This site uses cookies to provide you with a more responsive and personalized service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.

Bookmark Email Print this page

Health Care Reform Memo: November 12, 2012

Deloitte Center for Health Solutions publication

The health care reform memos are issued on a weekly basis, highlighting news from the previous week's activities in the administration and implications for the C-suite and various stakeholder groups.

My take: health care discord: another example of a divided nation

From Paul Keckley, Executive Director, Deloitte Center for Health Solutions

According to Merriam Webster, there are three definitions of “divided”: separated into parts or pieces, disagreeing with each other, and separated by distance. All apply to the state of the union if election results and headlines are accurate on the heels of Tuesday’s vote.

I pored through exit polls and listened ad nauseum to pundits dissect the results last week. Among the more prominent divisions in the post mortem:

  • Generation: Millennials were 18 percent of the vote vs. seniors, who were 16 percent of the vote, and these two groups are divided by social issues, political philosophy, and the role of government entitlement programs; seniors care more about health care and Millennials think more about healthy environments.
  • Sex: female voters care more about health care coverage than men. With 20 women in the Senate now, it means health care will get more attention, not less.
  • Political philosophy: one third think of themselves as conservative, one fifth think of themselves as liberal, and the rest are somewhere in between; health care issues for all three are based on their predisposition toward a bigger or smaller role of the government rather than a specific set of reforms.
  • Region: the vote furthered regional divisiveness—the Sunbelt, plains, and Midwest elected conservatives vs. western and northeastern voters who elected more moderates and liberals.
  • Ethnicity: Democrats were elected by substantial majorities of minority voters vs. Republicans; President Obama won 71 percent of the Hispanic vote and 93 percent of the African American vote.
  • Income: those earning under $50,000 vs. those above $100,000—tax policy, social programs and the role of government vary dramatically between the two, except for self-described “liberals” with higher incomes who tend to share values with lower income consumers.

Six billion was spent in this election cycle: almost 17 percent more than 2008. The top issues reflect our divisions: after the economy and jobs, which mattered most to voters in every group, health care was fourth for Romney voters, but second among the Obama electorate—especially among women, those with lower-incomes, and minorities.1

Opinions about the Affordable Care Act (ACA) illustrate the divide further. Exit polls suggest three views: wishing it repealed, wishing it expanded, and somewhere in between.2 Our polls since the fall of 2009 indicate those opinions haven’t changed: seemingly intractable based on a person’s predisposition toward the appropriate role of the government in our health system.3

Division is nothing new in our democracy and we’ll find a way to make progress in spite of it. As I jogged on Peachtree Street in Atlanta, Georgia Thursday, I passed St. Luke’s Episcopal Church. In the fall of 1863, while the war between the states raged around Atlanta, Charles Quintard, a physician and priest, assembled the congregation, which led to the establishment of St. Luke’s parish on Easter Monday in the year 1864. It sought reconciliation at the darkest hour of the nation’s divisiveness, and it saw health care as a bridge builder—thus naming the church Luke after the physician of the Gospels.

President Lincoln was 55 when St. Luke’s opened its doors. He would die from an assassin’s bullet before it had its first anniversary. He had lost an 1858 Senate race to Stephen Douglas, espousing fervent opposition to slavery, and won the White House in 1861 when the north and south were divided by the issue. He orchestrated the Emancipation Proclamation in 1863 and the 13th Amendment that abolished slavery in 1865. In the midst, he was re-elected in 1864, though as a moderate attacked on all sides per historians. Six days after the surrender of the South by General Lee, he was killed by an actor’s bullet at Ford’s theatre in Washington DC, having begun a reconciliation effort to heal the post-war divide. His two minute speech on November 19, 1863 at the Gettysburg battlefield framed his premise for healing: all men are created equal. Like so many, I memorized those 146 words in the third grade not really understanding the gravity of a nation divided. Now, I do.

Our divisions need not define our destiny. They provide a path to progress and mark the strength of our system of government.

The health system need not fuel division: it is a system with fundamental flaws but intrinsic strengths. Bridging the health system’s many divides would go a long way toward strengthening the character of our country for future generations. The transformation of the health system is not a red or blue issue; it is an American issue. The status quo is not an option: innovative solutions to lower costs, increasing transparency, engaging consumers to live healthier lifestyles, leveraging technologies to reduce paperwork and redundancy, applying evidence to practice and improving care coordination across a complex system of public and private agencies and programs are all necessary.

