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By Tara Siegel Bernard
The New York Times, September 1, 2014

Anita Maina was working on an arts and crafts project she found on Pinterest — creating a table out of wood and cork — when she ripped off a fingernail while removing staples from a piece of wood.

“It is one of those things that really hurt, and I thought I should go to urgent care,” said Ms. Maina, 27.

But she ultimately skipped the visit since she had not met the $6,000 deductible on her health plan, and she knew she probably did not have much left in her health savings account, a type of tax-advantaged savings vehicle that is often used with high-deductible plans to help defray out-of-pocket costs.

Ms. Maina, an associate in a health and human services consulting agency, said her employer added the high-deductible plan earlier this year; though her monthly premiums are only $34, these plans require employees to pay for a greater share of their medical expenses upfront, before the plan starts making payments.

Next year, even more corporate workers are likely to be offered high-deductible plans — sometimes known more benignly as consumer-directed plans — and at a rising share of large companies, it will be the only option remaining.

“You can’t sugarcoat this,” said Paul B. Ginsburg, a professor of the practice of health policy and management at the University of Southern California’s Sol Price School of Public Policy. “This is a more challenging situation for consumers and it’s a reflection of how difficult it is to afford health care.”

Just as employers replaced pensions with retirement savings plans, more large companies appear to be in a similar cost-sharing shift with health plans. Besides making workers responsible for more of their care, employers hope these plans will motivate employees to comparison-shop for medical services — an admirable goal but one that some say is hard to achieve.

Several big companies started offering consumer-driven plans as their only option in the last couple of years, including JPMorgan, Wells Fargo, General Electric and Honeywell, among others; it is the only choice for Bank of America employees earning more than $100,000.

Next year, nearly a third of large employers will offer only high-deductible plans — up from 22 percent in 2014 and 10 percent in 2010, according to a study by the National Business Group on Health, which included 136 large companies that collectively employ 7.5 million workers. And 81 percent of those large employers will have added one of these plans to their lineup of choices, up from 53 percent in 2010.

With high-deductible health plans, consumers pay for all their medical services — at the insurer’s negotiated rate — until they meet their deductible. After that, consumers typically pay coinsurance, which is a percentage of each service — say 10 to 35 percent — until they reach the out-of-pocket maximum.

That is scheduled to be generally capped at $6,450 for singles and $12,900 for families in 2015, according to the Kaiser Family Foundation, and includes items like deductibles, coinsurance and co-payments, but not premiums, which tend to be lower in these plans.

So it is easy to see how shopping for an M.R.I. of the lower back — which canrange from roughly $415 to $4,530 — would suddenly pay off for both the employee and the employer.

“There are different approaches to cost containment,” said Professor Ginsburg. “One is having a lot of skin in the game, or just having to pay for a lot of your health care.”

Insurers and independent providers, including Castlight and Healthcare Bluebook, offer tools that help consumers estimate their costs and the quality of the providers. But shopping around can still be challenging.

“Castlight and others like it make a valiant effort to provide price and quality information,” said Uwe E. Reinhardt, a health policy expert and professor at Princeton.

“But the question is whether the prices they give you are binding. To really shop around effectively, prospective patients need binding prices.”

Castlight — working with more than 130 large employers — provides consumers with tools that offer personalized pricing and quality information for services within their insurer’s network. But even the most diligent shoppers can run into problems.

“They may have done everything right,” said Dr. Dena Bravata, Castlight’s chief medical officer. “They may have picked an in-network gastroenterologist for a colonoscopy. But then you don’t know if you need to have a biopsy, which then goes to a lab or pathologist who is out of network.”

And using the tools can simply be impractical in certain circumstances. “Most health care costs are incurred by very sick patients, such as those with heart attacks, strokes, cancer, mental illness, injuries — often under emergency conditions,” said Sara Collins, vice president for health care coverage and access at the Commonwealth Fund.

Another concern is that some people will be ill prepared to handle large bills, and will forgo care as a result. “If you go to the pharmacy and there is a $1,000 deductible on your drug benefit, they aren’t going to write you a five-year loan,” said Karen Pollitz, a senior fellow at Kaiser.

