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Posting Patient Prices: Transparency Cure for Hospital Blank Checks
Joe Selvaggi: [00:00:00] This is Hubwonk. I’m Joe Selvaggi. Welcome to Hubwonk, a podcast of Pioneer Institute, a think tank in Boston. Consider a policy shift that promises to enhance healthcare for Americans, extending their lifespans, and generating savings of up to a trillion dollars. Advocates for healthcare price transparency argue precisely this.
Their proposals hinge on the belief that clear pricing fosters competition, drives down costs, elevates quality, and ensures accountability in services rendered. This concept of transparency is commonplace in modern consumerism, from online groceries to international flights. However, healthcare, unlike retail, lacks upfront pricing, leading to unchecked expenses and errors.
The ramifications of this absence of market discipline are evident in the U. S., where healthcare expenditure per capita is double that of other affluent nations, despite similar or lower [00:01:00] life expectancies. How might price transparency reshape healthcare costs? What obstacles impede efforts to empower consumers with pricing information?
And how might individuals and organizations eager to realize savings seek value in the future? My guest today is Cynthia Fisher, an accomplished entrepreneur, philanthropist, and founder and CEO of PatientRightsAdvocate. org, a nonprofit dedicated to healthcare price transparency. Ms. Fisher, along with Dr.
Arthur Laffer has co-authored a new report titled “Healthcare Price Transparency and Competition, How Real Price Transparency Can Reduce American Healthcare Costs by Over a Trillion Dollars Annually, and Extend Life Expectancy.” This report argues that consumer choice and market discipline can realign healthcare costs with historical norms while delivering the quality and accountability consumers demand.
We will delve into the obstacles facing price transparency reform and examine the [00:02:00] efficacy of regulatory and legislative initiatives driving change. When I return, I’ll be joined by the founder and CEO of PatientRightsAdvocate. org, Cynthia Fisher. This is Hubwonk. I’m Joe Selvaggi, and I’m now pleased to be joined by the founder and CEO of PatientRightsAdvocate.org Cynthia Fisher. Welcome to Hubwonk, Cynthia.
Cynthia Fisher: Thank you, Joe. Pleasure to be here.
Joe Selvaggi: Okay, well, I’m thrilled to have you. today we’re going to drill down into the need and potential benefits of price transparency in healthcare. Very, interesting topic. But before we go into detail, you are a founder of an organization.
let’s start off by, learning a little bit more about the patient rights advocate that you started. what’s your, mission? Joan.
Cynthia Fisher: Yes, our mission is to have price transparency throughout our healthcare system and empower patients and all consumers of healthcare and coverage to be able to lower their costs.[00:03:00]
by benefiting from competition and consumer choice, and to be able to be protected from overcharges in medical billing and claims payments. So if you think about it, price transparency is truly transformative because it shifts power to the consumer to be protected from overcharges and to be able to greatly lower their costs.
Joe Selvaggi: Well, that’s a great summary. I enjoyed reading your most recent report. You wrote it with well-known economist, Dr. Arthur Laffer, Professor Laffer. It’s entitled, it’s a pretty bold title, “Healthcare Price Transparency and Competition How Real Price Transparency Can Reduce American Healthcare Costs More Than 1 Trillion Annually and Extend Life Expectancy.”
That’s a big claim. So it caught my attention. I found the piece to be a very persuasive read. our listeners, we talk about healthcare a lot on the podcast, and our listeners probably already know. We spend about $4 trillion a year. That’s T trillion. But t [00:04:00] in an economy that’s only $27 trillion large.
So we know that we spend a lot, but we also know about half of that is in the private sector. Half of that it’s public, Medicaid, and these kinds of things. But you’re gonna, out of that $4 trillion, you’re gonna save us. A trillion. At a high level, where does that number, that amount, come from?
Cynthia Fisher: Joe, there was an article in the Journal of American Medical Association about 25 percent of our healthcare costs are purely administrative waste. 25 percent of an over 4 trillion a year spend is a trillion dollars. And in today’s world, we have not had. a functional market in healthcare. It is extremely dysfunctional because the true purchasers of all of healthcare, which is the patient and the employer and union [00:05:00] plan, as well as the federal government, when we look at the purchasers have had no concept of actual prices that they would pay in advance of care, or to see what the competitive prices are, In a market economy, that has enabled both hospitals and insurance companies to keep hiding prices and many middle players in between those prices and bills that add administrative waste and administrative costs.
to procuring care. And what have we seen over the past couple of decades? If we’ve seen high single and double-digit increases in coverage costs and premiums that have increased so much when you look at the share of workers wages and employers’ growth or budgets, public sector budgets, they’ve been harmed by these runaway costs that have been [00:06:00] far greater, three to five times.
That’s higher than inflation. That’s ridiculous. So that’s a big part of it because it’s really quite simple. So the true purchasers haven’t seen any prices, but now we have that right by law, which is a really transformative change.
Joe Selvaggi: Some would push back and say, yeah, we spend a lot on healthcare, but we’re a wealthy nation.
We like healthcare. So we’re spending all this money and therefore we should be healthier. is there any evidence that all this extra spending we do, is improving our health?
Cynthia Fisher: Well, let’s look at the numbers on a macro level, Joe. If we look at the American spending on health care, we’re spending over two times more than any other developed nation.
And yet we’re dying four years earlier than the average life expectancy of other developed countries. That [00:07:00] says, if you look at the correlation of our death rate, that perhaps we are, quality of care isn’t as high as other nations as we’re dying earlier is one of the factors. But why? Why are we paying and why has it even been tolerable to pay over two times more?
And a lot of that is because as long as hospitals and insurance companies and all the middle players continue to hide prices, they can charge whatever they want. And quite frankly, it’s the industry. moving toward profits over patience and keeping the billing data and the prices away from the true purchasers.
the good news is, this is all starting to change. And that is because of the Implementation Bylaw of Price Transparency over three years ago. Look, Jeff, every one of us, everyone who [00:08:00] gets CARE, simply wants to know what are we going to get and what’s it going to cost. When we see prices and price transparency will clearly usher in the next question is what are you going to get for that price?
And that would be quality discovery as well.
Joe Selvaggi: I found your paper very persuasive. Some of the graphs very early on in the paper talk about this. LifeCross or HealthCross. It shows an inverse relationship between what we spend and our life expectancy. What we spend is consistently going up. Our life expectancy, relative to that, spending is going down.
clearly, we’re not getting good value. You also point to a historical trend that we, relative to our wealthy peers, again, if we’re talking about life expectancy, if we’re spending, if we’re dying earlier than our peers, We’re spending far more, I think, in some of your observations, nearly twice as much as our wealthy peers in this world.
Was this always the case? Has the U. S. always spent twice what our peers spend, or is this a recent phenomenon [00:09:00] with an inflection point?
Cynthia Fisher: This is more of a recent phenomenon over the past couple of decades, and a lot of it’s due to government policies, that have enabled a broken system, and the system’s broken as long as the consumer, who’s the patient, employers, and unions, as long as the consumer has been not able to have access to prices in it and actually also have accountability and integrity in the billing practices. none of us would tolerate that in any other facet of our lives. Every other facet, whether we go to the grocery store or the gas station or buy online retail, has prices and markets and then when we get the bills we check it to the price we agreed we thought we would pay and we have the ability to have remedy and recourse.
However, in healthcare, that’s been blocked because the information has been blocked all along, and that’s game over now. We’re in a new revolutionary time where now prices are beginning to be revealed by law by all [00:10:00] hospitals and insurance companies. And we’re finding substantial, interesting findings from all of this discovery.
Joe Selvaggi: So I want to go there, but I want, let’s, I want to drill down a little bit more. We’ve got, the provider, the doctors, and hospitals that are, curing us, and we’ve got our, us, but there’s so many people in between. we’ve talked in this, A lot about these intermediaries or these middlemen.
