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US healthcare cost solutions
#11
Not from Trump though..

Quote:A lot happened in the 2016 campaign, but one of the things Donald Trump did to win the election was shift to the left on a number of key issues — promising to avoid cuts in Social Security and Medicare benefits and adopting a longstanding Democratic pledge to let Medicare negotiate bulk discounts in the price it pays for prescription drugs

Today, after a meeting with pharmaceutical industry lobbyists and executives, he abandoned that pledge, referring to an idea he supported as recently as three weeks ago as a form of “price fixing” that would hurt “smaller, younger companies.” Instead of getting tough, Trump’s new plan is that he’s “going to be lowering taxes” and “getting rid of regulations.”
After meeting with pharma lobbyists, Trump drops promise to negotiate drug prices - Vox
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#12
And then they blame Obamacare for bad and expensive healthcare in the US

Quote: Wrote:Are you angry about your health insurance premiums? You should be. Last year, $130 billion of your private health insurance money was spent — wasted, mostly — on administrative costs. That’s 12% of your total bill, and just over $1,000 per American household. Those figures come from the independent Kaiser Foundation. 

So how nice it was that Stephen Hemsley, CEO of UnitedHealth Group stopped by for some glad-handing with the president. 
Last year his company billed its customers $35.5 billion to pay for administrative costs and stockholders’ income. That’s before paying for a single pill, doctor, scalpel, or CAT scan. 

That represents one-fifth of the company’s $185 billion in revenues and a quarter of the $144 billion its customers paid in insurance premiums. No wonder Hemsley has been paid $15 million a year in recent years. Indeed, last year’s proxy statement shows Hemsley has accumulated 3.2 million UnitedHealth Group shares. Total value today: $528 million. You read that right.
Does Trump really know how to fix Americans’ health care? - MarketWatch

Turns out, shareholder capitalism is a big problem also in healthcare..
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#13
Quote:Last summer, Matt Anderson cut his finger on a knife while doing dishes. He’s a college student, and his roommate, a biology major, suggested that he go to the emergency room. He had recently used the same knife to cut raw meat and thought Anderson’s finger might get infected. Anderson estimates he got to the emergency room around 11 pm. A nurse saw him shortly after midnight and cleaned his wound. A doctor came by a little later to apply liquid stitches to his finger. Anderson went home around 1 am. “I saw a nurse for maybe five to 10 minutes and a doctor for maybe five minutes tops,” he says. A few months later, the bills arrived at his parents’ house: $2,782 in total.
A college student got liquid stitches and a bandage at the ER. Then he got a $2,783 bill. - Vox

Welcome to the wonderful world of US healthcare..

And you think this is going to change? 

Quote:Investors have less to fear with Trump's drug pricing talk than they thought because it's just that — talk. We know that because Republicans in Congress don't seem interested in taking up the cause at all.
What Trump will do about high drug prices - Business Insider

hahaha
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#14
Here is one big problem

Quote:Frankil’s troubles cannot be traced back to insurers or drug companies, the usual suspects that most people deem responsible for raising costs in the health-care system. He blames a collection of powerful corporations known as pharmacy benefit managers, or PBMs. If you have drug coverage as part of your health plan, you are likely to carry a card with the name of a PBM on it.

These middlemen manage prescription drug benefits for health plans, contracting with drug manufacturers and pharmacies in a multi-sided market. Over the past 30 years, PBMs have evolved from paper-pushers to significant controllers of the drug pricing system, a black box understood by almost no one. Lack of transparency, unjustifiable fees, and massive market consolidations have made PBMs among the most profitable corporations you’ve never heard about.

..

PBMs were formed in the late 1960s, initially to help with claims processing. As insurance plans started to offer prescription drug benefits, PBMs filled out paperwork, making sure reimbursements were passed along to pharmacies. And for a while, they really did provide a service, as one of the first health-care players to fully computerize claims-processing. This made the system more efficient and enhanced the fledgling industry’s credibility.

Over time, PBMs presented themselves as a cost-reducer. By aggregating customers of health-plan sponsors—insurance companies, big employers that self-insure, unions, state and federal employee plans, even Medicare and Medicaid—PBMs could form large patient networks, and negotiate discounts from both drug companies and pharmacies, which would have no choice but to contract with them to access the network. The savings would consequently pass through to plans and their patients. It sounded great.

