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Over the past week, Broken Healthcare has received an unusually large number of new subscribers. When we looked at why, we learned it’s because Discovery Communications, which owns stations in 26 television markets, ran a story with myself and Jamesia Schutt, the first patient that Broken Healthcare helped outside of my own circle of friends and family (and her saga continues to this day).

It’s important that we raise Americans’ awareness of predatory medical billing practices and the utter economic dysfunction of our healthcare system. But it’s even more important to get Americans involved in the solutions. Awareness is not enough. The mission of Broken Healthcare is to help Americans understand why our healthcare system is failing and to encourage every American to get personally involved in the solution.

A Difficult Truth

Just this week, the American Journal of Public Health released a summary of an academic report that will appear in its next print issue. This report is about the pharmaceutical industry’s support of patient advocacy groups. While this report is welcome and long overdue, I don’t imagine it will make its point the way I will: The pharmaceutical industry (and the hospital and health insurance industries) are buying off patient advocacy groups.

While pushing for legislation and a Colorado ballot measure in 2018, I learned this lesson all too well. While enjoying nearly universal support from private citizens, it was next to impossible to gain the support of patient advocacy groups (all of whom are enjoying tax-exempt status).

Why is it so hard to engage these groups? Because their funding comes from the very industries they must face when advocating for patients. Hospitals provide funding to advocacy groups under the guise of being helpful. They suggest that someone must advocate for patients, so they contribute to these local groups.

In turn, the groups advocate for individual patients, but they will never take strong positions about the issues that create the need for their advocacy in the first place, as that would threaten their funding and the funding of those who run them (Broken Healthcare doesn’t have this problem—all involved are unpaid volunteers).

Circular Logic

While there are many good nonprofit organizations in the United States, there are many more that do not deserve their “nonprofit” status. Many hospitals are at the top of the latter list. They do not deserve nonprofit status and such status is actually counterproductive.

The large nonprofit hospital systems in the US essentially print money these days. Many run double-digit profit margins. Some exceed 20%. Most tax-paying businesses would kill for such margins.

About 60% of US hospitals are nonprofits. In 2017 alone, they collectively earned $21 billion on their investment portfolios, yet they like to tell us that paying taxes would deprive them of the very profit they need to do good work for their communities. At best, that is circular logic. At its worst, it’s a bold-faced lie.

So, while approximately 3,900 hospitals are designated as nonprofits, many of them are highly profitable. What a farce. If they were doing such good things, they wouldn’t have such high profits. Do you see the problem with this reasoning?

A funny thing about taxes is often forgotten: A business only pays taxes on its profits. If you don’t have shareholders to return profits to, where do those profits go? For hospitals, the answer is into the war chest and the stock market.

For the hospitals that aren’t making money out there (especially hospitals in rural areas and smaller communities), their nonprofit status is as much of a curse as a blessing. Since they have no profits to shield from taxes, the only thing their nonprofit status does is increase their regulatory burden. (For example, being required by law to do nonsensical community assessments that never turn into action for the community.)

If the profits of nonprofit hospitals were being redeployed to lower prices, improve community health, and care for indigent patients in the local community, the hospitals wouldn’t be showing such high profits. Therefore, taxes wouldn’t be a problem.

Communities as Shareholders

For all intents and purposes, the community is the shareholder—or at least it should be. Thus, if highly profitable nonprofit hospitals won’t return the profits to the community in the form of care, then we should take those profits away from them through taxation.

Of course, the tax scheme could be progressive—and it should be. There’s nothing wrong with a nonprofit putting away a little money for a rainy day, just as a local government might before lowering taxes. However, that’s not what’s going on right now. Right now, highly profitable hospitals are merely hoarding money and raising executive compensation (which has been rising much faster for nonprofit hospitals than their for-profit brethren). The highly profitable local government, on the other hand, would either invest more in the community or would lower taxes—the equivalent of a hospital lowering prices. There is simply no justification for a NONPROFIT hospital to earn double-digit profits without lowering its prices.

A progressive tax scheme is simple to understand. For example, perhaps we don’t tax the first 3% profit (as a percentage of their revenue). The next 3% should be taxed like any other corporation: 21%. Beyond that, let’s tax them at 50%. And above 15% of revenue, let’s increase it to 90%. No nonprofit hospital should be banking profit of greater than 15% of its revenue. That’s simply not the social bargain we made in granting them nonprofit status.

