Nearly two years ago I wrote a post on the lack of healthcare price transparency (Healthcare Price Transparency Needed). Since then not much has changed.

A little known case before the Supreme Court, Gobeille v. Liberty Mutual, concerned a challenge to the right of states to collect healthcare data from insurance carriers under the Affordable Care Act. I mentioned this important case in my earlier post.

Unfortunately, SCOTUS found in favor of Liberty Mutual by a 6 – 2 vote. This decision upheld the opinion that states cannot force insurance plans to provide healthcare data, because ERISA protects these plans from all but the most trivial state recordkeeping requirements. This deals a blow to state efforts to increase transparency.

Why is this a problem?

The recent experience of two different people in the State of New York is illustrative. Steve Cohen, writing in The Wall Street Journal, tells the tale of Michael Frank, a 52 year-old Westchester executive, who underwent a left hip replacement in 2015. The Manhattan hospital where it was performed charged roughly $140,000. The insurance company paid the discounted rate of about $76,000, and his share – a 10% co-pay, plus a couple of uncovered expenses, was just over $8,000.

He contacted Mr. Cohen, whose name was noted in the media regarding a lawsuit against a different insurer. Cohen had personally undergone bilateral hip replacements, six months apart, at the same hospital during the same approximate time frame. The cost to Cohen was only his deductible. This difference is accounted for by the differences in their insurance policies.

But here’s the real story. When Cohen researched the actual charges for his two hip replacements, he found he was charged $175,000 for one and $180,000 for the other. The insurance company paid discounted rates of $75,000 and $77,000.

To combat this problem, New York’s then-attorney general, Andrew Cuomo, in 2009 created a nonprofit organization called FAIR Health. Its purpose was to provide consumers accurate pricing information for all kinds of medical services. Cohen contacted FAIR Health and found the out-of-network price for a hip replacement in Manhattan was $72,656, a close approximation to his and Frank’s experience. However, they were both in-network and the FAIR Health estimate for in-network was only $29,162.

Further research found there were no extenuating circumstances, such as medical complications, to explain the disparities. The results of this research discovered the fundamental problem – the data submitted for calculation of these estimates came from insurance companies, not from providers such as hospitals and physicians.

As long as insurance companies are protected from disclosing accurate data on healthcare, and bills are paid by insurers rather than patients, there will be problems in healthcare transparency. Consumers need to become more involved in the process of purchasing healthcare if they are to be influential in healthcare pricing.

Solutions to the lack of healthcare pricing transparency include:

• Health Savings Accounts – savings benefit patients, not insurers
• Published pricing by providers – doctors and hospitals
• National database for medical prices – to allow state comparisons

Let me know if you have other ideas for increasing healthcare pricing transparency.

There is an increasing trend occurring in the healthcare industry that should concern all Americans. Hospitals are consolidating, buying out their competitors. Healthcare insurers are consolidating, merging two or more companies into one. Pharmaceutical companies are doing the same thing.

Recently, Advocate Health Care and Aurora Health Care finalized their $11 billion merger deal to form the nations’ 10^th largest tax-exempt healthcare system. Dignity Health and Catholic Health Initiatives are currently moving toward a $28 billion merger. These are hospital consolidation mergers.

Then there are healthcare providers insurers purchasing healthcare providers. Optum, a subsidiary of United Health Group, is purchasing DaVita Health Group, a large group of physicians and clinics, for nearly $5 billion. Medicare insurance giant Humana just bought the 22 clinic Family Physicians Group in Central Florida.

And then there is consolidation of insurers with pharmaceutical suppliers. Aetna is slowly but surely moving toward merger with CVS Health Corp. In a reverse of this move, Walmart is considering buying Humana.

According to a recent report by Kaufman Hall, mergers were up 13% last year. Bloomberg reports mergers are off to their fastest start ever in 2018. Over $156 billion in deals had been completed by the end of the first quarter alone.

When healthcare companies merge, what happens to patients?

Marni Jameson Carey, writing for Medical Economics, says this is driving up the cost of healthcare, especially for Medicare. She cites a recent report by Physician Advocacy Institute, that says hospitals buying doctors is the leading cause of rising Medicare expenses. Carey says, “Between 2012 and 2015, Medicare costs rose $3.1 billion due primarily to the 49 percent uptick in hospital-employed doctors that occurred over the same period. And that study only looked at four procedures. Imagine the tally if all procedures were accounted for.”