This approach can work, when it truly represents what John Kenneth Galbraith termed countervailing power—when one large economic force counteracts another and prevents excessive advantage. But when one source of private power becomes the new monopolist, the idea backfires. A monopolist armed with state power and committed to serving the public interest—such as the VA’s power to negotiate drug prices—is a very different story.

...

According to data from the Centers for Medicare and Medicaid Services, between 1987 and 2014, expenditures on prescription drugs have jumped 1,100 percent. Numerous factors can explain that—increased volume of medications, more usage of brand-name drugs, price-gouging by drug companies. But PBM profit margins have been growing as well. For example, according to one report, Express Scripts’ adjusted profit per prescription has increased 500 percent since 2003, and earnings per adjusted claim for the nation’s largest PBM went from $3.87 in 2012 to $5.16 in 2016. That translates into billions of dollars skimmed into Express Scripts’ coffers, coming not out of the pockets of big drug companies or insurers, but of the remaining independent retail druggists—and consumers.

Why haven’t PBMs fulfilled their promise as a cost inhibitor? The biggest reason experts cite is an information advantage in the complex pharmaceutical supply chain. At a hearing last year about the EpiPen, a simple shot to relieve symptoms of food allergies, Heather Bresch, CEO of EpiPen manufacturer Mylan, released a chart claiming that more than half of the list price for the product ($334 out of the $608 for a two-pack) goes to other participants—insurers, wholesalers, retailers, or the PBM. But when asked by Republican Representative Buddy Carter of Georgia, the only pharmacist in Congress, how much the PBM receives, Bresch replied, “I don’t specifically know the breakdown.” Carter nodded his head and said, “Nor do I and I’m the pharmacist. … That’s the problem, nobody knows.”

This lack of transparency enables PBMs to enjoy multiple hidden revenue streams from every other player
The Hidden Monopolies That Raise Drug Prices

More market failures, like dominant market power, information advantages..
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#15
Quote:The EpiPen pricing controversy is enough to trigger mental anaphylactic shock. First, Mylan raised the list price of EpiPens to more than $600 a pair. When protests predictably erupted, Chief Executive Officer Heather Bresch went on TV to say that if she cut the price of EpiPens, some people wouldn’t be able to get them anymore. Which is weird, because usually a lower price makes things easier to getThen, on Aug. 29, Mylan announced it will sell a generic version of EpiPens at half the price—but keep selling the identical brand-name version at full price. Because, um, some people will be happy to spend twice as much as everyone else for their EpiPens? None of this, including the original price hike, makes sense if you think of brand-name pharmaceuticals as normal products whose prices are set by the forces of supply and demand.
The EpiPen Drama Shows What’s Wrong With How Drugs Are Priced - Bloomberg

Quote:Insulin has been around since 1923, so it came as a surprise in July 2015 when Cole LePere's doctor told his mother, Janine, to prepare to pay a lot at the pharmacy for it. Cole, who was 10, had just been found to have Type 1 diabetes, which commonly affects children. But even the pharmacist was shocked to see the price. Over and over, the pharmacist told Janine LePere, "This is really expensive." Each time she would respond, "I know, thanks, but I still need the medicine." The pharmacist finally gave the LePeres the supplies — and a bill for $1,550.

That was after a $350 coupon. As lawmakers and the public scrutinize dramatic price increases for other old drugs — most recently with the Mylan-owned EpiPen, which saw its cost go up by 500% in the past nine years — the next flash point may be insulin, a drug both ubiquitous and complicated. And the story of why the LePeres are now paying as much as their mortgage payment on insulin, even though they have insurance and even though there are competing drugs on the market, is really the story of what has happened to the healthcare industry in America since the start of the century.

