Top Blog

That probably sounds like a simple question to some, and a very difficult question to others. Personally, I think it’s an impossible question to answer. And yet…no one has ever told me I was unqualified to bake a chocolate cake or to make wise decisions about the ingredients I would buy to bake the cake.

Full disclosure: I am a pretty good cook, but I can’t bake and, for some reason, I can’t make rice. Despite these horrible truths, no one tells me I cannot if I so choose (except my wife and kids).

There are many decisions to be made before buying the ingredients to bake a cake. How big will the cake be? How many will it serve? What shape will it be? How tall? Does anyone who is going to eat the cake have an allergy to any of the ingredients I might use? Does anyone simply have a preference I need to know about (e.g., no gluten, which means it has to be flourless?). Will there be layers? Will it be frosted? What kind of frosting? Is there any filling? Will there be nuts, or fruit inside or on top of the cake?

It is unlikely that unless you and I are handed the same recipe by someone, we will choose the same answers to all of these questions. And even if we did choose the same answers, we might still choose different ingredients, or different brands of ingredients. So isn’t it odd that those of us who occasionally bake a cake at home seem to do just fine with all of the uncertainty and decisions?

Of course, if we wanted to know the true cost of baking the cake, we’d have to answer some other questions, too. For example, what temperature will the oven be set to and for how long? Is it preheated? What does it cost to heat the over to that temperature (i.e., what’s the cost of gas or electricity)? Should we book any depreciation to the oven to account for the wear and tear we’re going to put on it? What is the time of the baker worth?

And still, we seem to make pretty good decisions. For some of us, we don’t know that much about one cake mix or another, or the quality of the flour we buy, but no one tells us we cannot make value-based decisions because baking a cake is too complicated. You see the market for cake ingredients works. It’s competitive, prices of the ingredients are fair, and yet no one can answer the simple question: what’s it cost to bake a chocolate cake?

That’s why I scratch my head when I’m told that we consumers (a.k.a. patients) aren’t qualified to make healthcare decisions and that medical procedures are too complicated to tell us the price. It also seems that government officials and the healthcare industry don’t really understand what we mean when we say we want the price. It doesn’t always mean the price of the procedure or the price of the hospital stay.

Sometimes, I just go to the supermarket and buy a cake (like on my wife’s birthday). In that case, they give me the price of the cake. It’s simple. Think of that like the price of having your tonsils out. It’s fairly simple.

Other times, though, I buy some ingredients and then use other ingredients I already have at home. I can’t really tell you the exact cost of the cake, and that’s OK. As long as the supermarket was fair, honest and transparent with the prices of the ingredients I bought, the market works. Because the prices are right there on the shelf in the supermarket, I know I’m not being gouged and I trust that prices reflect a fair market value.

********************

The above example came to me as I was reading through the 187-page (9-point font) set of proposed new Federal rules that include provisions for increased price transparency in healthcare. The relevant information begins on page 7513, which is the 90th page in the PDF document found near the top right of this page. While the President, his staff, the Secretary of Health and Human Services, and his staff already know what the right answers are to the questions posed on page 7514, they must go through the process of asking for public comment. That’s the law. The comment period is open until the first week of May. I encourage you to submit your comments now. You can do it at the top of the same web page by simply clicking the button that reads, “Comment Now!” While I encourage everyone to thoughtfully read the proposed rules and to register your own comments, at a minimum, comments that read like these would be very helpful: “Let the market work.” “Make the net price truly transparent.” “Don’t try to engineer the market.” “Trust that we consumers are smart enough to handle things if only we had prices.” And my favorite: “I can bake a cake. So I think I can choose my own healthcare services, too, if only I had the prices.”

