For the first time since the administration of President Bill Clinton, healthcare is at the forefront of concerns for most Americans, according to a survey conducted by PricewaterhouseCoopers (PWC; New York). That is the conclusion of the survey results, issued by the firm in mid-December, a PSC staffer calling healthcare a "hot-button" issue. And the upcoming presidential election may spotlight the thorniest concerns: access to care and the cost of care.
In a conference call ro discuss the findings, Carter Pate, global and U.S. health industries and government managing partner, said, "Healthcare costs continue to gobble up the assets Baby Boomers spent a lifetime saving. Healthcare spending in the U.S. is 16% of the GDP and will rise to 21% by 2020. Despite that, the U.S. stands out consistently for high error rates, inefficient care, and high out-of-pocket costs that lead to barriers in care. So there's a demand for greater accountability."
The fact that retirees are playing a greater role in funding their healthcare coverage is among the top concerns for Americans, said Mike Thompson, principal, human resource services at PWC. "As the population ages, and healthcare costs increase, employers are shifting costs to employees. The concern in corporate America is widespread."
Three-quarters of executives at multinational companies say employers aren't expected to pay for retiree healthcare, he said. Is the bell tolling the demise of retiree health benefits?
In response, some large companies are offering innovative solutions. For example, General Motors recently addressed its retiree healthcare obligations by transitioning coverage to a union-managed trust, removing itself as the intermediary between retirees and their future healthcare coverage, according to the PWC report. And in 2008, we can expect to see more arrangements that provide retirees with a set stipend rather than the traditional promise of open-ended healthcare coverage.
"In 2008, we think employers will rethink their approach by capping and limiting liability on their balance sheets," Thompson said. "Pharmaceutical companies may see a shift to generics and possibly a drop in usage as retirees can't afford the cost of drugs. Increasingly, retirees will continue to work, given the cost of healthcare. Expect this to be a hot button issue in the 2008 election."
For the pharma, biotech and life sciences industries, the blockbuster model of drug development is coming to a screeching halt as patents are about to expire and more generic drugs are released to the market. The resultant trend will be an increasing number of collaborations between biotech and pharmaceutical companies.
"The pipeline is under great stress. R&D spending has increased and is expected to increase but the number of approved medications has gone down," said Tony Farino, partner, PWC U.S. pharmaceutical and life sciences advisory leader.
While companies are being pushed to deliver more effective and cost effective therapies, public confidence in the FDA's ability to handle drug safety has been shaken.
"Congress has put pressure on FDA, and FDA has responded with 41 initiatives," Farino said. "The rewards for innovation will pay off. In the long term, they must focus less on me-too products and more on innovation."
Another of the top trends for 2008 identified by the survey includes significant changes in the way hospitals bill Medicare. A new coding system, Medicare Severity Diagnosis Related Group (MS-DRG), is designed to pay more accurately for hospital care, the largest part of Medicare's budget.
"CMS [Centers for Medicare & Medicaid Services] anticipates an overall higher level of reimbursement to hospitals because patient diagnoses will be documented with more specificity," according to the report. "To offset this increase, CMS has adopted a negative 0.6% rate adjustment for fiscal year 2008, with more cuts anticipated in future years."
David Chin, MD, partner, health research institute leader, said, "This new MS DRG system includes 200 more procedure codes and is designed to deal with criticism with the old system that hospitals didn't get reimbursed for older/sicker patients. Change in reimbursing for things like falls in hospital, leaving foreign objects in bodies, and hospital-acquired infections — in the past, Medicare would pay more for this…. Under the new system, they won't do it. As a result, hospitals will have to pay close attention to coding."
Nearly two-thirds of consumers surveyed by PWC surveyed said tax-exempt hospitals have an unwavering responsibility to provide medical care for individuals who cannot pay for it. How this new policy will reach down to the poor and indigent who show up in the ER, however, is not addressed by the PWC report.