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“I think Obamacare was
effective in getting insurance
for a large number of people,” said
Tom Kane, senior vice president at Stephens,
Inc., a Wall Street investment firm
located in Little Rock, Arkansas. Kane deals
primarily with employer health care benefits.
“What’s frustrating for me is that I don’t hear
anybody on the national stage talking about health care
costs. They talk about health insurance costs, but there’s
not any talk about health care costs. And the reason health care
insurance costs continue to go up is because health care costs are
going up and we’re also seeing increases in utilization.”
Kane believes the federal government should sit back and ask why health
care costs are going up.
One reason is prescription drugs, he said.
“You are seeing drug manufacturers raise prices for no other reason than
because they can,” Kane said. “That’s very concerning for us. Today, we are
seeing the medical inflation trend around 5 percent. Prescription drugs are in
the low teens; specialty prescription drugs in the low 20s. I remember when
we first started offering prescription co-pays, the drug spend as part of the
total spend was 15 percent. Today I have clients where it’s well over 30 percent
and we are going to continue to see that rise as these drug costs go up.
That’s really what’s driving the increase in health care costs today.”
Hospital charges are also running rampant, Kane said, so much so that
those “charges” do not reflect the actual cost of providing the care.
“That’s another problem we have in this country today,” he said. “If you
look at the hospital charges compared to their costs of goods it ranges across
the country from 300 percent to over 500 percent” above the actual cost for
providing the service.
Kane talked about a relatively unknown term in health care pricing — the
hospital chargemaster.
Writing in Becker’s Hospital Review, author Carrie Pallardy in an article
headlined “Deconstructing the enigmatic hospital chargemaster,” had this to
say:
“Patients struggle to understand health care costs, but the process of setting
costs and charging for services rendered can be complex enough to confound
industry experts. The chargemaster is at the heart of the cost structure
matter, yet ask hospital executives to explain how it works and the answers
run the gamut from barebones basic to overly vague.
“At the most simplistic level, the chargemaster is a list of prices for any
service or product a hospital offers. At its simplest form, think of it as a menu
— anything you can charge a patient. But, looking past the obvious, understanding
the inner workings of this set of data elements grows more difficult.”
Every hospital negotiates its chargemaster separately, Kane said.
Those negotiations normally wind up with the insurance company and the
hospital agreeing to reimburse the hospital a set percentage of the actual
charges.
Again, it’s important to remember that a hospital’s charge for a certain
service has little reflection of the actual cost of providing that service.
“So, when I [as the hospital] bill Blue Cross for an incident, the bill goes
into the chargemaster in reference to what the pricing is, which may vary
from hospital to hospital,” Kane said. “One hospital says ‘we want to make
more money on hips and knees’ and another hospital says ‘we’ll use hips and
knees as a cost leader and we’ll make it up on stints and bypasses.’ And so,
you are going to see a huge variation in pricing.”
Another problem inherent to the pricing issue is that in America today
people typically equate cost with quality.
“So when you’re buying a car and you buy a Lexus you are going to pay
more than if you buy a Chevrolet,” Kane related. “In health care, this is not
necessarily true. In fact, oftentimes we see higher costs associated with lower
quality. One of the things we have to do as part of this big picture is create true
transparency in cost and quality in health care so that consumers can look and
say, ‘I had this laparoscopy done at Baptist or St. Vincent or UAMS or Saline
Memorial (four major central Arkansas hospitals),’ and see what the costs are
and what the quality outcomes are. And until we get to that point, what we
have to be careful of is when these insurers say ‘we offer a 60 percent discount
to our network,’ 60 percent of what? Sixty percent of $27,000 or 60 percent of
$10,000 [for the same procedure]? Because what the hospital does is keep raising
its prices, charging more and more and more. If your discount is a percent
of that, then the cost of the insurance plan continues to go up.”
And so the average American becomes the victim of this charge vs. cost
game, regardless of whether they are covered through a company plan or
have to purchase an individual plan from the exchange.
“Regardless of whether it’s Obamacare or Trumpcare, the problem is the
upward spiral of health care costs. Health care costs have continued to rise and
employers have shifted costs to their employees in the form of higher deductibles,
higher co-pays, and the concern has reached a point to where the average
American — truck drivers included — cannot access basic health care to
manage their chronic diseases because they have a $5,000 deductible,” Kane
said. “So, if the first $5,000 comes out of my pocket and I don’t have any disposable
income, I can’t afford to get a prescription filled or go see a doctor to
have my diabetes checked. And what happens if that person cruises along until
they have a major health event and then they arrive at an emergency room or
doctor’s office and then you have a really bad situation. And they are going to
get the care and it’s going to be expensive to the system. In America, we have
the best disease care system. We wait until people get sick and then we try to
deal with that instead of trying to keep people healthy. And that goes back to
my thing that we really need someone in government to start showing some
leadership and have some honest conversations with the American public that
we all have to be more accountable for our own health.”
What’s the impact of these rising costs (translated rising insurance costs)
on trucking?
“I think it’s going to be difficult for the owner-operator or a driver working
for a small company,” Kane said. “I think larger carriers are competing for quality
drivers and I think we’re seeing the labor market continue to be difficult,
especially in trucking. So if I’m a good driver, obviously I have a good record
and I’m going to be able to seek employment where I can get good benefits,
and that’s across every industry. And I think we’re going to see the labor markets
get more and more competitive and employers are going to have to offer
benefits, but for those smaller companies, it’s going to be a struggle.”
So, the question remains: Is anyone out there listening to experts such as
Tom Kane who believe the answer is not about Obamacare or Trumpcare, but
all about quality, fairly priced care?
Only time will tell.
TCA 2017 www.Truckload.org | Truckload Authority 11