The ongoing health care debate has caused some heated emotions, disagreements, great discussions on very important issues, and plenty of misinformation. Unfortunately, the most important issue of all has gotten lost in all the noise. 

We all need to remember that the real crisis is what’s already happening.  Today, the average price for health insurance premiums is $13,000 a year.  If we do nothing about reforming our health care system, this amount will double over the next decade to $25,000 and many more Americans will be forced to join the uninsured.  This is a real crisis.

Many of the discussions about health care reform focus on the 47 million uninsured Americans who do not have health insurance.  But remember, health care reform is just as important to the majority of Americans who already have health insurance.  Doing nothing results in a crisis that we cannot afford. 

Here are the facts:

• Rising health care costs are crushing American companies – particularly small businesses
• In 1960 U.S. firms spent 1.2% of their payroll on health insurance.  In 2006, they spent almost 10%.
• Health care costs put U.S. firms at a disadvantage to foreign companies and health care costs destroy U.S. jobs
• Escalating health care cost have been passed on to the middle class in the form of higher prices for products/services and flat wages.  Money that would have gone to raises has instead been spent on health care premiums that have doubled over the past 9 years.
• Small businesses pay 18% more per worker for health care than large firms for the same benefits.  They pay more because they have a smaller risk pool and have to absorb higher broker fees and administrative costs per worker.
• Businesses that offer employees health insurance:
  • Only 49% of firms with 3-9 employees offered health plans in 2008
  • 78% of firms with 10-24 employees offered health plan in 2008
  • 99% of firms with 200+ employees offered health plans in 2008
• This year health care expenditures are expected to account for about 18% of the GDP. Without reform, that number is projected to rise to 28% in 2030, and to 34% in 2040.

We all need to make sure that health care reform gets started this year.

John Stossel’s article in ABC News suggests why health care costs are out of control.   In his article he asks us to think about what would happen if you had an insurance policy that paid for your groceries.  You wouldn’t care what things cost.  Why buy hamburger?  Just buy expensive steaks.  Why look for sales?  Why shop at the store across the street?  If the insurance company’s paying, who cares? 

People with consumer-driven health plans are motivated to find the best value before spending their own money.   They comparison shop, do their research, and might even negotiate the price of service before visiting a provider.  They care because they are spending their own money.

In an effort to keep health care costs down, Whole Foods management decided to offer its employees high-deductible health insurance.  With this plan, employees have an incentive to find out what provider offers the best value (price & quality).  If they are savvy consumers they can make their health care dollars go a lot further by spending wisely.   Health care costs at Whole Foods went way down because employees started asking “what things cost” before visiting a provider.  The employees like the plan so much they decided to keep it.  The employees now ask “how much will this cost?” because now it matters.  It’s their own money they are spending.   The Whole Foods experiment works because:

Facts:

1. When consumers spend their own money, they spend less because they care about what things cost.
2. When consumers shop around before spending money, costs go down.
3. When consumers make informed choices, health care costs go down.

The health care industry can learn something from the advertising industry.  The key to successful interactive campaigns is to delight and engage consumers so they want to participate.  This same rule applies to reforming the health care system.   We need to engage and delight consumers to get them to participate. 

Regence, a not-for-profit health insurer in the Northwest/Intermountain Region, has been a leader in transforming our health care system.  They have created an engaging, interactive presentation to kick off their launch of WhatsTheRealCost.org.  It’s a delightful presentation on transforming our health care system.  Also, be sure to check out the Regence award winning one-minute video, WhatsTheRealCost.org.

The CEO of Whole Foods Market has some interesting ideas on how to lower the cost of health care for everyone --without adding to the deficit.   John Mackey, the CEO at Whole Foods wrote an Op/Ed piece in the Wall Street Journal last week.  Some of his reform ideas are powerful, practical, obvious and definitely worth mentioning:

1.       Remove the legal obstacles that slow the creation of high-deductible health insurance plans and Health Savings Accounts (HSAs).  These plans have been adopted by more than 12 million consumers and all the recent research indicates these plans are not only successful in holding down costs, but consumer satisfaction is rising for CDHPs .  Read about consumer-driven health plans.

