Former Hospital President: Republican Health ‘Reform’ Is Like Paying $500,000 For A Junker

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The Republican health reform plan revealed Monday afternoon suffers the same fatal flaw as Obamacare, mistakenly focusing on the cost of insurance. It’s like getting financing so you can afford to pay $500,000 for a junked automobile. Only big government shops this way.

Insurance is a means to finance the cost of medical bills. Premiums are determined by the pricing of healthcare services, to which politicians have turned a blind eye. The system has been structured to eliminate price competition among hospitals, labs and physicians. It is precisely how Americans are being bled dry. Big premiums are a symptom, not the disease.

The last four presidents (Clinton, Bush, Obama, Trump — two Democrats and two Republicans) came into office promising reform. The first three oversaw an explosion in total healthcare costs from 13% of GDP when Clinton was sworn in to 18% of GDP by the time Trump took office.

The latest official government projection is that total U.S. health expenditures will zoom from 18% to 20% of GDP by the end of Trump’s second term – a bigger jump than the Obama years.

The irrational focus on insurance costs, instead of the pricing of medical services, guarantees healthcare’s noose will continue to tighten around our necks. On this trajectory, Republicans will reap a whirlwind in future election cycles that will make the Democrats’ problems of 2016 look like a sun shower.

Medical costs are skyrocketing because there is no such thing as actual, real prices. Ask a hospital, lab or physician the price of anything and all you ever get back is a question: What insurance do you have?

Your bill is 100% based on how much can be extracted from you – individually, sometimes at your most vulnerable. It is a predatory system. The amount others pay for the treatment you purchase is literally protected as a trade secret. The next patient may pay 10 times more or one-tenth of the amount you were charged.

Healthcare pricing renders us powerless, unable to shop for value. We are also forced to choose medical providers from narrow insurance networks. Go out of network and you could face bankruptcy.

Today’s proposed reform consists primarily of modifications to insurance coverage mandates, new tax rules and credits as well as changing the framework for the purchase and sale of health insurance products. It merely shifts costs around between the states and the Federal government and different groups of citizens, depending on their income levels and illnesses. It has no chance of reducing the crushing burden of medical bills, which will continue to rise.

Yes, we may buy less comprehensive insurance coverage at a lower price, but the extra out-of-pocket expense for those persons who need to use it will offset the premium reductions. If you don’t need maternity coverage, no problem. But your cost saving is offset by the increased premium for women who need the coverage. The new mom still won’t be able to get a fair, market based price for an obstetrician or a hospital.

Ironically, this reform is sponsored by folks who railed against Obamacare’s individual mandate penalties, which are peanuts compared to the ongoing pricing penalty. For example, a $50,000 hospital bill to an insured person is commonly inflated to $250,000 or more for the uninsured or out-of-network; and, a $10 invoice for blood work may be inflated to $500, or more.

From a healthcare lobbyist viewpoint, the plan is a dream. Medical providers continue to be protected from price competition. We remain compelled to buy insurance and are limited to in-network providers under threat of pricing that would be considered fraudulent in any other business.

The solution: Legitimate pricing of medical services

Congress must compel medical providers to play by the same rules that apply to all other sellers of consumer goods and services. They should remain free to set their own prices. However, providers should be prohibited from billing each patient a different price for the same service. We all pay the same amount for a gallon of milk at the neighborhood grocery.

Legitimate pricing means:

  1. Networks would be obsolete. We could use any healthcare provider in the nation without being price gouged for being out-of-network.
  2. Everyone could shop any medical procedure online and see real prices.
  3. Wide-open free market competition, virtually overnight, will reduce U.S. health expenditures by a minimum of 33% (and the USA would still have approximately the highest cost per person healthcare on earth).
  4. Disposable income and prosperity would boom.
  5. The U.S. deficit would shrink.
  6. U.S. manufacturing would be more competitive, stimulating job creation.

How did the greatest nation on earth develop such a tortured healthcare system? Two words: crony capitalism. The industry spends more on lobbying than the defense, aerospace, and the oil and gas industries combined.

Because this ‘reform’ fails to require legitimate pricing of medical services it will fail spectacularly — exactly like Obamacare.


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