It is one of the most common components of emergency medicine: an intravenous bag of sterile saltwater.
Luckily for anyone who has ever needed an IV bag to replenish lost fluids or to receive medication, it is also one of the least expensive. The average manufacturer’s price, according to government data, has fluctuated in recent years from 44 cents to $1.
Yet there is nothing either cheap or simple about its ultimate cost, as I learned when I tried to trace the commercial path of IV bags from the factory to the veins of more than 100 patients struck by a May 2012 outbreak of food poisoning in upstate New York.
Some of the patients’ bills would later include markups of 100 to 200 times the manufacturer’s price, not counting separate charges for “IV administration.” And on other bills, a bundled charge for “IV therapy” was almost 1,000 times the official cost of the solution.
It is no secret that medical care in the United States is overpriced. But as the tale of the humble IV bag shows all too clearly, it is secrecy that helps keep prices high: hidden in the underbrush of transactions among multiple buyers and sellers, and in the hieroglyphics of hospital bills.
At every step from manufacturer to patient, there are confidential deals among the major players, including drug companies, purchasing organizations and distributors, and insurers. These deals so obscure prices and profits that even participants cannot say what the simplest component of care actually costs, let alone what it should cost.
And that leaves taxpayers and patients alike with an inflated bottom line and little or no way to challenge it.
A Price in Flux
In the food-poisoning case, some of the stricken were affluent, and others barely made ends meet. Some had private insurance; some were covered by government programs like Medicare and Medicaid; and some were uninsured.
In the end, those factors strongly (and sometimes perversely) affected overall charges for treatment, including how much patients were expected to pay out of pocket. But at the beginning, there was the cost of an IV bag of normal saline, one of more than a billion units used in the United States each year.
“People are shocked when they hear that a bag of saline solution costs far less than their cup of coffee in the morning,” said Deborah Spak, a spokeswoman for Baxter International, one of three global pharmaceutical companies that make nearly all the IV solutions used in the United States.
It was a rare unguarded comment. Ms. Spak — like a spokesman for Hospira, another giant in the field — later insisted that all information about saline solution prices was private.
In fact, manufacturers are required to report such prices annually to the federal government, which bases Medicare payments on the average national price plus 6 percent. The limit for one liter of normal saline (a little more than a quart) went to $1.07 this year from 46 cents in 2010, an increase manufacturers linked to the cost of raw materials, fuel and transportation. That would seem to make it the rare medical item that is cheaper in the United States than in France, where the price at a typical hospital in Paris last year was 3.62 euros, or $4.73.
The best thing opponents of Obamacare have going for them is Obamacare. The implementation glitches and the ensuing delays have created a perverse system: Individuals must purchase insurance with no out-of-pocket cost cap while employers are under no obligation to provide insurance. Aside from the gross unfairness and the difficulty in rolling out the plans (e.g. exchanges aren’t set up, there is no guarantee personal information will be protected, the centrality of a corrupted IRS) Obamacare’s debut is bringing home several unpleasant realities.
In January, a study by Kurt Giesa and Chris Carlson in the magazine of the American Academy of Actuaries estimated that 80 percent of Americans below the age of 30 in the individual market would find themselves with higher premiums next year than this year, even after subsidies. Early data from the states suggest this estimate may not be far off the mark. . . .The young and healthy are expected to enable that system to function in two ways: They will pay significantly higher rates than they do now, and more of them will buy coverage. But there is an obvious contradiction between these two expectations. If the cost of something goes up, why would more people buy it?
Obamacare’s promise of universal, affordable health-care insurance is illusory; it will be neither universal nor affordable.
Second, young and healthy voters will be getting a raw deal and they know it. If they behave rationally and take up Supreme Court Chief Justice John Roberts offer — don’t insure and just pay the tax — the system will collapse. The pool of covered people in the exchanges will be older (although Medicare remains in place for those 65 years and over) and sicker, the costs will increase, and the alternative will be to squeeze care (i.e. ration) or hugely increase taxes. Levin sums up: “Its mistreatment of the young and healthy is therefore actually a huge problem for the law, and points to the core of the new system’s economic irrationality, or rather to its failure to contend with how people understand their economic options.”
The other adverse consequences (stifling medical device companies, over-pricing the cost of labor, increases in part-time work) will also be felt as Obamacare works its will on the economy by taxes, mandates and more taxes.
