New estimate Of Obamacare’s fiscal impact on private doctor practices

Under Obamacare, doctors have been strained by costly new regulations, intricate payment “reforms” that tie their Medicare reimbursement to complex federal reporting requirements, and mandates that they install and make “meaningful” use of electronic health records.

Add a new burden to the mix: The proportion of patients they see are rapidly shifting away from commercial health plans and toward Medicaid, which sometimes pays doctors pennies on the dollar that they were previously reimbursed under private insurance.

The data comes from ACAview, a product of athenahealth that aims to measure the impact of Obamacare on medical practices. The project, jointly funded with the Robert Wood Johnson Foundation, is the first large-scale examination of data derived directly from outpatient medical practices belonging to more than 60,000 providers. It gives a unique insight into how the Affordable Care Act is impacting patients at the point of care.

The analysis was first released in February 2015, and this new data is an update on those initial results. It is being released today for the first time. It shows that in states taking Obamacare’s Medicaid expansion, Medicaid visits as a proportion of all visits to doctors increased from 15.6% in 2013 to 17.7% in 2014, and continues to climb, to 21.5% in 2015.

Meanwhile, in states that didn’t expand their Medicaid programs, the proportion of visits covered by Medicaid remained largely flat at 9.4% for 2013, 9.2% for 2014, and 8.9% for 2015. The results were based on a subset of 16,000 providers who have been on the athenahealth network prior to 2011 and tracked the longest.

But here’s the rub. The proportion of commercially insured patients, either through Obamacare’s exchanges or through workplace coverage, actually fell in states that expanded their Medicaid programs. In those states, commercially insured patients comprised 65.2% of all patients in 2013, 64.4% in 2014, and then fell to 62.8% in 2015. In states that didn’t expand their Medicaid programs, the percentage of commercially insured patients rose slightly, from 66.1% in 2013 and 2014, to 68.1% in 2015. It’s important to note that the number of uninsured patients fell across all states, as previously reported, from 4.6% to 2.4% in states that expanded Medicaid, and by slightly less in states that did not.

Nonetheless, this three-year trend is going to add fiscal strains to physician practices.

Obamacare is already paying close to Medicaid rates for many ambulatory procedures. Moreover, there is evidence that many of the people who are now “privately” insured under Obamacare were previously insured in the individual or group market, and got bumped off their prior commercial coverage and forced into the ACA’s exchanges. That alone is going to lower provider revenue right at the very moment when their practice costs are escalating.

Now, add to the mix the new trend unearthed by the athenahealth data. In states that expanded their Medicaid programs, the proportion of Medicaid patients visiting doctor offices as a percentage of physicians’ total patient volume is rising sharply, by almost 40% since 2013. Accepting that Medicaid pays much less than private coverage, this sharp change in payer mix will wreak havoc on doctors’ bottom lines. Even if Obamacare is reducing the number of uninsured, doctors’ total revenue is falling as a result of this mix shift.

Just how much revenue is this taking out of doctor practices? It’s hard to estimate, but here’s one admittedly crude calculation. Data shows that the average medical provider, across all specialties, generates about $1.45 million a year in total billing revenue. This is gross revenue, before any practice costs are netted against the doctor. Next, assume that Medicaid pays doctors, on average, 50% of what private insurance pays (which is consistent with prior estimates). Then assume that there are about 900,000 professionally active doctors in the United States. Finally, figure that Medicaid and commercial insurance together accounted for 80 percent of the patients that a doctor sees (roughly in line with the athenahealth estimates).

If you accept that Medicare pays close to commercial insurance rates (about 90% on average), then looking only across the insured patients who support a practice’s revenue, a shift in total average payor mix between Medicaid and commercial coverage — of the magnitude reported by the athenahealth survey between 2013 and 2015 — would already cost the “typical” doctor practice close to about $50,000 in top line revenue, even after factoring in that more of the previously uninsured are now covered (mostly by Medicaid). Figuring that 40% of practicing docs work in privately run medical offices, and the aggregate hit would come out to $18 billion in less total revenue going into private medical practices.

