If you’ve ever sold a house, or a car, or been offered a job, you probably took into consideration how much you were going to be paid.
People have been known to turn down purchase offers when the price proposed seemed too low, preferring to hold out for more from some other buyer. Favored with multiple offers, sellers sometimes, without scandal, convey their goods to the “highest bidder.”
And when deciding whether to accept a job offer, most of us think it defensible to compare its wages with our existing job or other opportunities.
But step through the looking glass into the wonderland of American health care, and an institution’s admitting to exactly this sort of everyday self-interest in what different purchasers are willing and able to pay suddenly becomes surprising, unprecedented, even disgraceful.
There are reasons for the difference. But one of those reasons is simply how impossibly complex, inconsistent and inefficient we’ve allowed our health care financing system to become.
Several big health care providers in Minnesota have recently been spotted responding to what they are being paid by various customers — specifically, to the very low rates they’re paid, by government decree, when they treat patients insured by public health care programs.
Earlier this month, a recording surfaced in which John Noseworthy, chief executive of the Mayo Clinic, told staffers that Mayo needs to “prioritize” patients covered by private health insurance over comparable patients on public programs, chiefly Medicare for the elderly and Medicaid for the poor. Or something like that. After heavy doses of public and press indignation about Mayo’s greed were administered, along with threats of state investigations into “human rights violations,” clarifying statements were issued that confused Noseworthy’s meaning somewhat.
But he didn’t back away from the idea that Mayo needs to “grow the commercially insured” portion of its patient mix, and that the whole health care world needs to face challenges to its “fiscal sustainability” by entering into these kinds of “uncomfortable … discussions.”
They’re doing more than talking at Hennepin County Medical Center, where 131 workers were laid off this month in a cost-cutting move and efforts are ongoing to attract more privately insured patients. Low public-program reimbursement rates are “a big part of a safety net hospital’s world,” Finance Vice President David Albright told me in an interview. Being “attached to government,” HCMC has “a disproportionate share of patients on Medicaid,” he said, and “Medicaid does not cover your costs.”
The low compulsory rates public programs pay are routinely noted in news reports on these matters. But maybe some actual numbers would bring the problem to life.
Acknowledging the complexities in such comparisons, Minnesota Community Measurement, a nonprofit health care data center backed by the industry, reported that in 2015, Medicaid paid $34 for a 10-minute doctor visit, while the average rate negotiated with a commercial insurer was $83.
Medicaid paid $62 to stitch a wound; the commercial average was $194. Medicaid paid $267 for a colonoscopy; the commercial average was $590.
Because most Minnesotans on Medicaid get their care through a private health plan that contracts with the state, the actual prices negotiated with providers are often slightly higher than these official fee-for-service rates. Medicare’s rates, too, are slightly higher.
But the differences between public and private prices remain very large.
And part of what’s making health care providers ever more uncomfortable is that health care reform, so far, has tended to increase the portion of patients covered by public programs — largely through the expansion of Medicaid under Obamacare and, in Minnesota, the continuation of MinnesotaCare for some whose incomes are too high for Medicaid (MinnesotaCare pays providers Medicaid rates).
According to the state Department of Health, 33.6 percent of Minnesotans were insured by public programs in 2015, up by more than half, from 21.1 percent, since 2001.
That percentage would grow still more if Gov. Mark Dayton eventually persuades the Legislature to meet the crisis of soaring premiums in the individual health insurance market by opening MinnesotaCare to all individual purchasers. About 6 percent of Minnesotans buy individual coverage today.
It’s not hard to diagnose the uncomfortable trend in the business model here. The segment of the patient base that is growing for Mayo and HCMC (and others) is the segment that pays the least — too little, they say, to cover their costs and support the kind of health care infrastructure and innovation it is their mission to provide. Their determination to come to grips with these facts is understandable.
And yet. There’s a more fundamental “uncomfortable discussion” America must face. It concerns the reality that the only way we can stop health care from eventually swallowing the American economy whole is to find some mechanism for declaring when enough is enough. This is existentially difficult in health care, because until we conquer sickness and death, not one human alive is going to get “enough” health care in the end.
Most advanced countries have turned to government-run “single-payer” systems to define “enough.” For some years now, under Obamacare, America has been moving in that direction.
Of course, the health care industry finds it uncomfortable. “Enough,” however it is achieved, forces efficiency, punishes waste, crimps compensation and generally enforces limits. Patients will likely encounter limits and discomforts from “enough,” too.
Republicans, of course, are struggling, with little success as of last week, to repeal the current complexities and replace them with new complexities — and an “enough” mechanism of their own. Theirs would aim to shrink government’s role and restore more of a free private market in health care. People would be freer, and rather more on their own, to buy what they believe they need and can afford — and those choices and limits would define “enough” in health care as they do for most other goods.
By many accounts, health care leaders are even more alarmed by the GOP plans than they are by the current mess.
Anyway, as the search for a cure to what ails American health care continues, industry concerns should be thoughtfully considered, not reflexively demonized — remembering that no real remedy will be painless for those inside the system, or for anyone else.
D.J. Tice is at Doug.Tice@startribune.com.