Blog Post: Health Care Industry Profits Soar While Consumers Sink

“The growing and egregious over-treatment and overpricing practices by physicians and health systems, abetted by health plans,” are detailed in this recent New York Times article. These excesses “are at the core of our national health care quality and cost crisis,” says Dr. Brian Klepper, CEO of the National Business Coalition on Health. “The best solutions are collaborative, considered actions by group purchasers, potentially the most empowered of health care’s stakeholders.”

While I wasn’t surprised that nearly every headline in a February Modern Healthcare Daily Finance Report heralded that profits are up — and in many cases WAY up — for drug manufacturers, hospitals and insurance companies, it was disheartening. We’re talking about the fact that while people are struggling to afford health care, there are huge profits on the supply-side of the industry.

I’ve pulled some of the recent headlines, below, with sample questions about what we, as purchasers, can ask as we continue working together to improve quality and drive down prices.

Gilead’s 2014 profit margin nears 50%, fueled by hep C drugs

The News: Drug maker, Gilead, reports that sales of its blockbuster hepatitis C duo topped $3.8 billion in the fourth quarter of 2014 alone, fueling quarterly revenue that doubled to $7.3 billion and $3.5 billion in profits.

A Question for Purchasers: Why does Sovaldi cost $84,000 in the U.S. and $57,000 in Britain?

Aetna closes 2014 with record profit, up 6.6% for the year

The News: Aetna recorded more than $2 billion in profit in fiscal 2014, the highest level in the company’s history and a signal that healthcare reform continues to treat the health insurance industry well. Full-year revenue surpassed the $58 billion mark, a 23% increase over 2013.

A Question for Purchasers: What are health plans doing to make premiums more affordable for employers and consumers?

Centene records strong 2014 as Q4 earnings beat expectations

The News: Centene Corp., providing health plans through Medicaid, Medicare, and the Health Insurance Marketplace, saw fourth-quarter earnings more than double from prior year’s levels, due in part to reimbursements the insurer and specialty-care provider received for the premium tax it and other insurers must pay. Earnings for all of fiscal 2014 rose 64.2% from the prior year.

A Question for Purchasers: How are expansions, investments and reimbursements benefitting the people Centene is supposed to be serving?

High-deductible Plans Lead to More Personal Debt

The News: Deductibles, copays, and other so-called cost sharing are absorbing a significant portion of household income, especially for the less well off. Roughly two of five adults who had deductibles that were high relative to their income reported avoiding needed care because of their deductible. The average amount workers had to pay before their coverage kicked in was $1,217—more than double the average in 2006.

Did you Know?

Medical bills are the leading cause of bankruptcy, a last resort after millions of families have drained their bank accounts, maxed their credit cards, and refinanced their homes. Click here to read more about medical bankruptcy.

A Question for Purchasers: Are employees health literate enough to choose (and use) a health plan that fits their budget and needs? More than 90 percent of U.S. adults not only lack the understanding of basic health concepts like co-pays, deductibles, and out-of-pocket maximums, but may also struggle with reading prescription labels, finding a doctor, or knowing whether to visit a walk-in clinic or ER. What’s more, a 2012 study by Guardian Life found that only one in four employees believe their employer communications are helpful in choosing what’s right for them.

What’s Being Done?

As the saying goes, “If you’re not part of the solution, you’re part of the problem.” Action Group members have always come together to identify problems and develop solutions that contribute to a more equitable health care system for all. Complete transparency of cost and quality information is a key goal, with members supporting policy, products and tools that help people better understand what they need to do to get the best care, at the right time, in the right place, for the right price. If you would like to learn how you can become more involved in becoming part of the solution, I hope you will contact me ([email protected], 952-896-5185).