Why are health care costs spiraling up?

By Pam Baggett-Wallis

We all know the cost of healthcare is surging every year. What most people don’t know is the reason.

No, it’s not doctors, nurses, pharmacists or other health care providers. It’s the omnivorous health insurance plans. That’s your HMO, PPO or POS. They are taking the largest chunk of your healthcare dollar.

Businesses, especially small business owners, struggle to provide health insurance for their employees, trying to select the plan that is least expensive for the coverage provided.

But it’s like scuba diving in Lake Travis after spring rains—murky to opaque. To make a truly informed decision, employers need accurate, current, and honest information on copays, deductibles, prescription limitations and participating health care providers.

Hidden within the health plan is another middleman—the pharmacy benefit manager (PBM).

Never heard of a PBM?

Turn your insurance card over and look on the back. Odds are there is a separate contact for prescriptions than for medical care. These guys are guard dogs standing between beneficiaries and the prescriptions their doctors order.

They exist to steer patients to drugs that the PBM has contracted with drug manufacturers to provide, along with significant rebates. It’s almost impossible to know how much of that rebate is shared with the employer.

Also, the formulary (approved drugs) changes at the whim of the PBM, and approved drugs may not be the best for a particular patient.

The solution is full transparency in health insurance and pharmacy benefit manager contracts to reveal how much of expensive health plan premium dollars actually is spent on healthcare.

Numerous bills in the past legislative session addressed the need for transparency. However, the bills died the same death as hundreds of other bills in the last month of the session.

One bill would have mandated a health plan report card to grade:

• How much of the health insurance premium dollar actually goes toward patient care (termed “medical loss ratio” by health insurers),
• Number of physicians and specialists that make up a health plan’s network (network adequacy),
• Patient complaints such as prompt payment of claims and unexpected out-of-pocket expenses,
• What a plan agrees to pay vs. what the patient gets stuck with, and
• Expected health plan profits.

Another addressed transparency in the state’s contracts with PBMs for the Employee Retirement System and the Teacher Retirement System. Together, approximately $6 million in tax money could be saved if the state used the same contracting standards developed by the HR Policy Association and used by major employers such as Dell, Home Depot, and Caterpillar.

Business owners and government have a fiduciary responsibility to their own bottom line, not to mention to their employees, stockholders, and/or taxpayers, to demand this information.

Pam Baggett-Wallis is the CEO of Persuasion Communication specializing in crisis management, business continuity and issue advocacy and can be reached at pam@abdmag.com