Health Sector Economic Indicators – Altarum Institute

By Clive Riddle, April 12, 2013

Altarum Institute each month issues Health Sector Economic Indicators Briefs through its Center for Sustainable Health Spending. The brief cover health care spending, utilization, prices, and employment, and are worth perusing each time. 

Altarum’s Charles Roehrig, Director of the Center, had this to say about their current assessment of health care in the economy:  “Health spending has remained at about 18 percent of gross domestic product since mid-2009, but health employment continues to slowly increase as a share of total employment.  Expanded coverage under the Affordable Care Act should push these figures upward, but an improving economy will push in the other direction as non-health spending and jobs accelerate. We look forward to tracking how these forces play out.”

Here’s the current pulse of the health care economic sector from Altarum’s just issued April briefs, which incorporate February and March 2013 data:

• National health care spending in February 2013 grew 3.9% relative to February 2012
• Health care price growth rose to 1.7% in February 2013 compared to February 2012, two-tenths above January 2013 reading
• This was still the second lowest rate of price increase since 1.3% growth recorded in December 1997.
• The 12-month moving average price growth at 1.9% in February 2013 is the lowest since the same figure recorded in November 1998.
• In February 2013, health spending increased to a seasonally adjusted annual rate of $2.89 trillion, slightly higher than its value of $2.88 trillion in January.
• The health spending share of the gross domestic product was steady at 18.0% in January 2013, up from 16.4% at the start of the recession in December 2007.
• Health spending by category in February 2013: Hospital – 32%; Physician & Clinical – 19%;  Prescriptions – 10%; Nursing Home – 5%; Dental – 4%; Home Health – 3%; Other personal healthcare – 11%; Other health spending – 16%
• Year-over-year, hospital prices rose to 2.6% in February (from 2.0% in January). Physician and clinical services rose 0.8%, barely above the low 0.6% January print.  Prescription drugs saw price growth tumble to 0.8%, from 4.0% as recently as August 2012, and the lowest since 0.7% in June 2007.
• Implicit per capita health care utilization averaged 1.3% growth over the last 12 months.
• Health care employment rose by 23,000 jobs in March 2013, somewhat below the 24-month average increase of 24,000
• Health care represented 10.74% of total employment in March 2013, compared to 10.67% a year ago and 9.49% in December 2007.

The Alzheimer's Elephant

by Clive Riddle, March 22, 2013

There are so many large, aging elephants in the national room: Social Security, Medicare and Alzheimer's to name three leading the herd. They keep growing larger - we can see it happening in real time - and we've seen it coming for quite some time. Decades ago Ken Dychtwald coined the term Age Wave, referring to the massive shift and implications of the ballooning senior segment of our population.

Robert Egge, the Alzheimer's Association's VP of Public Policy has this to say about Alzheimer's: "Alzheimer's disease steals everything – steadily, relentlessly, inevitably. With baby boomers reaching the age of elevated risk, we do not have time to do what we have always done. The National Institutes of Health needs to reset its priorities and focus its resources on the crisis at our doorstep, and Congress must fully fund implementation of the National Alzheimer's Plan to solve the crisis."

The  Alzheimer's Association this week released 2013 Alzheimer's Disease Facts & Figures, an annual report – this year spanning 71 pages – designed to serve as “a statistical  resource for U.S. data related

to Alzheimer’s disease, the most common type of dementia,  as well as other dementias.”

Here’s some ten key points to consider about the state of Alzheimer's one can glean from the report:

1. Alzheimer's disease is the sixth leading cause of death in the United States and is the only leading cause of death without a way to prevent, cure or even slow its progression.
2. 1 in 3 seniors dies with Alzheimer's or another dementia.
3. Based on 2010 data, Alzheimer's was reported as the underlying cause of death for 83,494 individuals
4. In 2013 an estimated 450,000 people in the United States will die with Alzheimer's.
5. Among 70-years-olds with Alzheimer's disease, 61% are expected to die within a decade. Among 70-year-olds without Alzheimer's, only 30% will die within a decade.
6. More than 5 million Americans are living with Alzheimer's disease.
7. Without the development of medical breakthroughs that prevent, slow or stop the disease, by 2050, the number of people with Alzheimer's disease could reach 13.8 million.
8. In 2012, there were more than 15 million caregivers who provided more than 17 billion hours of unpaid care valued at $216 billion.
9. Due to the physical and emotional toll of caregiving, Alzheimer's and dementia caregivers had $9.1 billion in additional health care costs of their own in 2012.
10. The total payments for health and long-term care services for people with Alzheimer's and other dementias will total $203 billion in 2013, the lion's share of which will be borne by Medicare and Medicaid with combined costs of $142 billion.