Of course, we have insurance companies. We don’t enter the healthcare system by ourselves. We seem to always be guided by our health, insurance. We have, intermediaries like pharmacy benefit managers who decide which drugs we can have and at what price. To what extent is this sort of, blurring of lines?
Let’s imagine in a brave new world where the hospital does offer prices. Aren’t all these intermediaries they say they represent us, but at some level they’re, shielding us from what we spend and the choices we make? Isn’t that part of the problem?
Cynthia Fisher: Absolutely. Absolutely. In fact, the first question you asked has this been the case over time.
You go back earlier, [00:11:00] Singapore adopted our model from the 60s, and they’re only spending around 5 percent of gross domestic product on health care. And they’ve engaged also the consumer living a healthier life as part of a cash model as well, cutting out many of those middle players. and compared to the U.S., we’re approaching 20% Gross domestic product spend somewhere between 18 and a half, but it’s projected to be at 20 percent and even, and several years in the future, it’s even projected to be as high as 25%. But when you look at that, the American worker is working at 20 percent of gross domestic product spend.
That means we’re working one day a week just to pay for health care. One in five days is working just to pay for health care. compare that to Singapore, at 5 percent of gross domestic product, it actually harms the American workers, it harms the American [00:12:00] businesses on growth, because we’re hemorrhaging on overpaying for healthcare, which could otherwise go into wages, and otherwise go into school budgets, more teachers, better academic programs, and maybe infrastructure bill, bridges, road repair when we look at having opportunity cost of loss because we’re way overspending for healthcare.
And so this is a moment in time where we’re at this incredible inflection point, Joe, where price transparency is truly revolutionary because it enables all of us to be able to, for the first time, consider the ability to shop And the ability to put a halt and question our bills to make sure that they were charged at the right price and it wasn’t price gouged or an error or overcharge.
Joe Selvaggi: I want to take that, I like to use simple analogies that our listeners might understand. And I’d say, okay, I like to compare healthcare [00:13:00] maybe to a grocery store where we walk into a grocery store. None of us would walk into a grocery store. Where there were no prices, right? You want to know whether the Wheaties or the Weetabix are more expensive, ultimately, so that you can choose what you want to spend on, right?
You, maybe you want the premium product for this and not for that, or you may want something on sale, a lot more of it, or less of it if it’s not. say more about why price Whether it’s healthcare or anything else, why it’s so valuable for an individual consumer when they enter any market and then take it to healthcare.
Why is that information, I mean, can’t someone argue against this saying, look, I need what I need. I need new hips or a knee or a, MRI. I may have a choice in a grocery store. I don’t have a choice in healthcare. why is health, why is the price so valuable even in healthcare?
Cynthia Fisher: no matter what type of healthcare system we have, prices create a sense of fairness and allow for the consumer to have financial certainty. Think [00:14:00] about it. When anybody goes in to get care today, we have been, until we get these prices, across the country, and we see full compliance by hospitals and insurers, without the price, a patient and a consumer are blind to no prices and often surprised by bills blindsided far higher than they expected to pay. And then I question this, Joe, why do we all have to go in and pick up that electronic pen? and sign a blank check? Goodness, the healthcare system now that’s gone electronic doesn’t even show us what we’re signing anymore and allows us to read what we’re signing.
But we are signing that we will be financially responsible to pay whatever the hospital chooses to charge us. even beyond what our insurance coverage would carry. And so in the world where there [00:15:00] are high deductible health plans and co-pays and co-insurance and do know, the American worker pays for almost all of healthcare because we pay for out of wages automatically deducted as a portion of share with our employers.
And then we pay for the federal government and the state and local government. healthcare plans with our taxes. So we have to have these prices in order to benefit from competition and choice. And look, a simple example is an MRI. What is a fair market price for an MRI? And what we’re learning is that in stand-alone imaging centers, a cash price, all in, for the MRI, including the read, is around 300.
And yet, you could go to Mass General Brigham, and our Blue Cross plan, our charge in our insured [00:16:00] rate is over 7,000 for that same MRI.
Joe Selvaggi: Right.
Cynthia Fisher: I think this is a That’s a big difference.
Joe Selvaggi: This is a profound point because I think it when some of our listeners hear prices and they say look I need what I need What difference is the price?
that’s what they’re charging. But I think what you’re powerfully saying is you have a choice if you want to get an MRI, for instance, as you quote unquote need one. It’s not, where in Mass General I’ll go. It’s Mass General versus BU Medical or the MRI center down the street.
If you have the prices of all of them, you may still opt, just like you may fly first class or drive around a gold-plated Cadillac. But, ultimately it’s money spent. We all spend it. You can choose to be more efficient if you’re provided with the price. You can still disregard the price. It’s great, but you ultimately have an opportunity to save yourself, your plan, your deductible, all the way down the road, and collectively, all of us, a lot of money if you have at least the information to make an informed choice for a value.
Is that fair?
Cynthia Fisher: That’s [00:17:00] absolutely fair, and I’ll tell you a funny story. My husband needed two MRIs, and in Massachusetts, It was a pretty high price if he stayed at Mass General. And then we started saying, what if we looked around Massachusetts as a market? What is the lowest price we could find?
And we found 950 is the lowest price. Woonsocket, Rhode Island, 250. So we happened to be on vacation in Florida, and I said, you know what? Let’s look for a cash price and why don’t you get your MRI nearby? We found one for 300 and a double read because a radiologist was going to provide two reads. My husband was very proud of his second MRI, he was able to lower that to another center and get it for 250.
So that case in point, you can’t teach an old dog a new trick, Joe.
Joe Selvaggi: Oh, no, that’s good. Good on you, husband. I also didn’t want to glide over the other point you made, which is accountability. Meaning, if I go in again, I’m stuck on this grocery store analogy. If I go into a grocery store, and [00:18:00] the Wheaties say, Hey, it’s me, Four bucks and ultimately I’m scanning through and it comes up eight bucks, I’ve got something, to go on I said look this the price shows there on the shelf for you just charge me You just overcharged me, if you don’t in a sense have information You are literally writing a blank check You have no idea what it should be costing you so you have no idea if you’ve been overcharged.
Is that a fair assessment?
Cynthia Fisher: Absolutely. And what if those charges when you went to the grocery store were thousands of dollars higher than you expected when you were thinking, I got two bags of groceries? Maybe it’s 120 a spend total. And then you get a 1,200 bill. If you went to the grocery store it would be, built like healthcare, right?
All the middle players in between, and then figuring out the maximum amount that you could be charged. think about it. Hospitals now have departments called Revenue Cycle Optimization, which to me is interpreted as charging whatever you can, as high as you can get away with at each patient encounter.
And then every middle player in between is looking at how can they profit from it. [00:19:00] Even more with additional modifiers or spread pricing on that patient encounter. And so the next thing you know, you’re paying thousands of dollars for something that should only be a couple of hundred. And so the other part on prices is Joe, now all of the hospitals are three years into having to show all of their actual prices and compare them by every insurance carrier and every plan as well as a discounted cash price. And we’ve learned a lot. Around the country, we do it every six months and a consumer-type report. And the last report we did, we showed that About 34. 5 percent of the nation’s hospitals are fully complying with the law where they’re showing all of their actual prices, so we could start to see tech developers, the more prices that are out there, We could see tech developers create, say, a Google [00:20:00] search engine for things like an MRI or a colonoscopy.
Joe Selvaggi: And Cynthia, I want to go, yeah, I’m glad you brought that up because, this is not a, an episode of despair. we’re not just going to throw up our arms and say that nothing good is happening, because as you say, some are complying with the CMS requirement. you, in your paper, mentioned an organization, a large organization.
