Steve Roper, president of Roper Insurance and Finance, Miranda Ross, actuarial director Kaiser Permanente, Chris Tholen, EVP of Colorado Hospital Association and Kim Bimestefer, executive director Colorado Department of Health Care Policy and Financing are with Andrew Graham, board chair of the South Metro Denver Chamber.
BY FREDA MIKLIN
The Business Leaders for Responsible Government arm of the South Metro Denver Chamber met at the headquarters of AAA Colorado, Inc. Greenwood Village April 17 to hear from a uniquely qualified panel of experts in health care costs.
Steve Roper, president of Roper Insurance and Finance, explained that health insurance is simply risk pooled sharing and that premiums are set on a national basis. Employers offer health insurance as a benefit because it: 1) is deductible to the employer and not taxable to the employee; 2) improves employee recruitment and retention; 3) helps keep employees healthy; and 4) is the right thing to do and employees expect it.
A big problem is that employees pay little attention to what they are charged by service providers. They are only interested in their deductible and copay amounts.
Miranda Ross, Kaiser Permanente’s actuarial director, told the audience that small group (two to 100 employees) rates are largely determined by the Affordable Care Act (ACA). She said that Kaiser’s small group rates have been very stable, going up only 3.5 percent in 2019 when the statewide average was 7.3 percent. Ross said deductibles on less expensive plans have gone up because of ACA coverage requirements.
Kaiser, acknowledged to be a leader in cost-saving policies, is achieving new savings by: 1) making sure patients get the right care in the right place: e.g., urgent care versus emergency room, full service hospital versus freestanding surgical center; 2) using telehealth: over half the patients who used this service did not have to visit their doctor in person; 3) using a Kaiser Permanente in-house pharmacy.
Kim Bimestefer, executive director of the Colorado Department of Health Care Policy and Financing, put the cost of health care in dire perspective, sharing that it consumed 32 percent of median household income.
From the governmental side, Bimestefer pointed out that Medicaid comprises 33 percent of the total Colorado state budget because 1.3 million Coloradans qualify for Medicaid. Before the ACA, the maximum income level to qualify was $11,000 per person. After the ACA that number went up to $16,000 per person. As a result, the uninsured rate in Colorado dropped from a pre-ACA rate of 13.8 percent to a post-ACA rate of 6.5 percent.
In Colorado, 39 percent of health care dollars go to hospitals, 26 percent go to doctors and clinics, and 11 percent go to prescription drugs.
With no certificate of need, Colorado has the second highest hospital construction cost in the U.S. Hospital overhead costs have risen 9.2 percent in Colorado over the past seven years while the national average was 4.7 percent.
On April 27, UC Health, which has already increased its statewide footprint from one hospital location in 2009 to 10 in 2018, will open another new 340,000 square-foot 87 inpatient-bed community hospital in Highlands Ranch, along with an 85,000 square-foot medical office building.
Hospitals in Colorado have been steadily acquiring physician practices, thus giving the hospitals control over which hospitals doctors refer their patients to, as costs for services delivered in hospitals outpaces costs for the same service in doctors’ offices.
From 2009 to 2017, hospitals costs grew by over 58 percent. Even though patient volume increased only 14 percent, hospitals’ margins increased by 250 percent.
To drive more consistency in hospital charges and quality, Bimestefer and her staff is working with the Colorado Hospital Association to identify centers of excellence for specific treatments, where it can direct patients for the best care for their specific needs at the most reasonable price. They are also encouraging purchasing alliances and the elimination of freestanding emergency departments.
The state department of health care policy and financing is working on controlling Medicaid prescription costs, which total $1 billion annually. The largest challenge is specialty drugs, which have comprised 75 percent of the increase in total drug costs from 2012 to 2018. These drugs are so expensive that even though they account for only 1.25 percent of Medicaid prescription, they consume 40 percent of Medicaid’s drug dollars. What’s worse, these drugs are so expensive because of the cost of marketing and administrative expenses, not research and development. The myriad of television advertisements for specialty drugs is being paid for by all of us. There is also the well-known phenomenon of extraordinary drug price increases on older drugs, which led to a criminal conviction for securities fraud of one pharma executive last year.
There are several pieces of legislation pending at the capital to combat some of these challenges, including the out of network bill to prevent unexpected balance billings to patients and insurance companies and exchange reinsurance bill.
2018 All Rights Reserved. Villager Publishing |