These days his mother says she spends $1,100 out of her pocket each month on his diabetes supplies. The list price of the drugs he takes, called Humalog and Lantus and made by the drug companies Eli Lilly and Sanofi Aventis, have risen by about 300% over the past decade. Many patients don't pay anything close to that sticker price. Some families Business Insider spoke with had their insulin mostly or entirely covered by insurance. But at the same time drug companies were increasing prices for many drugs, insurance plans have been going through their own transformation, leaving more families like the LePeres on the hook for far more of that cost. In half a dozen conversations with mothers of children with Type 1 diabetes, we heard stories like Janine LaPere's. The anxieties of these families don't just end with their monthly paycheck. Diabetes is a lifelong disease, and they worry too about what their children will do when they no longer have their parents' insurance covering them.
Rising insulin prices are taking a toll on parents of kids with Type 1 diabetes - Business Insider
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#16
Quote:Patients can easily — and inadvertently — rack up thousands of dollars of surprise medical bills. Many don’t know they have options besides gritting their teeth and paying. When Melinda Massa, a retired special education teacher in Virginia, went for a blood test a few years ago, she was stunned to receive a whopping $1,200 bill later. Massa assumed it was a mistake. But it wasn’t: The clinic, which was in-network, had sent the test to an out-of-network laboratory. Massa hadn’t even know that was possible until she got the bill.
The expensive risk lurking in nearly every medical experience you have - MarketWatch
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#17
Quote:Eric Pusey has to bite his tongue when customers at his pharmacy cough up co-payments far higher than the cost of their low-cost generic drugs, thinking their insurance is getting them a good deal. Pusey’s contracts with drug-benefit managers at his Medicap Pharmacy in Olyphant, Pennsylvania, bar him from volunteering the fact that for many cheap, generic medicines, co-pays sometimes are more expensive than if patients simply pay out of pocket and bypass insurance. The extra money -- what the industry calls a clawback -- ends up with the benefit companies. Pusey tells customers only if they ask. “Some of them get fired up,” he said. “Some of them get angry at the whole system. Some of them don’t even believe that what we’re telling them is accurate.”
Sworn to Secrecy, Drugstores Stay Silent as Customers Overpay - Bloomberg
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#18
Quote:The American healthcare system is rigged against you,” journalist Elisabeth Rosenthal writes in her new book, An American Sickness.

Rosenthal got a behind-the-scenes peek at the bamboozling when she was working full time as a doctor in the 1990s. She remembers one appendectomy patient, already in a hospital gown, pleading, “You guys [already] took my wallet … I don’t have a credit card.” The hospital was hassling the patient for a credit card number before continuing with the procedure, and the patient had to scramble to recover a card number from a friend before the operation could begin. It was clear to Rosenthal that profit came way ahead of patient care.
“That’s theater of the absurd,” says Rosenthal, the editor-in-chief of Kaiser Health News and a former New York Times writer.

But while anecdotes of the absurd, dysfunctional medical system abound these days, it can be difficult to know how best to navigate health care and avoid massive bills.
How to avoid getting ripped off at the hospital - Vox
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#19
This is how crazy it has gotten: crowdfunding to be able to survive..

Quote:Lonnie Cucinitti gets choked up when he thinks about all the people in his life who chipped in when he needed money for his four prescriptions. The 76-year-old Texan launched a GoFundMe page in January with the hopes of collecting enough money to cover his 90-day prescriptions. He shared the fundraiser on his Facebook page, and he started receiving small donations, a few from people he didn't know.  Most came from friends he had made while he was in the Navy, whom he'd met more than 50 years ago.  "It makes me very emotional to think that people I met 50 years ago would care enough to send $50," he told Business Insider.
Crowdfunding for prescription medications - Business Insider
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#20
From Insights from Yale

Why Is Healthcare So Expensive?

ZACK COOPER  FEBRUARY 12, 2016

A new study by Yale professor Zack Cooper lifts the lid on the Byzantine pricing system in U.S. healthcare by examining how much privately insured patients really pay for procedures. Cooper spoke with Yale Insights about why costs are so high and how he thinks policy responses can fix the broken healthcare market.

Q: You co-authored a working paper, “The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured,” that analyzed an enormous set of data that had never been publically available. What was the data and how did you get it?

The negotiated transaction prices paid by private insurance companies to healthcare providers have been treated as commercially sensitive data and therefore have been largely unavailable to researchers. But three of the five largest insurers in the nation, Aetna, United, and Humana, made a database of health insurance claims data available for research through a nonprofit called the Healthcare Cost Institute.