It is a misnomer then to call the problems ones of “implementation.” Even if states get their exchanges up and even if the government prevails in laws challenging the obligations of religious-based employers and even if the exchanges manage to secure personal data, the underlying assumptions on which Obamacare rests — young and healthy people can be corralled into the system to subsidize old and sick people is illogical. If you are under 26 years old then you likely stay on your parents’ plan. If you’re over 26 and are making little income you probably qualify for expanded Medicaid insurance. And if you are over 26 and have an income but no employer-based coverage you probably pay the fine and sign up for subsidized care when and if you get very ill or seriously injured. Besides all that, you’d still have the impact on hiring and the part-time work boom.
DALLAS — The young organizers fanned out through a neighborhood of ranch houses on a scorching midsummer morning, eager to educate Texans on the benefits coming their way under President Obama’s health insurance law. Idealistic and motivated, these health care foot soldiers were armed with glossy brochures emblazoned with the slogan: “Get Covered.’’
But a few hours spent with the team, from a nonprofit organization called Enroll America, illustrated the enormous challenges facing the White House and supporters of the health care overhaul in states like Texas.
In this large Republican-leaning state, one in four residents lacks insurance — the highest rate in the country — yet ignorance of the law and its potential benefits is rampant. State political leaders from the governor on down are actively opposing the law’s provisions and want it to fail.
Texas, in other words, remains hostile country before a key element of the law takes effect.
“I’m not interested,” a 37-year-old woman declared, waving an arm at the two college students standing on her porch before shutting her door in their faces.
Later, when the organizers found more people to speak with, they encountered deep confusion and skepticism.
Many Texans erroneously believed elected officials had repealed the law. Young black and Latino men, in particular, wondered if they would be signing up for “real” insurance, disbelieving that coverage could be both affordable and comprehensive.
“Texas is like the worst with health care, so a lot of people, especially people of color, don’t believe that’s going to change,” said Esteria Miller, Enroll America’s regional organizing lead for North Texas.
From the ground level, with time running out, it was difficult to see how these efforts will help Texas meet upcoming deadlines. On Oct. 1, residents are supposed to begin purchasing health insurance on a new government-sponsored website listing options for coverage.
By Jan. 1, they will be required to have obtained insurance or face a tax penalty under one of the most controversial elements of the 2010 law, modeled on Massachusetts’ groundbreaking universal health care requirement.
Governor Rick Perry and the Republican-led Legislature refused to take any part in implementing the online insurance marketplace. That task falls to the federal government, which is also responsible for setting up insurance marketplaces in 26 other states.
Texas has turned down federal Medicaid money included in the law to insure more low-income residents, joining roughly two dozen states that have rejected that provision, as well.
Mixed Signals on Employee Health Insurance
It is hard to know whether to rejoice or lament two striking if somewhat conflicting messages last week about the costs of employer-sponsored health insurance.
An authoritative survey found that premiums for family and individual coverage at work — including both the company’s and the worker’s share — have gone up only moderately for the second year in a row, suggesting that health care inflation may finally be abating and that whatever costs the president’s health reforms may add will be readily absorbed.
On the other hand, United Parcel Service told its white-collar workers that in an effort to reduce its health care costs, it will no longer cover some 15,000 spouses who can obtain coverage through their own employers. The company
said its move was prompted primarily by projected increases in the amount it would have to pay for employees’ medical care and secondarily by various costs associated with the health care reform law.
The
annual survey by the Kaiser Family Foundation and the Health Research and Educational Trust covered more than 2,000 small and large employers. It found that the average premium for employer-sponsored health insurance, typically paid mostly by employers and partly by workers, rose only 4 percent for family plans between 2012 and 2013, the same percentage increase as between 2011 and 2012. The premiums for individual policies rose 5 percent for individual workers, up from 3 percent the previous year.
Those are well below the large premium increases seen more than a decade ago. Unfortunately, they are also well above average wage growth. And on top of premium increases, many workers must cope with rising deductibles and co-payments.
Meanwhile, U.P.S. is joining a small but growing number of companies that decline to cover working spouses who can obtain coverage at their own workplace. The costs and complications of two separate policies may vary from family to family. In some cases, the plans may have different networks of doctors and offer different benefits. U.P.S. says that eliminating a spouse from a family plan could reduce the premium paid by many of its employees by enough to cover some or all of the premium the spouse will have to pay for a separate policy at another company.
http://www.nytimes.com/2013/08/26/opinion/mixed-signals-on-employee-health-insurance.html?_r=0&pagewanted=print
FYI -
SPC
Cal Thomas: U.K health care horror stories could happen here
PORTSTEWART, Northern Ireland — Each visit to the U.K. brings new horror stories about the National Health Service (NHS).