Here's a breakdown provided in the report of 2013 Health and Long-Term Care Services expenditures by source:

• Medicare: $107 billion (53%)
• Medicaid:  $35 billion (17%)
• Out-of-Pocket Costs: $34 billion (17%)
• Other Sources - private insurance / uncompensated - $27 billion (13%)
• Total: $203 billion

We’ve all heard the trope “an elephant never forgets.” The irony is, we as a nation are conveniently forgetting the elephant in the room that that in the long term, will rob us of our capacity to remember. 

High Deductible PPO Plans Versus CDHPs

By Clive Riddle, March 8, 2013

United Benefit Advisors has just released results of their annual health plan survey, with responses from 11,711 employers sponsoring 17,905 health plans nationwide, with results applicable for small to midsize companies. The survey includes a focus on Consumer Driven Health Plan (CDHP) vs. PPO comparisons of premiums, deductibles and enrollment. Their study found that “Consumer-driven health plans (CDHPs) -- high-deductible health plans (HDHPs) often paired with health savings accounts (HSAs) or health reimbursement accounts (HRAs) -- are not achieving long-term savings greater than what would be reached by raising the deductible on traditional PPOs.”

Unlike most national large employer benefit consulting firms, UBA – whose survey concentrated on smaller firms – is not bullish on account based plans, and would rather place their bets on straight PPO plans with a higher deductible. Although one could argue, it might be easy to make a stripped down high deductible PPO health plan yield immediate lower costs than a CDHP that has account administration costs, up-front wellness benefits and other bells and whistles. That doesn’t necessarily mean the PPO HDHP would be the best long term solution for an employer’s and employee’s objectives, unless immediate premium costs is the only concern.

UBA CEI Thom Mangan tells us “Employers are turning to CDHPs as a cost-cutting solution against the relentless upward spiral of health care costs. However, our research shows that small-to midsize businesses in particular, who may be considering these plans may first want to consider increasing the deductible on the plans they already have to achieve the same initial savings. Or, prior to implementing a CDHP plan, employers should build a culture of health and wellness in their workplace that drives employee behavior towards quality, low cost medical care and prescription drugs.”

Here’s some of the data UBA has shared from their findings:

• Nearly 60 percent of the 11,711 employers surveyed said they plan to offer a CDHP in the next five years
• PPOs remain the dominant plan type with 61.7 percent of U.S. employee enrollment
• The greatest savings of a PPO over a CDHP was achieved with a deductible of $2,000-$2,999, where PPO cost per employee was $7,811 and CDHP was $8,859, a savings of $1,000 per employee.
• Savings created by CDHPs over the plans they were replacing or HSA, averaged 1.75 percent in 2012, a significant reduction from prior years.
• Enrollment also decreased to 15.6 percent (a 1.8 percent decrease from 2011), and nationwide enrollment among employers with 1,000 or more employees dropped substantially from 15.9 percent in 2011 to 11.3 percent in 2012.
• The area of the country that has seen the biggest increase in CDHP growth is Minnesota, which saw the percent of employees enrolled in CDHPs increase from 15.5 percent in 2010 to 37.1 percent in 2012, a rate 18.4 percent higher than the national average in those same years.
• Other areas with rapid CDHP growth include Indiana, Virginia and the Northeast region. The only western state to see CDHP popularity increase was Oregon, where percent of employees enrolled in CDHPs increased from 12 percent in 2010 to 20.3 percent in 2012.
• Overall, CDHP enrollment in the west is the lowest in the country with only 7.7 percent of employees covered, a slight increase from 7 percent in 2011 and 4.6 percent in 2010. HMOs account for 31.3 percent of the market in the west.

The Numbers Behind Plastic Surgery

By Clive Riddle, February 21, 2013

The American Academy of Facial Plastic and Reconstructive Surgery (AAFPRS) has just released results of their annual membership study, which provides a wealth of information about what goes on their world.