The data covers 2007 to 2011 and more than 88 million unique individuals, or nearly one in three individuals in the U.S. with private health insurance. While it is anonymized, the data are incredibly granular. Basically, we have claims-level data for 1% of GDP each year.

Q: What do we know about why healthcare in the U.S. is so expensive? Where has the data for that come from in the past?

There’s a lot we haven’t known about why healthcare in the U.S. is so expensive. In part, that’s because almost everything we knew came from analysis of Medicare data. Medicare covers about 16% of the population, primarily people over 65. The world of the privately insured has been a big black box, but about 60% of the country gets their coverage from private insurers and they are under 65.

Part of this work has been asking to what extent our understanding of health spending borne from the analysis of the Medicare population is generalizable to the privately insured. This is a hugely important question for policy because we’ve effectively assumed that the patterns in health spending for the two populations— Medicare recipients and the privately insured—are similar so one policy will address both.

[Image: Average-Hospital-sm.jpg]

We found the correlation between spending for the two populations is about 14%. That is very, very low. Many of the places that we’ve been using as models for the nation, based on their low spending for the Medicare population, are high spending for the privately insured.

It’s incredibly important to understand why spending on Medicare and the privately insured are differentFor Medicare, the quantity of care is the driver. For the privately insured, price explains the majority of health spending variation.

Medicare prices are set by the federal government. On the private side, each hospital engages in a negotiation with each insurer. These private prices are a function of negotiation between two parties. Spending is a function of price times quantity. On the Medicare side, price doesn’t really vary, so regions that are expensive—like McAllen, Texas, and Miami, Florida—are expensive to Medicare because they provide a lot of care to each patient. They are more likely to do an MRI. They are more likely to hospitalize for certain conditions. They are more likely to put patients in an ICU.

On the private side, quantities vary just as they do on the public side, but prices vary as well—they’re not set by a regulator. We find that while quantity matters some, price plays an incredibly large role in driving healthcare spending for the privately insured.

This tells us that the avenues to target healthcare spending probably differ for the Medicare population and the privately insured. For Medicare, the goal should be to reduce excess quantity. On the private side, we don’t want to see excess care, but we really have to target price.

Q: The research also examines the significant variation in prices charged to privately insured patients. Could you explain those findings?

We looked at seven different procedures and found that prices vary tremendously across the U.S. and within geographic areas. Across the country, the price of a knee replacement can vary by up to a factor of 17—the most expensive hospital is 17 times as expensive as the least expensive hospital. Within geographic areas, that can be, for knee replacements, up to a factor of eight. Lower-limb MRIs, when you set aside the reading of the MRI, don’t have much quality variation, yet, as an example, the most expensive hospital in Miami is charging nine times as much for an MRI as the cheapest provider.

Q: Could a hospital’s reputation for quality drive the price variations?

We hoped to find that higher-quality hospitals have higher prices, potentially indicating functioning markets. We found a very small relationship between hospitals’ quality and their prices.

There is a negative return to being low quality. The worst-performing quartile on quality scores have prices about 3% lower than an average-quality hospital. At the other end, hospitals ranked highly by U.S. News and World Report are about 13% more expensive than other hospitals. But it’s a very small relationship considering the scale of the price variation we see. The factor that explains most of the variation is hospital market power.

Why are some hospitals able to charge 17 times more than other hospitals? Why can one provider charge 9 times what another does within a city for the exact same thing? Because the markets are not functioning effectively.

When hospitals merge, they have the opportunity to charge incredibly high prices. Monopoly hospitals can extract higher prices when it comes to negotiations with private insurers. If you are the only provider in the area, you have the chance to get much, much higher prices than if you were facing meaningful competition. The advantage is still there in duopoly or triopoly markets.

We saw about 100 hospital mergers last year; that’s the highest that we’ve seen in the last 15 years, but deals have been going on year after year. We’ve got to look at these mergers with a lot more scrutiny. We’ve got to look a lot more closely at how healthcare providers price their services and how that affects individual families and the wider economy.

Q: Are there difference between nonprofit and for-profit hospitals in terms of their prices?