High-deductible plans are often used with health savings accounts. As long as the plan deductibles in 2015 exceed $1,300 for single people or $2,600 for families, and meet other criteria, employers and workers can deposit money into the H.S.A.; in 2015, individuals will be allowed to contribute up to$3,350 in pretax dollars (or $6,650 for family coverage). The money grows tax-free and can be used to pay for out-of-pocket health care expenses. (Health reimbursement accounts can also be used, but those are largely controlled by employers, and workers cannot keep the money if they leave.)

The National Business Group on Health’s study found that the vast majority of large employers make deposits. But Kaiser’s 2013 survey, which covers both small and large employers, found that about half of employers do not fund these accounts. Of those that do, Kaiser found they deposit $950 for singles with health savings accounts, on average, and $1,680 for families.

Kaiser also found that the average deductible for single people in a high-deductible plan paired with a health savings account was $2,098 in 2013, while it was about $4,037, in aggregate, for families.

Employers can insulate their workers by depositing more generous amounts into their H.S.A.s, which employees keep even if they leave the company. “Once it becomes their money, they treat it like their money, and there is that desire to shop,” said Brian Marcotte, president of the National Business Group on Health. “And that is what employers are trying to do.”

That was one of the attributes that was most attractive to Matt Van Horn, a 46-year-old senior software engineer who lives in Lafayette, Calif., with his wife and 13-year-old son. His employer, an online apparel company, contributes $1,500 into an H.S.A., or half of his family’s $3,000 deductible. “I like having the H.S.A., and the fact that it will survive the insurance policy,” he said, adding that the policy feels more like catastrophic coverage, although preventive care is fully covered (as it is with all high-deductible plans).

Given the increased adoption of the plans — Kaiser estimates about 20 percent of workers covered by plans were enrolled in a high-deductible plan with a savings account option in 2013, up from 8 percent in 2009 — consumers will need to weigh their options more closely during open-enrollment season.

“Understanding the mechanics of these plans is really important,” Mr. Marcotte said. “When you walk into the pharmacy and all of a sudden it costs $200 as opposed to $20, there is sticker shock.”

When evaluating these plans, consumers need to ask themselves several questions: Do you have the money to pay for all medical expenses until the deductible is met? What is the out-of-pocket maximum — can you afford that? And are you the type of person who will skip needed care if you need to pay out of pocket?

Many workers may not have a choice — a high-deductible plan may be their only option. “If the deductible is very high, all of a sudden the financial protection part of insurance, you are losing that,” Professor Ginsburg said. “You still have protection against very high claims, but you have people who may have to pay $5,000 during one year toward the cost of their care or more. And a lot of people don’t have that kind of savings.”

http://www.nytimes.com/2014/09/02/business/increasingly-high-deductible-health-plans-weigh-down-employees.html

By Sarah Kliff
Vox, September 2, 2014

1) Americans pay way, way, way more for health care than anyone else

Health care in the United States is expensive. Insanely, outlandishly expensive.

We spend $2.8 trillion on healthcare annually. That works out to about one-sixth of the total economy and more than $8,500 per person — and way more than any other country.

If the health-care system were to break off from the United States and become its own economy, it would be the fifth-largest in the world. “It would be bigger than the United Kingdom or France and only behind the United States, China, Japan and Germany,” says David Blumenthal, executive director of the non-profit Commonwealth Fund.

Or here’s another way to put it in its (insane) perspective: The US, which has a mostly private health-care system, manages to spend more on its public health-care system than countries where the health-care system is almost entirely public. America’s government spends more, as a percentage of the economy, on public health care than Canada, the United Kingdom, Japan or Australia. And then it spends even more than that on private health care.

The reason that we spend so much money isn’t because we go to the doctor a ton. On average, Americans actually see the doctor less than people in other countries.

The reason that American health care is expensive is all about the price: when we go to the doctor, it costs more than when, say, someone in Canada goes to the doctor.

