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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
From Spencer's Benefits Reports: When it comes to health care, “We do not get very good value for our money,” said Joseph P. Newhouse, a health economist and John D. MacArthur professor of health policy and management at Harvard University’s John F. Kennedy School of Government. “We do not do cost containment very well,” he said, and expressed concern that cost-containment tools could give up more benefits than any costs that they might save. He also noted the huge variation in Medicare spending depending on the geographic region (for example, Miami spends much more than does Minneapolis). However, quality does not follow the level of spending, he added; states that spend more on health care tend to do worse on “process” quality measures. A recent Harvard study revealed that medical treatment incurs a 3% to 4% chance of medical error and a 1% chance of a “negligent” error, Mr. Newhouse said. Furthermore, an Institute of Medicine study reported that anywhere from 44,000 to 98,000 people die annually because of medical errors.
The increase of spending levels on health care in the U.S. is attributable to “new capabilities of medicine,” as the health care industry develops new lines of medicines and devices such as cardiac stents, imaging tools, and biotechnology drugs, he said. One need only note the increased use of CT scans and MRI test over the last ten years. In addition, biotechnology drugs are very costly.
Mr. Newhouse spoke on “The Paradox of Health Care Costs” at the University of Illinois at Chicago School of Public Health’s Institute for Health Research and Policy. He was a researcher at the RAND Corporation from 1968 until 1988 and designed and directed its Health Insurance Experiment and is the founder and editor of the Journal of Health Economics. He previously served on the Medicare Payment Advisory Commission.
Nonetheless, medical advances have raised life expectancy by seven years, from 70.8 years to 77.8 years, mostly from reduced rates of heart disease and the use of low-tech interventions. For example, only 5% of heart treatments now involve coronary bypass surgeries. In 1995, heart attack patients were prescribed six weeks of bed rest, but that figure fell to just a few days in 2005. The bulk of the reductions in heart disease deaths is due to improved medical treatment, Mr. Newhouse said. In addition, from 1970 to 1990, survey respondents with common medical conditions such as arthritis, cardiovascular disease, and orthopedic conditions reported improved quality of life.
Of course, the greater the increase in the percentage of gross domestic product (GDP) that the U.S. spends on health care, the lower the percentage of GDP spent on items other than health care, Mr. Newhouse noted. “If health care spending keeps rising, expect more uninsured,” he added. If the cost rise in federal spending for Medicare and Medicaid equaled the growth of GDP, spending for the baby-boom generation approaching retirement would be slight. However, the share of the GDP that the federal government spent for health care in 2007 was 18.5%, a proportion of GDP that the American public seems to not want to exceed, he commented. Medicare and Medicaid now represent a major portion of the federal government’s annual budget.
Individuals at upper-income levels want and are willing to pay for the latest treatments, but paying for those treatments at the lower-income levels is increasingly difficult, Mr. Newhouse said. Although there are growing pressures to increase health care costs, the conundrum is how to pay for it. Therefore, there will be increased pressure to eliminate inefficiencies in the health care system. In response to an attendee’s comment that the health care reimbursement system must change and fee-for-service compensation must be eliminated, Mr. Newhouse insisted, “There is no silver bullet here.” There are political obstacles to trying to replicate nationwide the high-quality, low-cost medical care that is achieved in some geographic areas are political, Mr. Newhouse commented, as congressional representatives work to protect the financial interests of their constituencies. Furthermore, costs in lower-cost areas such as Minneapolis are beginning to rise toward costs of typically high-cost areas such as Miami.
As to the reason that costs of improving medical technology do not decrease as time goes on as do costs for newer technologies in other fields, such as computers and televisions, “The story is that the medical industry keeps coming up with new products and lines of business, and some advances do lower costs as services improve,” Mr. Newhouse commented. In addition, the U.S. needs to spend more, not less, on regulations to manage the system; for example, spending on Medicare administration is too low to reduce inefficiencies and waste, he concluded.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
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