by George Chapman, GW Chapman Consulting

Drug spending continues to soar. Total spending on drugs was $425 billion last year up a staggering 12% from 2014. According to the AARP’s Public Policy Institute report, the average retail cost of a year’s supply of typically used prescription drugs by seniors is over $11,000. The average annual cost for specialty drugs, like those treating cancer and hepatitis, was $53,384 three years ago.  Overall Medicare spending was up only 1% last year to put the 12% drug increase into perspective. Drugs now account for 25% of overall spending. (Thirty years ago, drugs accounted for less than 5% of all healthcare costs.) Currently, hospitals account for about 32% and physicians account for about 20% of overall spending. The balance of expenses goes towards skilled nursing facilities, substance abuse and addiction, mental health, durable medical equipment and implants, chiropractic, podiatry, nutrition, etc. Congress establishes Medicare payments to physicians and hospitals but cannot set drug prices.  

Reduce your exposure. Seven typical household items rank as most hazardous to your health if not used or maintained properly. They are : step ladders (falls), dryers (fires)  lawn mowers (injuries), bed rails (injuries dues to poor installation), humidifiers (mold), blenders (lacerations, scalding), toasters (fires).

Insurance mergers.   The pending mergers of insurance giants Aetna-Humana and Aetna-Cigna are undergoing increased scrutiny by the Department of Justice and are facing uphill battles. The DOJ is wary of all “super mergers” that may hurt consumers through less competition on service and price. Hospital mergers are in the same boat. This increased scrutiny by the DJ has been happening despite the Obama administration being relatively passive when it comes to blocking mergers.

ObamaCare premium subsidies.  The House Ways and Means committee is questioning the Administration’s method of funding premium subsidies for the indigent who are purchasing insurance through ACA exchanges. Anyone with income between 133% and 400% of federal poverty guidelines qualifies for the subsidy. (Those under 133% qualify for Medicaid.) Subsidies are expected to total $170 billion over the next ten years. Without tax payer support, insurers on the exchange could face the prospect of having to cover the subsidies themselves.

Calculating premiums.  Determining competitive/fairly priced premiums for new enrollees with uncertain health statuses has been a challenge for commercial carriers. United Health has already announced it is pulling out of most state exchanges next year. As more data becomes available each year, insurers will have more experience which allows them to better assess risk and determine premiums. The fear however is that if premiums are too high, it might drive away the relatively healthy. The only way to combat that potential exodus of the “healthy” is to make penalties for not participating much higher than they are now.

Medical errors.    According to researchers at Johns Hopkins University School of Medicine, medical errors in hospitals and other healthcare facilities are the third leading cause of death in the US, claiming over 250,000 lives annually. (700 a day)  Head researcher Dr. Martin Makary summarized: “It boils down to people dying from the care they receive rather than the disease or injury for which they are seeking care.” Only hospital acquired infections have shown improvement over the years.  Many experts believe healthcare has too much tolerance for variability in practice versus other industries. Lack of standardization makes it harder to identify and fix problems.

Oneonta physician creates center for transgender patients. Family physician Carolyn Wolf-Gould offers hormone therapy, counseling, and coordination with other physicians for patients seeking surgery.  Dr. Wolf-Gould said transgender patients come from as far away as six hours due to short supply of providers offering services.

Opioid addiction. The unfortunate death of pop superstar Prince Nelson has brought more attention to the opioid painkillers addiction epidemic in the US. Someone dies from an opioid overdose every 20 minutes. Many addiction experts question the rationale of turning to the pharmaceutical industry for more drugs to combat addiction to drugs. Treatment for the underlying psychological symptoms that can lead to substance abuse should be also be part of a provider’s arsenal. The FDA is considering making it mandatory (currently voluntary) for physicians who prescribe opioids to undergo safety training courses paid for by opioid manufacturers.

Short term policy.    It is a cheaper alternative to policies offered on the exchanges. It is meant to fill gaps in coverage, but for only a few months. However, short term policies do not meet minimum ACA requirements for coverage and benefits, so buyers will face significant tax penalties.    


Thought for the month.  “Discussion is an exchange of knowledge. An argument is an exchange of ignorance”. Attributed to American journalist and humorist Robert Quillen.

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