Health-care costs and health-care insurance are on people’s minds in Wyoming. In late July, this forum hosted two writers on the pros and cons of Medicaid expansion. Their essays prompted more people to comment — and their comments made it clear that Medicaid expansion is only a piece of the puzzle that is frustrating us in Wyoming, where the numbers say we pay more for health insurance and more for health care than most other folks in the country.
So, here are three people taking a whack at the broader picture. Anne Ladd of Casper, who heads a Wyoming-grown employers’ group working on health care, lays out the case for axing the familiar “fee-for-service” way of paying for health care — and argues that employers and others in Wyoming can take this task on.
Annemarie Albins of Kemmerer, who works in her family’s small business, exposes the costs facing people in Wyoming. She brands health-care and health-insurance costs a crisis, shows its effect on business, and tells politicians to stop posturing and get to work.
And Sandy Shuptrine of Jackson, a former county commissioner who’s worked a bunch of jobs, says we should draw on our compassion to get Medicaid expansion adopted. Lawmakers must understand the majority sentiment favoring the federal program before we collectively tackle causes of high care and insurance costs.
Wyoming’s unique situation means the issues are something we’re just going to have to take on as a state. Wyoming’s a big place but there are not a lot of us — not so many that we can’t figure out and solve common problems. Join this forum, tell your stories and make your proposals. We’ll see whether this discussion will get us somewhere in taking the puzzle apart and defusing the health-care cost crisis.
— Pete Simpson
Employers have to be the change agents in health care
by Anne Ladd
The United States spends about twice what every other developed nation spends on health care whether measured as a percentage of GDP or on a per-capita basis.
Yet, the results of that extraordinary expenditure, as measured by infant mortality, average life span and several other key metrics, put the United States 37th in the world, right behind Dominica and Costa Rica.
We can, and should, do better.
To make matters worse, in Wyoming we pay more for health-care benefits than most other places in the country. That means we get a double whammy when it comes to costs.
The map below illustrates that Wyoming residents face some of the highest premiums in the United States. For example, the lowest-cost Silver-level plan available on the Affordable Care Act Marketplace in 2016 — to an individual non-smoker who is 50 years old — was $586.41 per month in Laramie County and $643.47 per month in the rest of the state.
High health-care costs have a negative impact on our state in many ways. First, they are a significant barrier for those working in economic development. It is hard to convince companies to come to Wyoming when they have to pay double or triple for health-care services.
Second, given that much of the Wyoming economy is based on commodities such as beef and coal, the high cost of our health care puts these products at a competitive disadvantage on both the US and global markets. Even our tourism industry is affected.
Third, the high cost of providing health benefits is preventing some employers from expanding, and forcing others to scale back or even close their doors. No one wants to put Wyoming doctors or hospitals out of business, but it often feels like those in the health-care industry — with a 50 year history of annual rate increases that are two and three (or more) times that of inflation — are trying to do just that to Wyoming’s businesses.
Finally, for individuals, the financial stress of unanticipated bills is the leading cause of personal bankruptcy. The human suffering involved is immeasurable.
Health-care costs are a problem. A big problem. The question is: what are we going to do about it? There is no silver bullet. No single change will fix all that ails health care. Addressing health-care costs in Wyoming will require a myriad of changes and extraordinary leadership from our hospital association, medical society, nursing association and every other stakeholder in this Byzantine business.
But let’s be honest; those in the health-care industry have no economic incentive to change the current system. Our fee-for-service payment methodology encourages those in the health-care delivery system to keep doing what they have been, which is what has gotten us into our current situation.
That is why the real leadership will have to come from employers who pay for health care.
Employers pay directly for their employees and their family members through the premiums they cover for their beneficiaries. Through taxes, they also contribute significantly to public programs such as Medicare and Medicaid. Those who pay the bills (either as an individual or a business) have a strong motivation to work for change. We see the cost of providing health benefits go up, year after year, at two to five times the price of any other input into our business or family budget.
We are at the breaking point.
Bills are up 67 percent, 7 times the increase in wages
Employers, be they private-sector or public-sector, can no longer absorb the cost increases, so they are passing them along to their employees in the form of higher deductibles and co-pays. Workers saw their share of the health-care bill increase 67 percent between 2010 and 2015. That is roughly seven times as much as wages grew during the same period.