I think one was a municipal, like a state, insurance for their employees. One was a union and the other was just a private insurer. They have used the power of price transparency to substantially save, in one case you say it saved them from insolvency, but it saved them a ton of money.
Share with our listeners at least, one of the examples of where price transfer transparency is actually working to inform large For instance,
Cynthia Fisher: we gave the example of S E I U 32 B J. 200, 000, workers in the New York, New Jersey area that are in real estate buildings. Janitors, doormen, and women that, tend to these buildings.
They were [00:21:00] able to save by getting the billing information and negotiating with hospitals that provided great care at reasonable prices. Looking at childbirth, hip replacements, those types of things. Cancer treatments are very expensive and find you where the same quality of care is better priced.
They save 33 million dollars a year for three years. And what did they do with that money? They increased wages to the highest wage increase ever and gave a 3,000 bonus to every employee.
Joe Selvaggi: That’s a small amount for someone who cleans office spaces. That’s a lot of money.
Cynthia Fisher: That’s a lot of money and a lot of happy people, a lot of happy workers that love their health plan.
And on top of it, the real estate building owners because this is a combined plan with the ability owners and the workers got to save a two-month premium each year of not having to pay for two [00:22:00] months because they saved so much money in addition to raising wages and bonuses. So this is a huge win. we’ve seen the states of Montana and Maryland Bartlett ran that health plan, and just by getting a hold of the numbers and running her health care plan by the numbers and creating pricing that was really What was a fair price for her state workers, 30,000 state workers?
She saved 121 million in 18 months for the state plan and put money back into the tax coffers, into reserves.
Joe Selvaggi: That’s your money, that’s my money. It’s people’s hard-earned pay that’s otherwise wasted. you, we’re, I love the success stories, but again, we’re going to focus on the success and then talk about where we still have to go.
We’re talking about the sort of fruit of the rule that was put in by CMS. This is, as you say, it came into effect, on January 1st, 2021. I think it was two parts. It required that all hospitals [00:23:00] post a machine-readable file with prices for all services and items they offer.
And they also had to have a cost estimator tool for the 300 most shoppable services. Say more about the rule and, what your thoughts are on it. is this the answer or, a hell of a start?
Cynthia Fisher: the true, important part of this rule is, that machine-readable file that posts all of the actual prices by every service and every code and code name and code, across every insurance carrier and plan that the hospital offers. And you can compare that to the discounted cash price if you just want to pay cash. So being able to have every hospital post those files in standard format, allows a tech economy to create mobile shopping tools.
And the whole goal here, think about what we have in the airlines, for instance. We can go and we can trust when we buy an airline ticket and we have [00:24:00] choices to be able to purchase. And just like healthcare, airlines have wide variation, look right now, we’re in storms, we have weather that might cause more turbulence or delayed flights, whatever, but we know that the airline prices have wind to deal with, fuel costs differ, wide variation, however they’re able to price.
And price, prices in airlines since the deregulation back in the 70s, when prices weren’t known for airlines, only by the travel industry, and once prices became transparent, And we purchased them directly, you cut out the middle player, which was the travel agent, right? And we went directly online, directly accessing prices for airlines, and what happened is that the real value of pricing of airlines in real dollars is now half of what it was in the 70s. And hundreds of millions of [00:25:00] people are flying, and planes are safer. And this is competition, this is choice, and it is readily available access to the consumers. And you have trust and accountability in those billings. The same can happen for health care with these hospital files being unleashed.
And you can imagine even an Uber platform. Let’s go back to the MRI. I would love to see an Uber-type platform for you, Joe, or me. If we needed an ACL looked at for our knees for an MRI image, why not allow a platform like an Uber type of platform to let the healthcare sector bid on our business at a time that we could go get that care and show us at what price and what quality of service that they would choose to provide us.
So you can imagine that.
Joe Selvaggi: You make a great point. You actually wrote an, I’m referencing one paper, but I’m now going to reference another paper by PRA that I think is also compelling. You took that [00:26:00] information again, now some of it’s online, not all of it, not as much as you want, but you looked at. In the information that’s provided, you found huge discrepancies.
Call it MRI. I don’t remember which procedure was in your paper, but you saw not just, again, we use BU and Mass General as a sort of, okay, I would rather go to one than the other. But even within, let’s say, Mass General, again, I’m using that just because that’s our local hospital.
For the same procedure, a difference of 10 times, 20 times, for the same exact procedure based on who it is. again, to use my crazy grocery store analogy, can you imagine, one customer being charged 10 times more for Wheaties than another customer? It would be absurd, and yet, it’s going on all the time.
Say more about your observations about the range of prices, intra-hospital and inter-hospital.
Cynthia Fisher: Well said. Intrahospital, what we were finding is that on average that is a ten times difference for the same service by the same providers for different patients. As you said, [00:27:00] none of us would tolerate that in a grocery store to see someone pay 5 for a half gallon of milk and another person pay 50.
Worse, let’s look at the gas station. I like to think about if I pulled up to pump my gas and got 15 gallons of gas, say it was 50, and you got the same gas right behind me, filled up your tank for the same exact amount of gas, and you were charged 500. In using the same gas station, you would be outraged.
I would even get out of my car to help you to get the appropriate price. That’s what we’re finding, right? All of us want each other to be treated fairly. None of us want to have a ten times difference in pricing, than the next person for the same service with the same surgical team, for instance. And it’s happening every day because we have been blind to know this.
And, [00:28:00] once it’s really wide scale known among patients, they have the right to see these prices and among employers and unions as they compare, what is that third party insurance carrier negotiating on their behalf? And why is the carrier allowing gouging at 10 times more? Because there’s certainly profit in the lowest price.
Joe Selvaggi: I want, yeah, of course, that’s right, they, nobody’s providing services at law, so you, you’re 100 percent you’re not eliminating. Profit or reasonable profit, I want to push back. There’s one thing that I think was missing in my, layperson observation of this phenomenon.
To me, again, to use my grocery store analogy again, let’s imagine the grocery store. It’s just like you want it. Everybody, all the prices are posted and they’re all fair and they’re all the same for all of us. Okay, we’ve gotten there. But I go to the checkout and all I do, regardless of how much is in my cart and what I’ve chosen, I pay a hundred-dollar copay and the rest goes to my insurance company.
What then, in that sort of. that’s me making an analogy to an insurance company. Once I get to my. Limits of [00:29:00] my copay, my incentive to shop has gone away. You don’t really address that in any of your papers. What would you say to those people? Again, you, I’m old enough to remember when medical insurance used terms like major medical, meaning, yeah, if you got really sick, we cover it.
But, you’re on your own for the basic stuff. We’ve gone to now almost the first dollar payment. Doesn’t that make the consumer and those of us who might benefit from prices indifferent to the difference in what we pay?
Cynthia Fisher: you raise a good point, Cho, and it can, absolutely, but where we’re not indifferent is what we make in our jobs and what we have in our savings and take-home pay, so when we can see actual prices and price comparisons, the real world.
Inflection to change is going to be coming from the employer and the unions as groups, as a collective with, for instance, SEIU 32BJ, 200,000 employees. And so when they were able to save [00:30:00] a hundred million dollars, that’s real money, and they’re able to be able to lower everyone’s cost of what comes out of their paycheck.
Joe Selvaggi: And when the consumer is exposed to the prices, again, they make better choices. Of course, we have all kinds of studies, like LASIK studies, where if insurance doesn’t cover it and you’ve got to shop around, magically, LASIK prices have come down, 95%, because you’ve got to pay it. you can’t just push that off.
I think, at least having the information, it’s going to govern prices. And of course, we all know, as amateur economists, that prices are determined at the margin. There’s some people who never buy something, some people will buy at any price. Prices are determined by the person at the margin, just someone who is influenced by price.
