Doctor to doctor

In our Oct. 14 print issue we run excerpts of an exchange of letters between two doctors, WORLD member Robert Berry and WORLD medicine correspondent Charles Horton. Below is the entire exchange. Drs. Berry and Horton may jump in again, but many WORLD members are M.D.’s, so this forum is for you, docs: Please send your thoughts to our managing editor, Daniel Devine, at ddevine@wng.org. He’ll run online cogent and concise comments, or excerpts from the verbose.

1) From Dr. Robert Berry, Greeneville, Tenn.

Eliminating the tax exemption for employer-based health insurance and replacing it with something like a universal tax credit for health savings accounts (HSAs) would make healthcare fairer for all Americans, especially the “forgotten” folk. No American should receive such tax favors when so many don’t benefit from it, including many WORLD Magazine subscribers who, like my family, are members of a Christian medical cost-sharing program.

Putting more healthcare dollars into the hands of consumers instead of employers and insurance companies will enable us to choose our own way of sharing risk for catastrophic care while purchasing elective medical care directly from providers we select.

More importantly, paying directly for everyday medical care drastically reduces cost. I know this because I have witnessed it firsthand for the last 16½ years in my own direct-pay primary care medical practice. My fees are one-third to one-half of those charged by insurance-based practices, since our annual overhead is about $250,000 or 70 percent less than theirs.

These savings in professional fees, however, are a pittance compared with what patients save on tests and procedures. One new patient with a high deductible recently told me that a local hospital-owned internal medicine group billed her $502 for a vitamin B12 test that would have cost $25 here. Many of my patients drive right past the nonprofit hospital half a mile from my practice to a for-profit, taxpaying facility 30 miles away to save roughly $100 on X-rays and $1,500 on CT scans and MRIs. They travel 40 miles to save $2,500 on colonoscopies and over 900 miles to Oklahoma to save more than $10,000 on outpatient surgery.

When patients pay directly for non-emergent care, they expect a price list up front and require their doctors to know the costs of their diagnostic strategies and therapeutic interventions—as they do of me. Keeping one’s primary care provider (PCP) accountable for cost at each visit, multiplied by approximately 1.5 billion patient/PCP encounters a year, could save this country on the order of $1 trillion annually. The third-party payment system for noncatastrophic care is a major reason for healthcare’s uncontrollable costs. We will either replace it with a system of direct payment where we keep healthcare providers accountable for the prices they charge, or we will give more and more of our money to distant third-party bureaucrats to do so for us, eventually resulting in a completely unaccountable single-payer system.

2) From Dr. Charles Horton, Pittsburgh, Pa.

Dr. Berry argues that a “universal tax credit for HSAs” should replace the tax exemption for employer-based health insurance. HSAs are already tax-free, so I wonder if he’s suggesting that each taxpayer receive a grant with which to fund an HSA. Since he favors Christian cost-sharing, that would appear to imply a separate change, namely allowing people to fund HSAs without having HDHPs (high-deductible health plans—i.e., catastrophic insurance). That’s currently forbidden by the IRS, but there’s no other reason one should have to buy an HDHP to have an HSA; HSAs would be useful with any insurance or none at all.

Assuming that Dr. Berry is indeed arguing for making HSAs independent of HDHPs, I think he’s also arguing that Christian cost-sharing should become an allowed expense for HSAs. That’s an interesting suggestion, but has two problems. First, I don’t see how families without HSAs would benefit from his plan. That’s most families: According to research by the trade group America’s Health Insurance Plans, only about 20 million people were enrolled in HDHPs in 2016, and of those, the individual market accounted for perhaps 1.9 million. (HDHPs provided by employers are still employer-based insurance, covered by the tax break Dr. Berry proposes to end.) Second and perhaps more important, using HSAs for Christian cost-sharing would presumably lead to more IRS oversight and paperwork, offsetting at least some of the tax savings.

He may be arguing that everyone should have an HSA, and were they no longer to require HDHPs, I’d agree with him. They currently do, though, and that’s important: Favoring HSAs further without changing anything else would effectively subsidize HDHP users, giving HDHPs a competitive advantage against other choices—including Christian health-sharing.

Dr. Berry’s argument improves when he discusses price transparency. It’s most applicable in primary-care fields like internal medicine and pediatrics—who’s going to shop around for an ER while having chest pain?—but in those primary-care fields, as in ancillary services like lab testing, entrepreneurs are experimenting with charging a cash price lower than insurance “co-pays.” He’s absolutely right that those entrepreneurs are driving costs down, both directly and by disrupting—to use Wall Street’s word of the moment—the business model of existing healthcare facilities.