But perhaps the lesson most obvious from our history is this: a nation divided is not a nation broken. The health care industry can lead the way. There’s more that unites us than divides us, as a nation, and as an industry.

Paul Keckely

Paul Keckley, Ph.D., Executive Director, Deloitte Center for Health Solutions

1Edison research exit polls: top issues overall: economy 59 percent, health care 18 percent, federal budget deficit 15 percent, and foreign policy 5 percent. Top issues for Romney voters: economy 51 percent, budget deficit 65 percent, health care 24 percent, foreign policy 33 percent. Top issues for Obama voters: economy 47 percent, deficit 32 percent, health care 75 percent, foreign policy 56 percent. (Source: National Election Pool Exit Poll conducted by Edison Research)

2ACA: repeal portions, 24 percent; repeal in full, 25 percent; leave as is, 18 percent; expand, 26 percent; and don’t know/other, 7 percent. Only 39 percent of Independents said Medicare was extremely important to their vote on Tuesday, compared with 52 percent of the overall population, according to an election analysis released by Resurgent Republic, a Republican-led polling firm. The group argues that the numbers mean Republicans won the Medicare debate. Voters told the pollsters, by a 52 to 35 percent margin, that the Medicare plan backed by Paul Ryan would preserve the program. (Source: Resurgent Republic, “2012: The Year Changing Demographics Caught up with Republicans,” November 9, 2012)

3Deloitte Center for Health Solution’s publication 2012 Deloitte Survey of U.S. Employers.

Implementation update

Health insurance exchange (HIX) deadline extended

Late Friday afternoon in a letter to governors, the U.S. Department of Health and Human Services (HHS) extended the deadline for states to submit blueprints for state-based exchanges until December 14. States still need to notify HHS by November 16—the original deadline—whether they intend to set up their own exchange. HHS will be accepting applications for states interested in a partnership exchange on a rolling basis. The final declaration and blueprint for a partnership exchange are due to HHS by February 15, 2013.HHS will approve or conditionally approve the state plans by the statutory deadline of January 1, 2013.

Background: per Section 1321 of the ACA, HIXs are supposed to be fully operational in all states by January 2014. They must be capable of verifying eligibility, allow online enrollment for those without insurance, and allow comparison of qualified health plans that have been verified to cover essential health benefits. To date, 15 states and the District of Columbia have declared their intention to create an exchange—either state-based or in partnership with the federal government—and two states have elected a federally facilitated exchange. In states that decide not to create an exchange, the federal government will step in and establish one.

DOJ defends the ACA in DC District Court

The individual mandate requiring individuals to purchase health insurance or pay an assessment fee (Section 1501 of the ACA) is being challenged in the DC District Court where the plaintiff’s argument is that the individual mandate exceeds Congress’ enumerated powers based on the “origination clause”—a technical rule requiring that all revenue raising legislation must originate in the U.S. House of Representatives. According to the plaintiff, because the Senate inserted the ACA language into an unrelated House bill in order to bypass the origination clause, the law should not be viewed as originating in the U.S. House of Representatives; therefore, the mandate cannot be considered a tax, as taxes generate revenue.

Background: on June 28, 2012 the U.S. Supreme Court held that the mandate violated the Commerce Clause, but that the individual mandate was within Congress’ power to lay and collect taxes, thereby declaring the individual mandate a tax.

Legislative update

Fiscal cliff negotiations begin

Last week, Congressional leaders and the President issued statements indicating efforts to avoid the fiscal cliff are their priorities. The consensus is that the lame duck Congress will likely pass a short-term extension of the nation’s borrowing capacity to avoid a government shutdown and settle credit market worries, and encourage the incoming 113th Congress to include a longer-term deficit plan that could include structural reforms to the tax system as well as spending cuts.

Background: the U.S. debt ceiling is $16.4 trillion as of the passage of the Budget Control Act of 2011. With it, Congress appointed a 12-person Super Committee that was to develop a long-term deficit reduction plan. It failed to reach an agreement, thus triggering a fallback to the $1.2 trillion (2013-2021) sequestration cuts. In the third Presidential debate, President Obama mentioned he would prefer to set aside the sequestration cuts with an alternative set of cuts. Party leaders on both sides have since voiced agreement that spending cuts other than those in the sequestration were preferable.