And if it’s the SEIU, great, they’re going to influence price, even if I, as Joe Consumer, might not have an interest. it will work even if I don’t care.
Cynthia Fisher: exactly. And, what’s really amazing is, look, it’s a lot of large employers too, and medium and small employers are [00:31:00] starting to get ahold of these numbers.
And they also need access to control the checkbook because when the employers share in our billing and charges, they need to make sure they’re accurate. And, look, there are some provisions in a lot of insurance contracts that shouldn’t be signed, like anti-audit provisions. Can you believe that?
Many of the insurance, big insurance companies say you can’t audit what you’re deciding with the hospitals we’re going to charge you. that’s, crazy. The employers that are actually saving 30 to 46 percent for all of their workers on what they were paying for coverage costs get a hold of the billing and they look at those charges before they’re paid to make sure they’re not being overcharged.
And the other part of it is to make sure the prices are right. Let me give you an example. Rosencare down in Orlando, Florida, Harris Rosen, 6, 000 employees, [00:32:00] pays less than half of the national average. for coverage for all of his workers. And how did they do that? For all of their families, they were front-loaded with great primary care and access to physical therapy, occupational therapy, and training, readily available to their employees, and they got a hold of the prices.
and they directly contracted and cut out many middle players with many of the hospitals. So they have been able to save over decades and put that into higher wages and growth for their hotel chains.
Joe Selvaggi: So we agree that, okay, I hope our listeners are excited about this, brave new world of, price transparency.
But yeah, you’ve, and your analysis is, this is a three-year-old law, we only get 30 to 36 percent compliance, and actually, your analysis suggests some hospitals are slipping backward, meaning, they don’t voluntarily choose to make less money, so surprise, surprise, if nobody’s [00:33:00] watching, they become less transparent.
What else is going on beyond the CMS rule? I’ve read something about something going on in the Senate, which is going to, rather than an executive oversight, executive branch oversight of CMS, we’re talking about the legislative branch passing laws that will actually have some teeth that might influence price transparency.
What can you tell us about what’s going on in Congress?
Cynthia Fisher: Yes, in Congress, it’s, this is such a bipartisan issue, and first of all, the polling for across the country, time after time, is over 90 percent of Americans want prices in healthcare, because they believe, very firmly, they will lower their costs when they have the ability to choose where to go, and at what price.
The last polling came in at 94%. Bipartisan. for Americans wanting health care price transparency. Congress has been frustrated that the Health and Human Services has not robustly enforced the law. [00:34:00] However, President Biden did increase the fines to over two million dollars. And when he did, they fined two hospitals.
Look, nearly two-thirds are yet to show all of their prices. Most of the hospitals in the country do have pricing files, but if they’re missing swaths of pricing data, then we can’t have a functional competitive market yet, right? but we did find that when the Biden administration fined two hospitals over a million dollars, It worked.
That higher fine worked because those two hospitals came into compliance within weeks. And today, they still have exemplary files, and that was two years ago. However, we have not seen that level of fining and rapid enforcement. I think they’ve only looked at around 20 hospitals, but having de minimis fines, and so it’s been slow walked.
So Congress has come [00:35:00] forward to put forth two bills. And the House passed a bipartisan bill for lowering costs through more transparency. And the Senate, Senator Braun from Indiana, and Bernie Sanders, who’s chairman of the Senate Health Committee, came together and even went further to create a better bill that allows for all actual prices to have to be, provided by hospitals and insurance companies and much higher fines, as well as a daily feed of the billing information and claims and electronic funds so that the industry has wanted to give estimates.
And why the Senate bill is so important is the Senate bill has actual prices and we just saw Health and Human Services roll back actual prices to being able to be [00:36:00] substituted with an estimate. Estimates have no accountability, Joe. Estimates do not allow for a true market or market forces. And so that’s why the Sanders Braun bill is so critical because it says actual prices.
So we have an actual market and when patients are given an estimate, I’ll give you an example. Cindy Reddy in Colorado came forward and testified. She was given an estimate for 5,000 and her actual bill came at 74,000. The insurance company that told her in advance the estimate and that they would cover denied her care after the fact.
So the hospital put a lien on her home for 74,000. She came to us, and [00:37:00] we have all of the country’s hospitals’ prices online. And fortunately, the hospital had complied and had her plan and those prices. And line item by line item, when she compared her bill, it should have been around 8,000 by the plan with an 800 copay.
She was able to prove to the insurance company and the hospital that they way overcharged her. It took seven months. But she finally got them to release the lien on her home, and the insurance company did cover at the prices they negotiated with the hospital.
Joe Selvaggi: I think that’s an interesting point, a very salient point, because, again, an estimate is by all rights, nonbinding.
You, if I estimate you change the oil in your car, it would be 25 bucks and now it’s 250 bucks. I’m like, what do you say? Oh, I gave you an estimate. That’s no promise. If the price is the price, that’s a contract. It’s saying, I will do this for that. so you’re saying with [00:38:00] the Senate, bill, you can’t slip in estimates and as a sort of, a catch-all phrase to say, and by the way, whatever we charge.
Regardless if it’s, as you described, 15 times more than the estimate, sorry, it was a bad estimate, but it was an estimate, so you don’t have that sort of escape hatch in the new bill.
Cynthia Fisher: That’s correct. And the other part of it is that prices, actual prices, are negotiated. And so we find those actual prices today in the insurance part of the insurance companies have to post all of their prices.
And so when we don’t see them missing in the hospitals, why then should the hospital be able to, in the new rule change in 2025, be able to substitute an actual price with an estimate? That’s a rollback, that’s harmful, and that’s what the Biden administration just did in their latest rule, is they allowed for [00:39:00] an estimate substitute.
Cynthia Fisher: That would throw a big wrench. in all of the progress that’s been made thus far. And for people like Cindy Reddy, who because she saw the actual prices, was able to prove that she was overcharged and that the estimate was meaningless.
Joe Selvaggi: Yeah. so what you’re saying is CMS did a little bit of backsliding by allowing estimates and I think it’s important for our listeners, you know, again, I don’t know, we know what we say, but we don’t know how it’s heard. It’s not that we’re price fixing. We’re saying, look. charge what you want, just let everybody know, and let, then they have, of course, the right of exit, they can go somewhere else, or not do the procedure at all, or go to a neighboring hospital.
we’re not looking for some philosopher king to determine what things should cost, we’re just saying, tell us what you plan to charge us, and give us a choice of, you Choosing where we want to go, right? I mean, this isn’t a command economy. This is a market economy that we’re advocating for.
Cynthia Fisher: Absolutely. let’s let the market [00:40:00] forces work. And instead of after the fact, the prices are known by the insurers in the hospitals, and they have traditionally not let us know until after the fact. It’s about moving those prices to the front. And 90 percent of care is planned. And even in emergent care, when you have prices, you normalize and have market forces work, right?
So, this is to pull back the curtains, let the market forces work, and restore trust and accountability in our healthcare system.
Joe Selvaggi: Yes, of course, it’s strange bedfellows when you have Bernie Sanders and a Republican Senator agreeing, but I think, again, from my perch, I see, People presented with the same exact facts that you and I have discussed and seeing two different worlds.
You know, my friends who are market-oriented understand prices are what constrain all producers, right? the Wheaties aren’t six dollars instead of four dollars because you buy something else. You can choose, choice is what [00:41:00] constrains prices in markets. We don’t have prices in healthcare, so it’s not constraining.
So, this is market dynamics going out the window, and essentially hospitals can charge whatever they can get away with. Your price strategy, and transparency, will impose the same market discipline on hospitals that are imposed on every other producer. On the left, I think they think, Someone like a Bernie Sanders I can imagine seeing this as a really good idea, largely because they imagine all markets to be, or capitalism itself, to be predatory in a sense to, the rich and powerful preying on the weak and powerless.