Remember, nonprofit hospitals don’t have to lose any of their money to taxes. They can reinvest it—in their community.

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It’s Sunday. That means there’s a lot of talk going on about #SurpriseBilling online and on TV. The conversation is picking up because it’s a new season for state legislators, we have a new Congress, and the President is talking about the problem.

And that’s just what the #HealthcareCartel wants. It wants us to address the problem of #SurpriseBilling in healthcare, because the more we focus on this symptom of a larger problem, the less we will focus on the problem itself.

Ask yourself: why don’t we experience surprise grocery bills when we go to a different grocery store than we usually do? Why not surprise gasoline bills for going “out of network” when we go to the Shell Station instead of Conoco. Sure, we might get a few pennies off for staying in our gasoline network—that’s normal business, and it’s transparent.  We might not get the benefit of the loyalty program at the supermarket, sometimes paying more for “going out of network,” but they let us sign up on the spot and the sign on the shelf says, “20% off for members.” These businesses have their incentive programs, but they don’t hide their prices from us. There are no “surprises.”

We used to experience surprise cellular phone bills (going out of network meant roaming or making calls from overseas), but the marketplace rejected that over time as Sprint, T-Mobile, AT&T, Verizon designed better plans for competitive advantage. That’s why the cost of cellular phone goes down over time—they keep competing.

I believe everyone wants to see an end to surprise medical bills.

The problem, unfortunately, is complex, and the solutions being proposed won’t work as expected. They amount to price controls, or call for providers to be forced to join networks, which in turns denies them their right to negotiate a fair deal—which we want, because that forms the basis of competition. We can’t just stop prices from going up. We can’t just legislate “fair” prices. We need competition that actually drives prices down. That’s the only way to reverse decades of dysfunction that have led to prices that are twice as high as they need to be.

Laws and regulations layered on the back of a dysfunctional economic model always leads to unintended consequences. The reason is simple: dysfunctional systems do not respond to change in predictable ways. That’s why policy makers have no business addressing the problem of #SurpriseBilling while ignoring the underlying economic dysfunction of healthcare. No matter how well-intentioned, they are going to get it wrong. They are going to make the system worse. 

The point is, surprise medical bills would not exist if we had an economically functional healthcare system based on truly transparent prices. That’s why the #HealthcareCartel is so pleased to see all of the political energy being absorbed by the problem of #SurpriseBilling. An entire political season is going to go by the wayside with politicians taking victory laps while merely creating the illusion of real progress.  The #HealthcareCartel couldn’t have done it better if it tried.

Highly complex machines evolve when we piece them together with one band-aid after another. The more complex the system gets, the harder it is to change. The status quo is solidified. This is just what the #HealthcareCartel wants. The more band-aids we put on the system, the deeper we entrench the highly profitable status quo.

It’s time to start looking at real solutions to the underlying problem. Our healthcare system becomes less economically viable every day. One day, in the not-so-distant future, we will cross the point of no return and will have lost the opportunity to create the finest healthcare system on the planet by doing what we have always done—letting the free market work its magic.

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A friend’s teenage daughter is on her way to do gymnastics at a Division 1 school and has been dealing with a shoulder injury for some time. On a recent visit to her orthopedist, an MRI of her shoulder was ordered. The order from the orthopedist was submitted to their insurance carrier for pre-approval. The insurance carrier declined.

This simple scenario plays out many times—every day. It’s a perfect illustration of one of the major problems with today’s American healthcare system. Somehow, somewhere along the way, we’ve gone from “insurance” to “payers” and from “patients” to, well, “payers.” In other words, we’ve put “payers” at the center of our healthcare system, as opposed to patients and their doctors.

When I hear of an insurance carrier determining that something is “not medically necessary,” I see only one of two possibilities. Either:

  1. The insurance carrier is wrong in its determination
  2. The insurance carrier is maintaining a physician in its network that prescribes medically unnecessary procedures.

Which is it? I don’t know about you, but if my doctor repeatedly orders unnecessary tests and procedures, that would be cause for major concern. For some reason, though, it doesn’t seem to concern the insurance carriers. They just keep declining pre-approval requests without kicking providers out of their networks. Could something else be going on?