Lame duck session agenda

  • Fiscal cliff discussions (i.e., tax cuts)
  • Sustainable Growth rate (SGR) “Doc Fix” (i.e., Medicare physician pay cuts)
  • Sequestration (i.e., Budget Control Act of 2011 cuts to federal spending to decrease deficit)
    • $1.2 trillion/2013-2021, including $109 billion in 2013. Projected breakdown: defense discretionary, $492 billion; non-defense discretionary, $492 billion; interest payments, $169 billion; Medicare, $116 billion; other mandatory, $41 billion; ACA HIX subsidies, $7 billion.
  • Pharmaceutical drug distribution legislation (i.e., track and trace drugs from manufacturing to distribution)
  • Compounding pharmacy legislation (i.e., regulating pharmacies in response to meningitis outbreak)

Sequestration and the ACA: what might change?

ACA Major programs/provisions Congressional Budget Office (CBO) project federal spending Sequestration cuts, FY2013
Exchange subsidies, high risk pools, premium review activities, loans to CO-OP plans, risk adjustment and transitional reinsurance, and grants to states for the establishment of exchanges $1,017 billion1 (FY2012-2022) $66 million4
Small business health insurance tax credit $23 billion1 (FY2012-2022) $10 million4
Prevention and Public Health fund $16 billion2 (FY2012-2021) $76 million4
Increase in Health Care Fraud and Abuse Control Account $100 million3 (FY2011-2020) $78 million4

1CBO projected 11 year effect on federal deficit, by fiscal year 2012-2022 (July 2012)
2
CBO projected 10 year effect on federal deficit, by fiscal year 2012-2021 (April 2011)
3Total amount appropriated by Congress in ACA: $10 million for fiscal years 2011-2020
4Sequestration Update Report to the President and Congress for Fiscal Year 2013, August 2012.

Sources: CBO, Estimates for the Insurance Coverage Provisions of the ACA Updated for the Recent Supreme Court Decision, July 2012; CBO, Cost Estimate H.R. 1217 A Bill to Repeal the Prevention and Public Health Fund, April 2011; The "Patient Protection And Affordable Care Act”, March 2010; and OMB, Sequestration Update Report to the President and Congress for Fiscal Year 2013, August 2012.

Report: CBO outlines health related deficit reduction opportunities

Last week, the Congressional Budget Office (CBO) released a report outlining the deficit reduction challenges. Its assessment: federal debt held by the public exceeds 70 percent of gross domestic product (GDP), and is expected to decrease to 58 percent under CBO’s baseline projections if current changes (sequester cuts, SGR cuts, payroll tax increases) are implemented and revenues continue. Under the alternative scenario, which assumes lawmakers set aside the cuts, debt held by the public will increase to 90 percent of GDP over the next decade and rise rapidly as a result of the aging U.S. population, increases in per-capita health care spending, and Social Security payments. Among health related spending reductions mentioned in the report:

Health care-related options that would reduce mandatory spending (approximately 60 percent of federal noninterest outlays):

  • Repeal of the expansion of health insurance coverage under the ACA: $150 billion
  • Converting the federal share of Medicaid’s payments for long-term care services into a block grant: $50 billion
  • Repealing the individual mandate for health insurance: $40 billion
  • Increasing the basic premium for Medicare Part B to 35 percent of the program’s costs: $40 billion
  • Raising the Medicare age for eligibility to 67: $30 billion

Health care-related options that would reduce discretionary spending (approximately 40 percent of federal noninterest outlays):

  • Keeping appropriations at the level originally set by the Budget Control Act of 2011 for 2013: $70 billion
  • Allowing automatic enforcement procedures in the Budget Control Act of 2011 to take effect: $34 billion
  • Reducing funding for the National Institutes of Health: $4 billion

Health care-related options to increase revenues:

  • Increasing the payroll tax for Medicare Hospital Insurance by one percentage point: $80 billion
  • Accelerating and modifying the excise tax on high-cost health care coverage: $40 billion
  • Letting certain tax cuts expire and not indexing the alternative minimum tax (AMT) for inflation: $550 billion
  • Extending certain tax cuts for taxpayers below a specific income threshold and indexing the AMT for inflation: $110 billion

Related: before adjourning for recess last month, legislation introduced by Representative Mike Rogers (R-MI) was marked up and approved by the U.S. House Energy and Commerce Committee—H.R. 1206: Access to Professional Health Insurance Advisors Act of 2011—which would exclude commissions paid to insurance brokers in the medical loss ratio (MLR) calculation. Last week, the CBO said in the next ten years, the bill would add close to $1 billion to the budget deficit.

