A Picture of Health in Northern New York: the players, how they interact, and a free dose of medicine
Healthcare is big business
According to the New York State Department of Labor, the Healthcare and Social Assistance industry employs the largest number of people in New York State. In 2014, nearly one in ten – 9.9 percent – of employed persons in the state worked in the healthcare industry. Nationwide, we spend 17 cents of every dollar on healthcare related goods and services. Those impressive numbers represent a monstrous, complicated industry tasked with one of the most important jobs in the world: help people get better and stay well. As one might expect, the system is knotty, crowded, and tough to follow. The simplified flowchart below explains key elements of the healthcare system and helps wind us through the labyrinth.
First — the new rules for these healthcare articles: For every chart and graph I subject you to, you will be treated to a picture of nature. This new rule has its basis in science, which I will explain later.
All aspects of traditional healthcare fall under the umbrella of the Federal and state governments. From mandated credentials for doctors to required reporting of communicable diseases by hospitals, to how much Medicare pays for x-rays, both the Federal government and New York State have a lot to say about our healthcare and how it is delivered. The Federal Affordable Care Act signed into law in March 2010 added a whole new and huge dimension to government involvement in healthcare.
Healthcare consumers are those who use the system — almost everyone. A consumer either has insurance coverage from an insurance company, Medicare, Medicaid, or they are self-insured, which means they are responsible for all the costs related to their care.
The payers, Medicare, Medicaid, insurance companies, and uninsured consumers, pay the providers for services rendered. The ownership structure of these organizations varies. Medicare and Medicaid are government programs. Insurance companies can be not-for-profit, or publicly traded for-profit companies. For example, Excellus Blue Cross Blue Shield provides health insurance plans throughout northern New York and is the largest not-for-profit health insurer in the state.
A publicly traded company that ranks 14th on the Fortune 500 list, UnitedHealth Group also provides health insurance plans in northern New York. With revenues of $130.5 billion in 2014, the firm pays more than hospitals and doctors. According to the U.S. Senate Office of Public Records, they also paid nearly $2.5 million to 11 different political lobbying firms in 2015. That is almost small potatoes compared to how much they spent when the Affordable Care Act was under construction. UnitedHealth Group and its associated businesses paid a little more than $5 million to 11 lobbying firms in 2007, and more than $4.8 million to 13 firms in 2008.
Our flowchart includes many organizations and individuals who receive payment for healthcare services they provide. Things are not as simple as they seem however. The ownership structure of these organizations also varies. And payers don’t pay the same amount of money for the same service to every provider. For example, different insurance companies pay different negotiated prices to a hospital for an appendectomy, and this amount is different than the amount Medicare and Medicaid pay, which also varies. The non-indigent consumer without any insurance coverage pays the highest price of all since he or she has no negotiating power.
In a throwback to the days when religious groups ran early hospitals, for-profit hospitals are not allowed in New York State according to state law. Boards of trustees or directors govern not-for-profit or government hospitals in the state. These boards hire a management team, or in some cases, a for-profit management firm that handles operations.
There is money in drugs
A big chunk of the 17 cents per dollar spent on healthcare in the United States goes to drug companies. Seven of the top-ten biggest healthcare companies on the 2014 Fortune 500 list are in the drug business or are pharmaceutical distributors. According to the International Federation of Health Plans, payers in the United States pay some of the highest prices in the world for prescription drugs. For example, the average price for Nexium in the United States is almost three times more than the average price in Switzerland.
The pharmaceutical industry is also no stranger to the halls of Federal and state governments. The Pharmaceutical Research and Manufacturers of America, a trade association for the industry, paid 33 political lobbying firms $18,920,000 in 2015. That’s far less than the association spent on lobbyists in the years before the Affordable Care Act was enacted; the group spent $26,150,520 in 2009 alone.
The other three healthcare firms on the Fortune 500 top-ten list are health insurance companies.
The good news
If you are overwhelmed when you think about navigating the healthcare system, and perhaps feel a little woozy from all the information, do not despair. A growing body of research proves exposure to nature and time spent outdoors is healing. Study after study shows there are many health benefits to time spent in nature. And a walk in the woods is free. Even more remarkable, a new study published in the International Journal of Environmental Research and Public Health showed just looking at pictures of the outdoors on a computer screen makes people feel better and less stressed. According to the lead researcher, Magdalena van den from the VU University Medical Center in Amsterdam, the data suggests short durations of viewing green pictures may help people recover from stress.
Enjoy the healing photograph of Lake Placid and the Adirondack Mountains, and stay tuned for our next Picture of Health in northern New York when we’ll learn more science about the health impacts of the natural world.
Read the first article in the series, A picture of health in northern New York.
Joann Sandone Reed is owner and principal of JSR Associates, a communications firm with special expertise in the healthcare and life sciences industry.
Have you explored the question of “who pays” in terms of how much health insurance actually covers? For instance, mental health appointments, breast ultrasounds, etc., which seem to be getting rejected more frequently. When insurances decline to pay, how are providers, big and small impacted? How about patients, insured and uninsured? How has Obamacare impacted this question?
Thanks Thinking, as we peel back the layers, we will get into the Affordable Care Act and health insurance, and explore some of the topics you mentioned.