We pay insurance carriers a great deal of money to negotiate contracts with providers (hospitals and physicians, among others). The insurance process is responsible for more than 25% of the overall cost of healthcare. You would think that if insurance carriers had physicians that were repeatedly ordering medically unnecessary tests and procedures, they would accept responsibility for protecting us patients from such malpractice.

The way we have put insurance carriers at the center of healthcare plays out in other ways, too. About a year ago, I was picking up an antibiotics prescription for one of my children. When I got to the pharmacy, the pharmacist said they hadn’t filled the prescription because the insurance carrier had rejected it. I blew my top, raising my voice louder then I should have to ask the pharmacist if they really thought I was going to let an insurance company dictate whether or not my child received the antibiotics she needed. Then I asked if they had a copy of the prescription order (they did) and to show me where the doctor said the need for antibiotics was contingent upon approval of our insurance company.

Cowering, the pharmacist said they’d “try again.” I told them not to bother—the prescription was less than $10.

Afterwards, I felt badly at how I’d yelled at the pharmacist when it was really our whole system that makes me so angry. And as it turns out, there was simply an administrative error with the birthdate in the pharmacy’s record that led to the denial. But none of that was the point. The point was, “how in the world did we get here—to where we allow insurance companies to sit between us and our doctors?”

A medical relationship needs to be between a patient and their doctor. Insurance companies should not have the power to allow or disallow a test or procedure. Yes, it is true that doctors order unnecessary tests and procedures. Auto mechanics have also been known to do unnecessary tests and replace parts unnecessarily, too. But we don’t task our auto insurance company from protecting us from these problems (even though we have no more experience looking at a transmission or circuit board than we do at our spinal cord). As consumers, we’ve managed to figure out which auto mechanics can be trusted and which can’t. We can do the same with our doctors, but not as long as we allow insurance companies to supposedly do it for us.

Insurance companies should only have the power to either include a physician in their network or to not. If they do, then they must accept the judgement of the physician and the patient. The real medical decisions must be between us and our doctors. Nothing else makes any sense. That’s the way it works in all other walks of life and so it must be in healthcare. When we truly have a market-driven system, this will be the ultimate result.

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Just picked up my car from the shop. It was routine service, though I had told them to replace my brakes because I have almost 50,000 miles on the car and I’m sure it’s time. I don’t like to wait just because I might be able to get a few more months on them since I often have trouble finding time to bring my car in. I’d rather get it out of the way.

Yet despite telling them I was willing to spend hundreds of dollars to replace my brakes, they still didn’t replace them. Why not? Because they insisted I have more than enough life on my brakes to make it to and even past the next service. In this particular car, I routinely use the down-shifting capability, so I guess I’ve successfully stretched the life of my brakes far longer than I have before.

What’s the point? The point is that the auto dealer has earned my trust (not the first time). Even though I’d given them permission to take more of my money, they didn’t. I assumed my brakes would be worn and they knew that. They also know with so many miles on the car, and a customer that believes it’s time to replace the brakes, that they’d never be questioned if they replaced them unnecessarily. They still didn’t. That breeds trust.

In medicine, we often hear that things are too complicated for patients to really judge for themselves. But that misses the point. Right now we don’t have a system we can trust in healthcare. While there are many healthcare providers I do trust—my own doctor, our pediatrician, our dentist and our kids’ dentist—there are many more that we don’t. And even when it comes to the providers we trust, I still don’t trust their business practices and billing offices. They are pushed to do things unnecessarily (like taking my blood pressure or temperature before looking at a discolored toenail or referring us to other doctors in their practice group) even if they don’t believe that is truly the best course of action.

Establishing a healthcare marketplace that we trust is the ultimate goal of transparent pricing. There are other steps that are necessary to accomplish this, but don’t let the healthcare industry fool you by trying to pick apart the way patients will, or will not, use the information they are given. The healthcare lobby would certainly like to convince policymakers that patients won’t really use pricing information, because “it is confusing” or because “healthcare is different.” It is not different.

When I was picking up my car, in addition to an itemized bill (something I was given without having to request it), I also received a copy of the mechanics’ checklist with more than 25 things that they checked on my car and measurements of my brakes and my tire tread. I didn’t have to ask for this, either, and I can tell you that many drivers don’t know what HVAC stands for, when their drive belt should be replaced, or what struts are. It doesn’t seem to confuse them.

