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Health care costs still too high, policy analyst says

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Robert Laszewski, president, Health Policy and Strategy Associates, spoke Thursday at the Lehigh Valley Business Coalition on Healthcare's 38th annual conference at DeSales University. (Wendy Solomon)
Robert Laszewski, president, Health Policy and Strategy Associates, spoke Thursday at the Lehigh Valley Business Coalition on Healthcare's 38th annual conference at DeSales University. (Wendy Solomon)

The American health care market is remarkably stable and profitable, for now, but it's still too expensive and, ultimately, unsustainable, cautioned Robert Laszewski, president, Health Policy and Strategy Associates based in Washington, D.C.

“We’re taking a long walk off a short pier,” Laszewski told a gathering Thursday at the Lehigh Valley Business Coalition on Healthcare’s 38th annual conference at DeSales University in Center Valley.

“But for the moment, enjoy the walk,” he said.

Laszewski’s talk provided insight on the health care system under the Trump administration. He called Alex Azar, U.S. secretary of health and human services, an “island of quality” in an administration that is riddled with numerous poor choices in leadership positions.

“As Obamacare goes, so goes the American health care system,” he said. “The outcome is going to drag the system in a particular direction.”

Laszewski noted Republicans failed to repeal the Affordable Health Care Act, also known as Obamacare, nor did they replace it with a more market-based system.

Health insurance companies’ margins are improving, which he attributed to the turnaround in the ACA exchanges, which he said are not sustainable.

“I think Donald Trump is screwing it up, but it was partly screwed up before,” Laszewski said. “The Trump administration continues to make it worse.”

Despite attempts to dismantle the ACA, it remains popular, which polls show is favored by 54 percent of Americans.

Insurance carriers “realized it was best to raise the hell out of rates” in the exchanges, which he described as “the political tail that wags the health care market dog.”

One of the biggest trends is the affiliation between health insurance companies and hospital systems, which is a big moneymaker for insurers, he said.

Medicare Advantage is another big profit driver, and health care providers are trying to get into the risk business.

“Medicare Advantage is becoming a pot of gold that drives the system,” he said.

The number of Medicare Advantage beneficiaries has increased dramatically, from 11.1 million in 2010 to 17.6 million in 2016.

“In the wake of the Republicans’ failed attempt to repeal and replace Obamacare, more states have begun to consider expanding their Medicaid programs,” he said.

“Medicaid expansion has been good for hospital stability and has had a profound and positive impact on the financial status of hospitals.”

While health care has been focused on improving utilization rates, such as the number of days in the hospital or number of doctor visits, that’s not the problem, Laszewski said.

U.S. rates are comparable to Canada and Germany.

“It’s still the prices, stupid!” he said.

And costs continue to escalate.

Hospital margins are still strong, but under pressure, with rural hospitals struggling the most. Eighty-two rural hospitals across the country have closed since 2010.

“It’s hard for hospitals to make it without being part of a larger system,” he said.

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