And in his mind, I imagine price transparency offers an opportunity to expose and shame, people who are rent-seekers, all the way, all the middlemen who are making quote-unquote too much money. If you have price transparency, there’s no normative, element here. Sure, you charge as much as you can get away with, and the consumer goes somewhere else.
you don’t need someone to police the system if you have price transparency. You’ve got markets. You’ve got, the discipline of markets. Do I have it about right, or do you see this sort of [00:42:00] seeing your advocacy for transparency seen through two different lenses, but at the end of the day, it doesn’t matter?
It works for both sides.
Cynthia Fisher: It does work for both sides. And, you mentioned, Bernie Sanders. He’s been very advocating to have the government pay for most of healthcare, and he advocates very strongly for price transparency because he doesn’t want the government to overpay when you get to see prices and markets come and function because they are functional, that the purchaser, the true purchaser, is the patient and the American worker and employers.
When we are able to see prices have choices and have competition, then we benefit. Competition benefits us all. And when markets are consolidated too, then oftentimes prices get higher. because it comes to be about, but without knowing the prices at all, you could almost say it’s extortion. Making every consumer sign a blank check, that they will open [00:43:00] up their checkbooks and their family savings and be responsible with all their assets to pay for that health care without having a price.
Joe Selvaggi: Well, we’re running out of time. I’ve enjoyed our conversation. I’m sure we’ve piqued the interest of our listeners. They might be interested to read this report that we cited and several of the others that talk about the range of prices and the lack of transparency in your analysis of how hospitals’ prices differ.
All that’s a really valuable resource. Where can listeners go to read more about a patient rights advocate?
Cynthia Fisher: Yes, they can go to our website at PatientRightsAdvocate. org, and they can see how to shop in these new times, by getting prices, and how to be protected from overcharges on our site, and also become an advocate.
And we encourage the Senate bill, anyone who wants to go to their senator and write their senator, encouraging them to sign on the bill and see these two bills come together to allow for price transparency [00:44:00] everywhere. True price transparency is a great way to take action, and it is effective.
Joe Selvaggi: That trillion dollars could be better spent elsewhere.
Again, the entire defense budget is, 800 billion. So this is, every year we spend, 25 percent more than the entire, we waste, not spend, waste more than the entire defense budget. Plus 25%. So that’s a lot of money. That’s a real dollar. It’s a trillion here, trillion dollars there. You got real money. So I’m very excited about the upside potential.
we’re on our way and I think you’ve, your advocacy is, helping to move the ball, and who knows, we may, I’ll invite you back in the future and you can see, tell us that we’ve succeeded. Now we know exactly how much we’re going to pay before we walk through the hospital’s front door.
So thank you very much for joining me today, Cynthia. You’ve been a really great guest. Thanks so much, Joe. This has been another episode of Hubwonk. If you enjoyed today’s show, there are several ways to support Hubwonk and Pioneer Institute. It would be easier for you and better for us if you subscribe to Hubwonk on your iTunes Podcatcher.
It would make it easier for others to [00:45:00] find us if you offer a five-star rating or a favorable review. We’re always grateful if you share Hubwonk with friends. If you have ideas, comments, or suggestions for me about future episode topics, you’re certainly welcome to email me at Hubwonk at pioneerinstitute.org. Please join me next week for a new episode of Hubwonk.
Joe Selvaggi interviews entrepreneur, philanthropist, and founder of PatientRightsAdvocate.org, Cynthia Fisher, discussing her research and advocacy for enhanced healthcare price transparency. This initiative has the potential to improve life expectancy and save Americans over a trillion dollars annually.
Guest:
Cynthia A. Fisher is Founder and Chairman of PatientRightsAdvocate.org, a nonprofit organization seeking healthcare price transparency, giving power to American consumers – patients, employers, and unions – to lower their costs of care and coverage through a functional marketplace and choice. Cynthia is best known for her pioneering work as Founder and CEO of ViaCord, Inc., a leading, price transparent umbilical cord blood stem cell banking company which she started in 1993. In 2000, she co-founded and was president of the cellular medicines company, ViaCell, Inc., of which ViaCord became a division. ViaCell went public in 2005, was acquired by PerkinElmer, and exists today under the ViaCord brand. Cynthia also serves on the public company boards of the Boston Beer Company, Inc. and Easterly Government Properties, Inc. She serves on the Florida Council of 100 and the board of the National Park Foundation, and she previously served on the board of directors of Water.org. Cynthia holds an MBA from Harvard Business School and a BS and honorary Doctorate of Science from Ursinus College.
Pioneer Institute Statement on the Commonwealth of Massachusetts’ March Tax Revenue Collections:
Preliminary March tax revenue collection numbers were released on Wednesday (4/3/24) by the Massachusetts Department of Revenue (DOR). The Commonwealth took in $4.065 billion in total tax receipts for the month. This figure is $129 million or 3.3% above the current monthly benchmark – the first time this fiscal year that actual revenues exceeded estimates.
While the slight uptick is good news because it breaks an eight-month streak of declining revenues, let’s not queue up the confetti quite yet. All major tax revenue categories other than withholding taxes are below estimates. Withholding tax collections are likely buoyed by the worker shortage and higher salaries that workers can now command. The weakening in other categories is troubling given stock market performance over the past year, record high housing prices that increase capital gains and the general health of the economy.
It is important to note that the tax revenue benchmark for FY2024 was revised downward in January to $39.834 billion from $40.41 billion to reflect the $576.8 million reduction in revenue from the recently enacted tax package and the decline in year-to-date tax receipts as well as the $1 billion revenue estimate for the 4 percent income surtax. Despite this downward revision, year-to-date revenue collections totaled $27.531 billion and fell short of the revised benchmark by $145 million. Without the money from the income surtax, this year-over-year decline in tax collections would be greater still.
March is a month when many corporate and business taxpayers are required to make estimated payments and could be a harbinger of things to come. Both categories were below projections. Corporate and business tax collections brought in $1.235 billion – $2 million, or 0.1%, below benchmark, and $5 million, or 0.4%, less than March 2023.
Estimated income tax payments, often called non-withholding income, that includes dividends, interest and capital gains, totaled $96 million for March. This is $6 million, or 5.6%, below benchmark, and $0.2 million, or 0.2%, less than March 2023.
Even sales and use tax collections, at $664 million, were $26 million, or 3.8%, less than March 2023, and $5 million, or 0.8%, below benchmark despite persistent inflation that raises the cost of goods.
The catch-all category of “all other” taxes fared slightly better. Collections for March totaled $175 million, $3 million, or 1.9%, above benchmark, but $19 million, or 10.0%, less than March 2023.
In response to these weakening revenue collections, the Healey administration implemented a hiring freeze for certain positions in the executive branch of state government. Whether this action is enough to balance the FY2024 budget will largely be determined by whether the rebound continues with April tax collections.
One thing is certain. Unforeseen and added spending, coupled with the exhaustion of federal funds, will make FY2025 budgeting much more challenging than in recent years. The only question is how much lawmakers will have to tighten the purse strings for FY2025.
This week on The Learning Curve, guest co-hosts University of Arkansas Prof. Albert Cheng and Charlie Chieppo interview U.S. Chamber Foundation VP, Hilary Crow. She discusses the state of K-12 civics, emphasizing the Chamber Foundation’s role in addressing America’s wide civic education deficits. Crow highlights a recent national civics survey, alarming civic literacy gaps, and links between political unrest and our nation’s educational shortcomings in K-12 civics. Ms. Crow also stresses the importance of local engagement and initiatives like the Chamber Foundation’s National Civics Bee.
Stories of the Week: Albert addressed a video from CBS News on Johnathan Haidt’s new book The Anxious Generation; Charlie reviewed an article from The Hill about wasted COVID relief funds.
