Felzkowski Leads on Health Care Pricing

How to keep score on how Wisconsin is doing on health care for its citizens? It’s a tough question. And a preeminent question. It deals with all-important family health and with family prosperity, since health and wealth run together.

The average family cost in the country, according to the Kaiser Family Foundation (KFF) from its broad survey, was $22,463 in 2022. Surprisingly, that staggering total was about flat with its 2021 number. What caused that?

Private employers pick up 73% of the cost, but the employee’s share still hits $6,106 per year.

The Wisconsin totals are probably higher, because a recent study by Rand Corporation ranked Wisconsin fourth highest in the nation for health costs. Note that Milliman Consulting puts the family of four cost at more than $30,000. Either number is a wrecking ball for family finances.

There are forces and initiatives that move prices even higher and some are attempting to get them under control. Here are some of the macro and micro dynamics:

1. Merger Mania has swept across Wisconsin in the last year, and the consolidations almost always work to give the provider corporations more leverage against payers for raising prices.

• The biggest merger combined Advocate Aurora Health of Wisconsin and Illinois with Atrium Health in North Carolina. It’s hard to see any synergies between those distant partners.
• Another whopper merger combined Gunderson Health System in La Crosse with Bellin Health in Green Bay.
• A third pending consolidation is between Minnesota-based Essentia Health and Marshfield Clinic Health System.
• The fourth game-changing pending merger will combine Froedtert Health of Milwaukee with ThedaCare in Fox Valley.

None of the merger partners talked about cost reductions in their news releases.

2. Price Transparency: A year ago the federal government started to require hospitals to publish prices for their procedures, but the implementation has been messy and difficult for consumers and employers to utilize.

On the positive side Sen. Mary Felzkowski (R-Tomahawk) has introduced a bill to require Wisconsin health care providers to publish prices online for their significant procedures and treatments. Her goal is to make the Wisconsin menus of care more transparent and easier to use than the federal mess.

Prices in the Wisconsin marketplace can vary as much as 400%, even within the same health system.

Price is only one component in determining values of health care; the other is quality, and there are almost no generally known ratings for quality at hospitals and clinics. Every other business competes on quality as well as price, but not so in health care.

3. Pricing Bundles: Self-insured employers of medium-sized companies are increasingly demanding “bundled prices” for the most common procedures. Employers like the Chippewa and Neenah school districts have negotiated as many as 70 fixed-price bundles at prices well below market averages.

• Hospital advocates will claim that medical treatments are too complex to be wrapped into a single price, but Solstice Health, which runs an ambulatory surgery center in Wauwatosa, has published more than 100 fixed prices online. For example, it will charge $19,000 for a knee replacement, which is about 1/3 of the cost in a big hospital system.
• My company has negotiated a bundled price for joint replacements at $28,600. The surgeries are performed at the Orthopedic Hospital of Wisconsin in Glendale, which has some of the lowest infections and readmission rates in the country.
• Other bundles that we had negotiated have been pulled back by big hospital corporations.
• When told that vasectomies cost $1,500 at Solstice Health, one wag said, “Good deal; I’ll take two!”

4. Medicare Advantage: One of the more dramatic movements in the marketplace for senior health care has been the stampede to Medicare Advantage. More than 50% of the people eligible for health care in the country have moved from the traditional Medicare plan to those sold, administered, and managed by private insurers.

Because private managers are more efficient than government managers, the Medicare Advantage plans offer “advantages” in the form of extra benefits such as vision care.

It should be obvious to anyone thinking about a national health care plan that the Medicare Advantage model that combines competition and marketplace dynamics offers the best compromise for delivering health care in public plans.

5. Medicaid Deficiency: At the same time, the clunky management of Medicaid health programs for the poor are proving to be sadly deficient. Some 15 million people in the country, including about 400,000 in Wisconsin, will be moved off the Medicaid plan at the end of this month. Those people were added during the Covid emergency that comes to an end May 30.

Where will they go? Guesstimates say that about 1/3 will gravitate toward their employer plans, 1/3 will head to the Bronze Plans offered by the Obamacare exchanges, and 1/3 will go uninsured. Medicaid managers knew this crisis was coming, but have been inert in getting out in front of it.

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Long and short, there’s a whole lot of changing dynamics in health care economics at the macro and micro level. Most of them, unfortunately, point to higher out-of-pocket costs for the average family.

With health care making up about 20% of the U.S. economy, and those costs hitting the family budget harder than any other costs, you would think that our political leaders would be fully engaged in efforts to get runaway health costs under control. They are up 41% for the average employee over the last ten years.

Felzkowski should not be the only political leader stepping up to this consumer challenge. Where are the governor, attorney general and legislative leaders?

On a positive note, the report card for U.S. health care needs to include that doctors pull off an unmeasured number of medical miracles every day that prolong the lives of their patients. Gratefully, I’m one of those.

John Torinus is the chairman of Serigraph Inc. and a former Milwaukee Sentinel business editor who blogs regularly at johntorinus.com.