Tag Archives: Health Care

Rising Nursing Home Prices Bode Poorly For The Future

Georgetown University Medical Center reveals brutal dynamic governing long-term care in America

The results of a six-year study by Georgetown University Medical Center revealed just how fast U.S. nursing home prices have been increasing all across America. And the future looks just as grim.

Dr. Sean Huang, the study’s lead author, said the brutal dynamic governing long-term care in America — where many nursing home residents must spend down the bulk of their life savings before qualifying for federal assistance — is intensifying. California, Florida, New York and Texas all saw increases that far outstripped the 11.6% rise in inflation between 2005 and 2010, the period reviewed by Georgetown’s analysis of eight states. Additional data show the upward trend has continued in the years since.

And it’s not just baby boomers who need to worry — Generation X, millennials and Generation Z might face an even darker old age. Rising wage pressure on a sector in need of workers is driving up costs, and unless Washington comes up with a fix, be it a version of Medicare-for-All or something less ambitious, the funding for some programs is projected to start running out in the next decade.

“We’re talking about long stays — people who have disabilities, dementia, Parkinson’s disease,” Mr. Huang explained about the growing nursing home population. “Medicare does not cover that. They will pay out-of-pocket until they use all of their wealth.”

Many Americans have no idea how Medicare works, including those approaching retirement. A sort-of government health insurance policy largely for older Americans, eligibility generally begins at age 65, covering some of the costs of routine and emergency medical care. What it doesn’t cover is most aspects of long-term “custodial” care — as in nursing homes, where a large portion of Americans can expect to spend the last years of their lives.

That’s where Medicaid — state-administered coverage for Americans whose assets fall below a certain level — comes in. For those who qualify for nursing home admission, Medicaid generally requires they exhaust most of their assets first before qualifying for coverage. Without expensive long-term care insurance, which most people don’t have, an increasing number of older Americans are falling into this financial trap, Mr. Huang said.

And their nest eggs are being depleted more quickly than ever. Mr. Huang’s study found nursing home price rises over the period measured generally outpaced increases in overall medical care (20.2%) and consumer prices (11.7%). For example, in California between 2002 and 2011, the median out-of-pocket cost for nursing home care increased by 56.7%.

Mr. Huang and three co-authors began looking into the matter in 2013. With no central database, they had to collect information from each state and individual nursing homes. Some states only had data through 2010, he said. In the end, they managed to crunch data from an average of 3,900 nursing homes for each of the years measured, representing approximately 27% of freestanding U.S. facilities.

Nursing homes in New York during the period reviewed had the highest average daily price of $302, while Texas had the lowest average daily price of $121. Additional information has shown that nursing home costs have continued to increase at a much higher rate than inflation, albeit slightly slower than the study period.

In 2010, the average price per day for nursing home care in California was $217, up more than 30% (with Florida close behind) from 2005. In a more recent analysis, Mr. Huang calculated that, from 2010 to 2015, nursing home prices in California rose more slowly, by roughly 19.6% to $258 per day. However, inflation from 2010 to 2015 only increased by 8.7%, he noted. Mr. Huang said his research doesn’t point to any improvement going forward.

“I don’t see there’s any major changes that suggest the trend will be different,” Mr. Huang said.

Indeed, the median daily price for a private room in a California nursing home just last year was $323, while the national median was $275 per day, according to life insurance company Genworth. Looking at the issue from an annual perspective, the median cost in the U.S. for a private room in a nursing home was $100,375. Oklahoma provided the cheapest annual median cost at $63,510, while Alaska was the most expensive at $330,873, Genworth data showed.

Nursing homes have long been a financial drain on most who need them, constituting one of the greatest risks retirees face when it comes to managing retirement funds, a report from the U.S. Department of Health and Human Services showed. Unfortunately, the annual costs for nursing home care will continue to grow at a rate much faster than inflation, according to Urban Institute Senior Fellow Richard W. Johnson.

“It’s that labor market pressure,” Mr. Johnson said. More elderly Americans mean more demand for nursing home care, and more demand for nursing home employees. Wages go up, and the cost is passed along to consumers who, under the current system by which America looks after its elderly, coverage is limited.

In an industry that requires significant hands-on attention, technology can’t eliminate many jobs, Mr. Johnson said. And just when the labor market for nursing homes is already tight, uncertainty over U.S. immigration policies may further reduce available workers, he said. In 2017, immigrants made up 23.5% of formal and non-formal long-term care sector workers, according to Health Affairs.

“It’s unlikely that you’re going to see any improvement in these trends, and if anything, things will probably get worse because nursing homes are probably going to face something of a worker shortage,” Mr. Johnson said. Home health aides and personal care aides are ranked as the third and fourth fastest growing occupations and are expected to increase 47% and 39% respectively from 2016 to 2026, according to the Bureau of Labor Statistics.

