Finger pointing won't lower health care costs

January 14, 2020
Sen. Cory Booker’s out of the presidential race as Democrats prepare for the seventh debate tonight in Iowa, which is expected to be a showdown between the two factions in the party, with Medicare for All likely to be an important dividing line. But first, we dug into…

Sen. Cory Booker’s out of the presidential race as Democrats prepare for the seventh debate tonight in Iowa, which is expected to be a showdown between the two factions in the party, with Medicare for All likely to be an important dividing line.

But first, we dug into new data to find the real reason why out-of-pocket costs are going up, plus we’ve got news on the EPA’s biofuels policy, in 792 words, or 3 minutes, 57 seconds.

Finger pointing won't lower health care costs

The United States pays much more than other countries for many medical procedures, according to new data. Yet as we mentioned yesterday, policymakers continue to target prescription drugs with misguided price controls in the effort to lower costs for consumers.

What they found: The International Federation of Health Plans (iFHP) and Health Care Cost Institute (HCCI) examined a range of health care services and found that commercial insurance plans in the U.S. paid significantly more than their international counterparts. 

And prices for procedures are even worse than they look. The costs of hospital and outpatient procedures are median amounts—meaning half the prices actually fall above the listed value—and they’re adjusted to account for the negotiated rates payers negotiate with providers. 

Bypass surgery is a good example. It’s the surgery with the highest price in the United States ($78.1K)—but it costs just a fraction of that in every other country examined, from 48% in New Zealand to 15% in Holland, as the below chart shows.

Cardiac Inpatient Costs: Hospital Admission Prices in 2017 Angioplasty
Cardiac Inpatient Costs: Hospital Admission Prices in 2017 Angioplasty

But notably, prices for prescription drugs aren't as bad as politicians and the media make them seem. Data on U.S. prescription drug prices don’t include manufacturer rebates—meaning the real net prices paid are actually lower, according to the analysis.

And these rebates can be substantial. In 2015, pharmacy benefit manager Express Scripts said rebate agreements negotiated by the company and manufacturers of therapies for hepatitis C meant prices were cheaper in the United States than in Europe.

The bottom line: When you compare high-cost drugs to high-cost services, other countries pay far less than the United States on services—yet policymakers continue to target pharmaceuticals. 

Alex’s Analysis: "This data is more evidence drug costs are not the only culprit when it comes to health care costs in the United States. Politicians on both sides of the aisle are targeting innovative drug developers with short-sighted policies that will do little to address the real reasons why patients are paying steep out-of-pocket costs at the pharmacy counter. A better approach would look holistically across the entire health care spectrum, since it’s clear we all have a role to play." – Alex Keeton, Director of Policy Research and Analytics


More Health Care News: 

Modern Healthcare: Appeals judges skeptical of HHS rule requiring drug prices in TV ads
The U.S. Court of Appeals for the District of Columbia “appeared unlikely to revive a Trump administration initiative to require drugmakers to disclose list prices in TV advertisements,” questioning “whether HHS has the authority to require the price disclosures.” N.J. parents can still cite religion as a reason not to vaccinate kids after bill collapses
New Jersey state lawmakers failed to pass a bill repealing the religious exemption to vaccination requirements.


Keeping an eye on the EPA

The government’s watchdog agency will investigate the EPA’s exemptions to refineries’ biofuels blending requirements, says Reuters—which we hope will be an important development in the race to reduce our dependency on fossil fuels with low-carbon alternatives. 

The news: The U.S. Government Accountability Office (GAO) accepted a request from Midwestern lawmakers to review the Trump administration’s use of Small Refinery Exemptions (SREs) to the Renewable Fuel Standard (RFS), which requires refineries to blend 15 billion gallons of ethanol annually. 

ICYMI: Last year, Trump’s Environmental Protection Agency (EPA) granted 31 such exemptions, even for some not-so-small refineries—severely undercutting biofuel demand and prices and leading to many biofuel facilities across America to stop production or shut down entirely, particularly in rural economies.

And worse: Trump’s EPA not only issued quadruple the number of waivers of past administrations, but also exempted even more gallons than recommended by the Department of Energy, Reuters previously reported

So, what now? GAO will “review the factors that the Trump administration’s Environmental Protection Agency considered in approving the waivers, and to examine the Department of Energy’s process for recommending exemptions to EPA.” TBD how the outcome translates to policy.

Why it matters: As the need to lower carbon emissions and stop the warming of the planet remains one of our biggest global challenges, it’s critical to support renewable energy innovations like biofuels—which is not only a good solution in the climate challenge, but also provides good jobs in rural economies. 

BIO is committed to driving low-carbon fuel standards nationwide—ensuring biofuels are part of the solution to climate change and the impact of transportation on the environment.

BIO Beltway Report

President Trump’s Tuesday: Heading back to Washington briefly after watching the LSU Tigers beat the Clemson Tigers in the college football playoffs (and hanging out with actor Vince Vaughn), then taking off for Milwaukee, Wisconsin, for a campaign rally. 

What’s Happening on Capitol Hill: The House and Senate are in session. All eyes are on the impeachment trial in the Senate, where Republicans are debating whether to allow witnesses, explains POLITICO.

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