As an example, one of the questions posed about ¾ of the way down the first column on page 7514 is whether there should be exceptions to transparent pricing for “unscheduled care, such as admissions subsequent to an emergency visit,” or for “Emergency care…such as for patients in need of immediate stabilization.” The clear answer is “NO!.” There should be “No Exceptions.” What federal regulators appear to still be missing is that fact that sometimes, we’re just baking a cake. We don’t need to know the actual cost of the cake, we just need to know the prices of the ingredients that might go into our cake. It’s that simple. A hospital, and a doctor, need to tell us the price of everything that they MIGHT do, whether or not it’s what we need today.

Many will ask how that helps patients. The answer is simple…it helps the market. And if it helps the market work, ensuring prices are fair and competitive, it doesn’t matter what the specific services are that we need today. I will write more about why price transparency is about markets, not individual consumers, in a few days. I encourage you to watch for it. It’s one of the most important principles that we have to fight for. I spent over an hour with two members of the President’s Council of Economic Advisers back on the same day as the State of the Union discussing this very topic. In a couple of days, I’ll share the ideas we discussed with you, too.

********************

The rules that are being proposed are intended to deliver what we’ve all been looking for—a truly transparent, functional market. But just because the rules have been proposed doesn’t mean they will be enacted. While I know first hand from my dealings with the White House that the intentions are to do the right thing, I also expect that more money will be spent on lobbying over the next three months than was spent over the prior three years. The healthcare industry knows what real price transparency–from both providers and insurance carriers–means. It means an end to easy and excessive profits. It means a competitive market that begins to serve patients, not multi-billion-dollar monopolies. Good companies will survive—and thrive. Those that can’t compete and don’t add value, will not. And that frightens many that are profiting from economic dysfunction today.
There were two recent headlines in the Wall Street Journal that you should be familiar with, even if you don’t have a subscription to read the complete articles:

March 7th: Trump Administration Weighs Publicizing Secret Rates Hospitals and Doctors Negotiate with Insurers.

March 11th: Hospitals, Insurers Set to Resist Price Transparency Proposal

The time has come. All of the work done by the many people in Colorado (and those beyond Colorado who supported these efforts) is coming to fruition. It’s time to push things over the goal line.

I’d like to call out a few of the people who have helped us get here, because I’m not sure they realize just what a big difference they have made.

  • State Representative Mike Foote (now Senator Foote), who sponsored the initial Colorado Legislation.
  • State Representative Susan Beckman, who was Mike’s Republican Co-sponsor in the Colorado House.
  • Senator Tom Coburn of Oklahoma who saw what was happening in Colorado and wrote about it in the Wall Street Journal, thereby bringing national attention to the efforts in Colorado.
  • Cynthia Fisher, of Boston, who read Senator Coburn’s article, supported Coloradans despite living in Massachusetts, and introduced me to key people in Washington.
  • The Colorado Libertarian Party, which had the courage to formally endorse and support the Colorado legislation and ballot measure. The party even collected signatures for the ballot measure.
  • State Representative Patrick Neville, the Colorado State House Minority Leader, who despite push back from some of the fiercest lobbying groups that hold sway over Republicans, stood his ground last year and supported Rep Beckman’s decision to co-sponsor the legislation and encouraged other Republican’s to resist the lobbies and support the bill that ultimately failed in Colorado.

There are many others who have supported our efforts along the way, but those above are the ones who stand out as having ensured our message made it to Washington.

So, read the new rules and submit your comments. If it doesn’t happen now, there’s a very good chance that it never will. The system is close to the point of no return, which means never getting to a market driven healthcare system. It will either be a government run system, or something even worse—an oligopoly that continues to strip the American middle class of its wealth and freedom. There is actually great risk that we get the worst of both options–a government run system that is then contracted to a small number of mega-companies. Were that to happen, our healthcare system would begin to resemble the defense industry.

My next two pieces will include:

  1. Why price transparency is about the market, not the individual consumer and
  2. Understanding what Medicare for All means, so you can make an informed decision about whether you support it or not (don’t be so sure of what you believe right now, whichever side you think you are on)

Please go submit your comments now!

0

Top Blog

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.

0

Top Blog

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 to protect 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.

0

Top Blog

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.

0

Sign Up to Stay Informed