Part of this is about the price per unit of health care in the United States. From prescription drugs to imaging scans, nearly everything costs more when it’s prescribed in America. Take the heartburn medication Nexium: the exact same medication costs $215 here and $23 in the Netherlands.

Most other countries have some form of price controls; the government negotiates with drug companies and device makers for lower prices, and the government has the power to win those negotiations. The United States doesn’t do that. It leaves the negotiations up to individual insurers. And they tend to lose.

Defenders of the American system argue that price controls stifle innovation. Many say that our higher spending creates financial incentives for drug companies to come up with wonderful new drugs. And they’re probably right. But that means we’re paying higher prices to subsidize drugs for the rest of the world.

There are more nuanced ways that our health-care prices are more expensive, too. Harvard University’s David Cutler points out that we have much higher administrative costs than most other countries — and those costs get tacked onto the bill when we go to the doctor. The average American doctor spends All those extra billing specialists’ salaries have to get paid somehow — and that gets worked into our prices.

Lastly, American hospitals tend to throw more technology at health problems — a heart attack, for example, is treated with more scans and tests in America than elsewhere, and that also drives up the price of going to the doctor in the United States.

The net price of a heart attack in the United States, then, is more expensive because of the unit price of each service delivered, the more intense treatment and the additional administrative costs of processing the ultimate insurance claim.

2) We pay doctors when they provide lots of health care, not when they provide good health care

The best way for a doctor to make money in the United States right now is simple: prescribe treatments.

The American health-care system by and large runs on what experts describe as a “fee-for-service” system. For every service a doctor provides — whether that’s a primary care physician conducting an annual physical or an orthopedic surgeon replacing a knee — they typically get a lump sum of money.

That’s how most businesses work. Apple gets more money when it sells more iPads and the Ford gets more money when it sells more cars. But health care isn’t like iPads or cars. Or, at least, it’s not supposed to be.

When patients buy knee replacements, for example, what they’re buying isn’t really knee surgery itself. What they’re trying to buy is an improvement in their health.

But here’s the thing: most American doctors aren’t paid on whether they deliver that improved health. Their income largely depends on whether or not they performed the surgery, regardless of patient outcomes. Their patient’s knee could be good as new or busted as always at the end — but, in most cases, that doesn’t factor into their surgeon’s ultimate pay.

There are certainly many non-financial incentives for doctors to help their patients get better; it’s hopefully a big part of why they got into medicine in the first place. But those intrinsic motivations are often in tension with most doctors’ financial interests.

There is a growing movement in health care to change this and tether payments to patients’ outcomes. The non-profit Catalyst for Payment Reform estimates that 10.6 percent of all health care dollars paid are paid in some type of value-based arrangement, where the patient’s outcome factors into how much the health care provider earns.

Obamacare is running dozens of little experiments in the Medicare program that also try to pay doctors more when they provide higher quality care. There are now penalties, for example, if a patient returns to the hospital after something was screwed up the first time. Those seem like they might be working; the number of preventable readmissions has steadily dropped since late 2010.

But all these experiments are on the margins of the American healthcare system. For most doctors, the bargain is as it’s always been: do more stuff, get more money.

3) Half of all healthcare spending goes towards 5 percent of the population

Americans are not equal health care spenders. There’s a handful of patients who use lots of medical services — and tens of millions of people who barely go to the doctor at all.

The National Institute for Health Care Management estimates that, in 2009, about half of health spending ($623 billion) went towards 5 percent of the population. On average, these are people who use $40,000 of health care annually.

The lower-spending half of the population, meanwhile, spent a paltry $236 per person during that same year.

High health-care spenders aren’t richer Americans buying up lots of health care. Instead, these tend to be the sickest patients. They are older and living with multiple chronic conditions, like diabetes and high blood pressure. These are people who take multiple trips to the hospital per year and many prescription drugs every day.

For health-care experts, this spending pattern suggests that the real space to save money is focusing on these high spenders. “What it says to me,” Commonwealth Fund’s Blumenthal says, “is we have a huge opportunity to do something that’s humane and practical by focusing extra attention these parts of the population.”