Guest:
Hilary Crow is Vice President of Civics at the U.S. Chamber of Commerce Foundation. Her responsibilities include leading The Civic Trust, an initiative focused on civics literacy, civics at work, and elevating civics as a national priority. As part of this work, Hilary oversees the National Civics Bee, an annual competition aimed at increasing civics literacy among middle school students, their families, and communities. The Bee is currently running in more than 100 communities across 28 states in partnership with state and local chambers of commerce. The Bee will scale to all 50 states by 2026. Hilary earned dual bachelor’s degrees in political science and philosophy from The American University in Washington, D.C.
Tweet of the Week:
“She’s a good girl. She helps me a lot. She has big, big dreams. I don’t have the money, but she has big dreams. I hope she’s going to get everything, but she works so hard. She works so hard in school.”
“Our family is needing to make some really big sacrifices because we believe this is important, and so, we’re basically going to do whatever it takes… Sometimes we look at each other and go ‘I don’t know if I can do it again another month…’”
“A lot of the families have to sacrifice and work multiple jobs… And just scraping together enough money to just make tuition, just the basics.”
“It is discriminatory, that parents who want to choose an alternative to public school for their children, would not in any way receive any compensation for that, whether it be tax credit, whether it be a voucher…”
In the 1840s, nativist movement leaders formed official political parties and local chapters of the national Native American Party (later the American Party), although they continued to be commonly known as the Know-Nothing Party. Politicians sought to insert provisions into state constitutions against Catholics who refused to renounce the pope. The Know-Nothing movement brought bigotry and hatred to a new level of violence and organization.
The party’s legacy endured in the post-Civil War era, with laws and constitutional amendments it supported, still today severely limiting parents’ educational choices. A federal constitutional amendment was proposed by Speaker of the House James Blaine prohibiting money raised by taxation in any State to be under the control of any religious sect; nor shall any money so raised or lands so devoted be divided between religious sects or denominations. These were then named the Blaine Amendments of 1875.
in recent decades, often in response to challenges to school choice programs, the U.S. Supreme Court has demonstrated great interest in examining the issues of educational alternatives and attempts limit parental options. Massachusetts plays a key role in this debate. The Bay State was a key center of the Know-Nothing movement and has the oldest version of Anti-Aid Amendments in the nation, as well as a second such amendment approved in 1917. Two-fifths of Massachusetts residents are Catholic, and its Catholic schools outperform the state’s public schools, which are the best in the nation.
Click here to read a transcript
Posting Patient Prices: Transparency Cure for Hospital Blank Checks
Joe Selvaggi: [00:00:00] This is Hubwonk. I’m Joe Selvaggi. Welcome to Hubwonk, a podcast of Pioneer Institute, a think tank in Boston. Consider a policy shift that promises to enhance healthcare for Americans, extending their lifespans, and generating savings of up to a trillion dollars. Advocates for healthcare price transparency argue precisely this.
Their proposals hinge on the belief that clear pricing fosters competition, drives down costs, elevates quality, and ensures accountability in services rendered. This concept of transparency is commonplace in modern consumerism, from online groceries to international flights. However, healthcare, unlike retail, lacks upfront pricing, leading to unchecked expenses and errors.
The ramifications of this absence of market discipline are evident in the U. S., where healthcare expenditure per capita is double that of other affluent nations, despite similar or lower [00:01:00] life expectancies. How might price transparency reshape healthcare costs? What obstacles impede efforts to empower consumers with pricing information?
And how might individuals and organizations eager to realize savings seek value in the future? My guest today is Cynthia Fisher, an accomplished entrepreneur, philanthropist, and founder and CEO of PatientRightsAdvocate. org, a nonprofit dedicated to healthcare price transparency. Ms. Fisher, along with Dr.
Arthur Laffer has co-authored a new report titled “Healthcare Price Transparency and Competition, How Real Price Transparency Can Reduce American Healthcare Costs by Over a Trillion Dollars Annually, and Extend Life Expectancy.” This report argues that consumer choice and market discipline can realign healthcare costs with historical norms while delivering the quality and accountability consumers demand.
We will delve into the obstacles facing price transparency reform and examine the [00:02:00] efficacy of regulatory and legislative initiatives driving change. When I return, I’ll be joined by the founder and CEO of PatientRightsAdvocate. org, Cynthia Fisher. This is Hubwonk. I’m Joe Selvaggi, and I’m now pleased to be joined by the founder and CEO of PatientRightsAdvocate.org Cynthia Fisher. Welcome to Hubwonk, Cynthia.
Cynthia Fisher: Thank you, Joe. Pleasure to be here.
Joe Selvaggi: Okay, well, I’m thrilled to have you. today we’re going to drill down into the need and potential benefits of price transparency in healthcare. Very, interesting topic. But before we go into detail, you are a founder of an organization.
let’s start off by, learning a little bit more about the patient rights advocate that you started. what’s your, mission? Joan.
Cynthia Fisher: Yes, our mission is to have price transparency throughout our healthcare system and empower patients and all consumers of healthcare and coverage to be able to lower their costs.[00:03:00]
by benefiting from competition and consumer choice, and to be able to be protected from overcharges in medical billing and claims payments. So if you think about it, price transparency is truly transformative because it shifts power to the consumer to be protected from overcharges and to be able to greatly lower their costs.
Joe Selvaggi: Well, that’s a great summary. I enjoyed reading your most recent report. You wrote it with well-known economist, Dr. Arthur Laffer, Professor Laffer. It’s entitled, it’s a pretty bold title, “Healthcare Price Transparency and Competition How Real Price Transparency Can Reduce American Healthcare Costs More Than 1 Trillion Annually and Extend Life Expectancy.”
That’s a big claim. So it caught my attention. I found the piece to be a very persuasive read. our listeners, we talk about healthcare a lot on the podcast, and our listeners probably already know. We spend about $4 trillion a year. That’s T trillion. But t [00:04:00] in an economy that’s only $27 trillion large.
So we know that we spend a lot, but we also know about half of that is in the private sector. Half of that it’s public, Medicaid, and these kinds of things. But you’re gonna, out of that $4 trillion, you’re gonna save us. A trillion. At a high level, where does that number, that amount, come from?
Cynthia Fisher: Joe, there was an article in the Journal of American Medical Association about 25 percent of our healthcare costs are purely administrative waste. 25 percent of an over 4 trillion a year spend is a trillion dollars. And in today’s world, we have not had. a functional market in healthcare. It is extremely dysfunctional because the true purchasers of all of healthcare, which is the patient and the employer and union [00:05:00] plan, as well as the federal government, when we look at the purchasers have had no concept of actual prices that they would pay in advance of care, or to see what the competitive prices are, In a market economy, that has enabled both hospitals and insurance companies to keep hiding prices and many middle players in between those prices and bills that add administrative waste and administrative costs.
to procuring care. And what have we seen over the past couple of decades? If we’ve seen high single and double-digit increases in coverage costs and premiums that have increased so much when you look at the share of workers wages and employers’ growth or budgets, public sector budgets, they’ve been harmed by these runaway costs that have been [00:06:00] far greater, three to five times.
That’s higher than inflation. That’s ridiculous. So that’s a big part of it because it’s really quite simple. So the true purchasers haven’t seen any prices, but now we have that right by law, which is a really transformative change.
Joe Selvaggi: Some would push back and say, yeah, we spend a lot on healthcare, but we’re a wealthy nation.
We like healthcare. So we’re spending all this money and therefore we should be healthier. is there any evidence that all this extra spending we do, is improving our health?
Cynthia Fisher: Well, let’s look at the numbers on a macro level, Joe. If we look at the American spending on health care, we’re spending over two times more than any other developed nation.
