Medicare – POTs and PANs

Is Telemedicine Here to Stay?

It’s going to be interesting to see if telemedicine stays after the end of the pandemic. In the past months, telemedicine visits have skyrocketed. During March and April, the billings for telemedicine were almost $4 billion, compared to only $60 million for the same months a year earlier.

As soon as Medicare and other insurance plans agreed to cover telemedicine, a lot of doctors insisted on remote visits during the first few months of the pandemic. In those early months, we didn’t know a lot about the virus and doctor offices were exercising extreme caution about seeing patients. But now, only four months later a lot of doctor’s offices are back to somewhat normal patient volumes, all done using screening patients at the door for temperature and symptoms.

I had two telemedicine visits during April and the experience felt familiar since I was was spending a lot of my day on Zoom meetings that month. These were zoom-like connections using specialized software to protect patient confidentiality, but with a clearly higher resolution camera (and more bandwidth used) at the doctor’s end. I was put on hold waiting for the doctor just as I would have been in the doctor’s office. One of my two sessions dropped in the middle when the doctor’s office experienced a ‘glitch’ in bandwidth. That particular doctor office buys broadband from the local cable incumbent, and I wasn’t surprised to hear that they were having trouble maintaining multiple simultaneous telemedicine connections. It’s the same problem lots of homes were having during the pandemic when multiple family members have been trying to connect to school and work servers at the same time.

One of my two telemedicine sessions was a little less than fully satisfactory. I got an infected finger from digging in the dirt, something many gardeners get occasionally. The visit would have been easier with a live doctor who could have physically looked at my finger. It was not easy trying to define the degree of the problem to the doctor over a computer connection. The second visit was to talk with a doctor about test results, and during the telemedicine visit I was wondering why all such doctor meetings aren’t done remotely. It seems unnecessary to march patients through waiting rooms with sick patents to just have a chat with a doctor.

There was a recent article about the topic in Forbes that postulates that the future of telemedicine will be determined by a combination of the acceptance by doctors and insurance companies. Many doctors have now had a taste of the technology. The doctors that saw me said that the technology was so new to them at the time that they hadn’t yet formed an opinion of the experience. It also seems likely that the telemedicine platforms in place now will get a lot of feedback from doctors and will improve in the next round of software upgrades.

The recent experience is also going to lead a lot of doctor’s offices to look harder at their broadband provider. Like most of us, a doctor’s office historically relied a lot more on download speed than upload speed. I think many doctor’s offices are going to find themselves unhappy with cable modem service or DSL broadband that has been satisfactory in the past. Doctor’s will join the chorus of those advocating for faster broadband speeds – particularly upload speeds.

Telemedicine also means a change for patients. In the two sessions, the doctor wanted to know my basic metrics – blood pressure, temperature, and oxygen levels. It so happens that we already had the devices t home needed to answer those questions, but I have to think that most households do not.

I don’t think anybody is in a position to predict how insurance companies will deal with telemedicine. Most of them now allow it and some have already expanded the use of telemedicine visits through the end of the year. The Forbes articles suggest that insurance companies might want to compensate doctors at a lower rate for telemedicine visits, and if so, that’s probably not a good sign for doctor’s continuing the practice.

My prediction is that telemedicine visits will not stay at the current high level, but that they will be here to stay. I think when somebody books a visit to a doctor that they’ll be given a telemedicine option when the reason for the visit doesn’t require an examination. The big issue that will continue to arise is the number of homes without adequate bandwidth to hold a telemedicine session. We know there are millions of people in rural America who can’t make and maintain a secure connection for this purpose. There are likely equal millions in cities that either don’t have a home computer or a home broadband connection. And there will be many homes with so-so broadband that will have trouble maintaining a telemedicine connection. Telemedicine is going to lay bare all of our broadband shortcomings.

Watching Health Care Costs

English: President Barack Obama’s signature on the health insurance reform bill at the White House, March 23, 2010. The President signed the bill with 22 different pens. (Photo credit: Wikipedia)

I know in my own company and that at every one of my clients that health care costs are a big concern. We have gone through a decade long period where the inflation in health care costs has been in the double digits each year, much faster than any other of the costs we face.

The rate of inflation of health care costs nationwide has finally slowed. This year the nationwide rate of health care cost increase is expected to be at 5.5%. Next year the prediction is for 4.5%. Both of these rates are still higher than inflation, but a welcome relief after years of really large increases. I know in my own firm, which has been around for fifteen years that health care costs per employee have nearly tripled since we opened for business.

And those current inflation rates do not tell the true story for many firms. The 5.5% increase in health care costs this year reflects the cost of health care to employers, not overall insurance costs. And so the slower rate of health care inflation is due in part to companies are pushing higher deductibles and copays to employees as a way to keep their share of health insurance under control. Last year the amount of copays by employees rose 13% which shows that the overall increase in health insurance was a lot more than the published 5.5%.

There are some trends in the industry that hint at a possible slowing in the cost of health care. For example, there is a large industry now of out-patient health clinics that charge as much as two-thirds less than a normal doctor. There is hope that the large statewide pools that are being created under Obamacare will lower overall insurance premiums by bringing more young people (and healthier people) into the insurance pool.

There is also becoming a bigger emphasis in many health care plans of preventive care, meaning that many ailments will be nipped in the bud before they become big problems. Over time preventive care will significantly lower overall health care costs.

And hidden underneath all of these numbers is the very numbing statistic that 30% of our nationwide health care each year is spent for the process of people dying in hospitals and hospices. In recent years just about two-thirds of people die in an institution rather than their home. But this is down ten percent over a decade ago. Almost nobody wants to die in an institution and perhaps as a country we will be able to find a way to allow more people to die at home.

But for most of my clients, even if health care cost inflation slows to 4% – 5% they are facing an ugly future. Trend those increases out ten years and see if you aren’t very concerned.

There is also something to keep in mind which is that in 2018 there is going to be a tax on ‘cadillac’ health care plans. These are plans today that would cost over $10,200 for an individual or $27,500 for a family. That may sound like high caps, but these amounts count the contributions made by both the company and the employee. The tax is a whopping 40% charged to the employer on anything over the cap.

The average health care insurance cost for last year was $10,522, so there are already many plans that would be considered Cadillac. These amounts will be increased over time by inflation, but if health care costs continue to climb faster than the rate of inflation, then more plans each year will fall under the premium category and incur the premium tax.

I know that all of my clients want to provide good health care to our employees. The decision to increase copays or deductibles is a painful one for all of us. There are a few creative ideas that some companies are trying that are worth considering. One of the most interesting is the idea of handing your employees the money to buy their own health insurance. There are now ways to do this as a defined health care plan. Since having health insurance is mandatory for employees in 2014 you need to demand proof that an employee is really using the money for health care. But companies who try this say that their employees are finding ways to get cheaper plans than they could buy at the company level.

The bottom line is that health care costs are going to continue to increase faster than the rate of inflation. Add to that the worry of crossing the premium tax threshold and it is going to get harder and harder for you to pay for your employee’s health care costs. I wish I had some magic bullet to recommend, but for now the best I can offer is to do the math and see if there is anything you can do to keep this under control at your own company.

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