By AVERY JOHNSON, JONATHAN D. ROCKOFF And ANNA WILDE MATHEWS
Insured Americans are using fewer medical services, raising questions about whether patients are consuming less health care as they pick up a greater share of the costs. The drop in usage is showing up as health-care companies report financial results. Insurers, lab-testing companies, hospitals and doctor-billing concerns say that patient visits, drug prescriptions and procedures were down in the second quarter from year-ago levels. “People just aren’t using health-care like they have,” said Wayne DeVeydt, WellPoint Inc.’s chief financial officer, in an interview Wednesday. “Utilization is lower than we expected, and it’s unusual.” Others say that consumers are beginning to forgo elective procedures like knee replacements. “We have a very weak economy and it’s just a different environment for the elective parts of health care,” said Paul Ginsburg, a health economist who runs the Center for Studying Health System Change and has been analyzing health-company earnings. But “this could go beyond the recession. Being a less aggressive consumer of health care is here to stay.” Continued weak demand could eventually put downward pressure on spiraling health-care costs, a long-sought goal of policy makers. It could also force insurers to lower premiums.
The new trend comes amid a broader drop in health-care use as more Americans lose their jobs and their health insurance. Such cutbacks have happened before in recessions, but the drop seems to be more pronounced this time, industry analysts say. More Americans also are buying high-deductible health plans that force them to bear more of the upfront costs for health services. Some 18 million Americans bought high-deductible plans this year, compared with 13 million last year, according to Paul Mango, a director at consulting firm McKinsey & Co. At the beginning of the year, Dan and Natalie Johnson, of Gig Harbor, Wash., used the website eHealthInsurance.com to buy a new plan with a high deductible, now set at $5,500 for their family. Their previous coverage had no deductible. Now, the couple says they are thinking twice before scheduling doctor visits. Recently, when their 16-year-old daughter’s allergy prescription ran out, Ms. Johnson called the allergist’s office to ask for a renewal, without coming in for an appointment, as she would have done under their previous insurance. And this spring, their son, 14, got his athletic physical at a local urgent-care clinic that charged just $40, instead of a doctor’s office, which would have cost about $90. “We don’t want to go through our savings going to the doctor,” says Ms. Johnson, a photographer. All this raises the question of whether, after a year of national attention on out-of-control health costs before the federal health overhaul passed in March, the trend portends a lasting change in the way Americans use the medical system.
Just a year ago, insurers reported surging health-care usage. Back then, more consumers were signing up for Cobra, the federal program that allows people who have lost their jobs to keep their insurance. The government had extended a subsidy to cover 65% of the cost of the coverage, which can be prohibitively expensive. However, the Cobra subsidies only covered the unemployed for 15 months, and many people have hit the limit and dropped coverage. What’s more, people who have lost their jobs since the end of May don’t qualify for the Cobra subsidies. To be sure, the change in behavior could be short-lived. On an earnings call last week in which it reported a decline in hospital usage, UnitedHealth Group Inc. said it thought utilization would rise again in the second part of the year, as Americans exhaust their deductibles and insurers start paying for services. Both Aetna Inc. and WellPoint said the utilization fall-off was new as of this year, and they had not seen the trend previously even as the economy has deteriorated. Some insurers also cited an unusually mild flu season this year as a temporary factor. What’s more, the federal health overhaul could cause usage to surge again. The new law will hand insurance cards to many Americans in 2014, which could unleash pent-up demand. Utilization has ticked down in previous recessions, and tends to take a year or two to change because of how far in advance employers and insurers design their health plans, said Carl McDonald, an analyst at Citigroup Investment Research. He said the last time he saw utilization fall off was in 2003, adding that usage also dipped in the early 1990s. But he added the drop is bigger this time than in previous recessions. The declines in utilization has boosted profits for insurers, who set their prices to cover anticipated medical costs. Insurance industry prices and profits have been under fire by Democrats and regulators this year. Insurers have justified high premiums by pointing to out-of-control medical costs. But the recent drop in usage could make it difficult for insurers to argue that continued price increases are necessary.
On Wednesday, Aetna said usage of health-care fell in the second quarter, feeding a 42% increase in profits. WellPoint reported a 4% earnings bump, saying that hospital admissions and usage of prescription drugs had dropped compared with a year earlier. After the earnings releases, Rep. Pete Stark (D., Calif.) called on the companies to reduce their premiums since they are paying out less in medical care. In an interview, Aetna’s chief financial officer Joseph Zubretsky said companies might eventually have to do just that. “If utilization stays down, it will have a favorable impact on rates,” he said. One company reporting evidence of lower utilization is CVS Caremark Corp., the drugstore giant. In its earnings announcement Wednesday it said it is seeing a drop-off in new prescriptions for maintenance drugs tied to a decline in physician visits. People are “visiting fewer primary care doctors and specialists,” said Chief Executive Tom Ryan, in a conference call with analysts. Last week, Quest Diagnostics Inc., a laboratory-testing company, told investors that its volume fell 2.6% in the first quarter and 1.3% in the second partly because of decreasing physician visits. In addition, AmSurg Corp., an outpatient-surgery company, reported that same-store procedures declined by 2.6% compared to a year earlier. Another sign that people are forgoing doctor visits or getting less care came from athenahealth Inc., which provides billing services and electronic health records for more than 1,700 medical groups. It said last week that the number of claims filed per physician, as well as the average value of the billing for each visit, had dropped from a year earlier. Physician visits and hospital admissions are dropping this year, according to Thomson Reuters’s healthcare business, which surveys doctors and hospitals. Doctor visits have declined each month this year, including a 7.6% drop in May from May 2009. Likewise, hospital admissions dropped in three of the first four months of this year compared to those months last year, including being down 2.3% in April from April 2009. Printed in The Wall Street Journal, page A1
Noticing new unintended consequences of our dependence on social media and this is just another to come up.