And yet we’re dying four years earlier than the average life expectancy of other developed countries. That [00:07:00] says, if you look at the correlation of our death rate, that perhaps we are, quality of care isn’t as high as other nations as we’re dying earlier is one of the factors. But why? Why are we paying and why has it even been tolerable to pay over two times more?
And a lot of that is because as long as hospitals and insurance companies and all the middle players continue to hide prices, they can charge whatever they want. And quite frankly, it’s the industry. moving toward profits over patience and keeping the billing data and the prices away from the true purchasers.
the good news is, this is all starting to change. And that is because of the Implementation Bylaw of Price Transparency over three years ago. Look, Jeff, every one of us, everyone who [00:08:00] gets CARE, simply wants to know what are we going to get and what’s it going to cost. When we see prices and price transparency will clearly usher in the next question is what are you going to get for that price?
And that would be quality discovery as well.
Joe Selvaggi: I found your paper very persuasive. Some of the graphs very early on in the paper talk about this. LifeCross or HealthCross. It shows an inverse relationship between what we spend and our life expectancy. What we spend is consistently going up. Our life expectancy, relative to that, spending is going down.
clearly, we’re not getting good value. You also point to a historical trend that we, relative to our wealthy peers, again, if we’re talking about life expectancy, if we’re spending, if we’re dying earlier than our peers, We’re spending far more, I think, in some of your observations, nearly twice as much as our wealthy peers in this world.
Was this always the case? Has the U. S. always spent twice what our peers spend, or is this a recent phenomenon [00:09:00] with an inflection point?
Cynthia Fisher: This is more of a recent phenomenon over the past couple of decades, and a lot of it’s due to government policies, that have enabled a broken system, and the system’s broken as long as the consumer, who’s the patient, employers, and unions, as long as the consumer has been not able to have access to prices in it and actually also have accountability and integrity in the billing practices. none of us would tolerate that in any other facet of our lives. Every other facet, whether we go to the grocery store or the gas station or buy online retail, has prices and markets and then when we get the bills we check it to the price we agreed we thought we would pay and we have the ability to have remedy and recourse.
However, in healthcare, that’s been blocked because the information has been blocked all along, and that’s game over now. We’re in a new revolutionary time where now prices are beginning to be revealed by law by all [00:10:00] hospitals and insurance companies. And we’re finding substantial, interesting findings from all of this discovery.
Joe Selvaggi: So I want to go there, but I want, let’s, I want to drill down a little bit more. We’ve got, the provider, the doctors, and hospitals that are, curing us, and we’ve got our, us, but there’s so many people in between. we’ve talked in this, A lot about these intermediaries or these middlemen.
Of course, we have insurance companies. We don’t enter the healthcare system by ourselves. We seem to always be guided by our health, insurance. We have, intermediaries like pharmacy benefit managers who decide which drugs we can have and at what price. To what extent is this sort of, blurring of lines?
Let’s imagine in a brave new world where the hospital does offer prices. Aren’t all these intermediaries they say they represent us, but at some level they’re, shielding us from what we spend and the choices we make? Isn’t that part of the problem?
Cynthia Fisher: Absolutely. Absolutely. In fact, the first question you asked has this been the case over time.
You go back earlier, [00:11:00] Singapore adopted our model from the 60s, and they’re only spending around 5 percent of gross domestic product on health care. And they’ve engaged also the consumer living a healthier life as part of a cash model as well, cutting out many of those middle players. and compared to the U.S., we’re approaching 20% Gross domestic product spend somewhere between 18 and a half, but it’s projected to be at 20 percent and even, and several years in the future, it’s even projected to be as high as 25%. But when you look at that, the American worker is working at 20 percent of gross domestic product spend.
That means we’re working one day a week just to pay for health care. One in five days is working just to pay for health care. compare that to Singapore, at 5 percent of gross domestic product, it actually harms the American workers, it harms the American [00:12:00] businesses on growth, because we’re hemorrhaging on overpaying for healthcare, which could otherwise go into wages, and otherwise go into school budgets, more teachers, better academic programs, and maybe infrastructure bill, bridges, road repair when we look at having opportunity cost of loss because we’re way overspending for healthcare.
And so this is a moment in time where we’re at this incredible inflection point, Joe, where price transparency is truly revolutionary because it enables all of us to be able to, for the first time, consider the ability to shop And the ability to put a halt and question our bills to make sure that they were charged at the right price and it wasn’t price gouged or an error or overcharge.
Joe Selvaggi: I want to take that, I like to use simple analogies that our listeners might understand. And I’d say, okay, I like to compare healthcare [00:13:00] maybe to a grocery store where we walk into a grocery store. None of us would walk into a grocery store. Where there were no prices, right? You want to know whether the Wheaties or the Weetabix are more expensive, ultimately, so that you can choose what you want to spend on, right?
You, maybe you want the premium product for this and not for that, or you may want something on sale, a lot more of it, or less of it if it’s not. say more about why price Whether it’s healthcare or anything else, why it’s so valuable for an individual consumer when they enter any market and then take it to healthcare.
Why is that information, I mean, can’t someone argue against this saying, look, I need what I need. I need new hips or a knee or a, MRI. I may have a choice in a grocery store. I don’t have a choice in healthcare. why is health, why is the price so valuable even in healthcare?
Cynthia Fisher: no matter what type of healthcare system we have, prices create a sense of fairness and allow for the consumer to have financial certainty. Think [00:14:00] about it. When anybody goes in to get care today, we have been, until we get these prices, across the country, and we see full compliance by hospitals and insurers, without the price, a patient and a consumer are blind to no prices and often surprised by bills blindsided far higher than they expected to pay. And then I question this, Joe, why do we all have to go in and pick up that electronic pen? and sign a blank check? Goodness, the healthcare system now that’s gone electronic doesn’t even show us what we’re signing anymore and allows us to read what we’re signing.
But we are signing that we will be financially responsible to pay whatever the hospital chooses to charge us. even beyond what our insurance coverage would carry. And so in the world where there [00:15:00] are high deductible health plans and co-pays and co-insurance and do know, the American worker pays for almost all of healthcare because we pay for out of wages automatically deducted as a portion of share with our employers.
And then we pay for the federal government and the state and local government. healthcare plans with our taxes. So we have to have these prices in order to benefit from competition and choice. And look, a simple example is an MRI. What is a fair market price for an MRI? And what we’re learning is that in stand-alone imaging centers, a cash price, all in, for the MRI, including the read, is around 300.
And yet, you could go to Mass General Brigham, and our Blue Cross plan, our charge in our insured [00:16:00] rate is over 7,000 for that same MRI.
Joe Selvaggi: Right.
Cynthia Fisher: I think this is a That’s a big difference.
Joe Selvaggi: This is a profound point because I think it when some of our listeners hear prices and they say look I need what I need What difference is the price?
that’s what they’re charging. But I think what you’re powerfully saying is you have a choice if you want to get an MRI, for instance, as you quote unquote need one. It’s not, where in Mass General I’ll go. It’s Mass General versus BU Medical or the MRI center down the street.
If you have the prices of all of them, you may still opt, just like you may fly first class or drive around a gold-plated Cadillac. But, ultimately it’s money spent. We all spend it. You can choose to be more efficient if you’re provided with the price. You can still disregard the price. It’s great, but you ultimately have an opportunity to save yourself, your plan, your deductible, all the way down the road, and collectively, all of us, a lot of money if you have at least the information to make an informed choice for a value.
Is that fair?
Cynthia Fisher: That’s [00:17:00] absolutely fair, and I’ll tell you a funny story. My husband needed two MRIs, and in Massachusetts, It was a pretty high price if he stayed at Mass General. And then we started saying, what if we looked around Massachusetts as a market? What is the lowest price we could find?
