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‘Health reform’ is fake news

‘Health reform’ is fake news

Picture of Steven Weissman
Fake News
Fake News

Because there are never any total cost projections, everything we hear about health reform is just right or left wing talking points. Discussions on both sides of the aisle are fake.

It has sailed over everyone’s head that neither the Congressional Budget Office (CBO) – nor any other governmental agency – considers total U.S. health costs in connection with reform proposals.

The purpose of the CBO is to “analyze the likely effects of proposed legislation on the federal budget.” The CBO does not consider the effect of any proposed reform on total health costs. The budget of ordinary citizens is not within the CBO’s purview.

The prices charged by hospitals, drug companies, physicians and labs have been rising for decades at a rate far in excess of the cost of everything else. Politicians avoid addressing the nation’s health cost misery by changing the subject to the system of paying medical bills - insurance. But insurance, including single payer, is just a means to pay the bills.

Back in 2009, President Obama acknowledged medical costs were unsustainable and driving premium increases, stating:

We spend one and a half times more per person on health care than any other country, but we aren't any healthier for it. This is one of the reasons that insurance premiums have gone up three times faster than wages . . .

Unfortunately, while the Affordable Care Act (ACA) provided government subsidies to finance premiums, it did not address skyrocketing medical bills which continue to propel premiums.

The most recent official U.S. projection by the Centers for Medicare & Medicaid Services confirms the Obama diagnosis that total national health costs will continue to be driven by rapid growth in medical pricing:

Throughout the 2016-25 projection period, growth in national health expenditures is driven by projected faster growth in medical prices.

The most recent presidents (Clinton, Bush, Obama, Trump - two Democrats and two Republicans) came into office promising reform. The first three oversaw an explosion in total healthcare costs from 13% of GDP when Clinton was sworn in to 18% of GDP by the time Trump took office. It is projected to zoom to 20% of GDP by the end of Trump’s second term – a bigger jump than the Obama years.

Proposals touted by Republicans as reducing premiums fail to quantify the average amount of deductibles and non-covered care to be paid out of pocket by our families. Without an understanding of total health costs, reduced premium projections for “free market” healthcare, even if accurate, are useless information.

On the other hand, single payer will only reduce total U.S. costs if lower amounts are paid for hospital bills, labs, physicians and drugs. For example, U.S. hospitals charge private insurers more than 50 percent over Medicare rates. We’ve heard plenty of politicians with the courage to tell the public single payer will provide “free” healthcare, but no politician talks about how much medical industry pricing would be slashed; or, the expected total cost of a single payer system.

The truth is that the pricing of medical services, which is the whole ball game, is politically untouchable. The healthcare industry has wired a well-oiled political machine to eliminate price competition and keep the prices of medical services rising. The industry spends more on lobbying than the defense, aerospace and oil and gas industries combined.

Medical pricing is all smoke and mirrors and totally dishonest. In fact, there are no actual prices for medical services. Ask any hospital, lab or physician the price of anything and all you ever get back is a question: “What insurance do you have?” Your price depends on how much can be extracted from you, often at your most vulnerable. Industry apologists, of course, disagree and explain that there are actual prices, it’s just that we all get a different discount. In any other business this is fraud.

Calculating total health costs simply requires adding the cumulative amounts paid to hospitals, labs, drug companies and physicians. No thinking person (or Congress) can evaluate the merits of any proposed reform without considering how it would affect total costs. If the total amount continues to rise and gobble up ever increasing chunks of our economy, by definition, any alternative system of payment would be a failure.

Democrats and Republicans uniformly refuse to address the pricing of medical services. It is rarely mentioned by politicians. Simple arithmetic is ignored. The constant flow of fake health reform news is a strategy to continue a crony capitalist system featuring rapidly growing, non-competitive medical pricing.