Last month, Sir Bruce Keogh, medical director of the NHS, issued a forensic report, commissioned by the government, which found that 14 underperforming hospitals in England had substandard care, contributing to the needless deaths of nearly 13,000 people since 2005. Earlier this year, it was reported that a single hospital in Staffordshire recorded 1,400 "excess" deaths.
Following the July report, letters from patients and relatives of those who died flooded in to newspapers, Sky News and the BBC. Many confirmed poor treatment, if in fact they or their loved ones were able to receive timely care at all. The lack of adequate nursing staff, cuts to elder care budgets and a rise in immigrant populations are a few of the factors that have exacerbated the problem.
One letter from Grace Nutt to the Sky News web page is typical: "I am not surprised at the report at all. In fact the scandal has been going on for longer than the (period from) 2005 the report covers. My daughter was stillborn at Basildon Hospital in 1986. I was ten days overdue and very, very big, and in a lot of distress but was told go home and come back tomorrow; we don't have enough beds. During the night my daughter died. The nurse even told me she could hear the heartbeat the following day. I told her she couldn't and it was confirmed by the doctor. The lack of care has been going on for much longer than stated. I am distressed that I did not at the time take the case further and sue, but it's too late now. I hope everyone in similar circumstances makes them pay. D--n you Basildon Hospital."
Bare Bones Health Plans Expected To Survive Health Law
By Jay Hancock and Julie Appleby
Kaiser Health News, Aug. 25, 2013
Consumer Reports calls it “junk health insurance.” A California regulator described them as “skeleton policies.” To an expert from the American Cancer Society, they “are a perfect example of why health care reform is so crucial.”
They are bare-bones health plans, and critics say they could leave consumers who become seriously ill on the hook for tens of thousands of dollars in medical costs. The Affordable Care Act was supposed to do away with them.
“The good news is that these plans will be a thing of the past in 2014,” Steve Larsen, then a high-ranking Department of Health and Human Services official, told reporters two years ago.
The law did outlaw so-called "mini-med" plans, which cap annual benefits at, say, $2,000 even though the average hospital stay costs $14,000. But now a new type of bare-bones policy may take their place.
Consumer advocates, employers and insurers say that unless regulators move to block them at the last minute, plans with limited benefits may continue to be offered by some large businesses, especially those with low-paid workers such as restaurant chains and retailers.
Proposed and final rules issued this spring surprised many by failing to bar large employers from offering insurance policies that could exclude benefits such as hospitalization.
Offering bare-bones policies may result in some fines, but that expense could be less than the cost of offering traditional medical coverage.
For large employers, "the feds imposed no minimum standard on how skimpy that coverage can be other than to say, in essence, it's got to be more robust than a dental plan or a vision plan," said Ed Fensholt, a senior vice president at insurance broker Lockton Companies. "We had customers looking at offering some relatively inexpensive and skimpy plan designs to satisfy the individual mandate at modest cost.”
Employers Showing Interest
“There is a lot of interest” from retailers and others that have offered limited-benefit plans in the past, said Joan Smyth, a partner with benefits consultant Mercer. She’s gotten so many inquiries since the Wall Street Journal reported on the issue in late May that limited benefit plans are “my favorite topic,” she joked.
Such plans were typically offered because some insurance was seen as better than none — and the premium costs for both employers and workers were far lower than for traditional coverage.
This summer, the Obama administration gave businesses with 50 or more employees another year, until 2015, to comply with the requirement that they offer insurance or pay a fine.
“Some of the pressure was taken off because of the announcement” to delay the employer mandate, said Neil Trautwein, employee benefits policy counsel at the National Retail Federation, a trade group. “But I think you will continue to see employers in many industries … carefully calculate their strategy for compliance,” in part by considering skinny plans. “As always, the interest is to limit cost increases.”
Officials for McDonald's, Ruby Tuesday, Darden Restaurants and other large employers that have offered mini-med coverage in the past declined to comment or did not respond to questions about their plans.
http://www.pnhp.org/print/news/2013/august/bare-bones-health-plans-expected-to-survive-health-law
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