“It’s the prices stupid,” Uwe Reinhardt and Gerard Anderson and colleagues asserted in the title their seminal Health Affairs manifesto on U.S. healthcare spending.
Sixteen years later, yesterday on 8th July 2019, a Federal U.S. judge blocked, in the literal last-minute, a DHHS order mandating prescription drug companies to publish “retail prices” of medicines in direct-to-consumer TV ads. I was getting this post on transparency together just before that announcement hit the press, so this post would have had a different nuance yesterday compared with today.
And that’s how health care politics and economics in America roll these days. Welcome to my world of ongoing scenario planning in a constantly evolving health/care ecosystem.
So regarding those “prices” about which Reinhardt and Anderson warned: the prices are personal to the patient, now the payer.
I grew up the daughter of hardworking dad who in business was a middle-man between manufacturers and retailers in a job that today probably doesn’t exist. He taught his daughters never, ever pay full retail when you can avoid doing so. This was before we had a Walmart in our community in suburban Detroit. We shopped J.L. Hudson and Jacobson’s, two retailers, and when they had a sale for 20% off, did we do Charles Sarasohn proud. When we waited for a 50% off opportunity, we called it “the deal of the day,” and competed to see who could save the most money.
As I studied health economics at the University of Michigan, I learned about health insurance and third party payment, and how insurance beneficiaries were arm’s length from a pure payment function.
Today, with high-deductible health plans that compel the patient-as-payor to spend dollar one on health care up to their plan share, she can’t get a handle on that ultimate, personal price. And that wouldn’t have been the quantity shown in the TV ad.
The rule that the judge struck down yesterday was part of the American Patients First Blueprint championed by Secretary of Health and Human Services Alex Azar. Secretary Azar was quoted in the press release for the Blueprint, saying, “If we want to have a real market for drugs, why not have [companies] disclose their prices in the ads, too? Consumers would have much more balanced information, and companies would have a very different set of incentives for setting their prices.”
For most patient-payers, those published prices have little resemblance to what the patient-plan-member actually would pay for the medicine.
Leave it to The Economist, that UK-based weekly, to cover transparency in an article called, “Never a bargain,” asking the question: “Will transparent pricing make American health care cheaper?”
The answer is, probably not in the short term, anyway. But that doesn’t mean we shouldn’t try to shed light on what “everyone pays,” the Economist argues in its conclusion.
This graphic from the column is titled “Mammoscams,” so you know where the editor is going with this plotline.
As your eyes review the left column of American metros from northeast in Boston to southwest in Los Angeles, you see that the mammography scan in Beantown has a fairly narrow range between about $200 in the 10th percentile and $400 in the 90th percentile. In LA, the very wide range runs from about $150 to nearly $800 in the 90th percentile of prices. The median price for the image doesn’t vary much between Boston and LA — in fact, the median is lower in LA, just under $200 compared with nearly $300 in Boston.
Health Populi’s Hot Points: The variability The Economist describes within towns, and across America, is another flavor of your ZIP code determining an aspect of your health — not so much your life span or social determinants of health, but the price you pay for health care services and products.
In the current health care financing regime in the U.S., the patient-as-payer faces costs based on their unique health plan provisions. Personalized medicine has been described as the application of information from a patient’s unique genetic profile in order to select effective treatments that have minimal side-effects.
For patient-payers, personalizing health care financing must be customized based on the person’s unique health plan provisions, optimally avoiding financial toxicity as a side effect.
Today, financial toxicity is a prevalent side effect, which I discuss in my book, HealthConsuming: From Health Consumer to Health Citizen. In the chapter titled, “The Patient is the Payor,” I wrote, “Doctors working at Memorial Sloan-Kettering Medical Center called out ‘financial toxicity’ as an observed side-effect of cancer. In health care, financial toxicity is the impact of a disease or medical treatment on a patient’s net worth and debt.”
The fact is that financial toxicity is a side effect that goes beyond prescription drugs when they’re priced so out-of-reach of a patient that she self-rations the therapy by not filling a prescription or splitting pills in half to make them “last longer.” Financial toxicity can be a side effect when a health plan enrollee can’t or won’t spend money on care due to not meeting their deductible. As The Economist notes, transparency is an important factor for shedding some light on pricing. But unless the prices are personal, based on real-time health plan data for the patient, transparency won’t move the needle on “shoppability” of health care or health care spending.