Thinking about the Future Individual Insurance Market Quickly Triples (13 to 40 million) McKinsey said

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  • The Future of Healthcare. . . May Not be Where the Crowd is Heading. Jeff Goldsmith National Advisor, Navigant Healthcare

    TENNESSEE HOSPITAL ASSOCIATION

    SANDESTIN RESORT

    DESTIN, FLORIDA

    JUNE 2, 2017

  • What are We Going to Talk About?

     What the Election of Donald Trump Means for the Health System?

     Has the Lengthy Pause in Health Cost Growth Ended and Why That Matters?

     What is Happening to Healthcare Payment?  Strategic Priorities

  • Hail to the Chief!

  • The Rust Belt Surge that Elected Trump

  • The Red Shift: 1996 to 2016

  • Boomers: They Really Did Change the World!

  • In 2016, They Elected Donald Trump President!

     Older Voters Skewed Sharply to Trump, as Did Whites and People with Less than a College Degree

     Average Age of Trump Voter: 57 yrs  Lower Income, Rural and Small Town

    Voters THUNDERED away from the Democrats

  • Key Facts to Know About Boomers

     A Lot of them are Broke Eight Years After

    Crash  A Lot are also Not Well  Many of Them Feel Trapped and

    Increasingly Angry  (How Smart of Trump to Pledge ”Not to Cut

    Social Security or Medicare”?)

  • Boomer Retirement Savings??

  • US Mortality Rate per 100,000 people aged 45-54

    Source: Anne Case and Angus Deaton; PNAS (By The New York Times)

    200

    300

    400

    500

    1990 1995 2000 2005 2010

    White Americans

    Hispanic Americans

    France

    Germany

    Britain Canada Australia Sweden

    2013

  • Increasing Causes of Deaths per 100,000 white Americans, 45-54

    Source: Anne Case and Angus Deaton; PNAS (By The New York Times)

    0

    10

    20

    30

    2000 2005 2010

    Alcohol and drug poisoning

    Suicide

    Chronic liver diseases and

    cirrhosis

    2013

  • Deaths from Opioid Overdoses 2003

  • Deaths from Opioid Overdoses 2014

  • Percentage of Adult Population Receiving Federal Disability

  • Poor Health and the 2016 Election: ”Branches of the Same Tree”

    C ha

    ng e

    in R

    ep ub

    lic an

    m ar

    gi n

    ov

    er D

    em oc

    ra ts

    , 2 01

    2- 16

    , % p

    oi nt

    s

    Index of county health metrics Worse health Better health

    Sources: Atlas of US Presidential Elections; Census Bureau; IFUMS, Institute for Health Metrics and Evaluation; The Economist

    C ha

    ng e

    in R

    ep ub

    lic an

    m ar

    gi n

    ov

    er D

    em oc

    ra ts

    , 2 01

    2- 16

    , % p

    oi nt

    s

    Voting-age citizens

    500,000

    5,000

    Midwest Northeast

    West South

  • Trump’s Main Healthcare Pledge: Repeal and Replace ObamaCare!

  • Repealing and Replacing ObamaCare: The Narrow and Rocky Road!

  • Republicans: One Big Happy Family on Health Policy!!

     ”Hamburger Hill” Republicans- Freedom Caucus, Tea Party Conservatives: ”Kill the Taxes and the Expansion!”

     “Deficit Hawk” Republicans-(Ryan, Price, e.g.) Budget Crisis requires Taming Medicare and Medicaid, Bigger Deal than ObamaCare

     Pragmatic Republicans (Alexander, Corker, Portman Cassady, Collins, e.g.) - Sound Health Policy Matters More than Striking a Blow against the Socialist Empire

     Sixteen Republican Governors (Kasich, Snyder, Rauner, Sandoval, Martinez, Baker, Pence-!) Who Expanded Medicaid Say: Give Us Flexibility but No Fiscal Crisis Please!

  • Historical Note: Trump Ran WAY to the Left of His Own Party

     Don’t Cut Medicare, Social Security, Medicaid (!!)

     Replace ObamaCare with a “Terrific” plan that ”Covers Everyone” with “Better Coverage and Lower Out of Pocket Cost”

  • The “TerrifiCare” Challenge: How do You . . . ?”

     Make ACA Disappear But . . .  Cover Just As Many People without. . .  Increasing the Deficit or (Visibly)  Harming the Sick without. . .  Losing More than Two Republican Votes in the Senate  Do you Risk ACA Repeal by ALSO Changing Medicare to

    Premium Support AND  Medicaid to Block Grants without damaging. . .  The Sixteen Republican Governors whose states Expanded

    Medicaid?  With No-one Obviously Managing the Process?

