The Correct Prescription

Blog Post
Wednesday, March 11, 2020

On the latest Facing the Future, I was joined by Concord Coalition Executive Director Robert L. Bixby, Loren Adler the associate director of the USC-Brookings Schaeffer Initiative for Health Policy and Lucy Hodder professor and director of health law and policy at UNH Franklin Pierce School of Law. 

We continued the discussion from last week's show on health care, focusing on surprise billing, pharmaceutical costs, state and federal efforts to combat systemic cost growth, as well as the government's response to the Coronavirus. 

Surprise billing occurs when patients incur health care expenses at out-of-network rates when they expected that the provided service was covered by their insurance at a much lower rate. The example Adler provided is the scenario in which a patient might choose a specific doctor for a surgery, but the anesthesiologist on staff, which the patient may not get to choose, is actually out-of-network and will bill his or her services accordingly. 

Adler said that the existence of surprise billing is a fundamental market failure, but he is still optimistic that reform is on the horizon. “The main hold up here, I think everyone agrees that we should not allow surprise billing, but so far the provider trade groups and hospital trade groups seem to be saying, ‘that’s fine if you stop surprise billing, but only if you then force insurers to make me whole,’ ” he said. 

He added that Congress has moved closer to solutions, with a few very similar bills working their way through the legislative process that would make it illegal to surprise bill patients in several instances, and build in price supports for providers.  

“I would probably call all of them a bit of a compromise ... but all are major improvements over the status quo,” he said. 

Adler also discussed the cost of prescription drugs in our health care system. “It’s not the biggest determinant of our health care spending ... it’s something like 10 percent of the cost of our system,” he said. “But 10 percent of a giant number is still a pretty giant number.” 

He confirmed what most claim, that the U.S. pays more for almost every brand-drug compared to other countries. “Interestingly enough, as an aside, for what are called generic drugs … we actually pay some of the lowest prices in the world,” Adler said.

The U.S. has a patent-based system that increases pricing power for pharmaceutical companies, which almost every country has, but what is different about our nation’s system is “that a lot of other countries basically use the full power of their government to try to negotiate prices for different drugs.”  

But Adler said our fragmented system makes it difficult to do that and the tradeoff to government pricing is that as an entire country, we would have to be willing to walk away if negotiations fail with a drug manufacturer. 

Hodder discussed the impact of high prescription drug costs on consumers. 

“We have unleashed consumers on this issue because they are now seeing the costs of prescription drugs, the degree to which those costs vary … and they’re just not happy with the irrational way they have to engage in the purchase of prescription drugs in their high deductible plans.” 

With the federal government largely stalling on bipartisan reform, states are starting to take action. “There’s a couple different types of legislation that most states are pursuing,” she said. “One is to try and bring some regulated review to price hikes … another strategy that states are pursuing is trying to allow the state to import drugs from Canada and allow consumers to purchase those drugs. A third strategy is to try and deal with the level of rebates or the transparency of the pharmacy benefit managers.” 

On the Coronavirus outbreak and state and federal response, Hodder praised how New Hampshire has responded to emergencies in the past, but “whether we are ready for what might come down the pike if New Hampshire happens to have a significant outbreak, I think a lot of that depends on whether the feds are keeping us apprised of what testing we need to be doing and how we need to be responding with resources and staffing.”  

Hear more on Facing the Future. I host the program each week on WKXL, NHTalkRadio.com (N.H.), and it is also available via podcast. Join me and my guests as we discuss issues relating to national fiscal policy with budget experts, industry leaders and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, iTunes, Google Play Music or with an RSS feed. And follow Facing the Future on Facebook