Economists point out that our slow recovery from the Great Recession of 2008 is, in part, due to the dollars sucked out of every other economic sector by health care. The fact that health-care cost increases are outpacing wage growth also means that providers are having a hard time collecting on their bills, as patients simply can’t afford them. It is a vicious cycle.
Employers, concerned individuals and those in the health-care industry that understand the toxic nature of our current arrangement need to work together on systemic change. First, we need to understand that not all health care is the same. Several studies have shown huge variations in quality and price for the same test, procedure, or service — even in the same town.
Further, there appears to be no correlation between price and quality. In fact, some studies show that facilities with the best outcomes (highest quality) have the lowest costs. That’s because they get the diagnosis right faster, avoid unnecessary test and services, or don’t commit medical errors that add significant pain and suffering along with additional cost.
Those employers and patients who pay the bills need to demand transparency from the health-care industry — both in terms of price and quality. Once we are able to compare price and quality, we can empower our employees and their family members, as well as the general public, to be smart health-care consumers. We can search for ways to reward those who provide value (consistently good outcomes at competitive prices) as opposed to continuing our current system that rewards only volume.
We who pay the bills also need to look for, and reward, those who are innovative. In Cody, Dr. Allen Gee, a neurologist, has successfully helped many of his patients avoid painful and expensive back surgery. He researched other treatment options and now offers less invasive, less costly, but effective therapies. As payers, we need to find ways to reward Dr. Gee and others in Wyoming whose quest for value in health care is sincere.
Doing so requires us to find a different way to pay for health care. Our current fee-for-service system rewards those involved in amputating a diabetic’s foot, but not the providers who educate a diabetic about the disease, proper diet and self-care in order to avoid an amputation. We need to appropriately compensate those who prevent clogged arteries, not just those who perform bypass surgery.
However, once the doctor and patient determine surgery is necessary, we need to increase compensation to those who achieve better results at less cost. This may seem paradoxical, but we can pay more for necessary services if we can find ways to eliminate the estimated 30 percent of care that is clearly unnecessary.
Bundled payments reward for the entire “episode of care”
One method, called “bundled payments,” is being used across the country and early results show improvements in quality of care and reductions in overall cost. For example, think about how poorly your car would run if you bought the various engine components from different places with no thought or effort put into the overall design. Instead, you buy the complete package.
Currently patients and health-plan administrators get a myriad of disjointed and frequently incomprehensible bills all for the same episode of care. The fact is, the care provided is as uncoordinated as the billing. This is a huge problem.
Why can’t we set a single, all-inclusive price for all of the care required to treat a particular condition? By bundling the various services we can reward providers for working together, for doing a better job coordinating care and for being efficient. These bundles have proven to reshape the delivery system in four positive and important ways:
- Increased care coordination and integration: Under bundled payments, the various providers have a financial incentive to talk to each other and figure out the best course of treatment and the best method to execute that plan.
- Increased care innovation: As providers get rewarded for finding higher-quality and/or lower-cost methods of addressing medical issues, new and improved treatment will emerge. Care teams become common and the “team” includes the patient, physician(s) and other appropriate care providers.
- Accountability for cost and quality: By definition, bundled payments hold providers accountable to each other as well as the patient. Because bundled payments are risk-adjusted, providers are rewarded for taking on difficult cases. At the same time, they are penalized for over-treatment or inappropriate treatment. Patients, who typically lack medical training, are incapable of creating that accountability, but those on the care team with medical training have a financial incentive to ensure the entire cycle of care is done as well as it can be.
- Costs: Bundled payments motivate hospitals, physicians and other care providers to understand and analyze the actual costs of each step in the care process. This leads to more sophisticated cost/benefit analysis and continuous quality-improvement efforts.
For those who want to read further, a recent article in the Harvard Business Review provides a more in-depth look at bundled payments and the problems with fee-for-service. In Wyoming, no single payer is large enough to make any of these reforms come to pass. But working together, the employers across the state, public and private, large and small, can get educated and work together to effect change.
Employers need local political and health-care leaders to work with us. The process will not be simple, smooth or straightforward. We will encounter lots of obstacles. But the effort has to be made.
Anne Ladd is the CEO of the Wyoming Business Coalition on Health, an employer-driven nonprofit working to address health-care issues in and around Wyoming. WyBCH encourages all employers — public or private, large or small — to get involved in looking for solutions to the high cost of health care in Wyoming — Ed.