Health Spending Sprung in Spring, But Not As Much as Expected

Health revenues increased steadily in the second quarter of 2014, yet the rise did not meet expectations of increased expenditures after the implementation of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The numbers indicating a steady rise in services provided and payments collected by providers were based on data gathered as part of the U.S. Census Bureau’s latest Quarterly Service Report for the second quarter of 2014.

Census Report

The U.S. Census Bureau report contained quarterly estimates for selected service industries for the second quarter of 2014. Included in the selected industries was data for health care and social assistance. Specifically, the report concluded that, “the estimate for U.S. health care and social assistance revenue for the second quarter of 2014, not adjusted for seasonal variation, or price changes, was $565.6 billion, an increase of 3.0 percent…from the first quarter of 2014 and up 3.7 percent…from the second quarter of 2013.” Notably, it was recorded that while some sectors of the health industry saw significant growth, such as the increase of hospital revenue by 4.9 percent, other areas barely experienced any growth at all. For instance, the revenue increase in physician’s offices from the second quarter of 2014 compared to the second quarter of 2013 was just 0.6 percent.

Previous Projections

While the increases in revenue recorded by the Census Bureau were thought to describe an overall positive change in the health care spending arena, according to some projections the data was disappointing. A Kaiser Family Foundation article noted that increases were lower than what CMS and at least one non-profit health care spending organization expected. Indeed, earlier this month on September 3, 2014, CMS announced that it expected health care spending growth to “accelerate” and for 2014, it was estimated that the growth percentage rate would be 5.6 percent as 9 million more Americans will likely gain insurance through the expansion of Medicaid and by coverage through enrollment in the Health Insurance Marketplace.

Soft Launch of SHOP Exchange Will Give Five States Early Access

In late October, small employers in Illinois, Missouri, Ohio, Delaware, and New Jersey, as well as agents and brokers in those states, will get the first shot at the process for evaluating health insurance plans in the Small Business Health Options Program (SHOP) Exchange, three weeks before the Exchange becomes available to the rest of the country, the Chicago Tribune reports.

Employers will be able to establish accounts on the SHOP Exchange, assign a broker to their account, upload a roster of employees, and verify eligibility before the open enrollment period begins November 15, 2014.

Increasing access for small businesses

SHOP Exchanges are intended to increase access to health insurance for owners and employees of small businesses with 50 or fewer full-time equivalent employees. These small businesses are not required to provide health coverage for their employees under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). Small businesses with fewer than 25 employees making an average of less than $50,000 are also eligible for tax credits of up to 50 percent of their premium contributions if they purchase coverage for their employees through the Exchange.

Avoiding major setbacks

The soft launch of the SHOP Exchange is intended to test the functionality of the systems and gain feedback from users before the open enrollment period begins. HHS hopes to avoid the kind of major setbacks experienced during the launch of HealthCare.gov. In most states, small business were not able to purchase coverage through the Exchange during the first open enrollment period.

“We are focused on implementing the FF-SHOP [Federally-facilitated SHOP] Marketplace in a way that best serves the interests of small employers and their employees by utilizing the lessons of the first year of Federally-facilitated Marketplace implementation,” an HHS spokesman told the Washington Post. “This includes providing FF-SHOP Early Access in a few states before fully launching online functionality.”

Trillions? Trillions! CMS Actuary Projects 2013 Spending at $2.9T

Health spending growth remained slow in 2013, with faster growth on the horizon due to the Patient Protection and Affordable Care Act’s (ACA) (P.L. 111-148) coverage expansion, economic growth and an aging population according to the CMS Office of the Actuary in a report published by Health Affairs on September 3, 2014. Sequestration, sluggish economic recovery and increases in private health insurance cost-sharing requirements attributed to the slow growth of 3.6 percent for health spending in 2013. Overall, in 2013 health care expenditures sponsored or paid for by the government (federal, state, and local) are expected to have reached $1.3 trillion, which is a 3.2 percent growth, as compared to 3.9 percent growth, or $1.6 trillion seen in spending by business, households and private sources.

Despite the slow growth in 2013, during the study’s full projection period of 2013 to 2023, national health expenditures are projected to increase at an average rate of 5.8 percent a year, which is 1.1 percentage point greater than the average annual growth rate in nominal gross domestic product. This is still slower than the growth rate from 1990 to 2008, which grew 2.0 percentage points faster than the gross domestic product growth. The 2023 projection for government financed health care costs is $2.5 trillion.