We found, consistent with the wider literature, that not-for-profits behave identically to for-profits. That is, their prices are equally high, and they are also likely to charge higher prices when they have monopolies.

Given that nonprofit hospitals receive $30 billion annually in subsidies in the form of tax exemption, I think we have to ask tough questions about whether or not we should be giving not-for-profit status to these large hospitals.

Q: Where does the additional money paid to providers go?

It’s a great question, and we don’t know. My instinct is that it goes to the leadership of these hospitals in the form of higher pay and it gets reinvested into the facility, some of which goes to better patient care, some of which goes toward shinier buildings and fancier technology with unclear benefits for patients. That’s something that I’m looking at now.

Q: What are the policy implications of this research?

This study tells us that insurance premiums are so high because healthcare provider prices are incredibly high. The way to rein in the cost of healthcare services is by targeting the massive variation in providers’ prices. We can do that by making prices more transparent, making these markets more dynamic, and really blunting the monopoly power that a lot of large healthcare providers have, which has allowed them to raise prices.

In making these changes, there are certainly roles for insurance companies, employers, and patients, but frankly, the largest role is probably for the federal government. Right now, for a hospital to get paid by Medicare it has to report quality data. I think hospitals should also be required to report their prices.

And critically, we need antitrust enforcement. We have to stop some of the extraordinary mergers that have been occurring with rapidly increasing frequency over the last 10 to 15 years. That’s what is giving hospitals more market power and allowing them to extract higher prices.

Q: How much of a political challenge would that be?

Healthcare is one of the most heavily lobbied industries in America. The hospital industry itself is 8% of GDP, so there would be a lot of pushback. But when we compare the pushback to the pain that high healthcare costs are inflicting on all of us, the impetus for action is pretty clear.

Q: What is the role for business?

Part of what’s so interesting in healthcare right now is that a $2.7 trillion industry that’s rife with inefficiency leaves tremendous space for innovators to come in and disrupt the status quo. We are starting to see companies do that.

Since business pays a portion of the insurance premiums for millions of employees, CEOs are aware that healthcare costs are an enormous strain. For manufacturing companies, it can be the largest input price to the cost of production.

Some companies are doing an amazing job seeking creative ways to reduce healthcare costs. I know of one firm that’s actually paying patients to choose a lower-price MRI. It’s the same quality. The patient is paid $500. The company still pays less overall. Everybody wins.

Or, if I’m an employee in a Chicago office, perhaps my company will allow me to fly to the Mayo Clinic or to MD Anderson in Texas where, potentially, I can get care that is both cheaper and higher quality than I can get locally.

If prices were more transparent, that would help patients be effective choosers. Increasing patients’ sensitivity to price and quality and their willingness to travel further to get better and lower cost care could have an impact. But right now, we have a very complicated market with almost no information. The federal government has the most power to effect change.

Q: Does this research offer any insight on where U.S. healthcare fits globally?

The U.S. is an outlier because it is one of the only countries where healthcare prices are market determined. In most countries, the prices are regulated. One of the challenging questions in healthcare is whether the ways that healthcare differs from traditional markets allow prices to be set through negotiation. I think the jury is still out.

Ultimately, if making these markets more transparent and increasing competition doesn’t rein in price, then we need to think about whether healthcare is so different from other sectors of the economy that it requires something like price regulation.

Q: What are the next steps for research?

We had the opportunity to analyze data at a scale that nobody had done before. We examined nearly a third of the privately insured patients in the U.S., but we need more data. For example, we don’t have data from Blue Cross Blue Shield. I’d love to see how they compare. I’d like to make a plea to the folks who read this interview: if you work for an insurance company, please make your data public. We tackle big challenges by getting more and better information. More data will give us a richer and more nuanced picture of healthcare spending in the United States.

Going forward, I’m also doing some really interesting work with my Yale colleague Fiona Scott Morton where we’re actually going to work with a large insurer to see if we can present information and structure monetary and non-monetary incentives in a way to help patients make better choices—choose better care at a lower price. It’s putting the evidence from this paper into action and seeing if we can really begin to come up with scalable solutions. I’m excited to see what we find.
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