For this to affect costs in the broader market as much as Dr. Berry hopes, a few more changes need to happen. Foremost among them, anti-competitive behavior among hospitals and insurers needs to end: Each facility should charge one price for a given procedure, regardless of insurance (or lack thereof), patients should be free to choose any facility without penalty from their insurers, and any given insurance product should be for sale to anyone who chooses to buy it.

I know about these problems firsthand, both as a doctor in an independent surgery center and as a member of Samaritan Ministries’ cost-sharing program. I agree with Dr. Berry that competition is the answer here. It would give consumers more choices, and it would increase access to care for all—common ground, perhaps, for our two bitterly opposed parties.

3) Response from Dr. Berry

Thanks for forwarding this well-thought-out response from Dr. Horton. He is right about the restrictions on HSAs being paired with an HDHP. I probably should not have mentioned them at all because it distracted from the other points I was trying to make. I mentioned some type of financing vehicle mainly because I believe that Americans who already have tax-favored, employer-based health insurance would go ballistic if something did not take its place, even though many Americans and especially the “forgotten” ones don’t benefit from it.

The tax exemption for employer-provided health insurance is regressive and expensive. As I understand it, it came into being during World War II during a wage freeze as a way for companies to attract talent by adding to their compensation packages without adding to their wages. It became a part of the IRS tax code in the early 1950s, and companies have exploited this loophole in compensation ever since. Currently, it leads to about a $250 billion shortfall in tax revenues that have to be made up somewhere else. This benefits those with richer policies (so-called “Cadillac” plans) at the expense of those with leaner plans or none at all, since the latter two have to make up disproportionately for the tax shortfall. So, it benefits the rich at the expense of the poor. It also leads to higher and increasingly unsustainable prices in medical care.

I don’t pretend to have the policy panacea for healthcare financing, but I would say that we need a policy that puts as many healthcare dollars as possible into the pockets of ordinary Americans instead of insurance companies in order to keep healthcare providers accountable for the prices they charge. That, I believe, would be the only way to break down the “anti-competitive behavior among hospitals and insurers,” as Dr. Horton noted, because the tax exemption (as well as Obamacare) has funneled money to insurers, giving them control over the market. Obamacare practically forced both insurance companies and hospitals to consolidate and medical practices to sell themselves to hospitals just to survive, creating a cartel where hospital practices can get away with charging patients $502 for a B12 test, when it costs the patient $25 at mine.

Perhaps a better and fairer way to do this would be to allow Americans to deduct from their income any “legitimate” healthcare expense (which includes out-of-pocket expenses to doctors, pharmacies, hospitals, etc.) instead of starting at 10 percent of adjusted gross income, as the law currently stipulates. In that way there would be a cost-sharing component with people who have high medical expenses, while at the same time people could use their own money to keep healthcare providers accountable. Even as I write this, I can see the holes in this plan. It is complicated. If Dr. Horton has some ideas about specific policy proposals, I would like to hear them, especially considering his knowledge of healthcare and his being a member of Samaritan Ministries (as is my family).

4) Response from Dr. Horton

Dr. Berry asks what I’d propose instead. Some of the ideas that follow are comparatively easy, others unlikely to pass in the real world. For background, let’s first consider the healthcare market where I live. Two large insurers divide the market, each of which controls a hospital system and attempts to steer its patients to it. Not counting the VA, all hospitals in Pittsburgh itself, and most in the surrounding areas, are part of those systems. This oligopoly pressures doctors and practices to join one of the two systems, at which point it insists on contracts that further increase its leverage over doctor and patient alike. The systems then use that leverage to extract further concessions from doctors, force patients to pay more for care, and generally enrich themselves at the expense of the public.

What does that leverage look like? Here’s one of the examples that led us to trade insurance for Christian cost-sharing. We went for a prenatal ultrasound at a local imaging center. (Our first baby was breech—“upside down”—and we needed to know whether this one would be too.) The center stated that our insurance did not cover their center. Knowing this insurer’s behavior, I stated that I’d simply pay the center myself. The center refused: Its contract with that insurer (for higher-end insurance products) forbade it to provide services to patients with our cheaper policy at all—even for cash! Not coincidentally, the “co-pay” at the imaging center that insurer owned was the same as the total cost at the center we wanted to use—had we even met the deductible (which we hadn’t). The insurer used its leverage to restrict choice, causing higher costs.

My proposals thus try to reduce that leverage. When a business has a viable business model, it should not need to force customers to buy its product: If Walmart wants to prevent people from switching to Target, it has to accomplish that with prices and selection. The same should apply to hospitals. To start, prices should be public: Hospitals know what they plan to charge, but most currently keep those prices a secret until they send the bill. President Trump could mandate that all hospitals publish that information online and keep it current. Hospitals will likely protest that those numbers are “proprietary,” but in what other business is it considered optional to tell customers what they’ll pay? We’ve already seen the benefit that internet-based price-comparison services bring to prescriptions. Let’s extend that to hospitals.