  • So Far, Legislative Process Hasn’t Been Pretty . . .

  • American Health Care Act:

  • Republican Theory of the Case: Blame the Patient!

     Poor Health and High Health Costs are the Result of Moral Failure by Patients

     Solution: More Individual Responsibility for the Cost of Healthcare! Less Government!

     ”Empower Individuals” by Providing Less ”Insurance” and More “Skin in the Game”

     Theory: Increased Financial Risk Will Transform People into Prudent Purchasers of Health Service AND They Will Take Better Care of Themselves. . .

  • An Empowered Consumer?

  • Trump Budget Priorities: FY18

     Cuts Medicaid $1.45 trillion over 10 years ($610 MORE than House Bill)

     Cuts Food and Nutritional Programs (SNAP, WIC, etc) by $208 billion

     Cuts Disability Payments by $79 billion

     Cuts Centers for Disease Control and Prevention by $18 billion

     Cuts the National Institutes of Health by $18 billion

     Zeroes Out Appalachian Regional Commission and (Mississippi) Delta Commission

     Cuts Substance Abuse and Mental Health Administration by $11.2 billion (25%)

  • Hospitals’ Economic Outlook

  • 0

    1

    2

    3

    4

    5

    6

    7

    8

    9

    2000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

    Is this Remarkable Cost Moderation History?

    Source: CMS, Office of Actuary *Estimated

    % G

    ro w

    th N

    H E

    Actual Spending O n H

    ealth Services

    Actual Spending On Health Services % Growth NHE

    1.2

    1.3

    1.4

    1.5

    1.6

    1.7

    1.8

    1.9

    2.0

    2.1

    2.2

    2.3

    2.4

    2.5

    2.6

    2.7

    2.8

    2.9

    3.0

  • Core Cost Trend Has Risen for Two Straight Years (Annual Percentage Increase, 2012-2015)

    Source: CMS, Office of Actuary 2015

    0

    2

    4

    6

    8

    10

    12

    14

    16

    2012 2013 2014 2015

    Overall NHS Hospitals Physicians/Clinical Care Prescrip. Drugs

    Gov't. Admin Net Cost/Health Insurance

  • Hospital Revenue Growth Challenge 2008-2017

    Source: JP Morgan, Altarum

    -6%

    -5%

    -4%

    -3%

    -2%

    -1%

    0%

    1%

    2%

    3%

    4%

    5%

    6%

    1Q 08

    3Q 08

    1Q 09

    3Q 09

    1Q 10

    3Q 10

    1Q 11

    3Q 11

    1Q 12

    3Q 12

    1Q 13

    3Q 13

    1Q 14

    3Q 14

    1Q 15

    3Q 15

    1Q 16

    3Q 16

    1Q 17

    Unit Revenue Growth

    Admissions

  • Signs of Trouble in Many Health Systems (Op Income FY15vs FY16)

     Providence Health- $511 million decline (-$250 million net)

     Dignity Health- $487 million decline (-$63 million net)

     Catholic Health Initiatives - $525 million decline (-$460 million net)

     Trinity Health- $411 million decline ($46 million net)

     SSM (St. Louis)- $220 million decline ($10 million net)

     Partners (Boston)- $214 million decline (-$108 million net)

     Cleveland Clinic- $341 million decline ($139 million net)

     ProMedica (OH)- $167 million decline ($-60 million net)

  • Some Possible Explanations

     “Integration” Expenses (e.g. physician practice subsidies)

     Questionable “Risk” Investments, including poor contracts

     Rising Patient Acuity  Spotty Position Control (FTE creep)  Rising Medicare and Medicaid losses on rising share of

    mix  Specialty Pharma

    STAY TUNED FOR FURTHER DETAILS

  • Health Insurance Reform?

  • What Most of Us Thought ObamaCare Would Do to Individual Market

     Individual Insurance Market Quickly Triples (13 to 40 million) McKinsey said 58 million.

     Disorderly End of Small Group Market as Small Employers Dump their 28 Million Workers into the Exchanges (followed by)

     Kneecapping of Large Group Market by Cadillac Tax in 2018

     Individual Market Eventually Reaches 80-100 Million (after Next Recession)

     Exchanges Structure/Dominate Individual Market and Cap Insurer Gross Margins and Rate increases

  • What Actually Happened?

     Public Exchange Population has Stalle