Health care needs PSC regulation

It has become perfectly obvious in Wisconsin and the country that not much has worked to bring down the soaring health care prices that are bankrupting families and damaging the financial health of small and medium companies.

An increasing number of self-insured medium companies have dented the upward spike in health costs for themselves and their employees. The most innovative have installed on-site or near-site clinics to deliver primary care, keep their people healthy and out of expensive hospitals.

They have also direct contracted for some procedures like MRIs and joint replacements for great savings.

Note that a recent Rand Corporation study reported that Wisconsin had the highest health prices of the 50 states. Froedtert Health was the most expensive in Wisconsin at almost 300% of Medicare prices.

The latest shock to family and business budgets has been the projection by several health care consultants that health costs will rise by as much as 8.5% in 2024. That comes on top of current family costs of $22,000 to $31,000 for a family of four, depending on who’s counting.

An 8.5% increase would add a couple thousand dollars per family and for employees.

You get the picture. Health costs have reached an unbearable level. What to do about it?

One approach would be to stop the “urge to merge” in the health care provider and insurance industries. With a few exceptions, trust-busting ala Teddy Roosevelt has been absent in Wisconsin and most parts of the country. The Federal Trade Commission under President Biden has taken a few wee steps to stop consolidation, but the impact has been minimal.

In Wisconsin, Governor Evers and Attorney General Kaul have shown no interest whatsoever in heading off the stampede toward consolidation. Aurora Health has merged with Advocate out of Illinois and Atrium out of North Carolina. Gunderson Health in La Crosse has merged with Bellin Health in Green Bay. Froedtert Health has merged with ThedaCare in the Fox Cities.

At the same time, providers on the sell side have joined insurance payers on the buy side. It is collusive to the max. What business wouldn’t like to own its customers?

The prime example is the Quartz Health Solutions, Inc, an insurer jointly owned by Advocate Aurora Health, Gundersen Health System, UnityPoint Health and UW Health. They obviously collaborate on price setting. Call it price fixing.

Every health care economist I’ve talked to agrees that consolidation ALWAYS leads to less competition, more market power and higher prices. The elephants dance together, and lesser creatures like families and businesses get trampled.

The biggest winners in the consolidations are the people in the C-Suites who end up with lucrative pay and retirement packages.

What to do about it?

Policy gurus and politicians on the left argue vehemently for nationalized health care. That, of course, would eliminate any competition that still exists. The better answer would be to keep the private sector on the provider and insurer side in business, but to impose the same kind of regulatory disciplines that come into play with utilities.

Wisconsin has a Public Service Commission (PSC) that was created in 1907 to regulate public utilities in the energy, telecommunications and water sectors. It has the power to control prices and policies for more than 1100 companies.

Most business people would reflexively prefer to let market competition discipline companies. But the competitive forces in health care are simply not working. Still, Wisconsin has to step up to the crisis of hyperinflation in health care. Health care insurers and providers need to be looked as utilities.

Regulation is very tricky business requiring immense expertise. Some states, including Massachusetts, Rhode Island and Maryland, have been regulating health care as a utility for as long as 50 years.

If I were running for public office in Wisconsin, which I am not, I would be calling for a blue-ribbon task force to recommend a new regulatory agency that would get the health care costs and related quality disciplines under some semblance of control. The task force would start by visiting and studying the three states that have been regulating to find out how and if regulation works.

The Medical Industrial Complex would fight such a commission tooth and nail. But they don’t have the votes that employers and employees, the victims of price-gouging, can bring to bear.

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