[Photo courtesy of boingboing.net]

Comments

Picture of <span class="username">Guest (not verified)</span>

My husband and I are on Medicare. In the few years since obtaining this coverage we have witnessed many situations in which the Medicare system is being taken advantage of.
One outstanding example is a back brace that was provided by Medicare at the cost of about $1,250.
I later found the same brace on line, new from the manufacturer for $175.
I called Medicare to report it and they said they couldn't do anything about is since they have a contract with the company and that was the contracted price.
My next question was ''who approves the contracts'' No answer.
By the way, the thing isn't worth $10 in my opinion.

Picture of <span class="username">Guest (not verified)</span>

My husband and I are on Medicare. In the few years since obtaining this coverage we have witnessed many situations in which the Medicare system is being taken advantage of.
One outstanding example is a back brace that was provided by Medicare at the cost of about $1,250.
I later found the same brace on line, new from the manufacturer for $175.
I called Medicare to report it and they said they couldn't do anything about is since they have a contract with the company and that was the contracted price.
My next question was ''who approves the contracts'' No answer.
By the way, the thing isn't worth $10 in my opinion.

Picture of <span class="username">Guest (not verified)</span>

Thank you for your forthright use of the F-word, "fraud." Certain ideologues will scream that effective corrective action will be taking of property without due process, but pricing in the overbuilt, overstaffed, overpaid, over-concentrated, over integrated, non-competitive, healthcare sector amounts to a widespread conspiracy to commit fraud. It must be corrected as the white collar, white coat and white cap, criminal conspiracy that it is. (IMO, of course). Insurance companies may prove unlikely allies and strange bedfellows, but hey, they have resources.

Picture of <span class="username">Guest (not verified)</span>

I have been through several heart "procedures" and a cervical laminectomy & fusion in the past year. I cannot comprehend the ridiculous cost disparities I have seen in billing. Costs for medicine fluxuates depending on who and where it is being administered.
It is time for Congress to really get serious about pricing for medications, starting with the ridiculous charges levied by drug manufacturers, who pass these prices on the drug suppliers, who pass them on to recipients.
The unrealistic charges levied by hospitals and/or Drs. vary with the market--what can I charge and get away with?
The structure of the medical/medication/provider industry is going to have to undergo radical examination and restructure. Many Drs. who make millions on their practices are going to find themselves priced out of the game, which they should never have been in to start with! Hospitals and other medical facilities providers (urgent care centers, stand-alone emergency rooms, day surgery centers, etc.) are going to have to learn they don't have free reign on pricing of services and goods.
We have to get back to the root cause of run-away medical costs, backed by the insurance industry, as well as the above listed groups and practices. It won't be easy nor pleasant, but it is mandatory that this kind of radical surgery be performed across the board before the medical cost spiral can be brought under control.

Picture of <span class="username">Guest (not verified)</span>

Until now I managed to avoid the worst effects of the ACA. When the ACA kicked in back in 2013, the exact same plan I was on through my employer was going up around $200/month in total. After shopping around, a new carrier was found that offered the same coverage in our local hospital network at less cost and also included my doctor of ten years.

Fast forward four and a half years. The rates have climbed enormously due to requirements to pay the government over $100 million a year in "risk adjustment" fees rather than plow that money back into the patients in the plan. The net result now is my carrier, CareConnect, is shutting down because it became unsustainable to keep paying out so much money. So for the first time ever, I am facing the possibility of loss of employer insurance since my tiny employer may just say "forget it" because they are small enough to be exempt from the ACA employer mandate. I have been thinking a prescription for either potassium cyanide or 5mg of Fentanyl would be a much more cost effective solution for me should I get seriously ill in the future (of course the prices on those items may skyrocket too if Big Pharma detects a profit angle in them LOL).

There is just no way these spiraling medical and insurance costs are sustainable. On the bright side, when I go to my dentist, I know exactly what the costs are as he has a published fee schedule. It is a shame that the medical community as a whole cannot produce a price list like a dentist can.