Now there’s no evidence that private doc practices have, on average, seen reductions in their average top-line revenue. Most data shows that revenue growth has remained flat. Moreover, that rough estimate is based on what would happen if every state experienced the kinds of mix shift that the expansion states saw. Many states didn’t take the Medicaid expansion money.

But there’s no question that in states that did expand Medicaid, as the payer mix has changed, medical practices have on average, seen a sharp reduction in their average paying-patient reimbursement. That change was too steep to be offset by the reduction in the number of uninsured patients. This suggests that doctors are (so far) making up the shortfall caused by a worsening mix of insurance types. Probably by expanding their volumes. Either they are increasing the total number of patients they see in an average day, or increasing the number of reimbursed tests and procedures that they perform. They may also be making up some of the deficit through higher out-of-pocket charges to privately insured patients. Keep in mind that none of these estimates factor in the additional revenue reductions seen as commercial patients shift out of group coverage and into the lower paying Obamacare plans.

All of these are admittedly rough estimates with lots of assumptions baked in. But they give a very basic measure of just one fiscal strain that doctor practices are feeling. With medical practice costs rising under the ACA, and revenue falling, it’s no wonder so many doctors are choosing to sell their private practices and become salaried employees of hospitals.

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Robots rising: How humans can flourish in the age of brilliant machines

“The Great Decoupling: An Interview with Erik Brynjolfsson and Andrew McAfee” is a must-read Q&A from Harvard Business Review. I’ve written often about the two MIT academics and their work on labor markets and the impact of technological change. Two things from the HBR interview that I want to highlight. First, their explanation of the above “decoupling” chart is noteworthy in that they point out the macro-nature of the forces driving that chart. In other words, it’s not just or even mostly the lack of “worker voice” in the US:

HBR: Is the Great Decoupling happening only in the United States?

Brynjolfsson: No, similar trends are appearing in most developed countries. In Sweden, Finland, and Germany, for instance, income inequality has grown over the past 30 years, though not as high as it has in the United States. 

The fact that the middle class has been hollowing out in country after country indicates that the decoupling isn’t due solely to changes in the social contract. Germany, Sweden, and the United States all have different views about capitalism, about how people should be treated, and so on. We’re not saying that social choices have no effect, and for that matter, we’re not saying that globalization has no effect, either. However, there seems to be a common underlying force that’s affecting all these countries. We think that force is technology. 

Second, there’s a really great summing of what we need to do so human can flourish in this world of powerful digital technologies:

HBR: What kind of economic environment would make the best use of the new digital technologies?

McAfee: One that’s conducive to innovation, new business formation, and economic growth. To create it, we need to focus on five things:

The first is education. Primary and secondary education systems should be teaching relevant and valuable skills, which means things computers are not good at. These include creativity, interpersonal skills, and problem solving.

The second is infrastructure. World-class roads, airports, and networks are investments in the future and the foundations of growth.

Third, we need more entrepreneurship. Young businesses, especially fast-growing ones, are a prime source of new jobs. But most industries and regions are seeing fewer new companies than they did three decades ago.

A fourth focus is immigration. Many of the world’s most talented people come to America to build lives and careers, and there’s clear evidence that immigrant-founded companies have been great job-creation engines. The current policies in this area are far too restrictive, and our procedures are nightmarishly bureaucratic.

The fifth thing is basic research. Companies tend to concentrate on applied research, which means that the government has a role to play in supporting original early-stage research. Most of today’s tech marvels, from the internet to the smartphone, have a government program somewhere in their family tree. Funding for basic research in America, though, is on the decline: Both total and nondefense federal R&D spending, as percentages of GDP, have declined by more than a third since 1980. That must change.

Again, read the whole thing.

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Is the U.S. losing the war against ISIS? Thiessen on Fox News’ ‘The Kelly File’

Fellow Marc Thiessen discusses the United States fight against ISIS on Fox News' 'The Kelly File'

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India’s economic growth: Be wary

India just announced that growth in gross domestic product (GDP) stood at 7.3 percent during the fiscal year April 2014 – March 2015. This will be seized upon by some as world-beating, even ahead of China’s. It will be heralded as a sign of India’s global economic rise. In fact, it may be fairly meaningless.