This is the approach that Atul Gawande described in his influential New Yorker article, “The Hot Spotters.” There, Gawande looked at a New Jersey practice that put extra resources towards a handful of patients who kept turning up in the emergency room. It would have nurses check up on patients to make sure they took their medications — and it worked. Patients got better, and their spending went down.

Whether that type of hands-on, labor-intensive intervention can scale up in a big way remains to be seen. But the spending patterns of the health-care system suggest that the biggest gains are to be made by focusing on the sickest patients.

4) Our health insurance system is the product of random WWII-era tax provisions

If you want to understand why we are the only developed country with an employer-based health insurance — really, the only one — then you had better get familiar with the 1954 Internal Revenue Service Tax Code.

The 1954 Internal Revenue Service Tax Code is the document in which the federal government codified into law that companies can provide health insurance benefits to workers tax-free. This affirmed a 1943 IRS Tax Court ruling that had also decreed health benefits to be non-taxable.

The early decisions were made in the context of a wartime tax code. There were overwhelming taxes meant to stop wartime profiteering and keep unions from shutting down production to extract wage gains. But when health care was protected from these taxes, it immediately became incredibly valuable to workers, and companies were able to keep it tax-free even after the war. The result is that a dollar in health benefits is worth more to a worker than a dollar in wages, because the dollar in health benefits is untaxed and the dollar in wages is taxed.

“That’s a huge discount off the price of health insurance,” says Melissa Thomasson, an economist at Miami University who has written extensively on the history of health insurance. “And it happened very quietly. I looked a few years ago to find out the name of who made the decision, and it’s been lost to history.”

Flash forward about 80 years or so, and the health insurance tax break is the biggest in the federal budget; the government loses out on $260 billion annually by not taxing health benefits. The majority of non-elderly Americans get their health insurance at work, and with good reason: the tax-free dollar can buy a lot more medical care.

But economists on both sides of the political spectrum hate this tax break.

For one thing, it’s regressive. As a rule, people who have jobs that offer healthcare benefits are paid more than people who don’t have jobs that offer healthcare benefits — or who don’t have jobs at all. And remember that someone is ultimately paying for this tax break. In short, we’ve created a tax system where the people with good jobs are getting their health care subsidized by the people with worse jobs or even no jobs.

The tax exclusion also drives up demand for expensive health insurance. Partly, this is because of the subsidy. But partly, it’s because employees usually don’t know the real prices of their health benefits. Though ultimately economists believe that the money employers spend on health benefits comes from the money they would have spent on wages, workers don’t feel the direct cost of their health-insurance choices, and so they have little reason to try to keep spending low.

Doing away with the tax exclusion might seem like a no-brainer, but it’s very politically difficult. It would mean a huge price increase on employer-sponsored insurance, which is not a popular platform to run on (John McCain got nailed for suggesting capping, not eliminating, this particular tax exclusion).

Obamacare did manage to make some inroads. It includes a 40 percent tax on the most expensive insurance plans that starts in 2018. Know as the “Cadillac tax,” this fine will hit any insurance plans that cost more than $10,200 for an individual or $27,500 for a family. That tax is meant to push back against the too-generous plans that the tax exclusion encourages.

What the Cadillac tax does not do is eliminate the tax-exclusion for employer-sponsored coverage. Instead, it puts a dent in a 60-year-old policy — one that was set up with little forethought and is pretty much universally derided by health economists on both ends of the political spectrum.

5) Insurance companies have small profit margins

Health insurance companies are an incredibly easy target for any antipathy towards the American health care system. They’re the ones that deny claims for the care that we want, but still charge an always rising premium for their coverage.

But here’s one fact about insurers that often gets lost in the debate over health care: their profit margins tend to be relatively small. Yahoo Business estimates that the health-care sector as a whole runs a 15.4 percent profit margin. Health plans, meanwhile, have an average profit margin of 3.2 percent.

