government paid out). A second issue is that IHS and other hospitals have access to a government database called the National Practitioner Data Bank, which flagged most, if not all of, the mentioned doctors. However, records from the National Practitioner Data Bank are not publicly available and as a result, patients are reliant on the judgement of hospital administration. In cases where hospital administration struggles to fill vacancies, patients may feel betrayed, as some of those interviewed for the article seem to feel. A policy change could require that the data bank is open to the public, allowing engaged patients to make more informed decisions for themselves (and less reliant on the judgement of hospital administrators). The article also mentioned that licensing occurs on a state basis, meaning that a physician who has been disciplined multiple times in one state can still operate with a clean license in another state. Perhaps a more national method of licensing and credentialing is in order.

Kaiser Health News reported on CMS's finalization of its Hospital Price Transparency Requirements. Hospitals will need to publish a list of services, their prices, and a range of negotiated discounts. CMS will specify 70 services that hospitals will need to publish data for, and hospitals themselves can select another 230.

An earlier version of this policy required hospitals to not only publish insurance discounts, but also how much each discount would be for each insurance company (and perhaps plan). That would have been more useful to consumers so that they can more accurately assess how much they would likely be liable for given their specific plan. Nevertheless, this policy is still a step in towards pricing transparency.

Kaiser Health News also noted the proposal to require insurers to offer financial calculators to their members, which would be another welcome change.

Health System Tracker, a collaboration between the Peterson Center on Healthcare and Kaiser Family Foundation, published an interesting piece on longer-term trends of healthcare spending among employees of large employers in the US in August. Unsurprisingly, healthcare spending (through both insurance premiums and out-of-pocket spending) has been increasing year after year. In 2008, the average total healthcare spending for a family of four was close to $15,000, while in 2018, the figure almost reaches $23,000 (representing a 55% increase). During the same time period, workers' wages grew by about 25%. In terms of absolute dollars, employees are not seeing all of the increases since their employers have been paying more and more via premiums, just as the employees have been. Similarly, average annual health spending by individual with larger employer coverage has increased from around $3,700 to over $5,700. Elsewhere, people have argued that the increase in spending is mostly due to rising prices, not more consumption of healthcare services.

Most of the increases in out-of-pocket spending appears to be coming through deductibles, at the expense of copayments. If the absolute dollar figure for copayments remains relatively static (e.g. $35 per visit), it would make sense that the percentage of out-of-pocket spending through deductibles has increased dramatically. However, in other news, Kaiser Health News reports that many employers are planning to scale back their reliance on high-deductible plans -- when the economy does well, employers are more likely to be generous with benefits such as health insurance.

Bloomberg published an editorial reporting that House Speaker Pelosi has proposed legislation to limit how much Medicare pays for medications. Under current laws, Medicare is prohibited from negotiating drug pricing. The new legislation would like to limit Medicare's price for medications to 1.2 times the average price paid in certain other industrialized countries. In cases where a drug is not sold internationally, Medicare would like to receive the same pricing that state Medicaid programs receive.

This legislation seems unlikely to pass in the current political climate. However, the editorial pointed out that Congress's assessment is that even with the pricing limits in place, pharmaceutical companies would likely continue their pace of drug discovery, albeit modestly slower (2%-5% less than current efforts, versus the dramatic fallout often claimed by industry).