The first reason for this has to do with India. The country recently altered its approach to GDP, leaving the previous totals for GDP almost unchanged yet somehow finding much higher growth over the last few years.

By itself, this seemed odd. GDP growth also clashed with almost every other indicator over the same period, leaving many observers doubting the accuracy of the revisions. For example, the manufacturing component of GDP shows strong growth, while the government’s own industry indicator does not.

Moreover, India’s economic statistics are often dubious. Striking revisions are not limited to GDP, and the reasons behind the changes can be remarkably amateurish.

The country releases multiple inflation rates every month but has no equivalent for unemployment, though unemployment and underemployment are vital challenges as young workers flood into the labor force. The new GDP series is said to be a long-overdue modernization. Much more work along these lines is needed.

The second problem is with GDP itself. It’s not just India’s numbers that provoke suspicion. Any GDP growth comparison to China is stacking one unreliable number up against another. Beijing is frqeuently unwilling to tell the truth about its economy and Delhi is frequently unable to.

Even in the U.S., the relevance of announced GDP growth is dubious. If GDP is used as the guide, the recession associated with the financial crisis ended in mid-2009 and the American economy has been expanding at an uneven but reasonable pace for almost six years.

But income and the job market tell a gloomier story, of a slow and still incomplete rebound. In America, India, and everywhere else, it’s how people are actually doing that matters, not how GDP says they should be doing.

In the Indian case, though we don’t know for sure, the supposedly rapid GDP gains do not seem to have created a large number of jobs or brought an increasing number of people out of poverty. They do not even seem to be helping curb the large budget deficit.

So when you hear that Indian GDP is showing powerful growth, the first question to ask is whether that’s really true. The second question may even be more telling: why, exactly, should anyone care?

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Please, don’t freak out over the negative first-quarter GDP report. Just worry

So the US economy went and did a very bad thing. Instead of growing during the first three months of this year — government’s first estimate was a 0.2% increase — it shrank. Now positive is sure better than negative, especially when many speculated/hoped/prayed/wished 2015 would see a marked acceleration in growth. But there’s a caveat in play here. A couple, actually.

First, something odd has been happening with first-quarter GDP reports for awhile. JPMorgan notes that over the past 20 years, 1Q  GDP growth has averaged 1.6 percentage points lower than in other quarters. Seasonal adjustments are supposed to smooth that out. Thus the San Francisco Fed finds the “anomalous pattern of generally weak first-quarter growth suggests that the BEA’s estimate of GDP growth for the first three months of 2015 may understate the true strength of the economy.” Although the Fed in Washington disagrees, the SF Fed thinks real GDP in 1Q was closer to 2%. Indeed, real gross domestic income was much stronger in this revised report, up 1.4%. Capital Economics says it “would view that as a much more accurate gauge of the economy’s true performance over the three months of this year.”

Second, there’s a plausible case that mismeasurement of productivity is also chronically understating US economic growth. Goldman Sachs, in a recent note:

Measured productivity growth has slowed sharply in recent years, and we have reduced our working assumption for the underlying trend to 1½%. … The proximate cause of the slowdown is a slump in the measured contribution from information technology. But is the weakness for real? We have our doubts. Profit margins have risen to record levels, inflation has mostly surprised on the downside, overall equity prices have surged, and technology stocks have performed even better than the broader market. None of this feels like a major IT-led productivity slowdown. One potential explanation that reconciles these observations is that structural changes in the US economy may have resulted in a statistical understatement of real GDP growth. There are several possible areas of concern, but the rapid growth of software and digital content—where quality-adjusted prices and real output are much harder to measure than in most other sectors—seems particularly important.

Along the same lines, here is economist Martin Feldstein in a recent column:

Today’s pessimists about the economy’s rate of growth are wrong because the official statistics understate the growth of real GDP, of productivity, and of real household incomes. … The measurement problem is particularly severe for new products. … The result is that the rise in real incomes is underestimated, and the common concern about what appears to be the slow growth of average household incomes is therefore misplaced. Official statistics portray a 10% decline in the real median household income since 2000, fueling economic pessimism. But these low growth estimates fail to reflect the remarkable innovations in everything from health care to Internet services to video entertainment that have made life better during these years, as well as the more modest year-to-year improvements in the quality of products and services.

