There are currently three bills in the Senate and House that are being considered as the basis of the major reform. Only the house bill has the support of any major business or medical group. The AMA supports only the House bill H.R. 3200.
With each of these bills being over 1000 pages, I find it hard to believe that any group could fully examine or endorse the impact of the law of unintended consequences.
Let me open the series by proposing the simple basis of what I, and my firm believe, are two covenants that would provide the backbone of a solid proposal.
1. All practitioners are allowed to charge whatever they want for their services, but they must charge everyone, regardless of socio-economics, the same amount.
2. The United States sets up a buying group that negotiates on behalf of all end users, the price of all FDA approved medications. Drug pricing to U.S. Customers should be based on what other countries pay for their social systems. Manufacturers may opt to exempt their drug from that cost control but would lose years on their patent protection.
If any of this sounds like no big deal, you are mistaken, and that’s why healthcare reform is so troublesome. Even the easy stuff makes no sense.
Examples:
#1 – Currently providers charge significantly different amounts for the exact same procedure or service based on who you are. You can prove it to yourself by looking at benefit statements from your current insurance, or click here to see a comparison of “list” and “discounted” pricing for a knee replacement in the Chicago area.
What you wont see here is Medicare and Medicaid reimbursements which are 1/3 to 1/2 of the “discounted” charge. Let me summarize: If you have knee replacement surgery in the Chicago area, your hospital LIST price ranges from $39,900 to $58,000. If you pay cash, you pay list price. Depending on your insurance carrier, your net price is $14,800 to $26,200, (you have no idea of the net price upfront or how much your insurance carrier gets discounted), if you had Medicare or Medicaid, your price would be in the neighborhood of $7-10k, paid for by the government.
National average list price is $41,000, National Average discounted price is $13,000. Got it? No? You aren’t alone. When you get healthcare, you fly blind in relation to cost. If we had open and level pricing, you could decide to go to the Wisconsin Dells, put up your family at a Water-Park Hotel Suite for the weekend, paid for their fun, gotten the procedure for $5000 to $10,000 less than in Chicago at a hospital up there, had a private nurse, and had money left over.
#2 – Why Have the Government involved? Can’t Blue Cross or Aetna, etc… do that now? No they can’t. Suppose you are Blue Cross. First, keep in mind that you charge your customers a margin on top of your costs. If things cost $1000, you charge $1200 and make $200 for overhead and profit. If things cost $2000, you charge $2400 and make $400 for overhead and profit. The incentive is not inherent for insurance companies to effectively negotiate pricing. If Blue Cross said to Merck, “we will only pay for Zocor what you charge the UK or Canada”, Merck is likely to say to that carrier “well, you aren’t getting Zocor”.
As we all know, we don’t accept someone else rationing our healthcare, so effectively, insurers are little or no incentive to mitigate cost increases.
