Repeat history: create health care ‘PSC’

In the absence of legislative or executive oversight and governance of the over-priced healthcare systems in Wisconsin, the concept of treating medical corporations as utilities becomes ever more necessary.

Consolidations and mergers have made most Wisconsinites subject to oligopolies, duopolies or triopolies for the delivery of health care and health insurance. The dereliction of public leaders on controlling health care, the biggest economic sector in the state — what I call the Medical Industrial Complex (MIC) — has produced a non-market with the fourth highest prices in the country.

That finding of bloated prices was first highlighted by the Rand Corporation, a top consulting firm, and has been affirmed in several other national analyses. There is no getting away from it: Wisconsin consumers and companies are stuck with soaring costs for their healthcare plans. Those “eye-watering” prices in Wisconsin resulted in an anti-trust class action lawsuit just filed jointly by a New York City law firm and a Madison firm.

The out-of-control costs are also why the concept of a public service commission bubbled to the surface in dialogues of what to do about it. National consultants put the price per family or per employee for healthcare at somewhere between $20,000 and $30,000 or more per year. Healthcare costs have been doubling about every eight years across the country, with Wisconsin sadly leading the way.

Little wonder that health costs are the number one cause of personal bankruptcy and a major drag on the financial health of state employers.

An economic sector of similar size and importance to citizens is the energy industry. It also is characterized by either monopoly or duopoly, but it is subject to regulation on behalf of the public. The Wisconsin Public Service Commission (PSC), created in 1907, was one of the first in the country. It is managed by gubernatorial appointees, who control prices and broad policies for that critical part of our lives.

“Utilities” in the medical field should also need to get approval from appointed commissioners before they jack rates on consumers.

It might seem an impossible challenge to create another public service commission for the regulation of hospital corporations. Actually, though, there is already an agency in place that could do the job – and maybe should be doing the job. The established Office of the Insurance Commissioner has jurisdiction over the insurance sector, and most healthcare providers own or are owned by an insurance corporation.

That ownership makes those healthcare companies “holding companies” under Wisconsin law and subject to the commission’s regulations.

Ergo, the insurance commission’s office could be ramped up to regulate the MIC. It already has the expertise required for common sensible and politically acceptable regulation.

Given the unbearable price trends for medical procedures and pharmaceuticals, it is a puzzle that no candidate for governor or a seat in the legislature has not called for MIC regulation. It is only a matter of time until such candidates emerge.

Health care costs are expected to rise another 8.5% this year.

Gov. Evers and Attorney General Josh Kaul have been inert on the subject. They have created a wide-open vulnerability for the Democratic Party on that score. They simply are not addressing one of the biggest challenges for Wisconsin citizens.

Their inaction has enabled mergers of hospital corporations to run rampant in the state. And those consolidations serve primarily as platforms to raise prices. They are all about market power against the payers. Looked at another way, the hospital system mergers are a defense against similar consolidations on the payer side, namely among health insurance corporations.

Healthcare corporations are among the biggest in the country, and their staggering market power drives the off-setting mergers on the healthcare side.

For Democrats, the answer will always be to nationalize healthcare, such as Medicare and Medicaid.

But the sustainability of those public payers is always a foreboding issue. Both Medicare and Medicaid are busting the budget of federal and state governments. That is reality despite reimbursements to providers far lower than what private payers pay for the same medical services.

In other words, there is a huge hidden tax on companies in the private sector and their employees. They are, in effect, subsidizing the public programs. Most hospital corporation experts admit they cannot survive at government price levels.

That is not to say that doctors, nurses and breakthrough technologies don’t work minor miracles every day on the medical side. I have benefitted from their life-saving efforts.

Long and short, though, the Medical Industrial Complex is an economic mess. No one would say the same thing about the energy sector, which is highly regulated. Regulation works to maintain reliable power systems at acceptable prices. Why can’t we learn from that model?

A public service commission, managed by the insurance commissioner, would look not only at soaring health prices, but also the reliability and quality of performance by hospital corporations. Most of them have not adopted the lean disciplines that have kept the manufacturing sector competitive with low-cost countries in the world.

Under expert state regulation, the health care corporations would have to bring practices, cost structures and prices into line. That would include rolling back excessive compensation at the executive level.

We need to repeat our history. UW-Madison and Wisconsin led the country in setting up the original PSC. We can lead again by setting up a health care PSC.

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