Last night at 2AM I got my first West African Inheritance scam via Facebook message. Imagine how scary these guys could be if they could use the personal information on Facebook or Facebook connect to target their scams to elderly, unmarried, catlovers, with bank accounts. Imagine them going into your information and finding one of your REAL aunts that did pass away, or an old address where you lived or school you attended and intersecting all that information into the scam. Maybe you clicked a like button for the new Porsche Hybrid coming out and they send you a message saying you won one because they know it is your dream car. They could even set up a fake email account with the name of someone they see in a lot of your facebook pictures and impersonate that person to get money out of you or facilitate a scam. The possibilities are endless for new levels of sophistication in criminal activity. The scary part is that many of these things intersect with us on levels that are unconscious and leave us vulnerable. We could be smart and internet savvy and still fall to a talented mind using FB, Twitter, and Google who has targeted you.
Things to think about!!!!!
Colin Komali July 29 at 2:21am Report
I am a personal lawyer to late Engr. S. A. Blackledge, who had the same nationality with you. He was an outstanding Civil Engineer who had handled so many projects/contracts here in West Africa. He was also a big dealer and supplier of building equipments/materials across West Africa. On the 21st of April 2007, my late client, his wife and their only daughter unfortunately lost their lives in a sudden gas clinder explosion incident in my late client’s resident. Reply through: firstname.lastname@example.org for detailed information about the fund valued $14.8million US Dollars he left behind with the finance firm here in Togo before it gets confiscated by the management since I have been given a notice to provide the next of kin. Mr. Komali Colin. E-Mail: email@example.com
I think we are marking a new phase in the internet where your bio is now written by others. The picture of you that is found through search is a complex formula of different inputs from others. From Twitter lists, Retweets, blog posts, followers, yelp reviews, forum discussions, and facebook wall posts increasingly the canvas of your life is being painted by others. Hopefully this will lead to a new era of integrity. I would hate to be a bully in the six grade these days because they would be assured their internet presence would be colorfully laid out by those they torment through high school.
So I’ve written a lot about the medical industry “inventing” diseases so that the medical industry can also “discover” new or existing drugs to treat these new diseases (see the history of Wellbutrin— it started out as an antidepressant and then made its way to an anti-smoking drug). Here’s a disease in the making. In about a year, I’ll link to this post because Big Pharma has found a drug to treat this new disease. Mark my words…
Even when drugs don’t work out they find a side effect and then market the side effect in order to sell the drug. Take Trazadone for example. It was first studied as an antidepressant, but subjects reported heavy sedation at therapeutic levels so the drug industry decided to market it for off label use as a sleep aid. Considering all the problems that ambien created following its approval as a sleep aid it is now far more difficult to get medications approved for insomnia, but far easier to get a anti-depressant approved that will then be used as a sleep aid because its main side effect is strong sedation. I agree with Jay, just like lobbyists writing laws for congressmen the drug industry pushes to identify new diseases that they can then market their drugs at.
Aaron Blackledge M.D.
Out of all my blog posts a simple off hand mention of pocket dialing got more responses than anything I have written so I thought I would expand on my post a bit. Basically I was mentioning it because having the name Aaron often puts me at the top of everyone’s cellphone directory and makes it far more likely for me to get pocket dialed.
Yes as my friend Eric mentioned this is my payback for always being first in line to go outside before elementary school recess.
The best pocket dials: When you see that phone call from that person you have been trying to avoid and are dreading the conversation and pick up and realize you actually don’t have to have that awful or boring conversation because it is just their pocket calling.
The worst pocket dials: When you have been waiting on that phone call or hoping someone will get back to you and suddenly their number comes up and you think finally I have been waiting to speak to this person and then realize no they aren’t calling you after all it is just their pocket. They still are not calling you back even though their pocket seems to think they should be.
Most frequent pocket dialers: I seem to be very popular with babies who play with their parents cellphones, although I guess technically this would not count as a pocket dial. These calls can be somewhat disturbing at first when a business associate seems to be slurping and making bizarre grunting noises into the phone when you try and answer it. Fortunately these are not often late night calls or they could be very misinterpreted. I once had a 6 month old son of one of the nurses at my hospital call me 5 times over a period of 2 months. It only stopped when she changed my name on her cellphone to Erin.
The most entertaining pocket dials: Late night calls when the surrounding noise is at a minimum and people are having conversations you can actually hear. If the phone is held or taken out of the pocket it sometimes takes a minute to realize they are not talking to you but the person next to them. Since this happens so frequently I have had to create some entertainment value out of these calls. I often will call people back a few days later and mentioned some aspect of the call that totally throws them for a loop. Like hey Janet, I think you should really buy the red couch, I agree with Tom that it would go much better with curtains in the living room. This especially works well with people you have not seen in awhile and for the life of them would have no idea how you would ever know about the couch or even who Jim was.
The most perplexing and nerve racking pocket dials: There are some moments when you see a number come up and you are struggling to even figure out how to answer the call because you can’t get your head around why in the world would they be calling me right now. Just imagine all the people on your cellphone directory and then imagine some of them calling you in the middle of the night out of the blue. Sometimes you think the only reason they could be calling would be if something bad had happened. If say your cousin is calling at 6AM on a Tuesday, or a CEO of a major company is calling at 1 in the morning. For the most part the strange out of place calls are fortunately almost always pocket dials.
I get more pocket dials from friends and family than anyone I know. When your name begins with AA you are at the top of almost everyones cellphone address book. I must say I have heard some pretty interesting conversations though as a result.