Monthly Archives: October 2013

Care to Continue — Home Care Business Report

The United States population is aging. By 2030 nearly one in five adults in the United States will be over the age of 65, according to the U.S. Census Bureau. Shifts in age demographics means changes in demands and services for the business sector. One industry on the rise is home care.  

“We believe home is sacred, we believe seniors are worthy of our care, and we want to empower them to keep living,” said Tyler Jefcoat executive director of one of Oconee County’s newest home care agencies, Care to Continue.

Care to Continue is a private non-medical home care business located in Watkinsville, Ga.

Launched in July of 2013, Care to Continue looks to bring a unique mission-based approach to the home care industry…(click for full story)

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Overweight and Out of a Job

Companies are paying closer attention to an individual’s health when hiring and setting wages as a result of increased employer-based insurance.

“I have taught employment workshops and I will say, look in the mirror and ask yourself: ‘Am I someone that I would want to hire?’” said Michael Kofoed, a doctoral student studying economics at the University of Georgia’s Terry College of Business. Kofoed studies the relationship between obesity and labor markets.

Kofoed described his research as a blend of two common economics, labor and health. “As an economist I started thinking perhaps there is a link between these two,” he said.

Kofoed’s research looks at the impact obesity has on employment and wages by comparing the employer-based health insurance in the U.S. and single-payer health insurance in Canada.

Obesity Discrimination 

“What I have found in the United States is that there is a negative penalty for being obese,” said Kofoed. Discrimination is present in the hiring process and when employers are setting wages, Kofoed said, which would be unfair if obese workers performed at the same level as healthy workers, but they do not.

In the United States, Michigan is the only state that has legislation outlawing discrimination based on weight. The majority of Employers have no legal obligation to consider employees of different weights equally, and many are choosing to factor in the economic cost of hiring obese workers.

Economic Cost of Obesity 

“One in three U.S. adults is obese, and researchers say the impact on business can be boiled down to a number: $1,000 to $6,000 in added cost per year for each obese employee, the figure rising along with a worker’s body mass index,” reported National Public Radio in their series “Living Large:Obesity in America.”

Obesity cost employers both in loss in productivity and additional healthcare cost.

“Obesity-related absenteeism costs employers as much as $6.4 billion a year, health economists led by Eric Finkelstein of Duke University calculated,” reported Reuters.

In addition to productivity cost, some of the most common and costly health conditions are associated with obesity including, heart disease, stroke and type II diabetes.

The Journal of Health Economics reported last year that obesity and its related health problems incur health care cost equaling $190.2 billion per year–more than the health care cost associated with smoking.

With new provisions of the Affordable Care Act going into effect over the next couple of years, companies will be covering the bill for these large health care costs. In order to balance increased cost, many employers are lowering the pay of obese workers.

“The cash wages for obese workers are lower than those for non-obese workers because the cost to employers of providing health insurance for these workers is higher,” reported the National Bureau of Economic Research.

“Your health is going to determine your productivity in the labor market, which in turn is going to determine your wage outcomes,” Kofoed said. Obese workers will not be able to perform the same as healthy workers and increases in the cost of their health care will be factored into their productivity and result in lower wages.

Financial Incentives for Health

Companies can also use financial incentives to promote healthier habits among their workers. Higher premiums or co-payments may be charged to employees above certain healthy weight standards, or discounted health payments may be awarded to employees who participate in a company’s health and wellness program.

 The Athens Clarke County Wellness program offers Clarke County employees a program that provides healthy living support and exercise programs.

“The incentive-based program, which began in April 2004, is dedicated to enhancing the mind, body, and spirit of ACC employees and designed to empower them to take personal responsibility for their health and well-being,” reports the ACC Wellness program in their Wellness Program Manual.

Employees who participate in the ACC Wellness program can receive financial benefits from their participation in the program through reductions to their health insurance premiums or awarded administrative leave days.

“If we know that the obese are being penalized for their weight than perhaps we can help them realize one of the big incentives of losing the weight could be increasing their labor market outcomes,” said Kofoed.

In addition to education and experience, health may be the next determinant in landing a job in this competitive job market.

As an economist, I encourage people to get fit and take better care of their health which will translate into better employment outcomes, said Kofoed,. “The big thing is your health does matter in the labor market.”

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Preventative Health Practices : Investing Now to Save Later

Reducing chronic diseases in the United States through more prevention programs could offer long term financial benefits and cut down on future health care spending.

Photo by Kathleen LaPorte

Photo by Kathleen LaPorte

Health expenses grew to $2.7 trillion in 2011, averaging $8,680 per person, according to the Center for Medicaid and Medicare Services. Over the next ten years health spending is projected to grow by more than $2 trillion.

“Preventing disease is key to improving America’s health and keeping rising health costs under control,” stated the Center of Disease Control and Prevention, CDC, on its Gateway to Health Communication website.

Chronic Disease 

Chronic diseases make up 75 percent of health spending in the United States. Heart conditions, cancer, diabetes and hypertension, were all among the top-ten contributors to national health care cost.

These chronic health conditions are often related to certain health decisions including, diet, smoking and sedentary lifestyles choices.

Chronic health outcomes often present risk indicators that can be identified before the onset of a disease or in early stages when treatment is more manageable and cheaper.  However, most chronic illnesses are not addressed until patients need advanced medical treatment.

Preventative Health Practices

“A 1 percent reduction in weight, blood pressure, glucose, and cholesterol risk factors would save $83 to $103 annually in medical costs per person,” reported the U.S. Department of Health and Human Services, in its National Prevention Strategy.

The Patient Protection and Affordable Care Act supports prevention practices through a Prevention and Public Health Fund, which provides financial incentives to improve and grow evidence-based prevention and public health programs. The ACA will also increase coverage of some preventative treatments under new insurance requirements.

