Insured Americans are using fewer medical services, raising questions about whether patients are consuming less health care as they pick up a greater share of the costs.
The
drop in usage is showing up as health-care companies report financial
results. Insurers, lab-testing companies, hospitals, and doctor-billing
concerns say that patient visits, drug prescriptions, and procedures
were down in the second quarter from year-ago levels.
"People just aren't using health care like they have," said Wayne DeVeydt, WellPoint Inc.'s chief financial officer, in an interview Wednesday. "Utilization is lower than we expected, and it's unusual."
Others
say that consumers are beginning to forgo elective procedures like knee
replacements. "We have a very weak economy and it's just a different
environment for the elective parts of health care," said Paul Ginsburg, a
health economist who runs the Center for Studying Health System Change
and has been analyzing health-company earnings. But "this could go
beyond the recession. Being a less aggressive consumer of health care is
here to stay."
Continued weak demand could eventually put
downward pressure on spiralling health-care costs, a long-sought goal of
policy makers. It could also force insurers to lower premiums.
The new trend comes amid a broader drop in health-care use as more Americans lose their jobs and their health insurance. Such cutbacks have happened before in recessions, but the drop seems to be more pronounced this time, industry analysts say.
More
Americans also are buying high-deductible health plans that force them
to bear more of the upfront costs for health services. Some 18 million
Americans bought high-deductible plans this year, compared with 13
million last year, according to Paul Mango, a director at consulting
firm McKinsey & Co.
At the beginning of the year, Dan and Natalie Johnson, of Gig Harbor, Wash., used the website eHealthInsurance.com to buy a new plan with a high deductible, now set at $5,500 for their family. Their previous coverage had no deductible.
Now,
the couple says they are thinking twice before scheduling doctor
visits. Recently, when their 16-year-old daughter's allergy prescription
ran out, Ms. Johnson called the allergist's office to ask for a
renewal, without coming in for an appointment, as she would have done
under their previous insurance.
And this spring, their son, 14,
got his athletic physical at a local urgent-care clinic that charged
just $40, instead of a doctor's office, which would have cost about $90.
"We don't want to go through our savings going to the doctor," says Ms.
Johnson, a photographer.
All this raises the question of
whether, after a year of national attention on out-of-control health
costs before the federal health overhaul passed in March, the trend
portends a lasting change in the way Americans use the medical system.
Just
a year ago, insurers reported surging health-care usage. Back then,
more consumers were signing up for Cobra, the federal program that
allows people who have lost their jobs to keep their insurance. The
government had extended a subsidy to cover 65% of the cost of the
coverage, which can be prohibitively expensive.
However, the
Cobra subsidies only covered the unemployed for 15 months, and many
people have hit the limit and dropped coverage. What's more, people who
have lost their jobs since the end of May don't qualify for the Cobra
subsidies.
To be sure, the change in behavior could be
short-lived. On an earnings call last week in which it reported a
decline in hospital usage, UnitedHealth Group Inc. (NYSE: UNH - News)
said it thought utilization would rise again in the second part of the
year, as Americans exhaust their deductibles and insurers start paying
for services. Both Aetna Inc. (NYSE: AET - News) and WellPoint (NYSE: WLP - News)
said the utilization fall-off was new as of this year, and they had not
seen the trend previously even as the economy has deteriorated. Some
insurers also cited an unusually mild flu season this year as a
temporary factor.
What's more, the federal health overhaul could cause usage to surge
again. The new law will hand insurance cards to many Americans in 2014,
which could unleash pent-up demand.
Utilization has ticked down
in previous recessions, and tends to take a year or two to change
because of how far in advance employers and insurers design their health
plans, said Carl McDonald, an analyst at Citigroup Investment Research.
He said the last time he saw utilization fall off was in 2003, adding
that usage also dipped in the early 1990s. But he added the drop is
bigger this time than in previous recessions.
The declines in
utilization has boosted profits for insurers, who set their prices to
cover anticipated medical costs. Insurance industry prices and profits
have been under fire by Democrats and regulators this year. Insurers
have justified high premiums by pointing to out-of-control medical
costs. But the recent drop in usage could make it difficult for insurers
to argue that continued price increases are necessary.
On
Wednesday, Aetna said usage of health-care fell in the second quarter,
feeding a 42% increase in profits. WellPoint reported a 4% earnings
bump, saying that hospital admissions and usage of prescription drugs
had dropped compared with a year earlier.
After the earnings
releases, Rep. Pete Stark (D., Calif.) called on the companies to reduce
their premiums since they are paying out less in medical care. In an
interview, Aetna's chief financial officer Joseph Zubretsky said
companies might eventually have to do just that. "If utilization stays
down, it will have a favorable impact on rates," he said.
One company reporting evidence of lower utilization is CVS Caremark Corp. (NYSE: CVS - News),
the drugstore giant. In its earnings announcement Wednesday, it said it
is seeing a drop-off in new prescriptions for maintenance drugs tied to
a decline in physician visits.
People are "visiting fewer
primary care doctors and specialists," said Chief Executive Tom Ryan, in
a conference call with analysts.
Last week, Quest Diagnostics Inc. (NYSE: DGX - News),
a laboratory-testing company, told investors that its volume fell 2.6%
in the first quarter and 1.3% in the second partly because of decreasing
physician visits. In addition, AmSurg Corp. (NASDAQ: AMSG - News), an outpatient-surgery company, reported that same-store procedures declined by 2.6% compared to a year earlier.
Another sign that people are forgoing doctor visits or getting less care came from athenahealth Inc. (NASDAQ: ATHN - News),
which provides billing services and electronic health records for more
than 1,700 medical groups. It said last week that the number of claims
filed per physician, as well as the average value of the billing for
each visit, had dropped from a year earlier.
Physician visits and
hospital admissions are dropping this year, according to Thomson
Reuters' healthcare business, which surveys doctors and hospitals.
Doctor visits have declined each month this year, including a 7.6% drop
in May 2010 from May 2009. Likewise, hospital admissions dropped in
three of the first four months of this year compared to those months
last year, including being down 2.3% in April 2010 from April 2009.
10:29 AM
|
0
comments
|
Read More
