healthcare price transparency

I’ve asked this question frequently over the years, starting in the ’80s, continuing to today … and I’ll keep it up until someone realizes that it’s a failed paradigm.

What we have here, kidz, is what happens when a society decides that socialism is anathema, but doesn’t empower and educate its citizens about how to take responsibility for themselves in ways that will keep them healthy, productive community members.

Business started picking up the tab for healthcare during World War II, when stiff wage controls made it impossible for defense plants to give their employees raises. In place of more money, they started to pay for health insurance – which state and federal government were more than happy to turn into mandated employee benefits over the next 20 years.

What happened then was predictable: three generations have been out of touch with the true cost of healthcare, and the true cost of their choices about their health. If you’re a good little American consumer, you do whatever your television tells you to do: eat this. Buy that. Otherwise the terrorists win!

Three generations of disconnection from the real costs of our medical care have delivered us an epidemic of obesity – thanks to plentiful empty calories, courtesy of agri-business, and our willingness to beach ourselves on our sofas, in our SUVs, or at our computers, the better to receive more messages about what we should buy and eat.

Health insurance costs have skyrocketed as we’ve become a nation of couch potatoes. Companies are scaling back their employee health benefits as those costs continue to rise, putting more and more people in the un-insured or under-insured bucket. Is that rise in healthcare costs, which in turn drives higher premiums, combining with the federal mandate that all companies offer employees health insurance or face the wrath of Khan, er, the feds the real “job killer”? I think so.

Here’s a suggestion: sell health insurance like auto, home, and life insurance are sold. Put consumers in charge of shopping for, and purchasing, their own insurance. Let business help their employees, if they choose to do so, as a true benefit rather than a mandate. Help every consumer set up a Health Savings Account for their healthcare expenses. And stop the state-by-state divvy-up that lets health insurers essentially gerrymander the health insurance marketplace.

Put consumers fully in charge of their insurance, and their care. Turn the health insurance market into a car-insurance model. People can buy minimum levels of insurance, and assume the risk of that choice. They can opt out completely, and assume all the risk for their healthcare costs. Make it a true marketplace, rather than the giant mess that we currently call health insurance. Employers are certainly able to help their employees with HSA deductions and matching contributions; smart companies will help their teams figure out managing and negotiating for insurance as a group. But they shouldn’t be expected to foot the bill.

Radical? Perhaps. Necessary? I’d say it’s essential.

Until we’re put in touch with the costs of our healthcare, we won’t be encouraged/empowered to take control of our health. As long as we’re using other people’s money to pay for healthcare, we’re stuck where we are.

Which is a very bad place to be.

That’s my story, and I’m stickin’  to it …

John Green of vlogbrothers breaks down why healthcare costs in the US are so crazy. (Hey, John – I feel dizzy, too!)

image credit: Alec

I talked about Steve Brill’s epic TIMEpiece Bitter Pill: Why Medical Bills Are Killing Us last week. I’m still absorbing the cost data he uncovered in that piece, and the graphics and images alone are worth the $5.99 cover price to get a physical copy of the magazine. The stories he shares about the healthcare industry’s Great & Powerful Oz – the hospital chargemaster price list – do reveal a big reason for the out-of-control price spikes in US healthcare.

As brilliant, informative, and galvanizing as Brill’s piece is, I believe he dropped the ball just short of the goal line when, in his wrap-up recommendations, he talks up solutions that nibble around the edges of the cost problem, but don’t address its core cause: our crazy 3rd-party payer system.

Take a walk with me through the hallways of US healthcare history. Here’s the timeline:

• 1880s: Chloroform in use as surgical anesthesia (thank GAWD).
• 1900s: The American Medical Association (AMA) becomes a big player.
• 1900s: Doctors no longer work fee-free in US hospitals (see bullet #2).
• 1910s: America lagging behind European nations on health insurance (already?).
• 1920s: Political complacency (must have been all the bathtub gin) leads to a “what, me worry?” attitude toward rising medical costs.
• 1930s: Oops, we broke the stock market. Blue Cross, against insurance industry advice, starts offering hospital insurance coverage.
• 1940s: Stiff wage controls in WWII defense plants lead to employers offering health insurance to their factory workers. President Truman draws up national health insurance plan, gets beat up on the White House lawn by Congress.
• 1950s: Pharma industry becomes big player via antibiotic and vaccine development, along with meds for a variety of illnesses. Lots of proposals for national health plan, all get beaten up in public and sent home. Employer-based group insurance plans, offering coverage for “major medical” (hospitalization), become the norm.
• 1960s: First incidence of the idea of a “doctor shortage”. Hospital costs have doubled since the last decade. Specialist MDs now are 70% of working doctors. Medicare becomes law.
• 1970s: First HMOs established (rending of garments and gnashing of teeth followed swiftly behind). Medicare expenditures are growing faster than predicted. President Nixon proposes national health plan, gets beaten up on the White House lawn by Congress, complains about it on Watergate tapes. Starts “War on Cancer” instead.
• 1980s: In the Corporate Decade, corporations start to take over, consolidating hospitals and health systems. Medicare shifts to paying by diagnosis rather than by treatment, private insurers follow suit. Private insurers start complaining that “fee for service” is being exploited by healthcare providers, but say nothing about the corporatization of healthcare.
• 1990s: Healthcare costs now increasing at double the rate of inflation. President Clinton attempts healthcare reform, gets beaten up on the White House lawn by Congress. 16% of US citizens now uninsured. The AMA starts up the RUC (Specialty Society Relative Value Scale Update Committee), a star-chamber group that sets pricing for medical procedures in secret and hands it to Medicare. Price-fixing? Nope, cause Medicare publishes the list, not the AMA.
• 2000s: Medicare starts to be judged as unsustainable. The RUC is still working in secret. Healthcare costs rise 100% for the average family during the decade. Employer-based group health insurance faces economic challenges due to changing workforce demographics. Insurance premiums for health coverage double. Oops, we broke the stock market AGAIN.
• 2010s: Obamacare passes. President Obama’s repeatedly beaten on the White House lawn by Congress, but he gets a few licks in himself. Obamacare is a fat, wet kiss on the lips for the insurance lobby; how it affects the rest of us is a still-open question. Word starts spreading about the RUC.

In Bitter Pill, Brill’s “big bad devil” is hospital profiteering via the chargemaster. He highlights the hospital lobby as the most politically powerful group in any Congressional district, and calls out the high salaries of hospital administrators as a big driver of overall healthcare costs. He also recommends that pharma patents should be limited in their blockbuster-drug Monopoly game, and that medical malpractice caps need to be put in place – both of which I agree with 100%. However, Brill reserves most of his bitch-slaps for hospitals, and the chargemaster.

I counter that the chargemaster arose as part of an overall structure problem in US healthcare: like the rest of US business, it’s bottom-line and shareholder-interest driven. Customers (commonly called patients) aren’t given a thought in the corridors of healthcare power other than as revenue units. And that’s because we aren’t directly paying the bills. It really is all about the Bens, and who hands them over, in a commercial transaction – healthcare, and everywhere else.

I’m not saying that doctors, and hospital administrators, need to work for minimum wage. Hell, I don’t think anyone should have to work for minimum wage – who could live on $7.75 an hour, which amounts to the princely gross sum of $310/week? What I do recommend is starting to put value into the equation for patients, not just for shareholders and employee bonus assessments. Healthcare customers – patients – need to be able to assess the value of the healthcare services they receive, beyond the fact that it might be saving their lives. Yes, that’s certainly a high-value item, but it’s not part of every healthcare encounter.

Making that value apparent will require putting customers – patients – at the table for all parts of the healthcare conversation. Starting with (and yes, I know I’m a broken record on this) asking, always and everywhere, “How much is that?” when making a healthcare decision. We also need to take a long, hard look at employer-based group insurance, and maybe put it out to pasture. I’m on record with my thoughts that we should all be buying our own insurance – when various groups shout about “job killers,” I wonder if they’ve ever had to buy group insurance for their employees. That’s a real job killer, right there.

Access to cost information, hand in hand with outcomes information (available on Leapfrog’s hospital safety app and other outcome-metrics reporting tools), will reveal the value of a service. That’s what will really reform the system: patients asking questions, and working to get the full answers to them. And killing off the RUC would be a great idea, too.

Otherwise, we might as well go beat ourselves up on the White House lawn – hey, the Secret Service might help us out if we do …