Hospitals and Drug Companies Gone Wild

Health Care

Pearl River       If you run a hospital, what do you do whether it’s a pandemic or wholesale panic? Jack up the prices seems to be the answer.

A report hit the news from the Rand Corporation the other day about hospital prices.  On average they pile on the charges two-and-a-half times the level that the federal government’s Medicare program establishes as its baseline.  In nine states the Times reported they don’t double up but triple down on the prices for care.  West Virginia, South Carolina, and Florida were in that unhappy number.  Amazingly, according to the report, in Arkansas they only inflate the prices 185%, rather than double, making the state almost an outlier, meaning they were ripped off, just not as badly.

Who is getting soaked by this kind of price-gouging?  Employers and their workers are the answer to that question.  For those still lucky enough to have health insurance on the job, and in fact a job at all, this means a constant downward pressure on wages to pay for skyrocketing insurance premiums and usually deteriorating coverage and increasing co-pays and deductibles, as hospitals lard on the cost increases.  As the Times’ reporter wrote,

Employers provide health insurance coverage for more than 153 million Americans. The companies and insurers in the study paid nearly $20 billion more than Medicare would have for the same care from 2016 through 2018, according to the RAND researchers.

Trust me, employers are not simply sucking down these whooping increases.  They are passing them on down to the workforce, contributing to the inequity gap everywhere.

Employers aren’t happy about this either.  One spokesperson for an employer group described the hospitals’ price jumps as “a runaway train.”  Politically, this also argues loudly for the public option, advocated by Biden in the current campaign.  The failure of private insurance companies, backed by businesses, to negotiate fair prices compared to the federal government speaks loudly in favor of that path for the future.

President Trump in his campaign desperation went back to the bench and pulled out an executive order on drug pricing, speaking of another area where healthcare pricing is out of control.  The order said that drugs in the United States couldn’t be priced any higher than drugs in Europe.  Hey, if we can’t lead, maybe we can learn to follow.  There will be lawsuits from the industry, undoubtedly, so don’t run out and do a happy dance in the street yet.

Of course, this is Trump and his White House, so there is a backstory.  There was almost a deal struck between the pharmaceutical industry and the government.  They were going to come up with $150 billion to pay for most Medicare copays and patient out-of-pocket costs.  It fell apart when the White House insisted on them sending out $100 drug cards to seniors before the election to help boost the Trump campaign.  On the industry side, they called them “Trump cards,” given the president’s tendency to brand everything sooner or later with his name.  The industry backed off of this plan realizing it was too much of a political campaign stunt for them to get the public relations benefit during the pandemic they hoped to achieve.

Maybe that’s good news?  Maybe we’re finally coming to the point where hospital and drug companies realize there are limits to what they can get away with?  Unfortunately, hope is not a plan.  We have to find a better way and hospitals and drug companies are not going to lead us there.