Panel offers ideas on uncovering true costs of health care at #AHCJ16

Joseph Burns

About Joseph Burns

Joseph Burns (@jburns18), a Massachusetts-based independent journalist, is AHCJ’s topic leader on health insurance. He welcomes questions and suggestions on insurance resources and tip sheets at joseph@healthjournalism.org.

money-and-medicineFor those of us covering health insurance, one of the best sessions at Health Journalism 2016 addressed the challenging issue of how to find the true cost of health care.

Moderator Bruce Japsen, who writes about health care and health policy for Forbes, kept the focus on where reporters can look to uncover the actual cost of care in their communities.

That generated a terrific pro tip from panelist Chad Terhune of Kaiser Health News. For journalists seeking the inside story on employer-sponsored health insurance, Terhune recommended attending meetings of public purchasers that buy health insurance for cities, towns, counties, or school boards. These entities uses taxpayers’ funds, and so must hold public meetings.

“During those meetings employers and union folks will be asking tough questions of health insurers,” Terhune said. Often the health insurers respond by “throwing the providers under the bus.”

Negotiations between commercial health insurers and private employers, however, typically are closed to journalists.

Elizabeth Mitchell

Elizabeth Mitchell

Outside of public meetings, getting good information on the true cost of care is difficult, in part because physicians and hospitals themselves generally don’t have the information, noted Elizabeth Mitchell, chief executive of the Network for Regional Healthcare Improvement in Portland, Maine.

They know only what they get paid and what they charge health insurers and consumers, Mitchell said. Often they cannot reveal the rates they negotiate with insurers because of prohibitions in their contracts. In any case, price data ideally should be paired with quality data, so that consumers can compare physicians and hospitals effectively.

“The best source of data on costs is health insurance claims, if you can get it,” Mitchell said. “But it’s considered proprietary, and there are disincentives for sharing that data. The status quo is working for those who don’t want to share that data.”

The proprietary nature of claims data was at the heart of a recent U.S. Supreme Court case, Gobeille v. Liberty Mutual, which we covered here. The case showed that employers are reluctant to participate in any program in which they would need to comply with different requirements in each of the 50 states, Mitchell said.

There is hope, however, for those who cover health care in states such as Colorado, Maine, Maryland, Minnesota, Missouri, Oregon and Utah. Those states have access to claims from all payers. “That means they can calculate the total cost of care, and this is the first time this data is available in these communities,” Mitchell said. “That means you can see why costs vary in Colorado versus Minnesota.”

David Lansky

David Lansky

David Lansky, chief executive of the Pacific Business Group on Health, which represents large employers in California, said employers do want their workers to know what their care will cost so they can shop for care based on price. But, like Mitchell, he said that health plans and health systems are reluctant to share that data with employers.

Lawsuits are pending over health system requirements that employers use arbitration to resolve any disputes, including those involving the cost of care, Lansky said. In arbitration the details of these disputes could be kept from public view. (For more on this issue, see Terhune’s KHN recent coverage of a dispute between large employers and Sutter Health.)

When covering the cost of care, reporters should focus on three types of costs:

  • Unit costs.
  • An employer’s or other purchaser’s costs.
  • The cost to society.

Unit costs alone are usually not useful because the cost of each unit of care (such as a knee replacement) is affected by the health plan or the employer’s benefit design, Lansky said. Each employer has its own benefit design and health plans have multiple benefit designs, each of which affect what consumers pay.

“Nationwide, there are tens of thousands of benefit designs. So, you need to know the benefit design,” he said. It’s knowable, but hard to get.”

Employer’s costs are “the total of all unit costs together, such as all heart disease costs and all knee replacement costs,” he said. Unfortunately, even gathering all unit costs together won’t include the cost of prescription drugs or mental health care, because employers and health plans pay those costs separately.

The cost of care to society is what a city, town or state pays for health care compared with what it pays for housing and infrastructure. As health care costs rise each year, there is less money available to pay for other costs to society, Lansky noted.

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