Redistributionist Economics

April 30th, 2014 4:00 pm | by John Jansen |

Bloomberg has an article which a fully paid up subscriber forwarded to me which delves into the increase in spending on healthcare which ObamaCare has motivated. According to the article those who signed up for the plan are more likely to avail themselves of expensive drugs and procedures than non ObamaCare insureds.

Via Bloomberg:

Health Spending Surges as Obamacare Patients Go to the Doctor
2014-04-30 17:24:22.782 GMT

By Alex Wayne
April 30 (Bloomberg) — Higher consumer spending on health
services, increased prescriptions for costly medications and
more elective surgeries suggests Americans are using the
insurance they gained under Obamacare.
Consumer purchases of health services surged 9.9 percent at
an annualized rate in the first quarter from the prior three
months, the highest rate of growth since 1980, according to the
Bureau of Economic Analysis. Health spending contributed 1.1
percentage points to total growth in gross domestic product, the
most since quarterly records began in 1947.
The growth is likely the result of increased utilization
under the Patient Protection and Affordable Care Act because
prices mostly have been little changed. Health plans, pharmacies
and hospitals say they are seeing the first signs of newly
insured patients seeking medical care, including high-cost drugs
and surgeries.
“It’s still pretty early for most of those newly insured
to access a whole lot of health-care services, but some of them
definitely are,” said Ceci Connolly, managing director of
PricewaterhouseCoopers Health Research Institute in Washington.
“This is definitely an increase in utilization, it appears,
more than pricing.”
More than 8 million Americans have signed up for private
health plans sold through the health law’s new insurance
exchanges, and federal officials say another 3 million have been
added to the Medicaid program for the poor since the start of
the year. While the percentage of enrollments who lacked
insurance isn’t known, the Urban Institute, a Washington
nonprofit that studies health issues, estimated this month that
5.4 million U.S. adults gained coverage since September.

Admissions Rise

Today’s report from the Bureau of Economic Analysis
included Obamacare enrollments only through Feb. 15. Enrollment
closed April 15 in most of the country, and a surge of sign-ups
in March and April will show up in the bureau’s report on
second-quarter spending, said Ben Mandel, chief of the federal
branch of the bureau’s government division.
Hospital operator HCA Holdings Inc. said yesterday in
states that have expanded Medicaid the company’s admissions
under the program rose 22 percent in the first quarter from a
year earlier.
Obamacare patients have filled four times as many
prescriptions for costly drugs to treat HIV as people in
commercial health plans, said Express Scripts Holding Co., the
nation’s largest administrator of prescriptions,
“We do believe that’s because you have individuals who
were going untreated before or didn’t have access to coverage
because of pre-existing conditions,” said Julie Huppert, vice
president for health reform at the company, in a phone
interview. “There was targeted outreach to that community.
We’re not surprised to see them utilize the benefit early.”

Expensive Prescriptions

People enrolled in exchange plans filled 47 percent more of
the most-expensive kinds of prescriptions, for so-called
“specialty” drugs that are usually injected and require
special handling, than people in employer plans in January and
February, according to an April 9 report by Express Scripts.
In New Mexico, Presbyterian Health Plan, the insurance
subsidiary of hospital chain Presbyterian Health Services, saw
an increase in nonemergency cardiac and orthopedic surgeries
after the beginning of the year, said Lisa Lugan, the president
of the division.
“Any time there’s been a barrier to an individual having
insurance coverage that’s removed” the plan sees pent-up demand
for medical care, Lugan said in a phone interview.

Counter-Indications

The Bureau of Economic Analysis’ report is preliminary,
deduced largely from hiring and wage trends in the health-care
industry, said Paul Hughes-Cromwick, a senior health economist
at the Altarum Institute in Ann Arbor, Michigan, which follows
health spending. There are counter-indications, he said, such as
the insurer WellPoint Inc. reporting today that its “medical
loss ratio” — the amount it paid out for medical claims — was
little changed in the first quarter.
“We want to see more information,” he said in a phone
interview. “You ought to figure, ‘gee, here’s a gigantic
insurer, let’s see more utilization so we can be more
comfortable with these numbers,’”
Yet there are only two possible explanations for growth in
health spending, said Charles Roehrig, a vice president at the
institute: higher prices or higher utilization. Health-care
prices increased just 1.1 percent in March from a year earlier,
Hughes-Cromwick said.
“It’s got to be utilization,” Roehrig said. “But there
are no direct data on utilization that we can go to.”

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