Tax changes scheduled January 1, 2013

These changes are scheduled unless changed by the lame duck Congress:

  • Capital gains tax rate: increase from 15 percent to 20 percent + 3.8 percent surtax on investment income of single taxpayers with adjusted gross income (AGI) over $200k ($250k for joint filers)
  • Federal income tax top rate: from 36 percent to 39.6 percent
  • Qualified dividends tax rate will increase from 15 percent to 39.6 percent + 3.8 percent surtax on investment income of single taxpayers with AGI over $200k ($250k for joint filers)
  • Corporate Tax Unchanged: Ranges 15 percent to 35 percent
  • Estate tax exemption of $5.12 million and 35 percent top rate will drop to $1 million exemption and 55 percent top rate
  • Payroll tax holiday will expire resulting in employees contributing 6.2 percent of payroll toward Social Security (rather than 4.2 percent contribution)

(Sources: Deloitte 2013 Tax and Wealth Planning Guide; U.S. Internal Revenue Service (IRS) Form 1120: U.S. Corporation Income Tax Return)

ACA specified changes scheduled January 1, 2013:

  • Section 9009, Medical device excise tax: 2.3 percent of the price for which the manufacturer or importer sells the taxable medical device.
  • Section 9013, Floor for itemized deductions on medical expenses to rise from 7.5 percent to 10 percent. Taxpayers age 65 and over are exempt until 2017.
  • Section 9005, Limit of $2,500 per taxable year on employee salary reductions for coverage under cafeteria plan flexible spending account (FSA).
  • Section 9004, Increases penalty on withdrawals from health spending accounts (MSA, 10 percent to 20 percent) and Archer MSAs (15 percent to 20 percent) not used for qualified medical expenses for those prior to age 65.

(Sources: IRS Medical-Device-Excise-Tax:-Frequently-Asked-Questions; Deloitte 2013 Tax and Wealth Planning Guide)

For more information contact: Jeffrey Kummer, Managing Director, Tax Policy, Deloitte Tax LLP or Jon Traub, Managing Principal, Tax Policy, Deloitte Tax LLP

IT incentive funds through Medicare, Medicaid top $7 billion

According to recent figures from the Centers for Medicare & Medicaid Services (CMS), the Medicare and Medicaid programs have provided more than $7 billion worth of funds to providers through the Electronic Health Record (EHR) Incentive program. As of September 2012, the Medicare program had distributed more than $3.9 billion in funds and Medicaid had expended approximately $3.5 billion. As of August 31, 2012, providers in 16 states received more than $151 million in payments, while providers in 13 states received less than $50 million during the same period.

Background: the Medicare and Medicaid EHR Incentive program provides payments to eligible providers and hospitals who demonstrate adoption, implementation, upgrading, or meaningful use of certified EHR technology. Professionals eligible for incentive payments through the program include Doctors of Medicine or Osteopathy, Dental Surgery or Dental Medicine, Podiatric Medicine, Optometry, Chiropractors (Medicare) and physicians, nurse practitioners, certified nurse - midwives, dentists, and physicians assistants who practice in federally qualified health centers or rural health centers led by a physician assistant (Medicaid). Eligible hospitals include subsection (d) hospitals in the 50 states or DC paid through the hospital inpatient prospective payment system, critical access hospitals, and Medicare Advantage affiliated hospitals (Medicare) and acute care hospitals with at least 10 percent Medicaid patient volume and children’s hospitals (Medicaid).

State update

Key ballot initiatives last week

Eleven health-related initiatives were on state ballots last week: notably, three of four state referenda challenging the individual mandate failed:

  • AL: voters rejected a proposal to prohibit the individual mandate 59 percent to 41 percent
  • AR: voters rejected legalization of marijuana for medical purposes 53 percent to 49 percent
  • CO: voters approved legalization of marijuana possession for recreational purpose 55 percent to 45 percent
  • FL: voters rejected a proposal to prohibit the individual mandate 51 percent to 49 percent (unofficial)
  • MA: rejected a law to permit physicians to prescribe assisted suicide drugs 51 percent to 49 percent
  • MO: voters approved creation of a state health exchange 62 percent to 38 percent
  • MT: voters approved a law to prohibit the individual mandate requirement 67 percent to 33 percent
  • MT: approved increased regulation of medical marijuana originally passed in 2004 57 percent to 43 percent
  • OR: voters rejected law to allow marijuana cultivation and possession legalization 54 percent to 46 percent
  • WA: voters approved medical marijuana legalization 55 percent to 45 percent
  • WY: voters rejected the prohibit individual mandate 77 percent to 23 percent

(Source: National Conference of State Legislatures, “State Ballot Measures Database,” November 11, 2012)

Opinion: CMS will allow flexibility on Medicaid expansion

Per an Avalere Health prediction, most states will expand their Medicaid programs to residents earning up to 100 percent of the federal poverty level (FPL) rather than the proposed 133 percent in the ACA, thus allowing residents above 100 percent of the FPL to receive subsidies through HIXs.