“I’ve asked an audience of doctors what share of the money that goes to insurance companies gets kept there, and most audiences will guess the company keeps about 50 percent of it,” Harvard’s Cutler says. “The truth is, they keep about 10 to 15 percent of it, and most of that goes towards claims processing and administration.”

As to who makes the most money, it’s mostly drug companies and device manufacturers — the people who make the things that insurance companies buy. They typically run profit margins around 20 percent.

One reason the cost of American health care is so high is that insurers are so weak. Having hundreds of different carriers, for example, means no one insurer has lots of negotiating power — hence those high prices drug and device makers can charge.

This suggests that tamping down on insurers’ profits won’t do much to tamp down on overall healthcare costs. They’re not pocketing a large amount of premiums; instead, they’re spending those premiums on a really expensive medical products.

“Only a nickel of your premium dollar stays with the insurance company,” says Uwe Reinhardt, a health economist at Princeton University. “The profits of insurance companies are truly a trivial part of national health spending.”

Video break!

We have covered a lot of territory — and still have a little ways to go. So now’s as good of a time as any to take a short breather and be thankful for how well the airline industry works.

Or, at least grateful for the fact air travel isn’t like health care. Even with the lengthy delays, terrible food and undignified battles over reclining chairs, just imagine how much worse your flights would be if a hospital called a shots. That, as this video underscores, would be utterly horrifying.

6) Getting health care in the United States is dangerous

We don’t know exactly how many Americans are killed in hospitals each year, but we do know that it is a lot.

In 1999, the Institute of Medicine published a seminal report titled To Err is Human, which estimated that at least 44,000 patients — and as many as 98,000 — die in hospitals each year as results of medical errors.

Even using the lower-bound figure, that would mean medical errors in hospitals kill more people annually than “such feared threats as motor-vehicle wrecks, breast cancer, and AIDS.”

A follow-up study published in 2013 argued that the IOM numbers were a vast underestimate, and that medical errors contribute to the deaths of between 210,000 and 440,000 patients. At the lower bound, that’s the equivalent of nearly 10 jumbo jets crashing every week — or the entire population of Birmingham, Alabama dying every year.

“It’s a big problem,” says Commonwealth Fund’s Blumenthal. “There has not been anything like the progress we should have expected or could have had since the To Err is Human report.”

He argues that the problem with hospital errors has much to do with medical culture, in which doctors rarely discuss their mistakes. Blumenthal remembers, shortly after the landmark IOM report came out, trying to start up a consulting business that would teach hospitals how to reduce errors.

“I thought it was this great little consulting opportunity,” he says. “But there was just no interest. It was sobering, and it made clear that abstract data was not going to change the behavior of complicated health care institutions.”

And on their own, patient deaths are small events that often happen with little notice or fanfare, making them less noticeable than other events.

“Even here in Houston, if a small plane crashes by the airport, that makes the evening news,” says John T. James, founder of Patient Safety America, who authored the 2013 report. “But people dying in hospitals are happening one at a time and in insolation, and we pay less attention.”

James has argued that the United States should have something akin to the National Transportation Safety Board, which investigates every plane crash in the United States, except for patient deaths from medical errors. Even if it couldn’t get to each and every case (there are thousands more patient deaths than airplane accidents), it would create some federal oversight that, right now, does not exist.

7) One third of healthcare spending isn’t helping

The United States spends $765 billion annually (about one third of our overall health care dollars) on things that do not make Americans any healthier.

“I’m always amazed at these conversations I have with physicians,” says Amitabh Chandra, a health economist at Harvard. “They’ll openly say that about 50 percent of what happens in medicine is waste, but it’s hard to always know which care was wasteful and which wasn’t.”

Much of the waste in our system has to do with the fact that we run an inefficient health-care system, in which hundreds of health insurance plans all charge different prices for the same surgeries and scans. That requires lots of billing staff: for every three doctors in the United States, there are two administrative staff to handle all the paperwork. That’s unique to the US system.

In addition, there’s unnecessary care: of the $765 billion wasted each year, the Institute of Medicine estimates that $210 billion is spent on medicine we don’t need.

Aside from being a waste of money, this extra medicine can be harmful.

