This Week in Health Care Reform - October 31st, 2014
Uncertainty continues to shroud preparations ahead of the second open enrollment period; transparency is shown to lead to cost savings in health spending, while drug price increases are shown to have the opposite effect; and, reach and connectivity pave the way for telehealth.
Week in Review
Questions Remain: With the second open enrollment period set to begin in just over two weeks, a number of challenges continue to stand in the way of a smoother process being realized than what consumers ultimately experienced during last year’s bumpy rollout. Perhaps chief among them, that the vast majority of the uninsured have no idea that the enrollment window is even set to open next month. And, it’s not just that they have little awareness of the ‘when’s’ of the law – the same number report knowing “only a little” or “nothing at all” about how the exchanges even work. While it’s clear that those whose job it is to reach, educate, and sign up this population have their work cut out for them, what’s still not known – at least, not with definitive enough clarity for some – is whether or not the law is actually doing what it set out to do.
Cost Saver: Whether or not you agree that the Affordable Care Act has delivered on its eponymic promise, it’s hard to deny that the law has ushered in a renewed focus on identifying cost-savings in the delivery of health care in this country. While policy and innovation certainly have large roles to play in helping to fully bring about this sea-change in how we collectively view health care, there’s a common sense undeniability to the idea that by simply arming consumers with greater price information, they will then be able to make more informed, cost-conscious decisions. A new study takes aim at this concept, examining the impact that transparency does, in fact, have on health care spending. The results: Consumers who are able to search and compare prices for common health care services tend to spend less than those who don’t. Put simply, the availability of pricing information influences health care consumer behavior. However, the study failed to address whether consumers were making better health care decisions or simply cheaper ones. It also falls short of predicting whether price transparency will eventually lead to a reduction in overall health spending.
Cost Driver: Having considered the cost saving potential on offer through greater price transparency, it’s only natural that we’d also want to turn our attention to the flip-side of that coin and examine what might be driving costs in our health care system. Recent reports indicate that consumers are using less health care services this year than last, but spending more when they do. While there may be a host of reasons why health care spending is up, drug price increases are at the head of the line. Case in point, last year, consumers used 15.5 percent fewer brand prescriptions, but the average price paid for those drugs went up 21.2 percent. The poster boy for this disproportion: Sovaldi. Gilead Sciences’ breakthrough hepatitis C drug continues to serve as less a warning shot across the bow of the health care system and more a direct hit to the hull. Already we’ve seen the $1,000-a-pill drug obliterate Gilead’s sales growth and revenue records, resulting in triple-digit increases to total revenue and net income for the pharmaceutical maker in the just-reported third quarter. However, patients and public health officials are left to deal with the wreckage left in Sovaldi’s wake. Hepatitis C patients are in a perpetual state of limbo, as many are left to manage the disease with less costly alternatives until their illness has advanced. Medicaid directors, many of whom are struggling to reconcile their already cash-strapped state balance sheets, sent a letter to Congress this week asking lawmakers to address the issue of specialty drug prices. And, it would seem, their attention can’t come quick enough, as Gilead’s next-generation hepatitis C drug, Harvoni, is poised to cast an even more ominous shadow than its predecessor.
Telehealth Lessons: All the discussion around things we should or shouldn’t be doing to improve our health care system presupposes opposing viewpoints, with well-reasoned arguments concerning the best way forward for our country. But, what if there was something we could already be doing that would not only lower costs, but increase access, as well? To many, that something is telehealth. While there are still barriers – both, regulatory and incentive-based – standing in the way of a wider-spread application of digital technologies in the health care space, there has been steady progress. The Department of Veterans Affairs, for instance, has embraced telehealth by creating a safe environment for veterans to interact with their providers and by making it more convenient for patients and physicians, alike, to access electronic health records. Additionally, last week, the Centers for Medicare & Medicaid Services (CMS) announced an $840 million initiative aimed at leveraging health IT to improve, both, the quality and coordination of care.
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