Healthcare Industry in 2005

Tuesday, November 23rd, 2004
This post was written by Melanie Matthews

While the healthcare crisis did not play a critical role in the 2004 Presidential election, one industry expert predicts that it will be the single biggest issue in the 2008 election.

We tend to agree here at HIN, after hearing from some of our members about the health insurance premium increases that they are facing in 2005. One member reported a 30% increase in premium costs in 2005.

While these double-digit increases from the insurance companies are expected, according to Nathan Kaufman, senior vice president of healthcare strategy for Superior Consultant Company, Inc., “these increases in insurance companies
were independent of hospital rate increases.”

One of the major misconceptions in the industry is if
hospitals keep charges down, there’ll be fewer uninsured and less
healthcare cost escalation. That’s not true. If hospitals keep charges down,
the insurance companies make more money and the hospitals go without
capital, Kaufman said during a recent audio conference, “Healthcare Trends & Forecasts in 2005,” sponsored by the Healthcare Intelligence Network.

This results in more uninsured individuals, and more bad debts. The
uninsured problem is a government problem. Kaufman predicts that there will be 55 million uninsured
people by 2008. When the government gets involved, the expectation is that these
uninsured patients will be paid some rate—the Medicare rate. And today,
most hospitals are losing money on Medicare. So there are four years
remaining to reduce cost structure and infrastructure to prepare to start
making money from Medicare reimbursement.

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