Take the example of prescribing antibiotics for acute bronchitis. Researchers have known for decades this isn’t an effective treatment, but nearly three-quarters of doctors do so anyway. Those prescriptions are actively harmful, as overuse of antibiotics can speed up the creation of deadly, antibiotic-resistant superbugs. Wasteful spending doesn’t just mean extra dollars put towards health care — in cases like this, it also means worse care.

Unfortunately, most situations of waste aren’t as easy to recognize as the overprescribing of antibiotics. At many appointments, doctors have difficulty knowing when treatment is needed — and when it won’t provide help at all.

The medical community tries to address these issues with comparative effectiveness research. As the name suggests, these studies compare the effectiveness of one treatment against another for a given patient population. Many national health insurance programs use comparative effectiveness research, for example, to decide which drugs they will cover, aiming to pick the medication that gives the best results at the most affordable price.

But comparative-effectiveness research doesn’t always offer clear directions. Study methods can be faulty and results contradictory; one drug might work great for certain patients but terribly for others. These studies can also be controversial and met with outcry over rationing.

When the government, for example, recommended lowering the frequency of breast cancer screenings — more screenings, decades of research had found, didn’t save any more lives — there was public outcry.

And that’s one of the really tough issues with cutting down on waste in medicine: there are lots of healthcare treatments that we want, even when it might not actually be health-care treatment that we need.

8) Obamacare is not universal health care

The United States does have a very recent, very large expansion of health insurance coverage — that’s the program we all call Obamacare. It’s expected to cover an additional 26 million people by 2024.

What the United States does not have, however, is universal coverage.

Obamacare doesn’t eliminate uninsurance in America; instead, it cuts the number of people lacking coverage about in half. Even after Obamacare is fully implemented, budget forecasters still expect that 31 million Americans will lack insurance coverage — a bigger group than the people buying coverage on the exchanges. Our uninsured rate will still be in the double digits, hovering around 11 percent.

This group includes people who are locked out of the insurance expansion and those who do have access but decide not to participate.

Among the groups left out of the healthcare law are undocumented workers, who are not eligible to purchase any healthcare plans from the new insurance exchanges, and people who live in states that are not expanding Medicaid. For a sense of how big a population that is, the 10 largest states not expanding Medicaid are leaving out an estimated 3.6 million low-income residents.

There will also be millions of people who do have access to health insurance, maybe at work or through the new exchanges, but decide not to enroll. Maybe they think its too expensive — lots of shoppers felt that way during Healthcare.gov’s open enrollment — or maybe they don’t think health insurance will help them. Many of these people will face a penalty for not purchasing insurance coverage.

This will continue to set the United States apart from most other industrialized nations, in which universal coverage is the standard. And it means there will still, in decades to come, be people who can’t afford health insurance. That means there will be millions who rely on free clinics for medical care.

http://www.vox.com/2014/9/2/6089693/health-care-facts-whats-wrong-american-insurance

By Bill Briggs
NBC News, August 31, 2014

The price to remove a gall bladder or replace a hip has spiked more than 20 percent during the past five years, according to an analysis of data collected for NBC News.

Surgery has bloomed into a $500 billion industry in the United States, where 80 to 100 million procedures are performed annually — a per-capita rate that’s some 50 percent higher than in the European Union, said Dr. John Birkmeyer, a researcher and adjunct professor at the Dartmouth Institute and in the university’s Community & Family Medicine program.

The reason? Expensive yet safer technologies and hospital consolidations that create medical monopolies, according to doctors and researchers.

For hospitals, surgery is the No. 1 revenue source. That encourages medical center administrators to ensure operating suites remain humming — an assembly-line mentality that can lead to unnecessary procedures and spiraling prices, experts say.

“The cost of surgery is growing at a surprising rate,” said Birkmeyer, a leading researcher on healthcare trends. He bases his calculations on national Medicare claims data.

