Consumer and Provider Costs

Now with new policies rolling out, such as the “consumer-based” label, it will be even harder to pay for medical needs such as the fore mentioned EpiPen. This label, “Consumer-based” breeds for the fact that consumer most take more control over their health care choices. While this is a valid wide-spread agreeable statement, the ins and outs are very muddy. Health care costs are on the rise, mainly due to poor diet within our country. Our diet is poor due to lack of funds and accessibility to healthier food options. This is also somewhat or could be heavily regulated by the federal government. Cheaper, less healthier options are located in areas lacking resources. This makes it harder for those truly needing the healthier options to get them, thus increasing there chances of poorer health. Yet, those same people are the ones punished by increased health care costs.

 

It is no secret that the United States has a problem with its health care spending. When researching the Congressional Budget Office’s Options for Reducing the Deficit: 2017 to 2026 report we find that revenue collected by the federal government will not be able to keep up with health-related spending. Multiple factors come into play, including an increase in the number of Americans eligible for Medicare services, the anticipated increase in health care costs for each person in the US, and the increase in interest payments made on the growing federal debt. According to the Congressional Budget Office (2016), “As deficits accumulate in CBO’s baseline, debt held by the public rises to 86 percent of GDP (or $23 trillion) by 2026.” As such, the CBO published this report with over a dozen different health related options that it has put forward in terms of looking to reduce the deficit. While each option will look to reduce the overall costs attributed to federal spending on healthcare, the effects these options might have on different health care providers may differ. Let us examine if one of these options was implemented, specifically Option 6: Introduce Minimum Out-of-Pocket Requirements Under TRICARE for Life. Let us investigate in a health care location that would be affected, for example a TRICARE accepted hospital in a metropolitan area that had a large military fingerprint, such as having military installations in its vicinity as well as a sizeable, retired military community. If there were negative effects experienced by the hospital, are there any considerations on how to minimize the effects?

TRICARE for Life is a Department of Defense (DoD) funded program that started in 2002 for military retirees and family members who were eligible for Medicare. TRICARE will look to cover almost all medical expenditures Medicare did not, and at the cost of minimal to no out-of-pocket spending by the beneficiaries. The DoD does not have any control over how much is spent and doesn’t have the authority to offer stimulus to those who use their services in a cost-efficient manner. As such, $10 billion was spent in 2015 toward TRICARE medical costs, which doesn’t include the billions already spent through Medicare (p.250). Instead, this option would find TRICARE enrollees being responsible for up to $4,125 of Medicare related costs each calendar year starting in 2020. The responsibility would increase for costs adjustments in the years ahead. As such, the CBO has predicted that the incidence of medical services being performed would decrease due to the increase in out-of-pocket spending by the beneficiaries (p.250).

How might this affect the hospital? A reduction in medical services being performed would almost certainly be felt by the hospital. With many Medicare beneficiaries on a fixed income regardless of having a military pension, the burden of increased costs on the patient may lead to some forgoing routine, preventive checkups for chronic medical conditions. According to a Kaiser Family Foundation/New York Times survey, over 40 percent of persons polled who had an issue paying medical bills stated they or a member of their family decided to forego medical care due to its expense (Hamel et al., 2016). As such a drop in revenue may be experienced by the hospital, which in turn would have effects on budget considerations. Investing in labor and technology may have to decrease, which in turn could put the hospital at a disadvantage in terms of maintaining current standards in hospital-based medicine. As more persons who the hospital would normally see for preventive care end up becoming sicker, it may eventually require admission to the hospital to address changes in medical status. This in turn may drive up debt the hospital accrues for treating patients who will be unable to reimburse for all the services rendered. If a person was unable to afford the lesser, out-of-pocket costs associated with co-payments, is it likely they will be able to pay the more expensive bills accumulated with a weeklong hospitalization?

What are some ways to mitigate the possible negative effects the hospital may experience? Some considerations were made by a DLanonymous (2021) article found on a CafePharma message board. The first recommendation was for hospitals to pay the initial 100 percent a TRICARE For Life beneficiary was responsible for toward Medicare services, about $750. While this amount may seem inconsequential in the context of a large hospital system, for a person on fixed income this can be a significant yearly expenditure. By absorbing this upfront cost, the hospital would be looking to promote continued compliance with preventive care amongst its older patient population. With average Medicare spending more than doubling for persons aged 85-94 versus aged 65-74 in 2012, it would be in the hospital’s long-term benefit to look to promote continued compliance as there is the possibility that they will end up losing more down the road in services provided to patients who will be unable to pay (Niu et al., 2015). Another option would be rather than cover the initial $750 the hospital provides specific preventive care screenings to these beneficiaries free of charge. The hospital would be able to provide education to persons who may be at risk for certain conditions and enable the hospital to remove the financial barrier to getting these persons from coming to the hospital in the first place. By building that patient-provider relationship the patient may be more inclined to continue to come in for services that would cost them out-of-pocket because they anticipate receiving a high level of care. One final consideration would be for the hospital to reach out to the local military groups and associations and create relationships with these entities. Demonstrating understanding regarding the needs of our military retirees and their families will forge bonds that again may cause persons to go and receive services in person sooner than waiting until it’s not a choice but a necessity they receive medical care.

There is no way to know if this option would be implemented, or how the hospital may be affected if any of the other options considered were undertaken, including those of a non-health nature. The takeaway should be that regardless of what occurs, hospitals who find themselves with limited payor variability or certain population groups specific to TRICARE For Life are able to navigate changes such that they will be able to continue to provide quality services.