For now Goldman says “it is better to focus on other indicators—especially employment—to gauge the cumulative progress of the recovery and the remaining amount of slack.” And this from Barlcays: “We believe growth in Q1 has systematically underperformed due to an incomplete seasonal adjustment process that leaves residual seasonality in many investment categories. As a result, we look to other indicators such as payroll growth, the unemployment rate, and the ISMs to get a complementary reading on near-term momentum.”

By the way, through April total job growth is down 15% from the first four months of 2014. There’s a new job report next week plus revisions to previous months. But overall it does look like a same-old, same-old year. Certainly a weak start. JPMorgan:

Even though 1Q may eventually get revised higher, it was clearly a weak quarter for growth. The modest upside surprise in the today’s headline figure was mainly related to inventories, and this is an unfavorable development for 2Q growth. Overall, it looks like growth in the first half of this year will be pretty weak partially because of a combination of some unusual special factors (bad weather, port strikes, issues with seasonal adjustment) as well as more fundamental drags coming from the stronger dollar and the drop in oil prices. …  Real gross domestic income increased 1.4% saar in 1Q, not as bad as the GDP figure for the quarter, but still a pretty soft gain.

“Soft.” Not a recession but also not nearly good enough. The continued inability of this economy to grow at much faster than 2% is what worries me.

 

 

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Is Puerto Rico America’s Greece?

Tolstoy famously remarked that all happy families are alike but each unhappy family is unhappy in its own way. The same might be said of the unhappy state of the Greek and Puerto Rican economies. But while both those economies are struggling with very high debt burdens within a monetary union, there are very big differences between the two that makes it difficult to tar them with the same brush. Indeed, on closer inspection, it would seem that though the Puerto Rican economic crisis might be serious, it is of a very much lesser dimension than that in Greece.

Both Greece and Puerto Rico have very high public debt levels in relation to that of their peers. However, the scale of Greece’s indebtedness dwarfs that of Puerto Rico. Whereas Greece’s public debt has now reached around $350 billion, or 180 percent of its gross domestic product (GDP), that of Puerto Rico totals $72 billion, or around 70 percent of its GDP. Another basic difference between the two economies is that whereas Greece’s debt is now mainly in official hands, Puerto Rico’s debt is mainly held by private-sector asset managers. In principle, this makes Puerto Rico’s debt more susceptible to restructuring than that in the Greek case.

Both Greece and Puerto Rico constitute a very small part of the monetary union to which they belong. Indeed, the Greek economy constitutes less than 2 percent of the overall eurozone’s economy, while that of Puerto Rico constitutes a very much smaller part of the overall U.S. economy. However, while Greece might constitute a small part of the European economy, it has the potential to cause contagion to much larger economies in the European economic periphery, like Italy and Spain. By contrast, Puerto Rico would seem to have little potential to cause contagion to the United States.

Full text of this article can be found at TheHill.com.

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Does the media hold anyone to a lower ethical standard than the Clintons?

Let’s say, just for kicks, you murdered your husband (or wife). Your neighbors have been suspicious ever since your nightly arguments suddenly stopped, right around the time you put something large in your trunk and drove off in the middle of the night. Now they see you driving his car and putting his suits and golf clubs up for sale on eBay. The police find your explanations implausible and contradictory, and then you tell the cops to direct all future questions to your lawyer.

The good news is that you have fans. Some neighbors think you’re the cat’s pajamas. They come to you and say they want to defend you against this terrible accusation. What should you tell them to say on your behalf?

Frankly, I don’t know what you should say, but I do have a good sense of what you shouldn’t say: “Tell them there’s no smoking gun.”

You see, when people suspect you’ve committed a crime, insisting that there’s “no smoking gun” is almost, but not quite, an admission of guilt. It is certainly very, very far from a declaration of innocence.

