Outpatient Services: Biggest contributing factor to rising health care costs — Daily Rise: Thursday, August 4

What’s Causing Health Care Costs to Rise: Outpatient Services

What’s causing health care premiums to rise? Not what you think.

Outpatient services are the biggest contributing factor to rising health care costs, an independent analysis has found. Fortune’s Sy Mukherjee reports that analytics firm Avalere “found that “hospital services, rather than high drug prices, are the primary roots of premium inflation.” 29.9 percent of rate increases are owed to outpatient services, which also account for 27.4 percent of insurance plans’ spending.

“Preliminary data indicate that drugs are not likely to have a disproportionate impact on premiums in 2017,” wrote Avalere senior vice president Caroline Pearson. “Instead, outpatient spending continues to drive premium increases.”

With outpatient services driving up costs — it should finally convince insurance companies to embrace oral parity laws. Right now, many patients receive IV treatments because their insurance won’t cover the pill form.

Humana Abandons 1,200 U.S. Counties

Almost as common as rate hikes: insurance companies withdrawing from the health care marketplace.

Humana announced this week that it was abandoning patients in more than 1,200 counties in the United States. One of the nation’s alrgest insurers will now provide subsidized individual coverage under the Affordable Care Act in “no more than 156 counties” across 11 states.

That represents an 88 percent cut in their geographic coverage from 1,351 counties.

Quote of the Day: Non-profit Coverage Saves Lives

“It is not hyperbole to suggest that if non-profit patient assistance programs did not exist, people would die… Although the District’s uninsured rate has fallen in recent years, many of the District’s most vulnerable patients are struggling to keep up with the premium payments necessary to maintain their health-care insurance.” —

Dana A. Kuhn, the founder and president of Patient Services, a Virginia-based non-profit patient assistance organization.

That’s from Kuhn’s op-ed piece published in the Washington Post. Local charitable assistance programs, such asPatient Services, Inc., have long provided care to those in need. As insurers drop marketplace coverage and raise rates, they’ll continue to grow in importance. Congress should take steps to back these endeavors rather than create new bureacratic restrictions to their operations.

Disclosing Failure

Should drug companies disclose their failures?

In a piece for Morning Consult, Peter J. Pitts, a former FDA Associate Commissioner and President of the Center for Medicine in the Public Interest, floats that idea as a way to better educate the public about the true cost of developing new treatments.

“If drug companies were open and honest about their frequent and expensive failures, they could quash the myth that pharmaceutical research is obscenely lucrative,” says Peter Pitts. “Drug companies must develop hundreds of compounds until they find one suitable for testing on humans. Of those rare compounds that make it to phase-1 human trials, fewer than 12 percent win approval from the FDA.”

Pitts also says that another reason for higher drug prices is hospitals mark up. Hospitals often mark up the prive of a medicine administered in a hospital by as much as 150 percent. Which might explain why, as noted above, outpatient services are driving up the overall cost of health care.

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