The Conspiracy of Silence in Health Care

Newtown, CT - February 9, 2018

A WSJ article entitled The Health Care Conspiracy of Silence focuses on one aspect of a broader omertà that plagues the industry. The conspiracy of silence reminds us of the perverse role that tax laws play in distorting markets, and the timing is good because it comes the day Congress has decided to punt on the few items that remained in the ACA that attempted to thwart those that prefer to ignore these distortions, in particular the so-called Cadillac Tax. And beyond tax distortions, the Congress has also weakened the effect of MIPS by delaying the portion of the formula that focuses on costs of care and eliminated the IPAB. It really seems as if no one cares, whether Democrat or Republican, that the average worker in the United States is all the poorer for these disastrous policies. The bipartisan support for avoiding painful choices is almost unanimous.

Omertà, however, is present in many other aspects of health care and must be pointed out. The most egregious certainly is the still prevalent pernicious clauses in payer-provider contracts that purposefully stifle competition and forbid anyone from talking about it. The one that is getting increasing play prevents payers from doing anything that could cause plan members to exercise their discretion in choosing providers. These are aptly called no-steerage clauses and go so far as to stop payers from even displaying comparative information on a provider that may lead a plan member to go to another. Unsurprisingly, the ones that are demanding these clauses are most often the “must-haves” in a network, those that have consolidated market power, raised prices, ignored quality improvement, and offer poor overall value. They see the writing on the wall and fully understand the underlying movement by employers to increasingly select narrower networks and preferred providers. They also read the reports showing that consumers in the individual market will sacrifice choice for lower premiums. So when you’re a giant hog used to a wide trough and become concerned the trough might be tightening, you’re going to squeal, and squeal they do.

Fortunately, this is 2018 and not 1998. The age of transparency has arrived and won’t be rolled back. While many states still have to get their act together to publish meaningful price and quality of care, a lot have and are in the midst of getting it done. Further, employers are taking matters into their own hands and deploying tools that provide direct financial benefits to employees that select higher value providers, even when the network is wide and undifferentiated. After all, even if the TPA is handcuffed in providing comparative information and steering plan members, the employer isn’t. But that may not be enough. Fortunately, a few brave states, led by our northern neighbor – Maine, are considering or have enacted the next generation of transparency laws. These mandate that health plans offer consumers direct financial incentives – think of them as rebates – when they select the lower priced provider for a specific set of services. That, of course, means the plans have to provide transparency tools as well and disclose price differences. Unsurprisingly, the Maine Hospital Association squealed. More concerning, the insurers also opposed the law. In our book, however, Maine gets an A+ because its actions may mark the beginning of the end of one form of omertà in health care, and a forced diet for the fattest of the hogs.