Picture of <span class="username">Guest (not verified)</span>

My daughter was traveling in Japan over the summer. She had an allergic reaction to octopus, she was taken to an ER. When all was done, I thought, what is this going to cost us? $4000-$5000?
She spent a couple hours in a bed with an IV, they sent her off with two different filled prescriptions and another in case she had a relapse. The entire bill was $225. I was shocked. No separate bill from the physician providing some subjective "Level" of care, no hospital "bed" bill. Just one bill for the services rendered. And a reasonable one at that.
That is the type of health care Americans want. Americans pay unknown costs to several entities everytime they walk into an ER. We want Health Care. Not Health Insurance.
Our costs for health insurance have soared, we have a huge deductible. I am reluctant to go to the doctor, all the unknown expenses are daunting.
My son spent less than an hour in the ER in a hall bed for a possible concussion, we were charged $1285 by the physician for Level 4 care. We saw the physician twice while he sat in the hall with an ice pack on his head. Once to assess him and again to release him. There is no reasonable way to defend that type of expense. The hospital sent their own bill, $880. I guess it's expensive to change those sheets. Our system is broken. The only way to fix it is get the health industry lobbyists out of the ear of the Democrats and Republicans. It's a shame both parties seem to either be lacking general common sense or they're too easily duped by the pretty words they're hearing.

Picture of <span class="username">Guest (not verified)</span>

Hear, hear!! Thank you, Mr. Weissman, for getting out the word on where the endless price hikes originate.

Picture of <span class="username">Guest (not verified)</span>

You are completely on point here. There is no doubt that the middle class is being squeezed out. The poor and wealthy will be the only ones left in this country. What's going to happen then?

Picture of <span class="username">Guest (not verified)</span>

I'm very interested in this statement: "Industry apologists, of course, disagree and explain that there are actual prices, it’s just that we all get a different discount. In any other business this is fraud." What is the law that would make this a fraud, and how is health care exempted from it? That seems like a productive line of attack. Perhaps a lawyer can point out that the health care industry is not as exempted as they think they are, and a class action suit can be launched. Dr Weissman, I hope you can respond to this.

Picture of Steven Weissman

Unfortunately, the laws that apply to all other industries are not applied to healthcare. There is zero consumer protection. For example, during the big Texas flood this week, anyone charging $10 for a gallon of gas or water can be arrested for “price gouging.” But when your life is on the line the health provider can charge you 100X more than what your neighbor is billed, depending on your insurance coverage. $10 for a 25 cent pill; no problem at all!

Picture of <span class="username">Guest (not verified)</span>

Steve, I agree with some of your thoughts on making the health care pricing system more transparent and providing the opportunity for competition to control costs. But I have raised this issue before with regard to hospitals. There are different levels of hospital care: Major teaching, minor teaching, community based etc. If someone needs surgery, as an example, the community hospital may be the cheapest but the staff may not be as adequately prepared for complications as a major medical center. If pricing is not tempered with an understanding of the system you may find yourself with many unintended consequences. Like any business there is overhead costs that must be accounted for in order for the institution to remain viable. If pricing alone directs the consumer than we may see more deaths/injuries and the closing of more expensive but highly technical and effective facilities. Micro Economic arguments always rest on the assumption that the consumer has the information to make a rational decision. I don't think that applies well to Health care. Most people take their doctors advice for treatment. Because they rely on his knowledge. It seems to me that you would have to impose -that dreaded word- regulation to control the outcomes so that some of these major facilities survive . On one hand while your proposal seems simple, you are in fact bringing focus on the Pharmaceutical Industry and the Medical equipment industries and the practices of the insurance industry. These industries are prime players in escalating health care costs. They are also very large players in the American economy. And as I understand it they often charge higher prices for products in this country then for when the same products in other countries. How do you make them more competitive at the consumer level when the average consumer is unaware of their pricing strategy. Do you think that a single payer system could provide enough clout to reign in price gouging from those industries.

Picture of <span class="username">Guest (not verified)</span>

Your article is interesting..I have read similar reports about the disparity in healthcare costs...how who your insurance is, determines the amount charged for services. My question is, what can we do to change this...how do we regulate costs so they are the same for everyone..maybe even opening the door to competition? I think another issue is prescription drug costs....right now pharmaceutical companies can charge whatever they choose and this is wrong..especially since the prices are so much lower in Canada and Mexico for the exact same drugs.....people have tried and failed to pass legislation allowing us to purchase meds from Canada.....