A price check on four of the most common procedures reveals the inflationary trends hitting ORs since 2009:

• Hernia repair, up 16 percent, with a “total fair price” of $5,056, according to Healthcare Bluebook.
• Gall bladder removal, up 21 percent, with a “total fair price” of $5,532.
• Hysterectomy, up 19 percent, with a “total fair price” of $11,780.
• Hip replacement, up 24 percent, with a “total fair price” of $22,606.

The cost-increase data was generated for NBC News by Healthcare Bluebook, an online guide that helps consumers shop for the best prices in their areas for various medical services. The dollar amounts show the “total fair price” for each surgery as estimated by the website.

Overall, health care inflation has averaged about 4 percent per year during the past five years, Dr. Jeffrey J. Rice, chief executive officer of Healthcare Bluebook, based in Brentwood, Tennessee.

Further causing surgical costs to surge: The U.S. health care economy is built on a tilted foundation. Insurance-company contracts can vastly differ from one hospital to another just blocks away, skewing prices for the same treatments.

“There is almost always a 500 percent — or more — variation for health care services in most cities,” Rice said. “For example, an MRI may cost $500 at one facility and over $3,000 at another facility across the street.”

Surgeons know this, of course. Their fees, dictated by insurance contracts or by Medicare, are included in the overall price of any operation.

“I can take out a gall bladder, and a surgeon in the next room can take out another gall bladder, but he or she may be with a different network of doctors or a different hospital system that negotiated better (insurance) contracts,” said Dr. Paul A. Ruggieri, a general surgeon in Fall River, Massachusetts. “He or she can get paid 20 to 30 percent more than what I get paid regardless of the outcome.”

Those hospital “systems” and doctor “networks” are rooted in a consolidation of care that’s been steadily gobbling up a greater share of the U.S. medical landscape and are a chief driver of the rising surgical prices, according to Birkmeyer, Rice and Ruggieri.

“Hospitals and their pricing systems have, for a very long time, been shielded from competitive market forces,” said Ruggieri, author of “The Cost of Cutting,” out Tuesday. “Hospitals have been allowed to charge whatever they want to charge to third-party payers (insurers). There’s been no transparency to the public in how hospital pricing is determined.”

And as more local hospitals end competitions and merge, the idea of winning new patients through lower prices vanishes, the experts said.

Consider Boston. In 1994, Massachusetts lawmakers allowed Brigham and Women’s Hospital and Massachusetts General Hospital to consolidate into a one system known as Partners HealthCare. According to the New York Times: “Investigations by the state attorney general’s office have documented that the merger gave the hospitals enormous market leverage to drive up health care costs in the Boston area by demanding high reimbursements from insurers that were unrelated to the quality or complexity of care delivered.”

The Affordable Health Care Act — or Obamacare — fueled even more hospital consolidations, Birkmeyer asserts.

The law created Accountable Care Organizations (ACOs) that “incentivize doctors and other providers to work together to provide more coordinated care to their patients,” former Health and Human Services Secretary Kathleen Sebelius wrote in March 2013. These ACOs “agree to take responsibility for the cost and quality of their patients’ care, (and) to improve care coordination and safety.”

They also boost the costs of surgeries, Birkmeyer asserts.

“That drive toward hospitals forming bigger conglomerations of networks and physician practices has reduced competition, and in a non-Medicare population, has enabled hospital systems in many parts of the country to charge far more,” Birkmeyer said.

At the same time, OR innovation — great for patients, tough on wallets — has bumped up surgery prices.

Those tech advances include robotic surgeries, now performed hundreds of thousands of times a year for certain procedures, including hysterectomies. A doctor sits near the operating table at a console, where he or she can manipulate robotic arms while watching through a 3-D viewfinder.

“Those have very positive effects in respect to recovery or the risks of complications for patients,” Birkmeyer said.

