Almost a decade after President Obama’s Affordable Care Act radically changed the healthcare landscape, costs are on the rise. Many Americans now pay more for their healthcare through increased out-of-pocket “cost sharing,” higher insurance premiums, and coverage for unnecessary procedures and services.
Now we can add rehospitalization to that list — a problem that’s not only a problem for patients, but also a serious driver of healthcare costs.
Rehospitalization is when a patient is readmitted to the hospital within 30 days of being treated, usually because the original visit was unsuccessful. Rehospitalization is not only unpleasant and frightening for a patient, but also extremely costly. The New England Journal of Medicine found that in the years prior to the Affordable Care Act, readmissions were a real problem. In 2003-2004, nearly 20 percent of Medicare beneficiaries who were discharged from a hospital were readmitted within 30 days, and 34 percent were readmitted within 90 days. The researchers estimated the cost of this rehospitalization to be more than $17 billion.
Of course there are multiple reasons for rehospitalization. Certainly, poor quality of hospital care is a leading concern; but it’s also worth mentioning that demographics and different patient personalities may factor into the equation. (For example, patients referred to as “willful endurers” are more likely to end up readmitted to the hospital because they tend to think there are more important things to focus on than their health.)
The issue of readmittance became a serious talking point during the debate over the Affordable Care Act. Healthcare providers and lawmakers considered both what more hospitals could do to help patients avoid readmittance; but also how Washington could incentivize hospitals to bring those readmittance numbers down.
Ultimately the new healthcare law mandated that the Centers for Medicare and Medicaid Services create the Hospital Readmissions Reduction Program to help curb rehospitalizations and lower healthcare costs. The program tied rehospitalization following a series of procedures — heart attack, congestive heart failure, pneumonia, hip and knee replacements — to a financial penalty. Though the program was nominally successful in its first few years, it stalled out shortly thereafter. And from 2013 to 2017 the rate of rehospitalization dropped by a mere 0.1 percent.
Now, more than six years after the program went into effect, more than 2,500 hospitals are still being reviewed for higher than expected readmission rates. In other words, roughly 80 percent of the hospitals that CMS evaluated in 2017 will face financial penalties this year.
The problem with rehospitalization, and the Hospital Readmissions Reduction Program, is that Washington has stretched an already growing rift between patient and provider. No longer is the hospital responsive to the patient; rather they are at the mercy of insurance companies, government health plans, and regulators. And as budgets shrink, hospitals will start looking for other ways to cut costs by consolidating, limiting access to care, and reducing their network of insurance companies.
The HRRP may have been well-intentioned, but it reflects a failure to understand everything that’s wrong with healthcare in America today. The real secret — or not so secret — to lowering readmission rates, driving down costs, and improving health outcomes, is less government interference in healthcare markets. When patients, rather than government or insurance companies, have real ownership and control over their healthcare dollars, hospitals will have to improve care or their patients will seek services elsewhere.
The architects of Obamacare have already admitted some of their plans, like hospital consolidation, have failed. What was initially conceived as a way of streamlining services and making healthcare more efficient has instead driven up costs and decreased access to care. Now we’re finding they weren’t able to fix the problem with readmittance, either. And the HRRP is failing to drive down healthcare costs. Let’s hope Washington will begin to see the pattern: More government drives up cost and decreases quality of care.
Repealing and replacing the Affordable Care Act should still be the goal, but in the meantime, let’s focus on improving accountability and reducing hospital readmission rates in a real way.
Matthew Kandrach is President of CASE, Consumer Action for a Strong Economy, a free-market oriented consumer advocacy organization.
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