Background: states were given no deadline to decide whether they will participate in the voluntary Medicaid expansion per Section 2001 of the ACA, they are encouraged to expand beginning in 2014, as the federal government will pay for 100 percent of the newly eligible individuals for the first three years of the expansion. HHS has not indicated that it will allow states to partially expand. States can expand their Medicaid programs through a state plan amendment or waiver, but the higher federal match would not be applied. To date 15 states and the District of Columbia have indicated they will expand Medicaid in their states; 6 states have indicated they will not expand.

State round-up

  • Massachusetts’ Health Policy Commission (HPC), an 11-member Governor appointed board established by Chapter 224, a law that was passed earlier this year to address health care costs statewide, will meet for the first time. The state law was passed in an attempt to control costs for the health care industry in the state, which accounted for more than $50 billion last year. Brandeis University economist Stuart Altman will lead the HPC.
  • Wisconsin Governor Scott Walker (R) indicated last week that he will begin meeting with state officials to discuss next steps for implementing some of the state responsibility clauses outlined in the ACA. Note: Governor Walker and his administration returned a $38 million HIX implementation grant from CMS in 2011.
  • Last week, officials in Illinois will move forward building the state’s HIX. Residents will be able to use a HIX web site to purchase health insurance with a “no wrong door” policy, that will guide individuals to Medicaid, CHIP, or private health insurance plans based on eligibility. In addition, as required by all states, the state will implement a process to share its data with the Medicaid program in the state in order to determine individuals’ eligibility for federal subsidies for health insurance premiums.
  • State officials in California will overhaul the health insurance market in the state, beginning with spending $90 million next year on marketing and outreach to residents of the state that might be eligible for health insurance premiums and/or other assistance under the ACA. Note: California was the first state to establish an HIX, California Health Benefit Exchange, now Covered California, after the ACA was passed in 2010.
  • Officials in Kansas have started to discuss next steps to implement the state responsibilities in the ACA. Insurance Commissioner Sandy Praeger is preparing an application for a federal-state partnership exchange and plans on seeking funding for implementation. Before moving forward with these steps, Governor Sam Brownback (R) must sign off with a letter of support for the state’s partnership exchange. Note: Governor Brownback rejected $31.5 million in federal funding to assist the state in building computer infrastructure necessary to support the HIX.
  • State officials in New York are expected to request federal funds for their Medicaid program through a Section 1115 waiver for short-term financial aid to hospitals; many hospitals are facing financial struggles and lost revenue due to Hurricane Sandy.

Industry news

Study: less experienced physicians account for higher health costs

A RAND Corporation analysis of physician costs from health insurance claims in Massachusetts found that physicians with less than ten years of experience had higher overall costs than physicians with 40 or more years on the job. In other words, physicians with less experience spend more treating patients. The report concluded that the use of cost profiling policies by health plans and Medicare are more likely to negatively affect less experienced physicians, causing them to be excluded from high-value provider networks or receive lower payments under Medicare’s value-based payment program. Researchers noted that they were unable to identify why more experienced physicians have lower costs, but suggest that newer training styles may result in a more costly style of practice. Key findings of physician costs compared to those with 40 or more years of experience:

  • Physicians with less than ten years of experience had 13.2 percent higher overall costs
  • Physicians with ten to 19 years of experience had 10 percent higher overall costs
  • Physicians with 20 to 29 years of experience had 6.5 percent higher overall costs
  • Physicians with 30 to 39 years had 2.5 percent higher overall costs

(Source: RAND Corporation, “Physicians With The Least Experience Have Higher Cost Profiles Than Do Physicians With the Most Experience,” November 2012)

Study: non-licensed caregivers provide complex chronic care management; role needs

According to a recently released AARP survey, family caregivers are increasingly providing home health care services in addition to aiding patients with activities of daily living (ADLs).  AARP recommends that the measures of ADLs be revisited as they no longer reflect the responsibilities of family caregivers; and health care professionals should teach caregivers to understand how to appropriately provide care and manage medication. Notable findings:

  • 46 percent of family caregivers performed medical/nursing tasks for care recipients with multiple chronic physical and cognitive conditions
  • 78 percent family caregivers who provided medical/nursing tasks were managing medications, including administering intravenous fluids and injections; almost 50 percent were administering five to nine prescriptions per day
  • 69 percent of the care recipients did not have any home visits by health care professionals; most family caregivers learned how to manage at least some of the medications on their own
  • 53 percent of family caregivers who performed medical/nursing tasks also coordinated care

(Source: AARP, “Home Alone: Family Caregivers Providing Complex Chronic Care”, October 2012)

Note: for more information on the prevalence of supervisory Care, reference the Deloitte Center for Health Solution’s publication Supervisory Care: Key Costs, Trends, and Strategic Implications. Per the Center’s analysis, non-licensed family members or friends provide $199 billion of supervisory services annually.

Smaller primary care practices face resistance to changes necessary to participate in medical home pilots

According to a recent study, smaller primary care practices face four challenges in implementing medical home models: they are “extremely” physician-centric, lack meaningful communication among physicians, are dominated by authoritarian leadership behavior, and are underserved by mid-level clinicians cast who are used in “unimaginative roles.” The report suggests that payment reform, the adoption of new practice models, and a shift to coordinated team care will help these practices be successful in establishing patient-centered care models.(Source: Paul Nutting et. al, “Small Primary Care Practices Face Four Hurdles—Including A Physician-Centric Mind-Set—In Becoming Medical Homes,” Health Affairs November 2012)

Some employers opt for part time workers in lieu of full time to avoid ACA mandate

Per the Wall Street Journal’s writers, employers in the retail, restaurant, and hospitality industries are reducing employee hours to avoid the ACA’s requirement that full time employees who work average of 30 or more hours weekly will be provided affordable insurance coverage in 2014, or the company pays a penalty of $2,000 (minus the first 30 employees) for each not covered. (Source: Jargon et al “Health Overhaul spurs Shift in Hours” Wall Street Journal, November 5, 2012)

Per the Kaiser Employer Health Benefits Survey data, current coverage varies widely by industry ranging from wholesale (74 percent); manufacturing (69 percent); finance (59 percent); and health care (65 percent) to retail (45 percent); transportation, communication, and utilities (46 percent); mining, construction, and agriculture (54 percent).

Background: between 2000 and 2010, almost 10 percent of employers dropped health insurance coverage for employees due to costs. In Deloitte’s 2012 Survey of U.S. Employers, 9 percent of employers representing 3 percent of the civilian workforce said they are likely to drop coverage if costs are not sustainable.

For more information see the Deloitte Center for Health Solution’s publication 2012 Deloitte Survey of U.S. Employers.

Report: providers seek increased capabilities from information technology vendors

Hospitals are becoming frustrated with health information technology companies that they believe provide inadequate support to build interfaces for meaningful use according to a new report issued Tuesday by KLAS. The study also identified vendors helping clients with analytic reporting, patient portals, and physician engagement.

“Building and supporting interfaces continues to be a big challenge for all vendors,” said report, “providers expect their health information exchange vendor to be an expert in moving data between multiple EMRs-regardless of the complexities or costs.” — Mark Allphin, Research Director and author of study, October 31, 2012

(Source: KLAS, “Health Information Exchange 2012: Muddled in Interfaces,” October 31, 2012)

Hearing on compounding pharmacies scheduled

The U.S. House Energy and Commerce Oversight Committee issued a subpoena last week summoning the President, Co-owner, and Managing Pharmacist of the New England Compounding Center associated with the meningitis outbreak to testify at a Congressional hearing this week. To date, there have been 424 cases reported across 19 states and 31 deaths.

Study: multivitamins do not cut heart attack risk

Researchers followed 14,641 male physicians 50 and older for 11 years using a control vs. placebo structured study design to conclude that regular use of multivitamins did not correlation to statistically significant decrease in the incidence of heart attacks. The authors, however, noted that related factors-nutrition, exercise, in tandem with multivitamins did show reduction. (Source: Sesso et al, “Multivitamins in the Prevention of Cardiovascular Disease in Men: The Physicians' Health Study II Randomized Controlled Trial” JAMA November 07, 2012, Vol 308, No. 17)

Humana acquires provider, analytics capabilities to expand in Medicare, Medicaid markets

Monday, Humana announced it is investing $850 million to acquire Metropolitan Health Networks, a Boca Raton, Florida physician network management company, Certify Data Systems and a minority stake in MCCI Holdings to expand its capabilities and resources for managed Medicare and Medicaid. The company’s news release indicated it was also investing $75 million in 2013 to open 15 primary care clinics in six markets targeting chronic care management programs bringing its total compliment of employed physicians to 2,600. (Source: Matthews et al “Humana Brings Physicians in House,” Wall Street Journal November 6, 2012)

Quotable

“With every election, the southern and central states drift further from the coastal sophisticates obsessed with social issues, and from the highly unionized industrial states around the Great Lakes. But open up those Obama states and you’ll discover divisions: their big city centers sit like blue moats of minorities and comfy singles who are surrounded by red counties or married couples trying to cope….More red voters will move out deepening the divide.”