When we trust that a market works, we don’t have to scrutinize the price of each and every thing we buy. We have to spot check. We have to have confidence that a small percentage of others have checked. We want to know that consumer websites or the media would call out abuses.

We Americans want a healthcare system we can trust—one in which preventive medical care is as simple as preventive auto care, in which care for an injury is just like care for a banged-up car. It is more than possible—it is essential. Healthcare is only different because we allow it to be. We let an entrenched industry that is profiting from that myth continue to obscure information, to drive prices far higher than they should be, to generate profits that border on obscene, and to engage in the financial abuse of the least fortunate among us.

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Not long ago I wrote that, “Change is in the Air.” Now it’s on the table. Earlier this week four Coloradoans (myself included) sat down with President Trump to discuss the issue of medical billing. Secretary of Health and Human Services Alex Azar and Secretary of Labor Alex Acosta joined the meeting as did other members of the White House staff.

As reported by NPR, I can confirm that the President struck a very serious tone. I do not believe this meeting would have been convened if he was not serious about change.

Below is a photo of Dave Altman, Jamesia Shutt and Mark Jay who were there with me. It’s notable that three Coloradoans were among the ten participants. I can only conclude it’s because of the efforts of Representatives Susan Beckman and Mike Foote (now Senator Foote) who fought hard for change in the Colorado state legislature as well as all of those in Colorado who attempted to follow their efforts with a citizen ballot measure. The bill and ballot, though they failed, have clearly gotten the attention of Washington. We said passing either the bill or ballot in Colorado would set an example for the rest of the country…well it seems we set that example even without having passed anything. It is my hope that we did not simply raise the Administration’s attention to the problem, but that our proposed solutions will somehow have an influence on whatever might be done next.

Already there’s been change, starting with the banning of gag orders on pharmacists last summer, then on to recent efforts to rein in drug prices. On January 1st, a new rule went into effect requiring hospitals to publish their chargemaster. That was but one small component of Colorado’s solution. Of course, the healthcare industry is whining about what a useless measure that was, so it was great to hear Seema Verma, the CMS Administrator say that it was just the first step. And Elizabeth Rosenthal, author of the best seller “American Sickness,” did a very elegant job of explaining why publishing the chargemasters matter, even if it’s only one small step in the long journey to truly functional healthcare markets.

Prior to the meeting, the President invited the press in to talk about the problem of egregious billing practices. It was disappointing that not a single question from the press actually had anything to do with healthcare. Instead, they merely asked the usual headline-grabbing questions as you can see in the title of the post on C-Span, the subject of which is based on mere seconds of an 18-minute impromptu press conference intended to be about healthcare.

Colorado, we still have a lot of work to do, but I hope the progress being made on the national scene will assure you that 2018’s efforts were not in vain. I’d like to also remind everyone of what a tremendously bi-partisan effort healthcare reform can be. If you recall, we had tremendous bi-partisan buy-in to legislation before key special interests found a way to kill it last year (refer to my blogs on the BrokenHealthcare.org website for more on that). The ballot measure was endorsed by everyone from the Foundation for Universal Healthcare to the Libertarian Party. It doesn’t get any more bi tri-partisan than that. My hope is that the issue of healthcare price transparency becomes something that finally brings Democrats and Republicans together in Washington. We all know we could use an issue that everyone can rally around these days.

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You’ve probably never thought about it. Hopefully you will now. Here is a PDF report just out from the Colorado Hospital Association. It is the worst imaginable job of trying to pass lobbying off as research or policy. Why do we allow a report like this to be written in the name of a non-profit? The report is nothing more than an exercise in creative writing, timed for the start of the legislative session, designed to distract legislators from the truth and to get them to “study” the problem instead of solving it.

The executive summary begins with the history of germ theory and how the transmission of disease was once misunderstood, suggesting that today we misunderstand the drivers of costs in healthcare and, by implication, we should do nothing other than study it. “Studying” a problem is one of the go-to strategies of lobbies.

Lacking any foundation, the report suggests the questions we should be asking — instead of the questions we actually ask. Here’s their list of what we should be looking at (what’s missing comes after):

  1. Colorado’s high cost of living significantly drives health care costs up. 

  2. Something in addition to health care costs is driving insurance premium rates in Colorado. High insurance premiums do not directly correlate with hospital overhead costs, nor with health care expenditures.

