If Jeff Bezos and Warren Buffett lift the veil on health prices, insurers are in trouble

“News that Jeff Bezos’ Amazon and Warren Buffett’s Berkshire Hathaway are forming their own healthcare company with JPMorgan Chase to increase transparency for their employees could be bad news for insurers and pharmacy benefit managers,” Bruce Japsen writes for Forbes. “Health insurance companies and PBMs have long said they want to bring more transparency to the U.S. healthcare system, yet consumers often don’t know the true cost of healthcare. Prices are negotiated in secret and doctors don’t often know what their own services cost or what their patients will be charged.”

“Details of the new company Amazon, Berkshire and JPMorgan want to create remain sketchy, but the idea that they want to bring more transparency is one of the disclosed goals. ‘Our people want transparency, knowledge and control when it comes to managing their healthcare,’ said Jamie Dimon, Chairman and CEO of JPMorgan Chase,” Japsen writes. “‘Resistance to transparency in healthcare remains high,’ says Network for Regional Healthcare Improvement CEO Elizabeth Mitchell, who welcomes Amazon, Berkshire and JPMorgan’s new company. ‘Employers who pay for this care still don’t have insight into the relative value of what they are buying. They are looking for a way to have assurance that they are paying a fair price for a high quality service.'”

“The Network for Regional Healthcare Improvement has long said any health reform effort needs to look closely at transparency because data that reveals the total and true cost of care is difficult to find. In a report last year, NRHI said health spending by U.S. commercial insurers can vary by $1,000 or more per year per patient, depending on where enrollees live,” Japsen writes. “Shares of health insurers like Aetna, Anthem and UnitedHealth Group lost 5% to 10% of their value while pharmacy chains CVS Health, Walgreens Boots Alliance and drug makers with expensive medicines like Abbvie also took a hit on Wall Street. And the big PBM, Express Scripts, also lost more than 2% of its value Tuesday.”

Read more in the full article here.

MacDailyNews Take: Yup. ‘Bout time, too!

Obviously the health insurance system in the United States of America is FUBAR and an unspeakably massive drag on the economy overall.

The basic problem is that the prices of healthcare are not defined. They are elastic. What else do you buy without seeing the price upfront? Without knowing the hourly rate upfront? Or the cost of typical procedures? You go to a garage and it says on a board the labor cost per hour. It shows the cost of an oil change, brake services, a tune-up, etc. You go into Target and the price is on the product. You can compare that price with Amazon’s and Walfart’s and then decide where to buy. Not so with medical services, tests, and procedures.

Ever wonder why a new doctor asks what your insurance plan is upfront? It’s not just to determine that you have insurance, it also determines how much you’ll pay. The prices change based on the insurance company/plan. Ever wonder why, when you have “good insurance,” the doctor’s office seems excited to hear it? Or how well you’re treated over others with lesser (read: less profitable) insurance companies/plans? They want to keep you happy. You’re a high-value patient. If you’ve ever gone from crappy insurance to good insurance or vice versa, you know what we mean.

Until the medical costs are displayed upfront and everybody is charged that rate, regardless of their plan, this mess will continue. You can’t have real competition that drives down costs until the actual costs are clearly known by all parties and uniform per person regardless of their insurance or even lack thereof.MacDailyNews, March 7, 2017

25 Comments

  1. The health insurance industry openly colludes to price fix. They want to be the gateway to health insurance. Many provider-insurance contracts since the ACA restrict providers from offering discounts or cash prices. Insurance gives the illusion that people are receiving a group discount for services but it actually inflates to cost.

    1. Absolutely, and that collusion is illegal under existing federal antitrust laws, but it’s never prosecuted…

      Want to see transparency in health care? Just have the DoJ start handing out criminal indictments to health industry CEOs and things will change in a hurry. The downside for the little people is that our economy now has a ridiculous, built-in line item for health care at about 15% of GDP. Disrupt or lower that significantly and there will be a serious recession. We must take our (economic) medicine, fix this foolishness and suffer through the adjustment period.

    2. My wife inherited bad genes from her father: diabetes, high cholesterol, high blood pressure. Because she manages her conditions, she is much, much healthier than he was at her age.

      Because she is an American citizen, 64 years old, and ineligible for any group or government coverage, we pay $1100/month in health insurance premiums, about $700/month for medication deductibles and copays, and around $150/month for doctors, labs, and so forth. That assumes that she doesn’t have any dental or vision issues (not covered) and doesn’t have a health crisis on a weekend that requires a $1000 ER visit.