The impact on healthcare prices can be dramatic. Martin Gaynor, Carnegie Mellon economist, submitted a report entitled Examining the Impact of Healthcare Consolidation, to the Committee on Energy and Commerce Oversight and Investigations Subcommittee of the U.S. House of Representatives in February of this year. He says prices increase 20 to 30 percent when hospitals merge. In some cases they increase as much as 50 percent. He says this often leads to poorer healthcare outcomes for patients, especially in areas where there is less competition.

Here are some statements from his report:

• The two largest insurers now have 70% of the market or more in ½ of all local insurance markets.
• 33% of all physicians and 44% of all primary care physicians are now employed by hospitals
• Extensive research evidence shows that consolidation between close competitors leads to substantial price increases for hospitals, insurers, and physicians, without offsetting gains in improved quality or enhanced efficiency.

If your doctor retired recently, as mine did, you probably had difficulty finding a new primary care physician who was not employed by a hospital. This is a trend that bodes poorly for future healthcare outcomes and costs. Competition leads to lower prices and higher quality. Lack of competition can be expected to produce the opposite.

Last post I talked about the British people’s blindness regarding their beloved, but failing, National Health Service (NHS). None other than a British politician and former member of the European Parliament, Dan Hannan, called the NHS “a fairly unimpressive system, when compared to other developed nations.” For more on Hannan’s observations about the NHS and the British people, see Part I.

In Part II I want to further document the deplorable healthcare outcomes of the NHS and help my fellow Americans, if not the British, understand the evils of a socialized medicine system.

In my 2014 book, The ObamaCare Reality, I documented the failures of the NHS. The NHS reported in 2014 that its hospital waiting lists soared to their highest point since 2006, with 3.2 million patients waiting for treatment after diagnosis. Even among those referred for “urgent” treatment, 15% waited more than 62 days to begin treatment.

Access to healthcare is the major problem in all socialized medicine systems in the world. The NHS is no exception. In an effort to overcome this problem, many patients seek treatment at emergency rooms. Some patients actually visit the ER up to four times a week. The BBC reports, “nearly 12,000 people made more than 10 visits to the same ER unit in 2012-2013.”

Despite the specific intention of the founders of NHS to overcome the access problem from its inception in 1948, two studies done in the 1980s and the 2000s, known as the Black Report and the Acheson Report, found evidence that access had become less equal, not more, in the years between the studies. In fact, the problem of poor access is so well known in Britain that the press refers to the NHS as a “postcode lottery.” This refers to a person’s chances for timely, high quality treatment depends on the neighborhood, or “postcode” in which he or she lives.

The Guardian newspaper in Britain sums up the situation thus: “Generally speaking, the poorer you are and the more socially deprived your area, the worse your care and access is likely to be.”

Is the situation getting better or worse?

Here are some more recent facts about the NHS from 2017:

• Over 140 Billion British pounds were spent on the NHS in 2017 (up from 12 billion in 1955)
• 30% of the UK budget now goes to the NHS (up from 11% in 1955)
• There is no end in sight to these rising costs in the future

Here are some worldwide healthcare outcome comparisons:

• Breast cancer 5 year survival rates
  • U. S. ranks 1st – 88.7% – UK ranks 19^th – 82%
• Colorectal cancer 5 year survival rates
  • U. S. ranks 5^th – 64.7% – UK ranks 20^th – 54.5%
• Heart attack 30 day in-hospital mortality rates
  • U. S. ranks 7th – 5.5% – UK ranks 22^nd – 7.8%
• Stroke 30 day in-hospital mortality rates
  • U. S. ranks 4^th – 4.3% – UK ranks 25^th – 10.4%

Despite the British people’s loyalty to the NHS, even the liberal British media is showing signs of throwing in the towel. Judith Woods, columnist for the Daily Telegraph, says, “It’s time to make difficult decisions about the NHS. The NHS, dying on its feet for decades, is in a critical state. The promised injection of cash may stabilize it temporarily, but the chances of a full recovery are nil.” The Guardian stated its position in a recent headline that declared the NHS is “on the brink of extinction.”

As the United States searches for answers to the failing ObamaCare system, we must be sure not to listen to the siren songs of the left who are calling for Medicare For All, a socialized system much like Great Britain. Those who ignore the lessons of history are doomed to repeat them.