Sunday, November 20, 2011

Weekend Update

Congress has recessed for the Thanksgiving holiday, and according to news reports, including the Wall Street Journal,  the Super Committee will admit defeat tomorrow. As it turns out tomorrow, not Wednesday, is the Super Committee's effective deadline because the Committee can only vote on proposals that have been made public for at least 48 hours before the vote.

The American Medical Association ("AMA") must be freaking out because they were betting that the Super Committee would fix the statutory sustainable rate of growth formula that will impose a 27.4% cut on Medicare Part B compensation to doctors on January 1, 2012. The beauty part of the Super Committee process is that if the Committee had produced a set of proposals with $1.2 trillion in deficit reductions over 10 years, both Houses would have been required to give the proposals an up and down vote with no amendments. Now the AMA has to rely on the vagaries of the usual legislative process during the holiday season.

We enter the second week of the Federal Benefits Open Season. Federal News Radio reports that
For advice, insight and analysis, [its] Federal Drive [program] with Tom Temin and Amy Morris turned to three experts in the Open Season arena — Colleen Murphy, executive for PlanSmartChoice, an ADP product; Walton Francis, editor of the Checkbook Guide to Health Plans for Federal Employees; and Federal News Radio's Senior Correspondent Mike Causey.
Details are available here.

Standard & Poors last week issued the September 2011 report on its healthcare index. Not good news.
Data released today by S&P Indices for the S&P Healthcare Economic Composite Index indicate that the average per capita cost of healthcare services covered by commercial insurance and Medicare programs increased by 5.75% over the 12-months ending September 2011. This is a slight increase over the +5.71% annual growth rate posted in August 2011 and the fifth consecutive increase since the index hit its lowest rate of +5.32% in April 2011.
As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance increased by 8.03% over the year ending September 2011, also increasing for the fifth consecutive month. On the other hand, growth rates in Medicare claim costs hit yet another low, rising at an annual rate of +1.97% as measured by the S&P Healthcare Economic Medicare Index. The S&P Healthcare Economic Hospital Medicare Index also posted a record low annual rate of +0.71% in the year ending September 2011. This is a staggering 7.59 percentage points lower than the highest annual growth rate of +8.30% recorded for this index just two years ago in August 2009.
The Hospital and Professional Services Indices posted increases of 5.51% and 5.78%, respectively, from their September 2010 levels. These are marginal changes from the +5.40% and +5.83% respective annual rates posted in August 2011.
That my friends is strong evidence of significant cost shifting from the Medicare Program to the private sector.

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