      Her father required the following services:
      1) 15 pills a day
      2) two daily home visits from health aides to make sure he took the pills and got out of bed, dressed, etc.
      3) one daily home visit from a social worker to assess his mental health, deliver a hot meal, and check on his general welfare
      4) A weekly home visit from a Nurse Practitioner to check his general health and progress
      5) A monthly house call by a physician (more often if needed)
      6) A 40-mile round trip by ambulance during health crises, once or twice a year
      7) Treatment at one of the world’s leading research hospitals for as long as necessary

      Because he lived in England, he paid less than $50/month for all that.

      You can’t attribute the difference just to higher government funding. Of 189 world countries listed by the World Health Organization, only Switzerland spends more per capita on health care than the United States. In 2015, the UK spent $4356 per person on health care; the US spent $9818. In 2000, it was $1673 in the UK and $4562 in the US.

      The UK is #34 out of 223 world countries for life expectancy; the US is #43—just barely within the top 20%.

      The UK is #40 out of 225 in low infant mortality; the US is #55—just within the best quarter.

      As for available funding, the UK ranks #40 out of 226 countries in per capita GDP; the US ranks #20 (and all of the higher-ranking countries are mini-states or oil kingdoms).

      The UK is #10 out of 229 individual countries in total GDP; the US is #2, much higher than any of the countries with better health outcomes.

      Every country that beats the US on either of the healthcare lists has what the American Medical Association used to call “socialized medicine.” Clearly, our current medical delivery system is not working well.

  2. The numbers I have seen make up a group of a little over a Million people and they are scattered. That is not a very big group to negotiate discounts from a Hospital, Doctor, Clinic, Pharmacy or Therapist.

    As one who works in healthcare I am interested to see what they do, but have my doubts about what they can do in such a small group. My guess is that they will hire or contract Primary Care Doctors and use them as gatekeepers for access to contracted providers- kind of a captive HMO. If you go much beyond that it gets very expensive and quickly.

    Healthcare is one of the most over regulated endeavors in the American economy. Every level of government from local to Federal sticks their fingers into the pie and not just once per level. Add in the regulations and compliance rules of the various credentialing organizations for both facilities and staff. Add in the rules demanded by insurers – public and private. It is a Hydra and the bureaucracy is a massive drag without equal.

    There needs to be a complete rethink how the whole healthcare thing is regulated- to streamline it without compromising safety or quality. The burden of regulation- not all of it governmental- eats up truckloads of money every day.

    I spend more of my time doing paperwork (in a supposedly paperless hospital) and babysitting multiple computers for what is essentially data entry (charting treatments, screenings, results, histories, supply usage, any incidents, billing, pre-approval, updating and correcting orders, communicating results, pushing data, etc) takes up more of my time than actual patient contact. A patient I had recently for an exam that lasted 10 minutes took up about 30-40 minutes of my time (and others) because of a brain fart by the EMR software that launched a cascading series of downstream complications. This in the middle of a very busy time with way more people to treat than I could easily treat without this complication. It could not wait to be fixed because of the way the system is designed, set up and locked down.

    If I and countless people like me could spend less time babysitting poorly designed IT systems, we could see more patients more quickly and do better by everybody.

    Hope they find the City of Gold, but it will prove a hard nut to crack.

    1. The goal of all Capitalist corporations is to increase the cash horde as is their top feduciary responsibility, not making people healthier. Therefore, I hold no optimism that this Troika of Capitalist enterprises will improve the life of my family in the area of health and/or safety. For example, I strongly suspect that each has major investments in GMOs, pesticides, and in HFCSs, all three not proven safe to consume.

  3. The health industry is the most anti-consumer industry in the country. It makes the cable companies look positively noble. The biggest scam: charging the uninsured much much more for the same procedure than what insurance companies pay.

    Years ago, I had a lapse in my coverage, and I had to pay for some lab work. If I was insured, the payment would have been about $150. But since I didn’t have insurance, I was forced to pay roughly $1,000 for the same series of tests. How does that make any sense?

    Perhaps the system America had 50 years ago worked better: health insurance was only for major expenses (Major Medical), and you paid your local doctor for routine appointments.

    1. 50 years ago or so, people could afford to support themselves, pay doctor bills and afford to retire with a paid home and retirement. Today for an increasing larger portion of the population that is as common today as a horse and plow.

    2. There is plenty of accounting chicanery going on, but what you call gouging the uninsured is not accurate.

      In network providers give discounts to those customers because they are using a preferred provider, while out of network customers pay the full price. It may sound like semantics, but it is simply a volume discount negotiated by an insurance company.

      What you can do to save money- if you have the ability- is to pay the bill and have the insurance company compensate you. Most providers will give you a significant discount if you pay the bill upfront. On an outpatient MRI that bills for $1500 you might only be asked to pay $600-800 total. and that will be it.

