The United States is home to some of the world’s highest health care costs, and those costs are growing — at roughly double the rate of inflation. Americans pay two times more for health care than residents of other developed countries, and more than 100 million are saddled with medical debt.
These problems threaten the health and finances of patients, families, small businesses, and governments alike. Today, experts, advocates, and lawmakers are seeking solutions that address lack of pricing transparency, anti-competitive practices, and misaligned incentives in the health-care system.
On Wednesday, The Washington Post hosted a discussion on improving America’s health-care system and rein in the high costs that make health care unaffordable and inaccessible for too many people. A conversation with Mark E. Miller, executive vice president of health care for Arnold Ventures, and Cynthia Fisher, founder and chair of PatientRightsAdvocate.org, explored possibilities for greater pricing transparency and other ways to address misaligned incentives and consolidation in the market Sen. Bill Cassidy (R‑LA) discussed bipartisan approaches to addressing health-care market consolidation that harms consumers. The audience also heard perspectives from Atul Gawande, assistant administrator for global health for USAID; Julian Harris, CEO for ConcertoCare; Sean Robbins, executive vice president for the Blue Cross Blue Shield Association; and Shawn Martin, executive vice president for the American Academy of Family Physicians.
Here are five takeaways from the discussion, which is available to view here.
1. Consolidation by hospitals is harming consumers.
A major problem is that large health care systems are buying up small physician practices, consolidating markets, and giving patients fewer options for affordable care.
Miller pointed out that around 90% of all markets are highly consolidated. As a result, he said, “They have become price setters in their communities.” Those prices are routinely 300% of Medicare rates.
Strikingly, Sen. Cassidy noted that a large number of the top health care markets face “such market concentration of hospitals as to constitute antitrust [situations], in which the hospitals could now fix prices and the insurance companies had no choice as to where to go,” according to the findings of a congressional hearing.
In consolidated markets, hospitals often redefine physician practices as hospitals, add facility fees on top of services, and bill routine procedures at a higher hospital rate. For patients, this means higher payments for the same care. Congress is currently working on site-neutral policies that will help close this loophole.
2. Lack of transparency helps providers drive prices up, but transparency alone won’t solve the problem.
The health care system offers little pricing transparency for patients, purchasers, or policymakers. Providers and insurers often can’t — or simply don’t — provide patients a complete answer about the cost of services.
“As long as hospitals and insurance companies keep prices in the dark, they can charge whatever they want, and the overcharging is rampant,” Fisher said. “Now that the curtain has been pulled back, we’re seeing wide price variation.”
Fisher noted that federal regulations require that prices be made clear to consumers, so that they can make informed choices. But only 36% of hospitals are fully complying, according to a report from PatientRightsAdvocate.org.
“Everyone has a story of being overcharged or [has] a family member [who] has experienced significant medical debt,” Fisher said, mentioning a man in Colorado who was charged more than $16,000 for an EpiPen before seeking recourse from his insurer.
In the commercial sector, Miller noted, this causes major affordability challenges for those footing the bill, not just patients and their families but employers and taxpayers. He also pointed out that greater transparency, while critical, is not enough on its own.
“We absolutely embrace transparency,” Miller said of Arnold Ventures. “It is a first step, in my opinion. It is necessary, but it is not sufficient. I don’t think the patient often is in a position that they can negotiate.”
3. Individual patients don’t have the knowledge or market power to negotiate prices on their own.
In this environment, individual patients have little leverage to negotiate prices.
“If you’re unconscious on a gurney, you’re not negotiating,” Miller said.
For a variety of reasons, patients are not well equipped to make decisions about their own health care and typically must defer to their provider’s opinion. They also have little bargaining power on prices, since they are one person against large, powerful health-care systems and such systems often own many or all the providers in a region.
Even employers, who in theory possess greater leverage by representing groups of consumers, struggle to negotiate prices in highly consolidated markets, Miller notes.
“Most employers feel that they don’t have the leverage,” he said.
4. Commonsense solutions are available today, including site-neutral policy.
Policy advocates and lawmakers are promoting solutions that address rising health-care prices and consolidation. That includes enacting both stronger regulations and new legislation.
Antitrust action by the Federal Trade Commission (FTC) could challenge consolidation by large health-care systems by reviewing mergers and acquisitions, and cracking down on suspected price fixing activity that reduces competition and drives up consumer costs.
“That’s something the FTC should explore and I think is exploring,” Sen. Cassidy said.
There is also legislation pending in Congress that would address both transparency and unequal pricing. And Democrats and Republicans are also working on these issues at the state level, too.
5. Bipartisan action could address high prices and make health care more affordable and accessible.
Legislation in the House has broad bipartisan support, and over 90% of the public is on board with the solutions it proposes. That bill, the Lower Costs, More Transparency Act, would codify regulatory changes that require pricing transparency. It would also embrace “site-neutral” policy for certain procedures, which aligns payments for services across hospitals and doctors’ offices, a move strongly favored by Arnold Ventures.
“You shouldn’t be able to purchase a physician practice and then double the price overnight for the same services,” Miller said. “That just should not be allowed.”
But this legislation would only be a first step, and there are significant savings from applying site-neutral policy across the board: Applied only to Medicare, Miller explained, it would save more than $150 billion over 10 years. If similar legislation were applied to the commercial sector, it would save more than $300 billion.
Today, however, the country faces twin culprits for rising prices: “Consolidation and lack of transparency,” Miller said, “those are the drivers.”