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Variation in Health Cost Prices – What a Mess

Health Cost Transparency - A Big MessOver the last few months, some major ‘events’ have developed regarding medical cost transparency issues. Now is the time to channel our collective outrage to change how we pay for health care in the future.

In March, Steven Brill wrote a compelling (and disturbing) article in TIME magazine, “Bitter Pill: Why Medical Bills Are Killing Us.” For the first time ever, TIME dedicated almost the entire publication to just one particular article – due mainly to the complexities baked within the hospital pricing method(s) currently in place in our country. When you have time, this is definitely worth a read. Whatever a hospital will charge for a particular service, the actual payment will vary tremendously by the payer community left with the tab – Medicare, Medicaid, private insurers, or individuals without insurance coverage, etc.

Also in March, the International Federation of Health Plans released the 2012 Comparative Price Report showing just how extraordinary the costs of various health procedures are in this country versus the costs found in many other developed countries. After the Brill article, few of us need to question the validity of this particular report. The price differentials between the U.S. and all other countries are abhorrently grotesque.

On May 8, the federal Centers for Medicare & Medicaid Services (CMS) publicly released hospital inpatient charge information from hospitals in the U.S. The data released was the first time the federal government provided this information publicly. According to the CMS website, “As part of the Obama administration’s work to make our healthcare system more affordable and accountable, data are being released that show significant variation across the country and within communities in what hospitals charge for common inpatient services.” Without question, CMS unleashed a great deal of data showing how diffused and opaque hospital charges are for inpatient services, even within our own cities!

On June 3, the CMS yet again publicly released additional data on hospital outpatient charges, in addition to Medicare spending and utilization. It is quite apparent that federal officials are deliberately making health care costs more transparent for public consumption (and scrutiny). Health Datapalooza is an annual gathering in Washington D.C. that focuses on health data transparency. Now in its fourth year, Health Datapalooza has grown from about 50 attendees to more than 2,000. The idea is to have entrepreneurs take this massive data and create applications to help the public navigate through a seemingly complex world of healthcare costs.

This deluge of data becoming publically available allows a greater dialogue about the transparency of health costs and its impact on those who pay the bills.

A little bit of sunshine can be a great disinfectant – don’t you think?

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Walter and Max – Moments of Truth

The Truth and ACAOn April 17, one of the architects of the Affordable Care Act (ACA), Democratic Senator Max Baucus of Montana, lectured Health and Human Services Secretary Kathleen Sebelius over the implementation snafus of the ACA and that he sees a “train wreck” coming if the administration does not do a better job implementing and communicating its features.
Almost immediately after learning this, I thought of Walter Cronkite and the mythical “Cronkite Moment.”
On February 27, 1968, CBS News Anchor Walter Cronkite offered on-air that the U.S. war effort in Vietnam was going nowhere and suggested negotiations to get us out of the war. Keep in mind, Walter Cronkite was the most trusted person in America during that period. President Lyndon B. Johnson (LBJ) supposedly shut off his television and muttered something similar to “If I’ve lost Cronkite, I’ve lost middle America.” (Perhaps a few other colorful words were included along with this quote!)

Now, 45 years later, our current president might be losing support from a key ally in his own party. Baucus, chair of the Finance Committee, who was instrumental in helping author the ACA, drilled Sebelius on whether federal exchanges will be ready this Fall and provided umbrage about “The administration’s public information campaign on the benefits of the ACA deserves a failing grade…you need to fix this.” 

Baucus continued his honest assessment by saying, “People generally dislike what they don’t understand. I hear from the people on the ground in Montana that they are confused about the new health care law. People are worried about the impacts…I don’t see any results.”
Much like LBJ, President Obama might have had a similar feeling when Baucus made his blunt sentiments known to the public. The clock is ticking on the many key reform measures that will affect most all Americans in the months and years ahead. Each generation has its own defining moments – both good and not-so-good. How will the “Baucus Moment” impact this and future generations?

One more thing. Baucus, a senator since 1978, just announced yesterday (April 23) that he will not seek reelection in 2014.

And, that’s the way it is…
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Seeking Truth in Health Care (Part I)

Iowa Employer Benefits StudyI recently had the privilege of presenting summary results of the 2012 Iowa Employer Benefits Study© to the Iowa Hospital Association (IHA) Board. This group consists of leaders from hospitals across the state who are confronted with many difficult and disruptive challenges that will forever change how health care will be delivered and paid. It is my view the paradigm shift occurring in the insurance industry, as great as it is, pales in comparison to what is happening in the health care provider world.

Health care is very a humbling subject – the deeper I dig to learn the truths about this vast topic, the less I actually know! What a great paradox – as the health care discussion is both exhilarating and frustrating at the same time.

My message to the IHA Board emanates from four observations about the employer community that come from previous consulting work, discussions with smart professionals, attending regional and national conferences, and from our annual studies. Such observations, in no particular order, are simply stating a few obvious facts:

  1. Health insurance premiums for Iowa employers have increased by 164 percent from 1999 to 2012. A great deal of uncertainty exists for employers about the future of health insurance.
  2. Momentum continues for employers to embrace wellness initiatives – as there is an increasing desire to have both a healthier and a more productive workforce.
  3. Lack of transparency in health care is a major concern and frustration to Iowa employers and their employees. Health insurance has become a huge distraction to employers.
  4. Health care reform is viewed with considerable skepticism by Iowa employers.

Again, I admit these observations are quite elementary, especially for those who follow health care issues and policies. However, it is the potential implications of these observations that will cause major disruption within the health care industry. In next week’s blog, I will address some of those implications and how health providers will most likely be impacted.

Vaclev Havel, a Czech playwright, essayist, poet, dissident and politician (President of the Czech Republic from 1993 – 2003) once said: “Keep the company of those who seek the truth. Run from those who have found it.”

I could not say it any better – especially in the ‘new world’ of health care.

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