“The baby boom generation is so large,” Mr. Johnson said. “They’re approaching their 80s, and that means that many more of them are going to need nursing home care or other types of long term care.”

“If there would be a higher reimbursement rate, either by Medicaid or Medicare, nursing home quality would be likely to improve.”

Another trend emerging in the industry that may be driving up costs is Wall Street. Four out of the 10 largest for-profit nursing home chains were purchased by private equity firms from 2003-2008, according to a case study analyzing private equity takeover.

Research on the impact of private equity has shown mixed results, though one study showed how a nursing home chain that was taken over by a private equity firm showed a general reinforcement of profit-seeking strategies that were already in place, while adding some strategies aimed at improving efficiency. Other reports have detailed darker results.

During the Obama administration, the Community Living Assistance Services and Supports Act (CLASS Act) was signed into law to help ease the burden as part of the Affordable Care Act (ACA), but it was later rescinded by Congress over concerns voluntary enrollment wasn’t viable — premiums would be too high and the system would eventually collapse, Mr. Johnson said. This left the ACA with little to no assistance for long-term care costs.

Some states have started taking matters into their own hands. Washington State passed a bill in April that would implement a 0.58% payroll tax that would give residents up to $36,500 to pay for long-term care services. Payroll tax will begin collecting in 2022, while residents can start withdrawing in 2025. But that’s just one state, and the problem, Huang and Johnson note, is national in scope.

“If there would be a higher reimbursement rate, either by Medicaid or Medicare, nursing home quality would be likely to improve,” Mr. Huang said. “But I don’t see that happening in the near future.

Source: Investment News

California Bill Would Create Health Care Price Controls

https://i1.wp.com/media.breitbart.com/media/2015/06/Covered-California-640x480.jpg?zoom=2

But, but…I thought Obamacare was suppose to reduce the cost of health care?

From Sacramento Bee: California’s government would set prices for hospital stays, doctor visits and other health care services under legislation introduced Monday, vastly remaking the industry in a bid to lower health care costs.

The proposal, which drew swift opposition from the health care industry, comes amid a fierce debate in California as activists on the left push aggressively for a system that would provide government-funded insurance for everyone in the state.

Across the country, rising health care costs have put the industry, lawmaker and employers and consumers at odds.

The proposal in California would affect private health plans, including those offered by employers and purchased by individuals. A nine-member commission appointed by the governor and legislative leaders would set prices for everything from a physical exam to an allergy test to heart bypass surgery. No other state has such a requirement.

“If we do not act now, I’m concerned that health care prices will become unsustainable,” Assemblyman Ash Kalra, a freshman Democrat from San Jose who wrote the legislation, said in a news conference in Sacramento.

The measure faces an uphill battle in the Legislature, where lawmakers are generally cautious about making drastic changes to the health care system and are already juggling a wide range of ambitious proposals.

The proposal is backed by influential unions including the Service Employees International Union, Unite Here and the Teamsters. The unions are frustrated that health care costs are gobbling an increasing share of employee compensation.

“Every dollar that we spend on rising health care prices is a dollar that comes out of a worker’s pocket,” said Sara Flocks, policy coordinator for the California Labor Federation, a union coalition. “This is something that is eating up our wages and it is increasing income inequality. This is a fundamental question of fairness.

Health care providers say price controls would encourage doctors to move out of state or retire, making it harder for people to see a physician when they’re sick, and force hospitals to lay off staff or, in some cases, close their doors.

The California Medical Association, which represents physicians, called the proposal “radical” and warned that it would reduce choices for consumers.

“No state in America has ever attempted such an unproven policy of inflexible, government-managed price caps across every health care service,” Dr. Theodore Mazer, the CMA president, said in a statement.

Under Kalra’s bill, prices would be tied to Medicare’s rate for a particular service or procedure, with that price as a floor. There would be a process for doctors or hospitals to argue that their unique circumstances warrant payments higher than the state’s standard rate.

Paying hospitals 125 percent of Medicare’s rate would cut $18 billion in revenue and force them to trim nurses and other support staff, said Dietmar Grellman, senior vice president of the California Hospital Association. Private insurers make up for the low payments from government-funded health care, which doesn’t cover the full cost of care, he said.

“That’s why their bill is such an empty promise,” Grellman said. “They take money out of the system with rate regulation, but then they don’t address the huge gaping hole that’s created by Medicare and Medicaid.”

In recent decades health care spending has risen faster than inflation and wages while employers and health plans have shifted more of the costs onto consumers through higher premiums, deductibles and co-pays. Americans spend more per capita on health care than other developed countries.

Meanwhile, a wave of consolidation by hospitals, physician groups and insurance companies has given industry players more power to demand higher rates.

Source: Fellowship Of The Minds