June 22, 2022
“It's the Prices, Stupid,” was attributed to the deceased Princeton professor of political economy Uwe Reinhardt back in 2003.  It is still the case today as the sizable differences in health spending between the US and other countries are explained mainly by healthcare prices.  This week’s newsletter provides resources and examples to support this position.
Houston Hospital Pricing Transparency
In This Issue

Houston Hospital Pricing Transparency

CPI Report shows Healthcare Prices up 4%, but almost 14% for Health Insurance

Our Dysfunctional Healthcare Benefits Market

Mexicare

Events of Interest
June 27-28 (Detroit and virtual): National Alliance Leadership Summits
HBCH hosted a public forum on June 8 at which the RAND Hospital Price Transparency  results for thousands of hospitals was released along with a financial breakeven point for each hospital developed by the National Academy for State Health Policy. A Hospital Transparency dashboard  that combines data from the above tools, incorporates quality metrics, and shows hospital compliance with the federal price posting was also shared. 
Key Houston findings include:

  • Many Houston area hospitals charge more than 250% compared to Medicare.

  • Commercial profit margins for many area hospitals are more than 45%.

  • Commercial prices paid are more than 100% the breakeven for many Houston hospitals. Note: HBCH is not advocating that employers pay at breakeven.

Click here to view forum presentations.
Click here to see Houston Chronicle coverage..
Click here to see KRPC-TV coverage.  

If you attended and have not already completed the survey for the HBCH event, please help by completing the survey using the link below:
CPI Report shows Healthcare Prices up 4%, but almost 14% for Health Insurance
This week’s Keckley Report focuses on what the May CPI means for healthcare. 

  • Healthcare has seen relatively constrained price increases while the rest of the economy’s price hikes have soared

  • Insurance premiums increased 13.8% while most other components of healthcare have increased by less than 4%

  • The reality is that healthcare price increases, no matter how small, are passed through to purchasers in wildly variable pricing schemes that bear scant correlation to actual costs

  • Price sensitivity among consumers will increase in every sector of the economy including healthcare until inflation is controlled

  • The complicity of health insurers in healthcare price inflation will heighten tensions between providers and payers

  • The attractiveness of low-price goods and services in healthcare will increase significantly


Related to this news is a short video by Eric Bricker, MD (A-Healthcare-Z) that summarizes health plan profits  from 2010-2022. The compounded annual growth rate for most major health plans has been more than 20%, and for the past 12-months have exceeded 90% of all other U.S. stocks. While this is great for their shareholders it may not be good for those who have to pay for healthcare. 
Our Dysfunctional Healthcare Benefits Market
In a recent episode of the podcast Relentless Health Value Kevin Schulman, MD, one of the authors of a recent JAMA article entitled “The Dysfunctional Health Benefits Market and Implications for US Employers and Employees” was interviewed.
 
Key points:

  • Commercial insurance costs have gone up 4x the rate of other benchmark goods or services in price

  • Because insurer profits are capped at 15%, means that the more healthcare costs go up, the more possible profit in absolute terms that a health insurance carrier can make

  • Wall Street likes this profit-generating formula

  • Wall Street likes less restructuring and pushing providers to deliver better care for less cost and then passing those savings on to employers and employees

  • Non-Profit hospitals contribute to high prices by unnecessary real-estate development to lure more commercial payers

  • Health plans are limited in their impact as all healthcare is local

Mexicare
Read in Kaiser Health News. Call it “Mexicare”: Fed up with high medical bills, a family crosses the border. The Fierro family owed a Yuma, Arizona, hospital more than $7,000 for care given to mom and dad, so when a son dislocated his shoulder, they headed to Mexico. The care was quick, good, and affordable. The Fierros were trapped in a situation that more and more Americans find themselves in: They are what some experts term “functionally uninsured.” 

There are countless stories of people with good paying jobs and “good” employer sponsored coverage who find themselves unable to pay for healthcare. Medical debt is the leading cause of bankruptcy in the U.S. and it decreases the ability to save for retirement, purchase a home, take a vacation …
 
And all of this is happening in times of record profits for health plans and health systems. Is this yet another example of cultural decline in the richest nation in the world?