Stop Blaming The Victim: The Case For Systemic Health System Transparency


Biologics Are Not Natural Monopolies

Health care costs strain the budgets of families, businesses, and governments, leaving less room for other spending and forcing painful tradeoffs. In 2017, the United States spent $3.5 trillion on health care – nearly 1 out of 5 dollars. Among people who get health insurance from their jobs, on average, spending on health care (not including premiums) grew 25 percent faster than the economy each year between 2013 and 2017, with most of the growth in spending caused by higher prices, and not increased utilization.

Despite the magnitude of health care spending and the significance of its impact, there is no definitive source of information that would allow stakeholders to better understand how the US health care system is performing. Indeed, insights into costs and spending are segmented, limited by information to which individual stakeholders have access. Researchers have traditionally been able to access Medicare data, and, as of November 2019, will have access to Medicaid data (albeit of indeterminate quality). However, data that allow for meaningful insights on the employer-sponsored population, which still covers more than 160 million people, were, historically, limited — until the creation of the Health Care Cost Institute (HCCI) in 2011.

That segmentation poses an obstacle to truly understanding the deeply entrenched incentive structures that drive rising health care costs. It also makes it difficult to address those problematic structures with systemic solutions. Whether fee-for-service reimbursement for clinicians or a pharmaceutical distribution system that rewards stakeholders at each point in the process, structures and systems throughout the health care industry push costs up. Decisionmakers and policymakers – federal, state, local, private sector – need more and better information to consider and implement changes that can alter the trajectory of health care spending. Greater transparency, by which we mean a comprehensive view of where and how health care dollars flow and what is driving them, is a key tool in enabling those changes.

Towards Systemic Health System Transparency

Too often, policymakers advocate for transparency as a way to spur consumer action to control costs. Most proposals promoting transparency are founded on the belief that increasing consumer engagement in health care decisions is the silver bullet for solving our health care spending challenge – a challenge whose solution has evaded other, larger, and more powerful health system stakeholders.

While HCCI applauds transparency of all kinds in the health care system, we advise restraint on viewing transparency solely through a narrow, consumer-focused lens for three reasons.

First, efforts to help consumers make more informed decisions have value in their own right but should not be central to reining in spending. We feel strongly that we cannot and should not put the burden of high systemwide costs on people who are trying to navigate our complex health care system. They did not cause the health care cost problem; they should not be responsible for fixing it. Not only is the scale mismatched – sufficient, timely change will not come one procedure, one person at a time.  But also, the very people we’re enlisting to tackle costs are dealing with potentially significant health issues and a variety of other factors influencing their health care decisions. To layer complex financial and clinical decision making on top of these stressors seems unrealistic, and frankly, somewhat callous.

Second, consumer-focused transparency efforts alone are not likely to meaningfully alter the trajectory of health care spending. HCCI analysis found that more than half of health care spending is on services that are not “shoppable.” Moreover, other evidence suggests that consumer-facing approaches do not lead to the desired outcomes. Studies suggest that fewer than 1 in 10 individuals offered price transparency tools use them, and the few who use them do not necessarily save money.

Finally, in linking transparency to proposals that put the onus of cost control on consumers, we miss the opportunity to effect broader change with increased systemic transparency. For example, databases, like HCCI’s, are instrumental to promoting price and quality transparency. These efforts allow third parties with a stake in reducing health care costs to aggregate and analyze disparate data. We believe this approach is preferable to recent transparency-related half measures which ask the parties driving health care costs to display non-standard information in dark corners of thousands of websites.

Stakeholder Responsibility

Stakeholders across the system, particularly those controlling large shares of dollars and/or markets, have the power – much more so than consumers – to reduce costs and foster innovation within the parameters of a sustainable health care system. Bolstered by systemic transparency, a better and shared understanding of the causes and drivers of spending will underpin those conversations.

We are invigorated by what seems to be renewed energy around increasing transparency in the US health care system. We are hopeful that policymakers and decisionmakers in the public and private sectors will focus on systemic transparency as a way to control costs rather than shifting the burden onto consumers.

The work we do at HCCI is one example of how bringing data to bear on critical policy questions can help policy makers – not just consumers — change the structures that facilitate rapid health care cost growth. Anchored in the belief that robust analytics allow all stakeholders to drive improvements in quality and value, HCCI works to use the best data on Americans with ESI to generate the best answers to critical policy questions. For example, our 2017 Health Care Cost and Utilization Report found that per-person health care spending grew by more than four percent for the second year in a row, outpacing per capita GDP growth, with a 5 year growth rate of 16.7% from 2013-2017. Moreover, our analysis concluded that increasing prices drove the majority of this spending increase.

Our Healthy Marketplace Index demonstrates dramatic variation in prices and utilization across the US most recently finding up to 25-fold variation in the prices paid for the same services across metro areas. Our analysis of insulin spending shows not only that insulin gross costs per patient nearly doubled from 2012 to 2016, but also how rising prices can impact individual’s out-of-pocket spending throughout the year.  Our analysis of in-network hospitals admissions, found that nearly 15% have at least one associated out-of-network professional claim, which gives rise to the potential of a surprise bill. When looking strictly at in-network rates for common services, we see robust variation at the state-level median allowed amounts, with the most expensive states having commercial rates three times higher than the least expensive in 2017.

We are also excited to announce a major new expansion in HCCI’s data assets. As many people know, United Health Group terminated its data sharing partnership with HCCI in early 2019, leading us to search for new data contributors to complement our remaining partners. In a new partnership, Blue Health Intelligence will contribute more than 40 million additional employer-sponsored insurance (ESI) covered lives to HCCIs existing data repository. Covering more than one third of the  ESI market, HCCI’s dataset is one of a very few independent sources of information on people who get health insurance through their employer. As such, it can offer a unique and meaningful assessment of the drivers of US health care spending. With this new and expanded database, providing actionable data and independent insights into health care costs, HCCI will continue to shed light on causes of and possible solutions to unsustainable health care spending growth in the US.


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