  3. Coloradans’ spending on health care and insurance premiums is lower – and growing slower – than the rest of the United States.

  4. Hospital spending is the largest expense “bucket” and it should be. Hospitals care for people when they are the sickest and most other care is provided in other, less expensive places. 

  5. What Colorado hospitals pay for workers, services and equipment is 6th highest in the nation. These expenses are also influenced by Colorado’s high cost of living. Further analysis is required to understand why Colorado’s proportion of non-medical costs is high. 

  6. Communities small and large need their hospitals to be there when they need care, especially when there’s a large-scale event, like a flu outbreak or natural disaster. Hospitals have to plan for those terrible events, and as Colorado’s population grows, hospitals will grow, too. Many Colorado hospitals reported operating at full capacity on multiple occasions in 2018.

What’s missing? Glad you asked. Here’s my list:

  1. Hospitals buying up physician practices then jacking up the price, adding facilities fees, and nickel and diming patients to pad the bills even further.

  2. An increasing lack of competition as the little guys are squeezed out (monopolies, by any other name).

  3. Collusion between hospitals and insurance carriers.

  4. Group Purchasing Organizations.

  5. Fast-rising pharmaceutical and medical device prices.

  6. Executive salaries and bonuses at what are supposed to be non-profit hospitals.

  7. Growing hospital profitability (yes, they are making ever-more money).

  8. And — you guessed it, A COMPLETE LACK OF PRICE TRANSPARENCY that would empower consumers and the broader marketplace to demand efficiency, balance supply and demand, and drive down costs.

Had the CHA done a good job and been even remotely honest, they could have included the six areas they suggested be studied to try and dilute these real reasons. But failure to include ANY of the real drivers of the out-of-control cost of hospital services is such a blatantly obvious (and stupid) strategy that we can only pray it backfires. 

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Happy New Year! I’ve been lying low for the past six months — ever since we had to withdraw the Colorado Ballot Measure due to the success of the healthcare industry’s misinformation campaign. But don’t think that means we’ve not been continuing to press forward. We have. While I can’t share the details of what we’re doing at Broken Healthcare just yet, I can tell you that it’s going to be a very big year for change on the healthcare front.

First, there are two new books that I strongly recommend if you are interested in coming up to speed on how American healthcare really works (and why it doesn’t). The first has been out a few months now and it’s a pretty heady read at over 500 pages, but the authors from the Cato Institute did a fantastic job of truly revealing how the system works in Overcharged. As one friend put it, “it’s time to invoke the RICO statute.” After reading this book, you’ll become convinced that America’s healthcare system resembles organized crime in many ways. Real organized crime is not always like what you see in the movies. Many of the people that work for organized crime syndicates are not really criminals themselves. The same is true in healthcare. It’s the few “mob bosses” that really make the system work the way it does. They are the ones that need to be stopped by policy makers.

The second book is titled The Price We Pay, which won’t be out until April. It’s written by my friend Dr. Marty Makary, a surgeon and professor of public health at Johns Hopkins. Marty’s writing style is very easy to follow and he does an amazing job of revealing much of what goes on behind the scenes in healthcare. Marty was a go-to guy for the Obama Administration and continues to be called upon for his expertise by the current administration. He is a true maverick and his book is at the very top of my list of recommendations.

Marty also appears in a movie I highly recommend. Netflix aired a feature-length movie focused specifically on medical devices and the corrupted system of medical device approval. It’s very well done and I suspect there are many more like it in the works. You can find The Bleeding Edge on Netflix.

Besides these exposés, there are many other signs that this will be a momentous year in healthcare. The press has been feeling emboldened to call out abuses. The Wall Street Journal has done quite a bit of excellent reporting lately. VOX runs outstanding and insightful stories. And many local journalists are exposing what goes on in their community.

New rules and regulations have started to stream from the federal government as well and I suspect that we are all going to benefit from Democrats and Republicans battling to see who can fix healthcare faster. Of course, they could also stand in the way of each other, but I suspect healthcare might be one thing they can come together on if they take the right approach. Time will tell.

So really just writing to let you know that the fight is far from over. There’s a new legislative session starting in Colorado, lots of activity at the Federal level, and the fourth estate is finally starting to do its job on the subject.