“I didn’t do it!” — that’s a declaration of innocence.

“There’s no smoking gun!” — that’s closer to, “You’ll never prove it, nyah, nyah.”

The origin of the phrase “smoking gun” comes from a Sherlock Holmes story, “The Adventure of the Gloria Scott.” In Arthur Conan Doyle’s tale, an imposter posing as a ship’s chaplain commits murder. “We rushed on into the captain’s cabin . . . there he lay with his brains smeared over the chart of the Atlantic . . . while the chaplain stood with a smoking pistol in his hand at his elbow.”

Figuratively, when you have a smoking gun, there’s no need for an investigation; you know for sure the culprit is guilty. But if the chaplain had thrown the gun out the porthole just in time, Holmes would not say, “Well, there’s no smoking gun. This shall have to remain a mystery for all time. Oh, and let’s give the chaplain here the benefit of the doubt.”

I bring this up because every time there’s a new revelation about the unseemly practices of the Clintons, every time a new trough of documents or fresh disclosures come to light, scads of news outlets and Clinton spinners insist that “there’s no smoking gun” proving beyond all doubt that Hillary Clinton and the Clinton Foundation did anything wrong.

The guy who set the bar so low that it’s basically stuck in the mud was ABC News’ George Stephanopoulos. In a now-infamous interview with Peter Schweizer, author of the investigatory exposé Clinton Cash, Stephanopoulos grilled Schweizer about his partisan conflicts of interest.

Despite Stephanopoulos’s hostile tone, it was perfectly proper to note that Schweizer worked for George W. Bush as a speechwriter for a few months. The irony, of course, was that Stephanopoulos worked in a far higher position, for far longer, for the Clintons — which Stephanopoulos did not mention. Nor did he disclose the fact that he was a donor to the very Clinton Foundation that was the focus of Schweizer’s book.

Since that story broke, thanks to the Washington Free Beacon, Stephanopoulos has apologized at least three times for his actions.

What he hasn’t apologized for is his yeoman’s work making a smoking gun the new burden of proof.

When the State Department released a sliver of a fraction of the e-mails Hillary Clinton hadn’t already deleted from her private stealth server, the Daily Beast ran a story with the headline “Sorry, GOP, There’s No Smoking Gun In Hillary Clinton’s Benghazi Emails.” Ah yes, because the relevant news is whatever’s bad for Republicans.

This week, the International Business Times reported that then–Secretary of State Hillary Clinton approved a huge spike in arms sales to repressive countries that donated to the Clinton Foundation, and that weapons contractors paid Bill Clinton huge sums for speeches at around the same time the State Department was approving their arms deals. Slate noted that “the IBT piece doesn’t reveal any smoking-gun evidence of a corrupt quid-pro-quo transaction.”

Now, obviously, if there is no smoking-gun proof of wrongdoing, the press should report that. But it might also note that many politicians and public figures have been prosecuted — and convicted — without the benefit of a smoking gun. Just ask former Virginia governor Bob McDonnell or, for that matter, Martha Stewart. The lack of a smoking gun in Chris Christie’s “Bridgegate” scandal hardly deterred the media mob.

Only in the Clintonverse could the lack of a smoking gun be touted as proof of innocence.

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Rick Santorum’s crucial message for the right

Rick Santorum is running for president, and every conservative and Republican should listen to him.

I can see readers’ eyes rolling now. Many conservatives, libertarians, and moderate Republicans dislike Santorum. They may think he’s a horrible messenger. They may find him terribly wrong on some issues. They may think he has no chance of winning the nomination, or that he would be a disaster in the general election.

These conclusions flow from some combination of reality, petty identity politics, disappointing experiences from the rudderless Bush era of the GOP, and clear-eyed political analysis. But Santorum haters and Santorum dismissers should be able to set aside their personal feelings about the man, and to listen for a moment to his message.

His most important message for the GOP, for libertarians, and for conservatives: We need to care about the working class, about people who are struggling, and about the poor. Republicans need to listen to these people — even if they occupy the 47 percent Mitt Romney so easily discarded — and talk to them, too.