In 2013 Medicare spending growth slowed, decelerating from 4.8 percent to 3.3 percent. This is attributed to budget sequestration requirements and other payment adjustments. Growth in spending is projected to increase in 2014, due in large part to the additional nine million Americans who gained insurance through private health insurance plans and Medicaid. Looking ahead to 2015, the national health spending growth is expected to slow to 4.9 percent, due to “significant decelerations in Medicare and Medicaid spending.” Reduced payments to Medicare Advantage, or Medicare Part C plans, will contribute to the deceleration.

Total hospital spending growth is expected to slow from 4.9 percent in 2012 to 4.1 percent in 2013, which equals $918.8 billion. More drastically, Medicare hospital spending has slowed from 4.5 percent to 2.5 percent over the same time frame. The ACA has led to increased use of hospital services which should result in growth acceleration of 4.5 percent in 2014.

Republicans Favoring OTC Contraceptives? Not As Strange As It Sounds

The ongoing birth control debates may be changing focus again, if some GOP candidates for Senate have their way. The Washington Post reports that Rep. Cory Gardner (R-Colo.), as well as Virginia Senate hopeful Ed Gillespie and Minnesota challenger Mike McFadden, have all endorsed the availability of certain contraceptives over-the-counter (OTC) rather than via prescription. This position is not as novel as it might sound.

Essential Health Benefit

The Patient Protection and Affordable Care Act (ACA) considers preventive services an essential health benefit that must be covered by all health insurance plans. Family planning services, including birth control, are considered preventive services; FDA-approved contraception must be made available to beneficiaries without cost-sharing. The debate has most recently centered upon whether employers with sincerely-held religious beliefs must be required to provide contraceptive coverage for certain types of medication that the religious employers believe to be abortifacients. Despite the Supreme Court’s decision in Burwell v Hobby Lobby Stores, holding that closely-held for-profit corporations should be offered the same accommodation as religious not-for-profit corporations, lower courts and HHS continue to grapple with determining how close is closely-held and whether the available accommodation infringes on religious liberties.

OTC Emergency Contraception

Emergency contraception, which is taken following unprotected intercourse to prevent fertilization, is included as an FDA-approved contraceptive that should be covered by health insurance. Prior to that decision, the FDA had required emergency contraception to be subject to point-of-sale age restrictions or placed behind a pharmacy counter. Despite an ongoing scientific consensus that emergency contraception is safe for consumers of all ages and should be available OTC, the Obama administration insisted on retaining the restrictions in 2007. At that time, HHS Secretary Kathleen Sebelius overruled the FDA’s determination of the safety of OTC emergency contraception, and President Obama controversially proclaimed  “I will say this, as the father of two daughters: I think it is important for us to make sure that we apply some common sense to various rules when it comes to over-the-counter medicine.” In 2013, a judge in the U.S. District Court for the Eastern District of New York ordered the FDA to make some types of emergency contraception available OTC. The FDA has since complied with that order.

OTC Oral Contraception?

The two recurring issues regarding making certain contraceptives available OTC and determining who should pay for contraceptive coverage may be colliding. Bobby Jindal, the Republican governor of Louisiana, authored a 2012 op-ed in the Wall Street Journal arguing against requirements that women visit a doctor and obtain a prescription as a requirement for purchasing birth control. Jindal’s argument followed a statement by the American College of Obstetricians and Gynecologists (ACOG) recommending that oral contraceptives be available OTC and without a prescription. Several GOP Senate candidates have recently endorsed Jindal’s argument. Although this may appear in opposition to the Republican party’s position against the ACA’s contraceptive mandate, looks can be deceiving.

In a July 2014 position paper, ACOG discussed the inherent conflicts between supporting health insurance coverage of contraceptives and supporting OTC availability: health insurance does not cover OTC drugs in most cases. Therefore, GOP candidates supporting OTC oral contraceptives is consistent with the party’s opposition to the contraceptive mandate, as well as its long-standing opposition to government regulations. It remains to be seen whether voters in Colorado, Minnesota, and Virginia will agree. Further, as ACOG says, “Cost is a major factor in a woman’s consistent use of contraception, and many women simply cannot afford the out of pocket costs of contraceptives without health insurance coverage.” Can oral contraceptives be widely available and affordable? The country may find out soon.