      The simple reason is that insurers pay slowly- very slowly- and essentially hospitals and clinics end up carrying massive amounts of cash in the float which costs the provider, but makes money for the insurer. It is not uncommon for a Hospital to not get fully paid until 4-6 months after the fact, despite the fact that supplies, equipment and labor were expended treating you today. By you paying up front, the Hospital does not have to carry that cost for months waiting for the bill to be paid.

      If you can afford to pay up front- ask what discount will be applied if you pay at the time of service. If they do not discount the charge- vote with your feet if you have an option. You can save yourself quite a bit of money in the process and meet your deductible up front.

  4. You’re telling me that supper investor Buffet the world’s richest man, Bezos of Amazon the world’s largest online retailer and JP Morgans’ Diamond who hid a $6 billion dollar loss of JP Morgan wants to make healthcare more open and reduce costs.

    Apparently they only got religion after the trillion dollar tax cut that will be paid for by cutting SS and MC. Excuse me while I go light one.

    1. As long as that company uses a fruit logo, MDN will be all for a corporate monopoly.

      We enjoy a nonprofit government managed system in the UK, which is far from perfect but it does objectively provide a better national standard of health than you yanks have at a fraction of the price you pay. Also there is nothing stopping one from purchasing additional insurance or choosing medical tourism if you prefer.

      I truly don’t understand why you yanks object to the idea of a nonprofit national health system being set up as an OPTION to compete against the cabal of for-profit middlemen who control your system today.

      If you think your government is inept, then few will choose it and costs will be low. If on the other hand nationwide economies of scale and a nonprofit structure turns out to be more efficient, then you will soon discover who’s been robbing you all these years. Pharma, insurance, HMOs, lobbyists, lawyers, and device manufacturers.

      What I do know is that your political factions are so narrow minded that you won’t solve anything by simply repealing AHA. You need to reform your entire approach to provide at least one health care option that is nonprofit and free of middle men. Your congressmen choose such a system for themselves, after all.

  5. Big Pharma and Insurance companies are colluding together. They are the modern day Mafia. They get away with it cause they can, and laugh at the poor dying people who cannot afford their medications, while they set in their gilded towers of power.

  6. And the next ‘industry’ that needs a revolution is the dental industry. What a complete ripoff and scam they are. This should all be covered under medical. My teeth are in my body, so why do I have to pay separate for dental work? WTF is that and who came up with it, ought to be shot. And dental insurance is a joke. It is insurance, it is a small discount plan, and you still have to sell your daughter to try and afford dental.

  7. Here’s a fun fact. Price transparency was one of the key pieces of the Affordable Care Act (Obamacare). The act required that health providers report the prices of procedures which were in turn made publicly available. Here in the Bay Area, we learned that the cost of the simple procedure like an appendectomy varied widely depending on the hospital and network.

    However, the primary problem is that health is not a commodity to be bought and sold in the free market. Until we change that mindset, healthcare will remain broken in the US.

  8. Visitor’s experience.
    Last year travelling between Savannah and New Orleans, I was bitten by a dog I surprised when I stepped out of the campervan one morning. Now as a Brit I would visit any surgery or hospital and get all necessary treatment for free. So off I went to a local surgery where they were sympathetic but referred me to the hospital and suggested I check our travel insurance beforehand for possible exclusion clauses for specific injuries like say rabies….RABIES!
    You gotta be kidding I thought but no, that’s all the hospital wanted to talk about and referred me to my New York based reciprocal provider for guidance on costs since by their reading I was not covered. Contacted the NY office – to cut a long story short…”Absolutely you are not covered even tho’ your insurer says otherwise” ??
    OK, how much will treatment cost? Can’t say.
    Approximately how much do you charge in fees?… … …long list of garbled legalese “Approximately, maybe, might, possibly could run to …and as a visitor we’ll do you a deal…uhmmm…$11,000
    Deep breath.
    Check with hospital. Their end including indemnity cover of some sort…$1500 + follow up treatment for the next 10 days prescriptions.
    London says “You are in excess for a single treatment to the tune of £8000” !!!
    WTF
    Ring my nephew in Savannah, who then drives down to Jacksonville, spends 3 hours tracing the dog owner, armed with my iPhone photo, who assured him that her dog was just surprised whilst sleeping under our truck and was “Just a dear”
    [Rory…you’re a hero mate]
    End result broad spectrum antibiotics cost $90
    So. This is not to bash the US health system but, from my perspective, it’s forcing its users to take unnecessary risks with the treatment they ‘may’ need largely due to insurance providers gross profiteering. Because I didn’t want to consider paying that excess fee of £8000 I might have gambled with my future life. That’s effing mad.
    Great holiday all the same.

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