A recent report by Institute of Medicine has revealed that the U.S. healthcare system “squanders $750 billion a year—roughly 30 cents of every medical dollar—through unneeded care, byzantine paperwork, fraud, and other waste,” writes the Washington Post.
“Healthcare in America presents a fundamental paradox,” said the report, which was compiled by an 18-member panel of prominent experts including doctors, business people, and public officials. “The past 50 years have seen an explosion in biomedical knowledge, dramatic innovation in therapies and surgical procedures, and management of conditions that previously were fatal … Yet, American healthcare is falling short on basic dimensions of quality, outcomes, costs, and equity.”
The report says that if banking worked like our current healthcare system, ATM transactions would take days, and if home building was like healthcare, carpenters, electricians and plumbers would work from different blueprints and hardly talk to each other. For shopping, prices would not be posted and could vary widely within the same store, depending on who was paying. And for airline travel, pilots would be free to design their own preflight safety checks or not perform one at all.
The report identified six major areas of waste:
- Unnecessary services ($210 billion annually)
- Inefficient delivery of care ($130 billion)
- Excess administrative costs ($190 billion)
- Inflated prices ($105 billion)
- Prevention failures ($55 billion)
- Fraud ($75 billion)
Adjusting for some overlap among the categories, the panel settled on an estimate of $750 billion.
And to put $750 billion in perspective, the Post writes: “The one-year estimate of healthcare waste is equal to more than 10 years of Medicare cuts in Obama’s healthcare law. It’s more than the Pentagon budget. It’s more than enough to care for the uninsured.”
“The threats to Americans’ health and economic security are clear and compelling, and it’s time to get all hands on deck,” said committee chair Mark D. Smith, president and CEO, California HealthCare Foundation, in a press release. “Our healthcare system lags in its ability to adapt, affordably meet patients’ needs, and consistently achieve better outcomes. But we have the know-how and technology to make substantial improvement on costs and quality. Our report offers the vision and road map to create a healthcare system that will provide higher quality and greater value.” (NACS: www.nacsonline.com)
Temporary Guidance for Health-Care Law Provisions
The Departments of Labor (DOL), Health and Human Services (HHS) and Treasury have released two guidance documents to clarify the definition of “full-time employee” and the 90-day waiting period limitation contained in the Patient Protection and Affordable Care Act (PPACA).
Full-Time Employees. Under the health-care law, employers that have 50 or more “full-time employees” and fail to offer affordable health coverage to them may be required to pay a penalty. The law’s employer mandate takes effect starting in 2014.
The recent temporary guidance explains how to calculate whether new and existing employees are considered “full time” under the law, noting that employers have the option to use a look-back measurement period of three to 12 months to determine whether newly hired variable hour or seasonable employees are full-time employees.
Employers will not be subject to tax penalties for these workers during the measurement period, the guidance says, but will be required to offer a corresponding “stability period” of up to 12 months during which coverage will be available to employees that are determined to be full time at the conclusion of the look-back period.
90-Day Waiting Period. The other guidance document explains how the law’s 90-day waiting period limitation applies to variable-hour employees where eligibility for an employer plan is determined using an hours-of-service requirement. The guidance states that an employer who offers coverage will be considered in compliance with the limitation provided coverage for an eligible employee is effective within 13 months of the employee’s start-date (plus the fraction of a month to the first day of the next calendar month). Both forms of guidance will remain in effect until at least the end of 2014. The guidance on full-time employees can be found here and on the 90-day waiting period here. (NACS: www.nacsonline.com)