 — Daniel Henninger, “Obama’s Divided Nation,” Wall Street Journal, Thursday, November 8, 2012

“As the health care reform law is implemented, policymakers must prioritize affordability for consumers and employers. Several provisions in the law, such as the new premium tax, minimum coverage requirements, and age rating restrictions, need to be addressed to keep coverage as affordable as possible and ensure broad participation in the system.”

— Karen Ignagni, President, America’s Health Insurance Plans (AHIP), “Statement on the Election,” November 7, 2012”

“If Congress reads this as an endorsement from the public of healthcare reform, I'm hoping we can move into a phase of further exploration and adjustments of the law. However, the current breakdown between the House and Senate remains the same so the risk is if the opposition remains intransigent and uses funding to starve the implementation processes...I hope that all of the states come on board (with the ACA's Medicaid expansion). The people who would be covered under the expansion are getting care now—they're just getting it late, when they're sicker and their care is more expensive.” 

— Don Berwick, former CMS administrator under Obama, senior fellow at the Center for American Progress, November 2012

“Because, the arithmetic in Washington hasn’t changed in any great shape or form, we now face the issue of can this President and this Congress come together to fix the debt...To the degree we go over the cliff we’ll react immediately and I’m sure a lot of us will as well...There have been people working in a bipartisan way, it’s been a minority and the election’s gotten in the way. Now would be the time for the president to convene the group, set the agenda, and don’t let them out of the room until they have a deal.”

 — Mark Bertolini, Aetna, CEO, “Aetna CEO Bertolini Sees Job Cuts with No Obama Debt Deal,” Bloomberg November, 7 2012

“Tax reform is the compromise and the solution, and I urge the President to take up the Speaker’s offer to work together." 

— House Majority Leader Eric Cantor, Ways and Means Chairman Dave Camp and GOP Whip Kevin McCarthy Wednesday, November 8, 2012

Fact file: general election 2012

  • Turnout: 120,766,345—60 percent of eligible voters (Source: Politico, “Election Results 2012,” November 11, 2012)
  • Popular vote: President Obama 62,027,068 (51 percent), Governor Romney 58,739,277 (48 percent). (Source: Politico, “Election Results 2012,” November 11, 2012)
  • Electoral votes: President Obama, 332; Governor Romney, 206. (Source: Politico, “Election Results 2012,” November 11, 2012)
  • Results:
Election Results 2012 Composition 2010 Composition
White House Democrat win --- ----
U.S. Senate Democrats retain majority 53 Democrats
45 Republicans
2 Independent
51 Democrats
47 Republicans
2 Independent
U.S. House of Representatives Republicans retain majority 233 Republicans
194 Democrats
242 Republicans
193 Democrats
Governors Republicans gain one governor 30 Republicans
19 Democrats
1 Independent
29 Republicans
20 Democrats
1 Independent

Source: Politico, 2012 Election Results, updated last 8am November 11, 2012

  • Health reform as an issue: New York Times: one in four want the ACA repealed, another one in four would repeal some parts, but not others, and the remaining would leave the law as is or expand. The Monitor: 47 percent want to keep or expand the ACA, 45 percent want it repealed. Associated Press: 50 percent favored repeal vs. 43 percent who did not. Note: numbers may not total 100 percent, as not all questions and responses are included. (Source: The Hill, “Exit polls find voters split on Obama health law,” New York Times November 6, 2012)
  • 2012 Election cycle spending:  $6 billion total, up 12 percent since 2008 (Source: Politico, November 2012)
  • State governor and legislature composition, pre-and-post 2012 general election:
  Pre-election (number of states) Post-election (number of states)
Republican Majority Legislature 26 26
Democratic Majority Legislature 15 19
Split Majority Legislature 8 4
Republican Governor 29 30
Democratic Governor 20 19
Independent Governor 1 1

Note: Nebraska has a non-partisan Senate and is not included in the legislature composition in the chart above.