I’ll share more detail in the weeks to come.

Change is in the air.

Happy New Year!

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With a very heavy heart, I announce the death of Colorado Initiative 146: Healthcare Price Transparency.

It could have been. We were on track to complete the signature campaign, but fake news killed it. Let me explain.

The initiative’s death blow was dealt at Colorado’s Democratic Party Central Committee Meeting in which the party voted down a request from Senator Matt Jones to endorse it. The endorsement itself was artfully crafted by Morgan Carroll, Party Chair. The party voted to “take no position”—foretelling its death. Without a Democratic Party endorsement, and with the opposition able to say they voted against endorsing it, it cannot pass in November.

What Happened?
Last week, Democrats surveyed their members. The results suggested an expected unanimous vote in favor of the initiative: 22 members for, zero against, five with questions. The vote was scheduled for Saturday, July 14th. And with that information, the healthcare industry mobilized, using Planned Parenthood and the ACLU to lobby party members. Lobbyists fed information to key Democrats—inflammatory, false, intentionally misleading information—and it spread.

The message sent Friday morning to Democratic Central Committee Members is here (it’s too long to include in this message, but I encourage you to read it). It was posted on Facebook by El Paso County Party Chair Electra Johnson. She knows now this was a mistake and has since removed the post, which should be a strong sign that she doesn’t stand behind it. She has also told me she intended to vote in favor of the ballot measure. But I suppose she doesn’t deserve too much credit for her mea culpa. I don’t believe she’s posted anything about why she removed the post and she also passed on the opportunity to get up and say something at the Committee hearing when members were invited to do so. She could have made the entire difference, but she chose not to. The damage had been done.

By midday Friday, with poison in the water, Matt considered pulling his request for the endorsement. But, understanding how important the measure was for Colorado citizens, he and Morgan stood strong. Why party members chose to trust Planned Parenthood and the ACLU more than Matt and Morgan I will never know, but I applaud them both for not taking the easy way out. I hope they have no regrets. They did the right thing—something we can’t say about many others.

Death by Friendly Fire
Democrats were used and should be outraged. They also need to accept culpability. Had an organization like the NRA done this, Democrats would be livid, speaking of dirty politics and the influence of big business. Will they be silent here, though, since the offenders are traditional Democratic Party partners? Or will they realize their party has been equally corrupted?

Planned Parenthood and the ACLU did the bidding of the healthcare industry. That’s right. Just as the NRA spends 10% of its energy advocating for the 2nd Amendment that it truly believes in, while the rest of its business is power brokering, the same goes for Planned Parenthood and the ACLU. Do we excuse such behavior because these organizations are also capable of doing good work? If we do not demand they replace their boards and executive leadership and turnover a new leaf, then we are accepting their continued distortion of our democracy. Democrats, this one is up to you. Are you going to hold anyone accountable for intentionally misleading you and condemning the American people to living with its current healthcare system?

Trust?
Trust is the operative word. Electra Johnson trusted Jack Teter, Planned Parenthood’s Colorado Political Director. If it were anywhere else in her life, I’d be willing to bet it would spell the end of a relationship. Will she forgive Jack in the interest of politics? Will she remain silent? Or will she become an advocate for the truth? Only time will tell. I took her at her word that she was duped. When we spoke this weekend at the Elizabeth High School meeting place, she told me she had read the measure six times since and didn’t find any of the problems she had written about. She said she intended to vote in favor of the endorsement. In the end, 54 people did vote in favor, but it wasn’t enough to pass.

Ms. Johnson wasn’t the only one who misplaced their trust. The ACLU was apparently making phone calls to Committee members who had placed their trust in the ACLU. I hope they all learned something and that members are inspired to simply not vote in the future if they do not feel qualified to assess something themselves. Having not read the initiative, but having had it “explained” to them by “trustworthy” special interest groups, Democrats voted against it after five minutes of debate and sealed its fate.

In politics, trust is among the most easily violated and quickly abused of all human qualities. Will Democrats punish those who lied to them? I doubt it. If I suggested that Coloradans stop contributing to Planned Parenthood until they change their ways, people would accuse me of being a threat to women’s reproductive rights. People will tell themselves that donating to Planned Parenthood isn’t about politics, continuing the erosion of democracy.

