Obamacare Increasing Medical Tourism

This year will see a huge increase in Americans seeking medical care outside of the United States due to the changes in insurance plans driven by President Obama’s signature healthcare reform law. In 2014, approximately one million Americans will travel abroad for health care services. Last year’s numbers totaled 750,000 people.

Dental procedures are the most frequently sought after foreign medical care. Coronary bypasses and bariatric operations are tied for second and cosmetic surgery ranks third. In fourth place is orthopedic procedures, most notably hip and knee replacements. These categories comprise about 82 percent of the procedures that are done out of the country.

Obamacare plans are the driver with their notoriously high deductibles ($10,000 in the bronze family plan). The new healthcare law has mandated so many changes to insurances that some procedures are simply no longer covered under employer insurance plans. This lack of coverage is what is driving more Americans to get those particular procedures done outside of the United States.

Due to location, Canada is the most popular place for Americans to seek medical care and they are likely to see more Americans over the years. Studies are showing that the exodus of Americans seeking medical care abroad is expected to increase 25 to 35 percent per year! Perhaps the most interesting trend is that some employers are not only picking up the cost for overseas health care, but may even add a cash bonus for the employee as an incentive. As we have seen time and again, the healthcare reform law in the United States is full of misaligned incentives.

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Contact ABISA, a consultancy specializing in solo and small group practice management. Visit us at ABISALLC.com.

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Understanding Canadian Healthcare: The System

Discussions about healthcare reform in the United States often contain references to Canada, but many of those references are inaccurate. The intent here is not to discuss healthcare reform in the U.S. nor other healthcare systems (socialized or otherwise). Rather, this is a clarification on what occurs in Canada. This will be a brief (short and to the point like all my posts) three-part summation. We have taken a brief look at the Canadian physicians and also how healthcare in Canada is funded. Finally, let’s take a look at the structure of the Canadian healthcare system.

The Canadian Health Act of 1984 is the law that frameworks healthcare in that country. As individuals enroll in the program they are issued a health card which enables them to receive health care services which the government deems “essential”. As I outlined in yesterday’s post, there are a multitude of services which are not covered and thus the individual must pay for themselves (either out-of-pocket or through insurance). It is unlawful for private insurance to duplicate public healthcare system benefits. Private insurance is only allowed to address coverage gaps, similar to supplemental insurance in the United States (yes, the AFLAC duck).

I think one of the biggest misnomers about Canadian healthcare is that it is “free”. It definitely is NOT free. Canadians pay heavily for healthcare through the tax system. In 2013, the average Canadian family paid $11,320 in taxes just for the public healthcare insurance. Furthermore, the cost of public healthcare (before inflation) has increased 53% just in the past 10 years and is now running a deficit of $540 billion.

Hospital care is provided by publicly funded hospitals and under the law, hospitals are required to operate within their budget. Since the cost of healthcare is rising (in Canada as it is everywhere else), hospitals are cutting costs and eliminating services. Approximately 30% of the healthcare budget is consumed by hospitals.

Canadian healthcare is very controversial and it is beyond the scope here to get into that debate. I will however end with a few items. Canadian healthcare receives very high marks for breast and colorectal cancer survival rates, primary care, and preventing costly hospital admissions from chronic conditions such as asthma and uncontrolled diabetes. The system receives very low marks for the extensive wait times that patients experience. Poll after poll show that Canadians like the notion of public healthcare, but those polls also show that Canadians understand the system is unstainable and in need of massive reform.

This concludes our three-part summation of Canadian healthcare. I hope you found it insightful and perhaps it helped to clarify some questions and misnomers.

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Contact ABISA, a consultancy specializing in solo and small group practice management. Visit us at ABISALLC.com.

Understanding Canadian Healthcare: The Funding

Discussions about healthcare reform in the United States often contain references to Canada, but many of those references are inaccurate. The intent here is not to discuss healthcare reform in the U.S. nor other healthcare systems (socialized or otherwise). Rather, this is a clarification on what occurs in Canada. This will be a brief (short and to the point like all my posts) three-part summation. Yesterday, we took a brief look at the Canadian physicians. Next, let’s take a look at how healthcare in Canada is funded.

In 1966, Canada enacted their single payer system (akin to Medicare in the U.S.) and in 1984, the Canada Health Act passed. The government funding accounts for about 70% of national healthcare expenditures, with the remaining 30% being covered by private insurance (usually supplemental-type insurance). Some items that generally are not covered by the government include:

  • Dental care
  • Eyeglasses
  • Prescription drugs (Canada is reportedly the only country with a universal healthcare system that does not cover prescription medication.)
  • Assisted living and caregivers
  • Hearing aids

There are other healthcare services that are also not fully covered by the government because they are not deemed “essential”. Some examples include infertility treatments, cosmetic surgery, and some forms of elective surgery. All of these items I have just listed can be paid out-of-pocket or through private insurers. It is important to note that each province in Canada does have the ability to partially cover some of these expenses. Because of this, there are considerable differences across the country with respect to what services are covered in some fashion.

Family doctors receive a fee per visit. This fee is negotiated annually between the province and the medical society. Physicians are not allowed to charge a user fee to patients for services which are covered by the government.

The percentage of GNP in Canada used on medical care is approximately 4% less than in the United States. In 2000, the World Health Organization ranked the Canadian healthcare system 30th in the world and ranked the United States 37th. There is much talk in Canada these days about the future of its healthcare system as they are currently experiencing a funding gap of approximately $537 billion. Much of the dialog is made up of what one would expect: reform, increase taxes, further reduce services, or all of the above.

Tomorrow is our final chapter in this three-part series and we will take a brief look into the structure of the healthcare system.

