It’s been a little more than four months since commercial insurance company executives were summoned to Capitol Hill for a congressional hearing in which they were probed on care denials, profit-taking, consumer affordability, and more.
The response from Big Insurance: Continue to go on the attack and point fingers at providers, like hospitals and pharmaceutical companies, through barely-concealed front groups with focus group-tested names like “Better Solutions for Healthcare,” the “Affordable Health Care Initiative,” and “Hospital Watch.”
These websites, the ads they are paying for, and the messages they are delivering are filled with half-truths at best. But to a public frustrated with a growing national affordability crisis, and to politicians who want to be responsive to their constituents’ needs, truth doesn’t seem to matter as much as action.
While it’s regrettable that these commercial insurance companies are choosing to double down and spend big to deflect attention from their profits and responsibilities, hospitals are fighting back.
American Hospital Association President & CEO Rick Pollack recently called out the hypocrisy of the commercial insurance industry. “It’s no surprise that large commercial insurers are trying to shift attention away from their own abysmal record,” he said. And the hospital-backed Coalition to Strengthen America’s Healthcare, supported by CHA, is running ads hitting insurers for “putting your health care on hold” with delays and denials.
At the state level, CHA is supporting several bills to hold commercial insurers accountable. Senate Bill (SB) 1037 (Weber Pierson, D-San Diego) would require the state to conduct an enhanced rate review that includes the annual change in health care insurance premiums to determine if they are affordable for individual and group purchasers. Another, Assembly Bill 1970 (Harabedian, D-Pasadena), would prohibit health plans and insurers from requiring step therapy protocols for medications used to treat a serious mental illness or substance use disorder. A third, SB 964 (Smallwood-Cuevas, D-Los Angeles), would reduce prior authorization barriers for medications.
This all makes for a critical moment in health care. If the response to the public’s desire for more affordable health care is based on lies or half-truths disseminated by a commercial insurance industry that rakes in tens of billions of dollars in profits every year, then it will be communities and patients that suffer as health care providers get squeezed.
Politicians should not be fooled by these slick, well-funded campaigns.
Here’s the truth. When it comes to hospitals, they are indeed the most expensive health care setting. And with good reason: They are open 24 hours a day, 365 days a year; they care for a growing number of people with the most complex illnesses and injuries (car crashes, heart attacks, strokes, cancer, and so much more); they provide strong, high-paying jobs (even when adjusted for cost of living, California nurses are the highest paid in the country — $150,000 per year and 34% more than the national average).
In fact, hospitals have little-to-no control over their expenses, with prices for 53% of their costs dictated by the local labor market, and with entities outside the hospital directly controlling the price for the remaining 47%. Hospital spending is composed of:
- 53% — Labor costs
- 15% — Supplies (pharmaceuticals, medical equipment, gowns, gloves, bandages)
- 19% — Purchased services (electronic health records, food, laundry services, and building repairs)
- 13% — Other expenses (leases, financing costs, insurance costs, etc.)
Still, hospitals are doing their part to keep costs in check. Adjusting for California’s high cost of living, the state has the 10th lowest per capita hospital expenditures in the nation — efficient care that comes despite hospitals facing serious financial challenges, with dozens at risk of closure and more than 40% of all hospitals operating in the red.
Few dispute that the nation’s health care system needs to evolve so it works better for patients and families, and hospitals stand ready to do their part. It’s just too bad that commercial insurance companies would rather play a tired blame game than cooperate on actual solutions.
