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Healthcare Reform and the Economy: Are Either Looking Up?

Karen Minich-Pourshadi, for HealthLeaders Media, May 24, 2010

Then just last week, Standard and Poor's released a report on healthcare in the U.S. called "Can The U.S. Economy Afford Health Care Reform?" (note, only subscribers can view this report). It looks at the cost of healthcare in the states versus in other G-7 countries. In their press release S&P notes, "The new healthcare bill will not help lower costs. Its emphasis is on increasing coverage. How much the additional coverage will cost is uncertain." I'm going to read between the lines a bit here; they don't come right out and say things look bad, but it doesn't sound like they are saying things look good either with healthcare reform.

Another report came out the same week that may be helpful to CFOs and their predictions of what healthcare reform and the economy may mean for them. The federal Bureau of Labor Statistics shows that healthcare prices overall increased 0.2% in April and were 3.1% higher than a year ago.

These are healthcare consumer prices that are on the rise, like the result of more people being asked to shoulder higher deductibles and offset the current cost of so many uninsured. BLS reports that physician office prices rose 0.4% from March to April, and were 2.4% higher than in April 2009. Also, hospital prices overall increased 0.1% in April and were 3.7% higher than a year ago.

If costs are rising, then the Nashville Health Care Council's footnote that a positive outlook was dependent on providing high quality care at reduced costs doesn't seem to be taking shape – but it's early still, these things can always change.

Keep in mind that the number of uninsured isn't declining just yet. Actually, it could still grow based on the latest unemployment stats. As of May 7 national unemployment rose to 9.9% in April, after having remained steady at 9.7% for the previous three months. The number of unemployed workers hit 15.3 million and the number of long-term unemployed, those without a job for 27 weeks or more, rose to 6.7 million.

We are all familiar with the expression about people and opinions, and when one expert says "up" another five will say "down". Still, it's important to make note of all these surveys and commentaries—the best any financial leader can do is watch them over the course of several months to see whether a direction can be discerned. Fact is, no matter what you decide to put into your forecasts in the end it's always just an educated guess.


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Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
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