There should also be one price per specific procedure at each hospital, with no discounts for anyone—including insurers. What this means is not that insurers will pay more, but that self-pay patients will now get the same effective price as the insurers do. This eliminates hospital/insurer systems using wildly inflated list prices to punish—the word I’ve personally heard an insurer’s employee use—patients who neither sign up for their insurance nor qualify for their charity-care programs.

Since each hospital would now publish its real, final price for each procedure, independents could compete on price while knowing what other market players are charging. Let’s build on that, with an executive order that any insurance policy covering a given procedure at a given hospital must also cover it for up to that price anywhere else, and that all anti-competitive “networks” and exclusionary contracts are null and void. In other words, if Hospital A offers an ultrasound for $500, but a patient would rather have the test at his local imaging center for $250, his insurer should not be allowed to say, “Sorry, your policy doesn’t cover the imaging center,” to drum up business—and cash, since the deductible applies—for the hospitals it owns. This isn’t theoretical; it was our family’s experience with an insurer. My proposed change would eliminate much of the pressure on doctors to join hospital-based groups and on independent facilities to sell to hospitals.

How about across-the-board changes that would let all market players charge lower prices? Dr. Berry is right to blame the federal government, but Obamacare—the law he names—is only one example of its overreach: From mandates that we buy expensive electronic health record systems to Medicare reimbursement cuts if we don’t participate in (also expensive) big-data programs to measure “quality,” the government demands lower prices while compelling us to buy expensive services. As with any business costs, these costs end up with the consumer. When the consumer refuses to pay more, the business fails: In a 2012 Accenture study, 87 percent of doctors stated that business expenses were a main concern in deciding whether to remain independent. An executive order reining in the mandates—or simply declaring that they won’t be enforced, as has occurred with federal marijuana laws—would cut those costs and preserve consumer choice.

Commonsense reforms could help with drug prices, too. First, when a company announces that it will cease making a drug, its production process for making that drug should enter the public domain. (The company has already decided the drug isn’t worth its time to make, so where’s the harm?) Any generic manufacturer using an identical process should receive expedited approval. Second, almost all of the most common prescriptions compete with very similar drugs; let’s have a rule that any price increase of over 10 percent in a year triggers an educational blitz about cheaper competitors. Companies remain free to set prices—it’s up to them whether they’d like to remind customers how much more they cost.

I don’t think we’re likely to see all, or even most, of these changes: Insurers and hospitals can marshal armies of lobbyists to explain to Congress why choice and competition aren’t nearly as good as they sound. But Dr. Berry and I do agree in this: Let’s nurture competition where we can, and make the market as free and open as politics will let us.

Please continue reading below for additional healthcare-improvement ideas and comments from medical professionals among WORLD’s readership. (Doctors and nurses, send your comments to ddevine@wng.org. Please include your town and state of residence.)

I’m concerned that Dr. Horton’s idea to regulate a hospital’s prices would raise cash prices for those without insurance or for those of us on a faith-based cost-sharing plan (my wife and I are on one too). Our contracted cost under an HDHP in Oregon for a prothrombin time test for my wife was $34, but this year without insurance our local provider is only charging $23!

I’ve thought for years we need to get the consumer more involved with all aspects of his healthcare. Some system that puts the insurance companies in competition with each other across state lines, like a voucher system for everyone (including Medicaid patients), would create a consumer-driven healthcare economy. It seems to work for cell phones and car dealers!

Additionally, we should mandate that all electronic medical record systems be accessible to all other systems so all emergency-room or ambulance personnel can get up-to-date health records. We are able to keep credit card information generally safe 24/7, so we should be able to do the same with personal health information. As an independent community pharmacist, I know our computer systems must be compatible with all electronic medical records, as they have been since the beginning of electronic prescribing many, many years ago.

I’d also mandate that every person on Medicare have and keep updated an advance directive that is accessible to every EMT and ER person. We spend unnecessary money doing things we don’t want done to us because there isn’t a reasonable system for sharing our very personal wishes for the last stage of our life.

—Bob Coulter, R.Ph. / Cove, Ore.

Three things that need to change to truly decrease the cost of healthcare:

(1) Limit liability risks for providers. Defensive medicine eats up a significant portion of our healthcare dollars without increasing quality, and in many cases harms patients.

(2) Cut overhead. Simplify the system so we do not require an army of coders, quality managers, pre-authorization specialists, and insurance executives. Instead, hire more nurses and cut costs.