Source: Politico, November 11, 2012; National Conference of State Legislatures, November 11, 2012

Fact File

  • Military health: between 2004-2009 suicide rate among active Army and Marine personnel doubled to 22/100,000—more suicides than killed in action. (Source: Headquarters Department of the Army, “Army 2020,” January 2012)
  • Immigration: incidence of tuberculosis is 12 times greater for immigrants than persons born in U.S. and Hepatitis B infection is 10 times higher. (Source: Prosser et al “HIV in Persons Born Outside the U.S. 2007-2010”, JAMA, August 8, 2012, 308:6)
  • Mobile health: 31 percent of cell phone owners have used their phone to look for health information vs. 17 percent in 2010; 52 percentof smartphone owners gather health information on their phones vs. 6 percent of non-smartphone owners and, 19 percent of smartphone owners have at least one health app on their phone. Exercise, diet, and weight apps are the most popular types. (Source: Pew Internet Research, “Smartphone Owners Driving mHealth Usage,” November 2012)
  • Statins: the cancer-related mortality rate is 15 percent lower for cancer patients who also take statins to lower their cholesterol. (Source: Nielsen et al., New England Journal of Medicine, “Statin Use and Reduced Cancer-Related Mortality,” November 2012)
  • Health risk factors: 22.4 percent of employer and employee medical spending can be attributed to the 10 most expensive health risk factors: employees with depression are the most expensive, costing $2,184 (48 percent) more annually than those without. Other conditions associated with above average per-capita expenses include high blood glucose ($1,653 more), high blood pressure ($1,378 more), and obesity ($1,090 more). (Source: Goetzel et al., Health Affairs, “Ten Modifiable Health Risk Factors Are Linked to More Than One-Fifth of Employer-Employee Health Care Spending,” November 2012)
  • Stakeholder survey: of 829 respondents, 67 percent of respondents stated the ACA will negatively impact the bottom line of their health care businesses. Thirty-three percent predict the law will have a positive impact; 57 percent believe it would have been better for their organization if Republican Mitt Romney had been elected instead; 42 percent of those surveyed waited to see the outcome of the election before moving forward with implementation of the ACA. (Source: Modern Healthcare, November 2012)
  • Physician vacancies: 51 percent of vacant physician positions were filled by the end of 2011, down from 60 percent in 2010. Primary care recruiting took, on average, 151 days to fill positions in 2011 compared to 125 days in 2010 and 115 days in 2009. The physician workforce is aging; 21.5 percent of physicians in 2011 were over the age of 65 vs. 13 percent of doctors in 1975. (Source: AMA, “Physician Characteristics and Distribution in the U.S., 2013,” November 2012)
  • EHR incentive payments: over 307 thousand eligible hospitals and professionals have been enrolled in the Medicare and Medicaid EHR Incentive Programs since May 2011. Combined incentive payments for the two programs total more than $7.4 billion. (Source: CMS, November 2012)
  • Diagnostic imaging system market: due to an increasingly unhealthy population, aging, and increasing demand for minimally invasive procedures, the market is expected to reach approximately $4.5 billion by 2017. Some areas will grow faster than others, with ultrasound systems expecting to reach $1.8 billion by 2017 due to their low cost. (Source: Millennium Research Group, “US Markets for Diagnostic Imaging Systems 2013,” October 2012)
  • Device approvals: premarket approval processes: in 2011, 40 applications to the U.S. Food and Drug Administration (FDA) were approved, average review time of 13.1 months (8.4 months FDA review and 4.7 months for responses to questions) vs. 71.3 months in Germany, 36 in France, and 16.4 to 26.3 in Italy. (Source: Basu et al “Patient Access to Medical Devices: A Comparison of US and European Review Processes,” NEJM 376:6 August 9, 2012)
National health reform: What now?

National health reform: What now?

At Deloitte, we continue to explore and debate the key questions facing 
the industry, and we look forward to helping our clients find and implement 
the right answers for their organizations. To learn more, visit www.deloitte.com/us/healthreform/whatnow today.

Subscribe to the health care reform memo

Health care reform memo — The weekly health care reform memo is available for subscription. Please visit www.deloitte.com/us /healthmemos/subscribe.

  • Step 1, confirm your sector(s) of interest. 
  • Step 2, select the health care reform memo as one of your subscriptions.

Related links

Share this page

Email this Send to LinkedIn Send to Facebook Tweet this More sharing options

Stay connected