2.       Balance the tax laws so that employer-provided health insurance and individual health insurance have the same tax benefits.  Today employer health insurance benefits are fully tax deductible, but individual health insurance is not.

3.       Repeal all state laws which prevent insurance companies from competing across state lines.

4.       Repeal government mandates that determine what insurance companies must cover.

5.       Pass tort reform to end the damaging lawsuits that force doctors to pay insurance costs of hundreds of thousands of dollars per year. These costs are passed back to consumers through much higher prices for health care.

6.       Make prices transparent and give consumers more freedom to pursue health care value. Provide meaningful tools to help consumers understand what health-care treatments cost. How many people know the total cost of their last doctor's visit and how that total breaks down?

7.       Reform Medicare. Medicare is heading towards bankruptcy and we need reforms that create greater patient empowerment, choice and responsibility.

Whatever reforms are passed, it is essential that they be financially responsible, and give consumers the freedom to choose doctors and the health-care services that best suit our own unique set of lifestyle choices. We are all responsible for our own lives and our own health. We should take that responsibility very seriously and use our freedom to make wise lifestyle choices that will protect our health.

America's Health Insurance Plans (AHIP) just published a report that identifies physician out-of-network charges for 30 states.  The report provides a state-by-state snapshot of excessive charges billed by out-of-network physicians, and compares these charges to what Medicare would have paid for these exact same services.  This report demonstrates huge disparities in the cost of various medical services that were in some cases tenfold higher than Medicare reimbursements for the same service in the same area.

Here are some examples from the report, of the price disparities for common procedures. 

·         A patient in Illinois was charged $12,712 for cataract surgery.  Medicare pays $675 for the exact same procedure. 

·         In California, a patient was charged $20,120 for a knee operation that Medicare only pays $584 for. 

·         A New Jersey patient was charged $72,000 for a spinal fusion procedure that Medicare covers for only $1,629. 

What is obviously missing from this report is the insurer’s average contracted price for in-network providers. Wouldn’t it be remarkable to see how prices compare for a specific service side-by-side including: 

·         List price (the inflated charges)

·         Negotiated price (discounted price contracted with in-network providers)

·         Government CMS Medicare price (lowest contracted price)

Comparing provider health care prices across different health insurance plans for the exact same service is what we are trying to accomplish with the OutofPocket.com directory.  If you want to look up some of these prices, be sure to check out our directory. 

The best advice I can share with consumers regarding these “inflated” out of network prices – is to make sure you do your research.  If you are uninsured, or if you are insured looking for an out-of-network provider, make sure you don’t pay the inflated charges.  Instead you should do your research, understand what the “fair” contracted rates are for this service and know what Medicare reimburses for this service in your area.  Then you can confidently ask the provider for a discounted price.  On average, Medicare pays about 80 percent of what private insurers pay for the exact same service.  If you want to look-up what Medicare pays for specific services -- use the AMA CPT online tool.  If you want to find out what the average insurer reimburse for specific services --- use Healthcarebluebook’s tool.

If you are still confused, feel free to contact me and I’d be happy to walk you through these steps to help you become a more informed consumer.

Be sure to read the article that appeared in The New York Times, Survey Finds High Fees Common in Medicare Care that discusses this AHIP report data.

Imagine a reformed health care system where costs are clear, information is simply stated, procedures are openly and honestly evaluated.  Where participants share knowledge and information.  Where technology drives value.  Where all particpatants are informed, engaged and rewarded for smart choices and health behavior.   

This is how we need to reform our health care system.

Wondering how you can reduce your medical bill?  David Whelan’s recent article in Forbes.com, “How to Cut Your Doctor Bill,” describes real-life situations where savvy patients comparison shop to find the best value, and negotiate prices with their health care providers to get a discount.   

Comparison shopping can be tricky and you need to be persistent.  The good news is your effort and research can pay off. 

The Forbes article lists a few websites consumers can use to look up prices of procedure to help you negotiate a fair price. 

Healthcarebluebook.com

Changehealthcare.com

Outofpocket.com

Myhealthscore.com

If you are not successful in negotiating the price of services before visiting a provider, or have trouble negotiating your medical bill, you can hire a bill negotiation company. These companies typically charge a fee based on the percentage of savings achieved.

Myinsnet.com

Medicalcostadvocate.com

Billadvocates.com