Health care workers prepare an ICU room at Providence St. Mary Medical Center in Apple Valley, Calif., on March 30, 2021. (Mario Tama/Getty Images)
The true costs of health care are hidden from most of us. That’s especially true if you’re on Medicare, as I have been for three years. But somebody has to pay for the potions, devices, and hospital stays.
For example, earlier this year I had a minor health scare and headed to the Hoag Hospital emergency room in Orange County, California. I saw a doctor two short times, during which a nurse took my blood pressure. The full cost on the bill was $1,000. But Medicare billed me only $100. This shows how third-parties are the main links in the system, basically hiding the true cost of the care. And that’s just a small example.
For the first time in six years, the federal government released data comparing state spending on health care earlier this year. It covers years up to 2020. That was the COVID-19 year, which might distort the numbers. We’ll have to watch for future data.
The California Health Care Foundation, a nonprofit that works to improve the medical system, summarized
the numbers, “In 2020, California PHC [personal health care] spending totaled $405 billion and accounted for 12% of total US PHC spending. On a per capita basis, California health care spending ($10,299) surpassed the US average ($10,191) for the first time since 1991.
“Between 2010 and 2020, health care spending in California grew faster on an annual average basis than health spending in the U.S. and the economic growth in the state. ... Medicare spending per enrollee was 10.5% ($1,300) higher in California than the U.S.”
Site-Neutral Medical Payments
Congress currently is taking up two bipartisan reform bills that would reduce medical costs for Californians.
is the SITE Act, for the Site-based Invoicing and Transparency Enhancement Act. It is sponsored by Sen. Mike Braun (R-Ind.) and co-sponsored by Sens. Maggie Hassan (D-N.H.) and John Kennedy (R-La.).
It’s complicated. But the summary
by the Committee for a Responsible Federal Budget reads, “The bill would adopt some site-neutral payments
in Medicare and increase the transparency of hospital billing. These provisions would promote better efficiency and align incentives in the health care system, lower Medicare premiums and out-of-pocket costs, and could reduce the deficit by between $30 and $40 billion over a decade, based on prior estimates from the Congressional Budget Office (CBO)
to the American Hospital Association’s calculation, the SITE Act would save Californians $2.3 billion over 10 years.
to the Committee for a Responsible Federal Budget, full-scale site-neutral billing nationwide over the next decade could:
- Reduce Medicare spending by $153 billion
- Reduce premiums and cost-sharing for Medicare beneficiaries by $94 billion
- Reduce total national health expenditures by a range of $346 to $672 billion
- Reduce the federal budget deficit by a range of $217 to $279 billion
- Reduce private cost-sharing and premiums by a range of $140 to $466 billion
There’s no specific breakout for California. But assuming the state’s share is 1/12 of the numbers, for the state over a decade the savings could:
- Reduce Medicare spending by $12.75 billion
- Reduce premiums and cost-sharing for Medicare beneficiaries by $7.8 billion
- Reduce total health expenditures by a range of $28.8 to $56 billion
- Reduce private cost-sharing and premiums by a range of $11.7 to $38.8 billion
S.1869 currently is being considered in the Committee on Finance.
Transparent Health Billing
The second reform bill comes from the House of Representatives, called H.R.3417
, the FAIR Act, for the Facilitating Accountability in Reimbursements Act. It’s sponsored by Rep. Kevin Hern (R-Okla.). Co-sponsors include Reps. Anne M. Kuster (D-N.H.), W. Gregory Steube (R-Fla.), Claudia Tenney (R-N.Y.), James Baird (R-Ind.), and Chris Pappas (D-N.H.).
Ms. Kuster explained
, “Patients in New Hampshire and all across the country deserve to know what they are being charged for when they get medical care, and our health care providers deserve a system that allows them to provide the best care possible. I am proud to introduce the Facilitating Accountability in Reimbursement Act to help create a more transparent health care billing system.”
H.R.3417 currently is in the Subcommittee on Health of the Committee on Energy and Commerce.
Helping the Military and Veterans in California
Brad White is the founder of the Our Nation’s Heroes Foundation
. He recently wrote why he’s backing the two bills: “These increasing health care costs have an outsized impact also on one important group here in California: many of our military families. As the founder of Our Nation’s Heroes Foundation, a nonprofit that educates communities about how to support members of the U.S. military, I see how service members and their families can struggle to keep up with health care expenses. Many of these families rely on a fixed income, especially during deployment. And in a time of persistent inflation and economic uncertainty, increasing medical costs can be out of reach for these heroes and their families.”
The military runs its own health-care system, as does the Veterans Administration (VA). Most people don’t know it, but both interlink with the private health-care system. As a U.S. Army veteran, a couple times a year I go to the Tibor Rubin VA Medical Center
in Long Beach. Usually I see the VA doctors. But sometimes it’s a contract doctor from the private sectors. That happened a year ago when I saw a podiatrist who worked in the hospital a couple days a week aside from his regular practice.
And for active-duty troops, sometimes the non-military system must be used directly, as when a child gets sick and must be rushed to the nearest emergency room. And some bases in distant places have little or no military medical service, meaning the private system must be used for all care.
As Mr. White wrote, “Reducing medical costs would benefit our service members who serve our country and their families. It is imperative that the California congressional delegation support the FAIR Act and encourage their Senate colleagues to support the SITE Act. Passing these bills would offer much-needed reform to a system that isn’t working. It’s time to fix it.”
Conclusion: Time to Straighten Out Health Payments
Since Medicare was enacted in 1965, the medical payments system has become complicated and opaque. That allows the powerful actors—insurance companies, big hospitals, and the drug companies—to obfuscate the real cost of health care. Giving patients more insight into what they’re actually paying should reduce costs. Information brings freedom.
If Congress ever gets through its ongoing budget and other squabbles, it just might cut medical costs for us all. That would be especially welcome in these inflationary times.