“But technology is very costly for hospitals and, ultimately, those costs get passed to insurers — and to the rest of us.”

http://www.nbcnews.com/health/health-care/surgery-prices-surge-innovation-consolidation-under-obamacare-n191901

By Inge De Becker, M.D.
The Chronicle Herald (Halifax, Nova Scotia), Aug. 26, 2014

As a Canadian physician who now lives south of the 49th parallel, I’m alarmed that Canada’s publicly financed national health-care system is once again under attack

Nine years ago, we witnessed Dr. Jacques Chaoulli’s legal attack on medicare in Quebec. Then we saw the Harper government’s failure to renegotiate a new Canada Health Accord this past March. And now Dr. Brian Day, owner of the for-profit Cambie Surgery Centre in Vancouver, is unleashing his drive to “profitize” health care in British Columbia.

On Sept. 8, a trial to hear a constitutional challenge to B.C.’s health system that Dr. Day launched in 2008 will begin in Vancouver. Day wants to strike down provincial legislation that limits private payments for medically needed services by claiming that these laws violate the Canadian Charter of Rights and Freedoms.

Should he win, the door will open for an American-style health-care system (consistently ranked lowest in performance among wealthy nations — and the most expensive) with its profit-driven insurance companies, bloated administrative costs, and inequitable access.

Let me tell you about my experience with the U.S. health-care system. I am a pediatric ophthalmologist by training and, like all of us, I am occasionally also a patient. In 2008, for personal reasons — not for a better job — I chose to move across the border from my home in Nova Scotia to Minnesota.

I knew that the health-care system in both countries would be different. But I did not grasp what that meant until I lived the difference.

My learning curve as a patient in the U.S. was brutal: even as a “well-insured” patient, I suddenly was dealing with pre-authorizations, in-network/out-of-network issues, co-pays, co-insurance, deductibles, health savings accounts, and EOBs (Explanation of Benefits) which look like bills but aren’t.

The accounting department of my HMO (Health Maintenance Organization) overbilled me by thousands of dollars. I stalled with the payment.

On a bright Saturday morning, I received an intimidating call from a collection agency for unpaid medical bills. Never mind how that affected my credit rating.

In Canada, I paid taxes, had a Nova Scotia health card that guaranteed access to medically needed care anywhere in the country, used the health-care system if I needed it, got to choose my doctor, and did not have to worry about bills. With private insurance in the U.S., I learned not to take the Canadian experience for granted anymore.

In Canada, I benefited from superb oncology care. In Canada, my son was in a catastrophic car crash. He spent seven days in a state-of-the-art neuro-intensive care unit. Not one bill, not one phone call to or from an insurance company disrupted emotionally charged times.

My learning curve as a physician practising in the U.S. was equally unpleasant. For the first time in my professional life, I had to deal with the intrusion of third parties — health insurance companies — between the patient and me.

I had to keep in mind that a patient’s insurance may not cover the tests and treatments needed, that common procedures needed to be pre-authorized by an insurance clerk, that certain things needed to be done before the insurance ran out, or that some treatments had to be delayed to the next “benefit year.”

I have been an unknowing accomplice in causing great anxiety and financial harm to a patient and his family: a $24,000 bill for services that were not covered because the patient had gone “out-of-network.”

The U.S. is the world’s richest democracy, yet it has decided that health care is a commodity for the privileged who can pay. Its health-care system is an opaque and complex patchwork of competing multiple payers, causing mammoth administrative costs (12 per cent for U.S. private multi-payer insurance overhead vs. 2.1 per cent for Canadian public single payer insurance — i.e. medicare).

Each year, up to 45,000 people die from a treatable condition because they lacked coverage and could not access care. Medical bills cause 56 million adult Americans, more than 20 per cent of adults between the ages of 19 and 64, to struggle financially, and about 650,000 to go bankrupt annually, affecting 2,608,119 individuals.

Other rich and civilized democracies have made the fundamental moral decision that access to health care is a human right and have figured out a way to make it happen. Canada is one of them.

Rather than sliding down the slippery slope toward a U.S.-style system, I ask you to stand on guard for Canadian medicare. Please reject Dr. Day’s bid to undermine it.

Dr. Inge De Becker practised in Nova Scotia for 20 years. She now resides in St. Paul, Minnesota.

http://thechronicleherald.ca/opinion/1232079-doctor-s-prognosis-american-style-health-care-a-nightmare