Picture of <span class="username">Guest (not verified)</span>

The American medical system is broken. The very idea that consumers are charged at different rates depending on their insurance coverage is outrageous. U.S. Citizens must demand that their duly elected officials at both the state and federal levels grow a pair and stand up to the special interests in the medical profession, insurance conglomerates and big pharma on behalf of their constituents, you know the people who work their asses off everyday to fund their elected officials luxurious lifestyles, including their well-financied healthcare benefits. It is well past time that the clueless leadership at state and national levels be held accountable for their complicity in railroading the well-being of their citizenry. Capitalism at all costs is a detriment to democracy.

Picture of <span class="username">Guest (not verified)</span>

Thank you for this refreshingly lucid breakdown of the fundamental crux plaging a resolution of this most important issue.

Picture of <span class="username">Guest (not verified)</span>

The highly praised ACA is absolutely corrupt by giving more power to the insurance companies with subsidies from the federal government (our taxes). Why can't the CBO not make a true cost comparison of a true single payer system (no medical insurance at all involved) with increased taxes but no insurance premiums, no co-pays or deductibles. Every other civilized country manages to spend less of their GDP on healthcare but with better coverage. Why can't we do it?

Picture of <span class="username">Guest (not verified)</span>

I think that it is essential that you continue to broadcast this vital message as loudly as possible, to reach as many as possible. It is devastating that, on the whole & with the exception of a possible very few, neither republican nor democratic governmental members are addressing this very real issue, which has been and still is, one of the fundamental reasons for the significant problems with USA's entire health care system. It is also devasting that most US citizens and the US government are so unwilling to look to other industrialized nations, which provide equal or far better health care and provide far better health insurance systems, where all persons are ensured timely quality health care from birth to death, to learn from them how to better institute such a system here. Though I'm a U.S. citizen, I have lived many years in such a foreign country (Germany) with such an excellent health care and insurance system. No person was ever left without timely quality health care that many times exceeded that which I have had in the States.

I believe that the willfull ignoring of the real and fundamental reasons problems are caused, regarding many issues, is too often not an uncommon occurrence. This tactic very sadly serves an unethical purpose (usu. to gain profit or power at the expense of everything else). You must be very frustrated to try to work against this approach to compel others to help solve one of the fundamental reasons for the U.S.'s ongoing health care problems. But it is vital that you never give up !!! I appreciate very much your efforts. I will continue to pass on your vital message to all those I know.

Picture of <span class="username">Guest (not verified)</span>

So what do we do? Do you have a proposal?

Picture of Steven Weissman

Here is one idea I proposed:
https://www.centerforhealthjournalism.org/2017/03/21/betrayal-corrupt-co...
So far, not a single politician is willing to so much as mention the pricing of medical services.

Picture of <span class="username">Guest (not verified)</span>

Unfortunately now in the US our care is abandoned to the insurance industry. Many doctors have lost their ability to investigate illnesses. Everything is programed and by the book. Genetically modified foods is causing all the chronic illnesses (doubled) and it is allowed by the FDA and EPA. What do you expect when our health deteriorates, costs go up, and our agencies are corrupted - all for the money. When we ask, Please let us have labels so that we can at least help to identify and help ourselves, even that is denied. In 20 to 30 years we will be down the road to extinction (and I'm not exaggerating!

!

Picture of <span class="username">Guest (not verified)</span>

It's good you put "health reform" in quotes in the title. Because you really mean "health care pricing reform." "Health" per se would be incorrect. Please be accurate. We talk about "health insurance", "health care", or in this case, "health care pricing." I'm tired of media and pols constantly saying "health care" when they really mean "health insurance." If you're going to give us straight talk, use correct terminology.

Picture of <span class="username">Guest (not verified)</span>

Would be nice if journalism groups would not perpetuate the term "fake news." It's a term meant to undermine our industry and we should avoid using it.

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