The Santorum-Romney contrast became clear the night they tied for first place in the Iowa caucuses. Both men spoke about the problems with federal welfare programs. Romney castigated welfare recipients as the takers in an “entitlement society,” which is at odds with a “merit society.” This view plagues the American Right — that those who aren’t successful are necessarily that way through some personal perfidy.

Santorum, that same night in Iowa, also took aim at the welfare state. But instead of casting the poor as the bad guys, he made it clear that the poor are the victims of government programs that “increas[e] dependency.”

Rather than blame and write off the working class and the poor, Santorum’s message is to court them, to show them you are on their side, and that you are fighting for them.

Following Iowa in 2012, Santorum ran a respectable second place in the primaries. Partly, he was the default anti-Romney vote for anti-establishment conservatives. But also he connected with blue-collar voters who weren’t your typical William F. Buckley disciples, and who felt excluded by the Romney wing, and the K Street wing of the GOP.

Santorum says his strong second-place showing, as well as his multiple wins in Democratic-leaning Pennsylvania, were “not just because I stood for something. It’s because I stood for someone — the American worker.”

The importance of these voters to the GOP became clear when the votes were counted in Romney’s November 2012 loss to Obama. About 5 million to 7 million fewer white voters showed up than expected, according to political analyst Sean Trende, and “These voters were largely downscale, Northern, rural whites.” In other words, Santorum Republicans stayed home.

How to turn them out? Part of it is tapping into the perception that the game is rigged in the American economy today, with big business and big government doing the rigging.

Santorum sounded those notes in his campaign announcement May 27: “Working families don’t need another President tied to big government or big money,” he said.

When discussing the economic devastation of the rust belt, Santorum blamed the “excesses and indifference of big labor, big government, and yes, big business.”

Of “Hillary Clinton and big business,” Santorum said “their priorities are profits and power. My priority is you — the American worker.”

Santorum, on the policy front, often takes the Pat Buchanan, Ross Perot route, calling for less immigration and protection of U.S. manufacturers. The danger with big-government populism is (a) it usually corrupts over time into big-government corporatism, and (b) Democrats can always go bigger on the big-government front.

A free-market populist agenda could include a war on corporate welfare, tax simplification, a payroll tax cut, clearing away regulatory burdens to sole practitioners and small businesses, and reforming safety net programs so that they ensnare fewer and empower more.

But when Santorum talks about helping the working class and looking out for those who are struggling, he makes a point that’s crucial: “I almost feel uncomfortable talking about, ‘Well, we need to do that to win.’ ” Santorum told me at the recent Southern Republican Leadership Conference. “We need to do that because it’s the right thing for America.”

Caring for those who are struggling, stripping the insiders of their political privilege, and ending the government programs that hurt people — these are things we have a moral obligation to do. If it does nothing else, Santorum’s campaign will hopefully convince Republicans to take up this effort.

Timothy P. Carney, The Washington Examiner’s senior political columnist, can be contacted at tcarney@washingtonexaminer.com. His column appears Sunday and Wednesday on washingtonexaminer.com.

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Vox is partnering with McClatchy to bring its explainers to local readers

You might have heard: Vox card stacks are now embeddable anywhere on the Web (Vox)

But did you know: As Vox makes its card stacks embeddable anywhere on the Web, Vox is working with McClatchy to bring their explainers to readers on McClatchy’s 29 local news sites. On Thursday, McClatchy began including card stacks in relevant national and world stories, which are then distributed to the company’s local and regional newspapers. Julie Moos, McClatchy’s director of shared news initiatives, says the card stacks will help add an additional layer of context to stories: “It’s a great opportunity to learn from a company that has been innovating in digital ways that are going to allow us to do things that we couldn’t otherwise do.”

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Why visual communication remains a vital skill for journalists

Zach Kitschke, Canva’s head of communications, says that as the Internet becomes a shouting match, it’s not about who shouts the loudest but who shouts the smartest. To make people stay on the page, share your article and remember what they read, Kitschke says visuals are essential. People only retain 20 percent of what they read, but if you put that information into an image, retention jumps to 80 percent.

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