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Contact ABISA, a consultancy specializing in solo and small group practice management. Visit us at ABISALLC.com.

Understanding Canadian Healthcare: The Physicians

Discussions about healthcare reform in the United States often contain references to Canada, but many of those references are inaccurate. The intent here is not to discuss healthcare reform in the U.S. nor other healthcare systems (socialized or otherwise). Rather, this is a clarification on what occurs in Canada. This will be a brief (short and to the point like all my posts) three-part summation. First, let’s take a look at the physicians.

The number of physicians in Canada is at an all-time high with more than 75,000 currently in practice. This equates to approximately 215 physicians per 100,000 people, which is up 4% from the prior year. In fact, the number of physicians per capita has increased for the past 6 years. I think it is important to also note that 15.3% (5.3 million people) of the population are of age 65 years or older.

And the structure? Many Canadian physicians are not government employees, but rather are self-employed. Since Canada has a publicly funded healthcare system, patients are entitled to “essential” health services at no charge and may choose the physician they wish to see. Just as in the United States, the self-employed physicians set their own work hours and choose their desired location. They also are responsible for paying their own practice expenses such as staff salaries, office rent, operational expenses, etc.

How are they paid? Canadian physicians bill the government for services rendered in taking care of patients. Although the Canadian system is often classified as socialized medicine, it actually consists of many private practice physicians billing the government for reimbursement. The reimbursement, indeed, comes from a publicly-funded structure. On average, patients over the age of 65 spend approximately $5,400 annually in out-of-pocket expenses.

Tomorrow we will take a brief look into the system funding and patient fees.

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Contact ABISA, a consultancy specializing in solo and small group practice management. Visit us at ABISALLC.com.

Medical Debt Climbing

NerdWallet Health produced yet another survey and the results are quite interesting. This survey (conducted by Harris Poll) had a small sample size of only 2,016 adults, but the results may not be far from the truth across the United States. Here are some highlights of the survey’s findings:

60% of all personal bankruptcies are caused by medical debt

20% of Americans will be contacted by a collection agency in 2014 for their medical bills

63% of adults surveyed state their medical bills were higher than anticipated

57% are confused with their medical bills

The study also shows that nearly half of all Medicare claims analyzed by the OIG contained billing errors. Additionally, half of those error-ridden claims resulted in overpayments by Medicare.

Of those surveyed, 73% wish they had access to do price comparison. Although that may help them reduce their bills, I do not believe that would alleviate bankruptcy/collections issues. The best advice I have for patients such as these (and for all medical and dental practices) is to work with the provider to set up payment plans. Many practices now employ financial counselors who work with patients to help them understand their bills and responsibilities before receiving medical/dental care. If this is done properly, the patient can avoid bankruptcy issues. If the patient works with the provider on the payment plan, a collection agency will never be used.

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Contact ABISA, a consultancy specializing in solo and small group practice management. Visit us at ABISALLC.com.

40% Have Dropped Out of ACOs

More hospital systems are dropping out of the Medicare Pioneer Accountable Care Organization (ACO) program. Recently four more hospital systems joined the ranks of the departing. These recent departures include systems in California, Michigan, Indiana, and Pennsylvania. To date, 40% of the original have dropped out of the program, all citing similar reasons which are based on rules that are too strict and benchmarks that are unobtainable.

In the case of the Michigan system, they were able to lower Medicare spending by $20 million but at a cost to the organization overall. The CEO stated they simply could not make the economic model work. The Indiana system was able to increase quality but not costs of patient care and thus did not receive a shared savings payment. In fact, 60% of the hospital systems in the pioneer program did not receive a shared savings payment in 2012.

Other data shows that of the ACOs started in 2012, 53% were not able to lower expenditures in the first year. CMS states the ACO programs are meant to create savings over the long term. But, with all of the other financial pressures providers are facing, how many will stick it out for the years it takes to show savings and thus receive shared savings payments?

There continues to be other roadblocks to general ACO success. Two key areas are that payers are reluctant to offer ACO contracts and the fact there has not yet been a proven ACO model. Regarding the payers, this is a free and capitalist society so movement from the payers will be dependent upon how it benefits them . . . period. Regarding the lack of a proven model, there are some ACOs that appear to be doing well. It will take time for those to be analyzed in detail (and honestly) and determinations made as to whether models can be duplicated throughout the country. Everyone working in the healthcare industry acknowledges the mantra, “healthcare is local”, so time will tell if ACO models can be replicated.

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Contact ABISA, a consultancy specializing in solo and small group practice management. Visit us at ABISALLC.com.

Swiss say “NO” to Socialized Medicine

This week in Switzerland, citizens overwhelming voted against moving the country to state-run healthcare vice the current system of privately-run healthcare. The vote saw 62% in opposition which was near the 2007 vote where they tried it before; that time saw 71% in opposition.

The Swiss healthcare system is ranked as one of the best in the world. So what’s the problem? The costs to citizens are rising. Sound familiar? Oftentimes superb healthcare is brought about by new technology, which comes at a price. As the price of most everything continues to rise, so does the cost of doing business . . . the business of healthcare.

If the U.S. government (as the Swiss did) allowed a referendum to be voted on as to the direction of healthcare, I wonder what the citizens of America would decide. Don’t get too excited though as that is not about to happen. Switzerland is the closest state in the world to a direct democracy and as such, referendums are mandatory for any change in constitution and referendums can be requested for any change in law.

Feel free to comment to this post. I would like to hear what your thoughts are on the decisions (2014 and 2007) of the Swiss saying no to socialized medicine.

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Contact ABISA, a consultancy specializing in solo and small group practice management. Visit us at ABISALLC.com.