A Spike of Springtime Knee Replacements?

Is there going to be a spike of requests for knee replacement procedures in the U.S. this spring?

A top Wall Street orthopedic industry analyst asked recently if orthopedic device makers will benefit from the uncertainty of the Supreme Court’s upcoming King vs. Burwell arguments and decision about whether or not patients enrolled in the federal healthcare exchange qualify for premium subsidies.

Uncertainty of Coverage

Larry Biegelsen, Wells Fargo’s analyst, mused on February 3, 2015 whether or not the uncertainty of continued coverage will prompt patients in the federal exchange to rush to their surgeons and undergo elective knee replacement procedures before a court decision is announced in the summer of 2015. Knee replacement procedures, according to Biegelsen, tend to be more elective than hip or spinal procedures, so knee procedures are more likely to see a spike during the second quarter of 2015.

While not predicting how the Court will rule or whether procedures will spike, Biegelsen says there is a precedent as orthopedic procedures spiked in the last quarter of 2013 when patients dealt with the uncertainty of what full implementation of the Affordable Care Act (Obamacare) would mean for them in 2014. In that quarter, the U.S. knee market appeared to see the greatest benefit from the uncertainty surrounding the implementation of Obamacare.

Eight Million Beneficiaries

“The headlines will likely highlight that 8 million people across 34 states may lose their health insurance if the Supreme Court rules against the government and that a ruling against the government could destabilize the health insurance markets in those states, ” wrote Biegelsen. A decision against the subsidies could also cause insurance premiums to skyrocket for everyone. A Rand Corporation analysis estimates that premiums could jump by 40% for some. If you need or are considering an orthopedic procedure, why would you wait?

Published reports are already saying the Court’s decision to even hear the case has prompted confusion, panic and predictions of doomsday scenarios for patients.

“We think the media coverage of King vs. Burwell could create fear and confusion and drive people to have elective orthopedic procedures in [the second quarter] of 2015 before their health insurance is potentially taken from them, ” concluded Biegelsen.

To Spike or Not to Spike

But Biegelsen isn’t betting the farm on a procedure spike for knee replacements.

He says much has changed in the U.S. since late 2013. Seasonality likely contributed to the procedure volume spike in late 2013, says Biegelsen. With high-deductible plans, many patients likely had already reached their annual deductible by [the fourth quarter] of 2013 and would not have had significant out of pocket expenses to get a total knee or hip replacement. The current challenge to Obamacare is happening early in the year; therefore, fewer patients have hit their deductible level which would increase their out of pocket expenses for a procedure. He also says the highly publicized problems with the federally run healthcare exchange website likely created some anxiety among patients at the end of 2013. The macroeconomic environment may have also contributed to patients’ mindset at the end of 2013 as the economy was still recovering and the government had shut down which likely caused some concern about what to expect in 2014.

At the heart of King vs. Burwell is the question of whether or not Congress intended only individual states to set up healthcare exchanges. The federal government also set up an exchange for those people residing in states where no exchanges were established. The IRS then ruled that people in the federal exchange qualified for the subsidy.

The Supreme Court is expected to announce its ruling in June. If you replace knees, don’t be surprised if more patients come to see you between now and then. But don’t bet on it.