Representative Chris Kennedy was the voice of the opposition. Chris knows the truth. Months ago, he had offered to replace Representative Mike Foote as the sponsor of the legislative version of the bill had Mike be chosen to replace recently resigned Boulder Country DA Stan Garnett. Kennedy spoke against the measure this weekend and personally signed its death warrant by pointing out that six Democratic women had voted against it in the legislature. He didn’t mention that they had been duped in the same way. I’m not sure if the Democrats will post a recording of the meeting. If not, I have one and will get it up shortly. What Mr. Kennedy has done to his own party may not stop him from election in 2018 now that the primaries are over. But the phrase, “Remember 146,” will haunt any future election for Mr. Kennedy. I’m confident he won’t survive another primary. His position and remarks will live on.

Note: please do not confuse Chris Kennedy of House District 23 with the other Chris Kennedy running for State Senate. Do your homework. Punish the right man.

The vote was lost 77 to 54. The healthcare industry was smart. The timing had been carefully planned. It waited until Friday morning to spread misleading information. If we had been given another day to counter the lies, I’m confident it would have passed. But there was no time.

I let Democrats know that the initiative would be dead if they failed to support it. Following the vote, we pulled the plug and sent home circulators from offices all around the state. Tens of thousands of petitions will be destroyed, along with the hopes and dreams of the many volunteers and donors. I do not believe the magnitude of opportunity that was squandered will be understood for several years. Remember 146 every time you open a medical bill that you don’t understand.

Without a Democratic party endorsement, the lies in Ms. Johnson’s Facebook post foreshadowed the Fall media campaign to be funded by the Colorado Hospital Association, the pharmaceutical lobby, and the insurance industry. I’m told $30 million had been committed thus far to convincing Colorado citizens that healthcare price transparency is a bad thing. The failure of Democrats to affirmatively support the measure means the public will listen to that message. Only Democrats could have told that portion of the electorate that these are lies, but this weekend they declined to do so.

To fight back without a Democratic endorsement would have meant going dollar-for-dollar in the media battle. With an endorsement, we would have been able to spend a tenth of that money. A simple message from Democrats would have assured Democratic voters that the opposition’s ads were lies, but they weren’t prepared to do that and we simply can’t afford to continue without their endorsement.

While Republicans were going to be needed to help the public understand that price transparency would lead prices to go down, not up, and that transparency was pro-business, not anti-business, Democrats held the power on the other side of the message—that price transparency is patient protection. They were made to believe the opposite, however, and many were pretty easily convinced that somehow price transparency is a threat. Rep. Chris Kennedy became the spokesman. He was clearly on a mission, despite knowing the facts. He’ll now have no choice but to stand by his position now and the debate will continue. Whenever Chris is prepared for a public debate on the issue, I will be glad to meet him. He won’t do it. It is the ugliest part of politics when organizations like Planned Parenthood and the ACLU, and someone the people trust such as Chris Kennedy, sell their soul.

Remember 146.
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“We can’t get to the $4 trillion in savings that we need by just cutting the 12 percent of the budget that pays for things like medical research and education funding and food inspectors and the weather service. And we can’t just do it by making seniors pay more for Medicare.”
-Barack Obama

“The curious thing is Americans don’t mind individual mandates when they come in the form of payroll taxes to buy mandatory public insurance. In fact, that’s the system we call Social Security and Medicare, and both are so popular politicians dare not touch them.”
-Robert Reich

“I believe keeping our promises should be our highest priority and that means saving Social Security and Medicare while preserving the American dream for our children and grandchildren.”
-Tom Coburn

“We know that Medicare’s going broke in seven years, but we need to start over. That’s what the American people want us to do.”
-John McCain

Medicare Will Never Run Out of Money
Not long ago, I wrote about the fact that the U.S. Government’s own forecasts predict a time when the Medicare Trust Fund will be depleted, leading to either large increases in taxes, significant reductions in benefits, or both. Following that message, a friend wrote to me, “Dave, why are you being such an alarmist? We’ve been hearing about things like Social Security and Medicare running out of money since Reagan was President.”

And you know what…my friend is right. Actually, the alarm bells were ringing just a couple of years after Medicare became law. But the truth is that Medicare will never run out of money—you and
I will pay for it, one way or another.

