Time to Address the Real Healthcare Issue – Costs

by Douglas Tardio, HealthCost Founding Partner

Another day in the life of Congress trying to repeal and replace the Affordable Care Act equals another day of ridiculous remarks from our political leaders without any actionable solutions for consumers.

Let’s just stop for a minute and reflect on why Congress can’t provide a solution. I’m not in Congress, however, it seems clear — Big Pharma, Big Hospitals, Big Insurance — are all working together to ensure that they continue to provide profits to their shareholders while managing the status quo. 

Revolutionary change means winners and losers and none of these players want to be left out. These big players keep their cards close to the vest and so while they publically appear on the side of the consumer, it is always the consumer who gets left out.

We need cost controls but no one is doing it with the consumer in mind. In recent months, we’ve seen private equity firms buying drug manufacturers and sending prices for drugs that have been in the market for over a decade up 1,000%. Congress holds an urgent publically covered panel to investigate; grab their 60 seconds of fame insulting the CEO of the newly acquired pharma company (that’s the one that looks like the deer in the headlights) and then they all go back to their day jobs. Meanwhile, we end up with crippling costs of drugs. 

Things are no different with large hospital systems. I’m talking about the big ones (both for-profit and incredibly not-for-profit) that are tucking away hundreds of millions of dollars each year. They are telling us they are being prudent by holding on to these vast sums for when times are not so good. Since the number of individuals with financial debt is at an all-time high and increasing daily, my team is asking when is it time to start giving back? 

Please don’t buy into the notion that these surpluses all go to charity care in their local communities…while some do, that’s simply a worn-out marketing ploy to defend profits and the status quo. And of course, we can’t ignore the insurance companies. They have taken quite a beating in the press over the last decade. Their CEO’s have been dragged all over The Hill and back. All that said, it’s not their business model we should be trashing, it’s their inability to control healthcare costs. 

The media so often confuse healthcare delivery with health insurance. Defined, insurance is “a practice or arrangement by which a company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium” and can’t be sold for a loss.  If costs go up the premium goes up, plain and simple. So, insurance companies can either try to manage costs, narrow their networks, or simply write a policy that covers the current rate. 

I think at this point they have decided to take the latter approach. After throwing all of their collective knowledge at managing costs — through Pharmacy Benefit Managers (an oxymoron if ever I’ve heard one), propriety network rates with hospitals and doctors, prior authorization on everything and everyone to ensure evidence-based care — and in the end they did what they had to do to hold on to some resemblance of an affordable insurance product by shifting massive first dollar costs onto the shoulders of consumers. 

And yes, it’s complex…but so is everything else in our world. So, I will leave you with a quote from Willie Sutton in response to why he robbed banks, “Because that’s where the money is”. 

It’s time for Congress to get serious…it’s our money and we are being robbed.