Let’s take a peek, with some excerpts compiled from their study:

Cosmetic Procedures: The survey indicated 73% of all procedures were cosmetic  (versus reconstructive) in 2012, up from 62% in 2011. Non-surgical treatments made up two-thirds of all 2012 cosmetic procedures. The most common cosmetic non-surgical procedures remain BOTOX® and hyaluronic acid fillers, with the top three areas of the face most treated by injectables being the forehead (42%), cheeks (35%) and the lips (18%).

Volume and Fees: Member surgeons report performing an average of 945 facial cosmetic surgical, cosmetic non-surgical, reconstructive and revision procedures per surgeon in 2012. Facelifts command the highest average fee per procedure ($7,453, on average), followed by: hair transplants ($7,182), revision surgery ($6,542), and rhinoplasty ($5,541).

Women: 80% of all surgical procedures and non-surgical procedures are performed on women.  Two-thirds of women having procedures are mothers, primarily in their 40's and 50's. In 2012 the most common cosmetic surgical procedure for women was facelifts, followed by blepharoplasty, and rhinoplasty. The most common non-surgical cosmetic procedures among women were BOTOX®, hyaluronic acid injections and microdermabrasion, respectively.

Men: Rhinoplasty remains the most requested surgical procedure overall among men.  On average, 20% of male patients request plastic surgery as a result of their significant other having received plastic surgery. Men had a significant increase in Botox  (up 27% from last year - with hyaluronic acid fillers and microdermabrasion also among the most popular maintenance treatments ) while the number of Botox procedures among women was similar to 2011.

Age Groups: 28% of Facial Plastic Surgeons have seen an increase in cosmetic surgery or injectables in those under age 25. For both female and male patients under the age of 35, the most common procedure performed was rhinoplasty (53% females; 70% males), followed by BOTOX® (30% women; 13% men). For all procedures, except rhinoplasty, the majority were performed on patients between the ages of 35 and 60.

Race: The 2012 survey revealed that African Americans and Hispanics were most predisposed to have received rhinoplasty (80% and 65% respectively). Asian Americans were most likely to have blepharoplasty (44%) or rhinoplasty (41%), while Caucasians were more likely to have facelifts (40%) or rhinoplasty (39%).

Consumer Selection: Most patients get their information about plastic surgery online (57%) and are most concerned with the results of the surgery (40%) followed by concern over the cost (33%)  and recovery time (21%)when making their decision to undergo facial plastic surgery. Last year just 7% of prospective patients used social media to research doctors and procedures, down from 35% in 2011. However, there was a 31% increase in requests for surgery as a result of social media photo sharing.  Surgeons report that, on average, 22 women and 12 men that were dissatisfied with previous rhinoplasty surgery from a different office requested corrective surgery.

Aon Hewitt Finds Employee Wellness Incentives Continue to Proliferate, Tie Rewards to Results

By Clive Riddle, August 10, 2012

Aon Hewitt, based on findings from their 2012 Health Care Survey of 1,800 employer organizations that represent over 20 million employees, tells us that “employers are increasingly relying on incentives to drive participation in health programs and encouraging employees and their families to take better care of themselves.”

Here’s data Aon Hewitt shared regarding the state of employers and incentives in 2012:

• 84% offer incentives for participating in a health risk assessment
• 64% offer an incentive for participation in biometric screening
• 51% offer incentives to participants in health improvement and wellness programs
• 59% used monetary incentives to promote participation in wellness and health improvement programs, up from 37% in 2011
• Monetary incentives for participating in disease/condition management programs increased from 17% in 2011 to 54% in 2012
• 46% incorporate some type of VBID (Value Based Insurance Design)
• Less than 10% provide an incentive to address the results of the health risk assessments or take action based on  biometric screening results
• 58% of employers that offer incentives,  provide incentives for completing lifestyle modification programs
• About one-fourth of employers that offer incentives, provide incentives for progress or attainment made towards meeting acceptable ranges for biometric measures

Jim Winkler, Aon Hewitt’s  chief innovation officer for Health & Benefits reaches this conclusion: "Incentives solely tied to participation tend to become entitlement programs, with employees expecting to be rewarded without any sense of accountability for better health. To truly impact employee behavior change, more and more organizations realize they need to closely tie rewards to outcomes and better results rather than just enrollment."