ASA NEWSLETTER

• Rapid growth for new and often expensive medical services;

• A large and growing federal deficit;

• Significant changes in the private-insurance market; and

• Continued growth in the uninsured and underinsured populations.

Volume Growth
Growth in volume and cost of services has led to rising insurance premiums in the United States. In the Medicare Part B program, volume growth that exceeds overall economic growth has led to conversion factor reductions for all physicians through the sustainable growth rate (SGR) formula. Unless Congress acts, the Centers for Medicare & Medicaid Services will be implementing SGR cuts for many years to come, with an estimate of a 10-percent cut next year alone.

The Medicare claims data file is a good data source for analyzing volume growth in the Medicare program, but these data often apply equally well to the private sector. The volume of all Medicare physician services has increased about 7 percent a year, with anesthesiology growing only about 4 percent. Anesthesiology growth is similar to that seen for most major surgical specialties. We are seeing, however, big increases in two areas: certain spinal injection codes and anesthesia for gastrointestinal endoscopy. In the latter, anesthesia volume grew 18 percent more between 2003 and 2004 than can be explained by growth in endoscopy procedures. Growth in charges was even greater, and this growth accounted for almost 40 percent of the increase in payments to anesthesiologists in Medicare — a fact not lost on policymakers on both the public and private side.

Federal Deficit
The federal government authorized deficit spending in recent years to help pay for the war in Iraq and Afghanistan, to help spur economic growth after 9/11 and to pay for new programs, including the Medicare Part D prescription drug benefit. This return to deficit spending, after a brief period of budget surpluses in the 1990s, has profound implications in our efforts to improve Medicare payments to anesthesiologists.

The total federal deficit is almost $9 trillion and is increasing about $1.5 billion per day. To put that amount in perspective, total Medicare spending for all anesthesiology services was about $1.8 billion in all of 2005. Each day of deficit growth at these rates makes our goal of improved Medicare anesthesia payments more difficult.

The new Congress, elected in November 2006, may have a different philosophy regarding deficit spending. The new director of the Congressional Budget Office is a well-known deficit hawk who believes strongly that deficit spending is detrimental to our economic well-being. The Democratic leadership has promised a return to a “pay as you go” appropriations policy. While this may help better match income to expenses and perhaps moderate deficit growth, it also means that any additional funding for physician services will either have to be linked to an associated cut in spending somewhere else or an increase in revenues (i.e., increased taxes). Gaining improved payments becomes even more challenging!

Growth in spending for entitlement programs is accelerating, with entitlements accounting for an ever larger share of federal spending. By 2014, Medicare and Social Security will consume 50 percent of total federal outlays. By 2080, they will cost the equivalent of 17 percent of the gross domestic product. If current trends continue, there will be little money left to pay for infrastructure, the military or any other governmental function other than these two programs.

Private Insurance Trends
With Medicare anesthesia payments lagging inflation, our specialty’s ability to improve, or even maintain, annual income over the past few years has depended to a great extent on payment growth in the private sector. At the same time, private insurance premiums have increased more than 7 percent a year since 2000, far in excess of inflation. These increases have been in response to the demand for improved physician payments, the cost of expensive new services and the need to demonstrate profitability to shareholders. Consolidations in the insurance industry will likely lead to lower premium growth through more effective negotiations with providers.

Employers have responded to increased premiums by either shifting a greater share of the cost to their employees or dropping insurance coverage altogether. Employer-supplied insurance peaked in 2001, when 65 percent of employers offered coverage, and has dropped by 15 percent since then. Employee contributions have doubled between 1999 and 2006.

Cost-shifting to employees may be seen most clearly with the growth in High-Deductible Health Plans (HDHP). HDHPs provide the employer with the only realistic opportunity to reduce health benefit expenses without dropping coverage entirely. For the physician, the move to these plans creates significant problems — delays in payments and reduced collection rates chief among them.

The Uninsured, the Underinsured and the Epidemic of Medical Debt
Given that researchers have demonstrated that the largest contributor to the growth in un-insurance rates is premium increases, recent years of large increases make it no surprise that we have reached an all-time peak in the number of Americans who are uninsured. For 2005, 16 percent of the population, more than 46 million in all, had no health insurance. Furthermore the transfer of costs to employees has increased the rate of under-insurance.

Medical debt has reached epidemic proportions with two out of five Americans exposed. Medical debt is the top reason for personal bankruptcy and clearly serves as a barrier to less-costly early disease management and preventative care. Having an HDHP or lacking prescription drug coverage increases the likelihood of medical debt, making the move toward greater use of HDHP/Health Savings Account plans worrisome.

ASA Advocacy
ASA has fought hard on behalf of its members. I received a request in 2006 from ASA First Vice-President Roger A. Moore, M.D., to quantify the impact of these efforts. This analysis demonstrated that ASA’s many successes, such as helping to halt SGR cuts, earning Five-Year Review increases in 1997 and 2002, identifying and helping to correct Medicare update errors and improving the valuation of several anesthesia codes, have benefited each member more than $6,000 a year. At least $3.6 billion more reached the specialty between 1992 and 2007 as a result. Most would consider this an excellent return on their dues and certainly a good answer to the oft-heard question, “What has ASA done for me?”

Final Thoughts
Each of the four trends described presents a major challenge. Taken together, they will almost certainly lead to structural changes in the financing and delivery of health care services in the United States. Both as individuals and as a specialty, we must prepare for these changes by demonstrating our value to patients and payers, anticipating increased competition, recognizing that hospital financial support may be fleeting and adjusting our business and professional plans accordingly. ASA is focusing significant resources on these issues, which pose unprecedented threats to the specialty’s long-term viability. Likewise I would encourage every anesthesiologist to consider the local impact of these national trends and to take the steps needed to prepare for a turbulent future.