(3) Encourage primary care. Our specialty-driven system is designed to give the most expensive, technologically advanced medicine to some people while neglecting the basic infrastructure of caring for all people. If 50 percent of all doctors practiced primary care, as in many countries, costs would be much less.

With the savings from these proposals, we could fund basic healthcare for all Americans.

You should not talk about primary care without mentioning the largest primary care specialty—family medicine. Less than 5 percent of today’s internal medicine physicians go into primary care. A decreasing proportion of pediatricians practice primary care. If we invested in full-ride scholarships to medical school for every family physician, it would turn around our system in a decade.

—Terry S. Ruhl, M.D. / Altoona, Pa.

As a respiratory therapist at a community hospital in southeast Wisconsin, I have firsthand experience with medical billing from both the hospital and patient side. I have tracked the medical and dental expenses for our family on a computer spreadsheet for many years.

I have watched the increasingly inflated billing become deflated by increasing discounts and shrinking insurance payment percentages. The co-pays have not moved very much and the deductibles have wobbled in a relatively narrow range. Insurance companies, hospitals, and medical practices have tracked their billing and receipts for many years and know when to adjust the billing upward to offset decreased reimbursements. The government and the medical and dental industries know very well the expected percentage returned on a dollar billed, taking into account the uncollected amounts.

My suggestions are these:

(1) Require what I will call “True Cost Billing” by all medical and dental service providers (including laboratories, surgery centers, hospitals, preferred provider networks, governmental medical centers, etc.): Each entity, using its own historical records, must bill the cost of any medical procedure or service at its individual, averaged return rate over a rolling period of two to three years. Since the medical industry is already accepting this return rate in its regular billing process, it is a “True Cost Billing.” All patients get the same size itemized bill: those with insurance, those in a preferred provider network, those with a government payment program, and those who pay privately. And nobody gets to undermine or negotiate the payment amount required—not even the government.

(2) Require that all medical parties openly post or publish their “True Cost Billing” so that patients may decide where to go for medical services, knowing in advance the required payment amount.

(3) Require that no hidden fees or service charges be added to the posted “True Cost Billing” fees for services (except for the discounts and surcharges discussed below).

(4) Provide for a discount of up to 2 percent for any immediate payments of medical bills (i.e. within 24 hours of patient checkout or discharge), in part or in full. Provide for a discount of up to 1 percent for payments within 10 calendar days, and a 0.5 percent discount for payments within 15 calendar days. Provide for a surcharge increase matching the current rolling annual U.S. inflation rate for any unpaid amounts after 15 days.

(5) Encourage individuals to go to their medical provider office or to an urgent care center instead of always using emergency care service. Require those who go to an emergency room to pay a $75 co-pay fee directly to the emergency medical facility; the fee would then be subtracted from the facility’s billing fee to any other payer (such as insurance). This also means that medical provider offices must maintain at least one evening per week of patient access up to 9 p.m., and all urgent care centers must maintain hours from 7 a.m. through midnight.

—Brian Kuehmichel, R.R.T. / Sheboygan, Wis.

I believe the plan proposed by Ben Carson of setting up health savings accounts for every person in the United States—funding the accounts with pretax dollars and/or Medicare dollars, and allowing families to transfer funds as needed among members—also allows for more local, personal control. If the government wants to subsidize (i.e. through Medicaid), it could add funds to individual accounts. Persons and employers could also contribute to these accounts, from which patients could then directly pay for medical, dental, eye, and pharmacy expenses. (Prices for these services should be posted across the respective entities.)

Allowing for catastrophic medical plans to be purchased across state lines would cover extreme circumstances and provide more competition.

As it is, insurance carriers, including the government, cost more for the patient in higher co-payments, deductibles, and premiums. In the meantime they are paying less to providers but requiring more documentation. As a solo practitioner in a private practice, I survive by the grace of God.

—Bobbi D. Baker, M.D. / Panama City, Fla.

I’d require that:

(1) All health insurance companies be made nonprofit.

(2) Basic health insurance be provided for everybody.

(3) All providers and hospitals post online their prices for any service they provide.

(4) All drug companies provide a certain number of different generic medications at no more than 10 percent above the best Canadian price. (An alternate plan would be to have the U.S. Food and Drug Administration provide all the generic drugs at no more than 10 percent above the best Canadian price.)

(5) A 5 percent tax on profits of medical malpractice lawyers be designated to the basic health insurance fund.

(6) Medical supplies be sold at no more than 50 percent over cost of production.

I agree that fewer middle men between the patient and provider would return us to more responsible pricing of services. HSA plans also encourage a more responsible use of health dollars and should be promoted. I agree with the idea of freedom of choice for location of service by the patient, but I think some of these games would be ended with the implementation of my suggestion No. 1 above.

—Rick Vaughan, M.D. / Ellensburg, Wash.