Though the ACA provides financial incentives and new legislation to increase coverage of some preventative medical programs, doctors still will not receive reimbursement from insurance companies for a majority preventative care treatments. Doctors cannot file for insurance reimbursements for certain practice, like consulting a patient on improving his or her weight or exercise.

Only under very specific terms can doctors get reimbursements for preventative practices, because many insurance codes are written for easy to measure medical treatments.

Prevention Cost 

Despite the cost saving that many health organizations relate to prevention programs, the United States’ current healthcare system is not set up to take on the extra upfront cost and increased volume of patients that many preventative medical programs would create.

“We think of health care as an expense, but we really should be thinking of health care as an investment. We want to invest where we have the greatest return. I would put prevention in that bucket. But the way we do it now, no one has an incentive to invest in things with a long-term return,” said Dana Goldman, director of the Schaeffer Center for Health Policy and Economics at the University of Southern California, in an interview with The New York Times.

The current healthcare system is based on insurance returns and incentives to reduce costs and increase profits. This system does not encourage large amounts of spending with delayed returns on the investments.

Only 1 percent of the $1.9 trillion spent on health care in the United States in 2009 was used for health protection, illness prevention and injury prevention programs, reported the National Business Group on Health.

Prevention Programs

Prevention programs rely largely on health education and awareness of the public to be effective. “A better gauge of the value of preventive medicine is bang for the buck; that is, not whether it reduces healthcare spending but whether it buys more health than treating the disease does,” reported Sharon Begley a senior health and science reporter for Rueters.

Image from page 1 of the National Prevention Strategy 2013 Annual report.

Image from page 1 of the National Prevention Strategy 2013 Annual report.

Instead of looking for doctors or health professionals to implement preventative health programs, community leaders and organizations are being used to provide support and training for community health leaders.

“Evidence-based preventive services are effective in reducing death and disability, and are cost-effective or even cost-saving,” the National Prevention Strategy stated, “While preventive services are traditionally delivered in clinical settings, some can be delivered within communities, work sites, schools, residential treatment centers, or homes.”

Preventative programs can be good financial investments if the programs are properly carried out by accessible outlets that will create effective relationships with the patients being served.

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Health Insurance Reacts to Healthcare Reform

Insurance companies’ financial success will depend on how they navigate through the new healthcare reforms of the Patient Protection and Affordable Care Act–particularly the new medicaid and medicare services, and the new health insurance marketplace.

WellPoint Inc.

“WellPoint Inc (WLP.N), the nation’s second largest health insurer, sees President Barack Obama’s healthcare reform giving a $20 billion boost to its revenue by 2016, led by an expansion of the Medicaid program for the poor and the introduction of subsidized coverage for the uninsured,” reported Rueter in July.

Wellpoint is an insurance company that provides a variety of different health care plans and recently acquired Amerigroup, a leading medicaid provider.

WellPoints 2013 second-quarter financial report showed an early trend of growth with the net income raising to $800.1 million, or $2.64 per share, from $643.6 million, or $1.94 per share, from the previous year.

WellPoint Stock chart from Barrons.com. Tracking WellPoint Inc. Stock from Jan. 2012 to Oct. 2013

WellPoint Stock chart from Barrons.com. Tracking WellPoint Inc. Stock from Jan. 2012 to Oct. 2013

As the new health insurance markets open, health insurance stocks, like WellPoint, will get to see if the predicted expansion and their investments in new healthcare reform will payoff.

“With Amerigroup, WellPoint’s affiliated Medicaid health plans now serve approximately 4.5 million beneficiaries of state sponsored healthcare programs in 20 states, bringing the company’s total medical enrollment to approximately 36 million members in all affiliated plans. WellPoint also now has a presence in several states with significant dual eligible managed care opportunities,” stated WellPoint in a 2012 press release.

Medicaid

Medicaid is a state-run health insurance program that is partially funded by the federal government and provides health insurance for, low-income families and children, pregnant women, the elderly and people with disabilities. The ACA provides states with funds to expand state medicaid coverage if they choose.

“The ACA expands Medicaid coverage for most low-income adults to 138% of the federal poverty level,” reported the Kaiser Family Foundation.

Twenty-three states and the District of Columbia have passed legislation to expand Medicaid. To manage these state-run program, many states chose to hire private insurance companies to handle the growing number of Medicaid recipients, reported Johanna Bennett for Barron’s.

Medicare

The ACA also will increase incentives for insurers to invest in Medicare. Medicare is federally funded health insurance that covers adults over the age of 65, people with disabilities and people will end-stage renal diseases.

“The Center for Medicare and Medicaid Services announced plans to increase the amount the government pays to insurance firms for its Medicare Advantage plan,” CNN Money reported. “Payments to insurers under Medicare Advantage will increase by 3.3% in 2014.”

Health Insurance Marketplace

In addition to Medicaid and Medicare expansion, the ACA is predicted to expand the health insurance market through legislation that requires all U.S. citizens to have health insurance by 2014, or pay of fee. To expand the number of health insurance options a new online health insurance marketplace opened Oct 1.

Insurance companies filed to participate in state or the federal health insurance marketplaces, and are offering plans targeted at people who are currently uninsured because they can not afford health insurance plans or previously did not qualify for coverage.

An increased number of people buying health insurance could increase health insurers profit, but will also increase health coverage cost.  In anticipation of additional cost some insurance companies raised premium costs on their current insurance plans.

Health insurance stocks, like Wellpoint, must decide how their services and investments can be utilized in new health insurance marketplaces to capitalize on the changes and growth being made in the insurance market.

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