When I recently asked some friends for ideas for this column, their first response was why do we pay so much for insurance, and why do we still end up paying so much out of pocket? In this article, I want to discuss how we get up every morning and think about our aches and pains then decide whether to get some advice on what to do. And all too often, our decision about whether to ask a professional is based not on how long the pain has been there, where it is, or what other symptoms are associated, but rather how much it will cost, or whether the local provider takes my insurance. This leads to delays in treatment (a recent paper showed 26.7% of adults did this), visits to the ER only when the problem is more serious, higher costs, and subsequent worse outcomes due to delay in needed treatment.
The Trump administration has been on a mission to get rid of the Affordable Care Act. The benefits of this program to the participants and national healthcare costs have been clearly demonstrated. Income-based tax credits provided more affordable insurance and guaranteed coverage despite pre-existing conditions, and for basic health screenings. Trump and his HHS have eliminated those credits, with the result being health insurance costs for working families reaching over $20,000/year. The only solution for many has been to drop their coverage and hope they don’t get sick.
In a previous column, I wrote about the fact that the US spends more on healthcare than similar countries and has consistently worse outcomes for its citizens. This is because it costs more for medications, more for hospitalizations, more for doctors and more for administrators. Healthcare is big business; we spend $5 trillion a year, and it is about 20% of the US economy. We know that hospital costs are a significant contributor. Most hospitals are not-for-profit, though, so it isn’t that they are generating big profits for shareholders. Instead, they pay big bucks for every piece of equipment, every pill, and every administrator. Some CEOs make over $1 million a year, in addition to large bonuses; the UVM CEO makes almost $2 million a year. The hospital has become a profit center for the community. They pay employees who spend their money in the community, and as the hospital grows in size and reputation, that status draws more people and more spending. Because the hospitals (and insurance companies that pay them) need to buy all this stuff and pay all these people, they are constantly looking for ways to reduce their costs. Since they can’t lower the cost of drugs or equipment, and they are competing for the best people, they look for partners, joining into large hospital systems (which may not know the community), and contract with systems to purchase drugs (called pharmacy benefit managers-PBMs).
A word about PBMs. At this point, three companies manage 80% of all prescriptions filled. They pay the manufacturer one fee, then charge the provider (or patient) another. Theoretically, they can negotiate prices with the pharmaceutical company and control costs, but somehow, they generate billions of dollars in profit for themselves every year. Ultimately, we are paying for that.
It feels like an insurmountable problem. Hospitals form monopolies, as do insurance companies and PBMs. Doctors are rarely in private practice any longer, now choosing to be salaried by these big hospital systems. And, as with any other large and profitable industry, investment by private equity investors (rich people who see only profit and will exploit a business to get what they can out of it, then discard the carcass) has been increasing. There has been much scientific analysis of this intervention lately, appearing in the New England Journal of Medicine and the Journal of the American Medical Association. We need to pressure our representatives to recognize that healthcare should be for people, not for profit, and that the government needs to do a better job limiting those profits and directing care to where it is needed.
Consenstein is a retired physician who lives in Fayston.