I asked one of my interns to plot a different chart for me. He went all the way back to the earliest days of projections for the Medicare Trust Fund D-Day (depletion-day) and plotted the time remaining by year. Turns out, my friend was right, it has been an up and down kind of picture. I needed to understand why. As it turns out, a few of the same recurring things account for the variability:
  1. During times of economic growth, we increase revenue projections, without believing they’ll come down. They always do.
  2. We raise taxes.
  3. We cut payments.

Interestingly, back in the late 90s it seems that we cut too deep and reversed the pressure on prices by deciding to pay physicians more. That should be a present-day warning to us. The system is capable of resisting government pressure on prices. That, in turn, should remind us that the only true system capable of driving down prices is market forces, not government proclamations.

Looking at this year’s projections, we see a steady decline in the balance of the Trust Fund, which comes at a time of:

  • Sustained economic recovery/growth, which should put income tax revenues near a peak (the recent tax cuts are included in the projection).
  • Near 100% employment, which means payroll taxes do not have room to grow beyond projections (payroll taxes fund Medicare).
  • Increased revenues from the ACA’s increased payroll taxes.

The projection is for the Medicare Trust Fund’s depletion-day is just 8 years away.


Now, like I said in the title, Medicare will never actually run out of money—because it never really had any to begin with. The Medicare Trust Fund is merely an accounting concept. One way or another, the Federal Government will fund Medicare, though it will take an Act of Congress to do so. That Act can only do one of a few things:

  1. Raise taxes
  2. Cut benefits
  3. Borrow money

That’s it. Those are the three choices. We’ve already seen that the Federal Government is not capable of actually driving prices down, though I’m sure we will continue to hear that it is. If you think there’s partisanship and stagnation in Washington right now, just wait until decisions have to be made about how to keep Medicare benefits flowing. If Democrats are in power, you can bet that we’ll see big increases in taxes and, very likely, some version of universal healthcare (ObamaCare on steroids). And if Republicans are in power, you can bet we’ll see big cuts to benefits, and likely a lot of borrowing (while Republicans claim to be fiscally conservative, that really only means that they don’t want to raise taxes. They seem to have no problem borrowing money when they are in power).

Or, we can do something about it. We can force transparent pricing that creates competition and allows the marketplace to drive down prices. These are the choices. There are no others. The time has come to act. Please join us.

“We need real leadership, Democrat, Republican and independent to stand up and say, we have to live within our means.”
-Tom Coburn

“The largest party in America, by the way, is neither the Democrats nor the Republicans. It’s the party of non-voters.”
-Robert Reich

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Blog
Here is a story that flies directly in the face of a common, albeit laughable, suggestion that “if people saw the prices of emergency services, they might not seek care when needed.”

While laughable, it’s one that is repeated often by hospitals with absolutely no evidence to back it up. It’s a “theory” that, along with a lack of price transparency, confuses the issues. In the story, a Boston woman tries to reject an ambulance out of fear of the price, even though she had no idea what that price would be.

Both situations (knowing the exorbitant price and not knowing anything about the price) actually miss the point. And that IS the point. When we only look at things surface deep, we often have the wrong conversation about why things need to change.

In the case of the Boston incident, it’s not a question of whether we do or do not know the price of an ambulance. The real point is that if the price was publicly known, we wouldn’t be charged irrational prices for ambulances and emergency services and thus there would be nothing to fear in the first place. If prices were known, they wouldn’t be irrationally high for long. And, given just a little bit of time, prices would actually come down—not rise—year after year. That prices will come down is not merely a theory, it’s a fact—evidenced by 250 years of experience with a little known American concept called “the free market.”

You can call the long-term effect on prices a second-order effect if you like. Knowing the price we’ll pay today is the first-order effect and it’s one very small reason why we need transparent prices in healthcare. The long-term effects—second- and third-order effects—will be much more significant.

Yesterday was Independence Day. So let’s celebrate American independence by reflecting on what works in America to keep us independent—free market competition that drives down prices by increasing competition. And while we’re at it, let’s reflect on a second American principle: standing up for the little guy. In America, those who are most affected by exorbitant and ever-rising healthcare prices are those who can least afford the cost and who have the least power to do anything about it.

If you are out and about over the next few days, look for the red shirts that say “Healthcare Price Transparency” on the front, and #trust on the back. We’re in the home stretch.

Thanks for your support!

David
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