And we found 950 is the lowest price. Woonsocket, Rhode Island, 250. So we happened to be on vacation in Florida, and I said, you know what? Let’s look for a cash price and why don’t you get your MRI nearby? We found one for 300 and a double read because a radiologist was going to provide two reads. My husband was very proud of his second MRI, he was able to lower that to another center and get it for 250.
So that case in point, you can’t teach an old dog a new trick, Joe.
Joe Selvaggi: Oh, no, that’s good. Good on you, husband. I also didn’t want to glide over the other point you made, which is accountability. Meaning, if I go in again, I’m stuck on this grocery store analogy. If I go into a grocery store, and [00:18:00] the Wheaties say, Hey, it’s me, Four bucks and ultimately I’m scanning through and it comes up eight bucks, I’ve got something, to go on I said look this the price shows there on the shelf for you just charge me You just overcharged me, if you don’t in a sense have information You are literally writing a blank check You have no idea what it should be costing you so you have no idea if you’ve been overcharged.
Is that a fair assessment?
Cynthia Fisher: Absolutely. And what if those charges when you went to the grocery store were thousands of dollars higher than you expected when you were thinking, I got two bags of groceries? Maybe it’s 120 a spend total. And then you get a 1,200 bill. If you went to the grocery store it would be, built like healthcare, right?
All the middle players in between, and then figuring out the maximum amount that you could be charged. think about it. Hospitals now have departments called Revenue Cycle Optimization, which to me is interpreted as charging whatever you can, as high as you can get away with at each patient encounter.
And then every middle player in between is looking at how can they profit from it. [00:19:00] Even more with additional modifiers or spread pricing on that patient encounter. And so the next thing you know, you’re paying thousands of dollars for something that should only be a couple of hundred. And so the other part on prices is Joe, now all of the hospitals are three years into having to show all of their actual prices and compare them by every insurance carrier and every plan as well as a discounted cash price. And we’ve learned a lot. Around the country, we do it every six months and a consumer-type report. And the last report we did, we showed that About 34. 5 percent of the nation’s hospitals are fully complying with the law where they’re showing all of their actual prices, so we could start to see tech developers, the more prices that are out there, We could see tech developers create, say, a Google [00:20:00] search engine for things like an MRI or a colonoscopy.
Joe Selvaggi: And Cynthia, I want to go, yeah, I’m glad you brought that up because, this is not a, an episode of despair. we’re not just going to throw up our arms and say that nothing good is happening, because as you say, some are complying with the CMS requirement. you, in your paper, mentioned an organization, a large organization.
I think one was a municipal, like a state, insurance for their employees. One was a union and the other was just a private insurer. They have used the power of price transparency to substantially save, in one case you say it saved them from insolvency, but it saved them a ton of money.
Share with our listeners at least, one of the examples of where price transfer transparency is actually working to inform large For instance,
Cynthia Fisher: we gave the example of S E I U 32 B J. 200, 000, workers in the New York, New Jersey area that are in real estate buildings. Janitors, doormen, and women that, tend to these buildings.
They were [00:21:00] able to save by getting the billing information and negotiating with hospitals that provided great care at reasonable prices. Looking at childbirth, hip replacements, those types of things. Cancer treatments are very expensive and find you where the same quality of care is better priced.
They save 33 million dollars a year for three years. And what did they do with that money? They increased wages to the highest wage increase ever and gave a 3,000 bonus to every employee.
Joe Selvaggi: That’s a small amount for someone who cleans office spaces. That’s a lot of money.
Cynthia Fisher: That’s a lot of money and a lot of happy people, a lot of happy workers that love their health plan.
And on top of it, the real estate building owners because this is a combined plan with the ability owners and the workers got to save a two-month premium each year of not having to pay for two [00:22:00] months because they saved so much money in addition to raising wages and bonuses. So this is a huge win. we’ve seen the states of Montana and Maryland Bartlett ran that health plan, and just by getting a hold of the numbers and running her health care plan by the numbers and creating pricing that was really What was a fair price for her state workers, 30,000 state workers?
She saved 121 million in 18 months for the state plan and put money back into the tax coffers, into reserves.
Joe Selvaggi: That’s your money, that’s my money. It’s people’s hard-earned pay that’s otherwise wasted. you, we’re, I love the success stories, but again, we’re going to focus on the success and then talk about where we still have to go.
We’re talking about the sort of fruit of the rule that was put in by CMS. This is, as you say, it came into effect, on January 1st, 2021. I think it was two parts. It required that all hospitals [00:23:00] post a machine-readable file with prices for all services and items they offer.
And they also had to have a cost estimator tool for the 300 most shoppable services. Say more about the rule and, what your thoughts are on it. is this the answer or, a hell of a start?
Cynthia Fisher: the true, important part of this rule is, that machine-readable file that posts all of the actual prices by every service and every code and code name and code, across every insurance carrier and plan that the hospital offers. And you can compare that to the discounted cash price if you just want to pay cash. So being able to have every hospital post those files in standard format, allows a tech economy to create mobile shopping tools.
And the whole goal here, think about what we have in the airlines, for instance. We can go and we can trust when we buy an airline ticket and we have [00:24:00] choices to be able to purchase. And just like healthcare, airlines have wide variation, look right now, we’re in storms, we have weather that might cause more turbulence or delayed flights, whatever, but we know that the airline prices have wind to deal with, fuel costs differ, wide variation, however they’re able to price.
And price, prices in airlines since the deregulation back in the 70s, when prices weren’t known for airlines, only by the travel industry, and once prices became transparent, And we purchased them directly, you cut out the middle player, which was the travel agent, right? And we went directly online, directly accessing prices for airlines, and what happened is that the real value of pricing of airlines in real dollars is now half of what it was in the 70s. And hundreds of millions of [00:25:00] people are flying, and planes are safer. And this is competition, this is choice, and it is readily available access to the consumers. And you have trust and accountability in those billings. The same can happen for health care with these hospital files being unleashed.
And you can imagine even an Uber platform. Let’s go back to the MRI. I would love to see an Uber-type platform for you, Joe, or me. If we needed an ACL looked at for our knees for an MRI image, why not allow a platform like an Uber type of platform to let the healthcare sector bid on our business at a time that we could go get that care and show us at what price and what quality of service that they would choose to provide us.
So you can imagine that.
Joe Selvaggi: You make a great point. You actually wrote an, I’m referencing one paper, but I’m now going to reference another paper by PRA that I think is also compelling. You took that [00:26:00] information again, now some of it’s online, not all of it, not as much as you want, but you looked at. In the information that’s provided, you found huge discrepancies.
Call it MRI. I don’t remember which procedure was in your paper, but you saw not just, again, we use BU and Mass General as a sort of, okay, I would rather go to one than the other. But even within, let’s say, Mass General, again, I’m using that just because that’s our local hospital.
For the same procedure, a difference of 10 times, 20 times, for the same exact procedure based on who it is. again, to use my crazy grocery store analogy, can you imagine, one customer being charged 10 times more for Wheaties than another customer? It would be absurd, and yet, it’s going on all the time.
Say more about your observations about the range of prices, intra-hospital and inter-hospital.
Cynthia Fisher: Well said. Intrahospital, what we were finding is that on average that is a ten times difference for the same service by the same providers for different patients. As you said, [00:27:00] none of us would tolerate that in a grocery store to see someone pay 5 for a half gallon of milk and another person pay 50.
Worse, let’s look at the gas station. I like to think about if I pulled up to pump my gas and got 15 gallons of gas, say it was 50, and you got the same gas right behind me, filled up your tank for the same exact amount of gas, and you were charged 500. In using the same gas station, you would be outraged.
I would even get out of my car to help you to get the appropriate price. That’s what we’re finding, right? All of us want each other to be treated fairly. None of us want to have a ten times difference in pricing, than the next person for the same service with the same surgical team, for instance. And it’s happening every day because we have been blind to know this.
And, [00:28:00] once it’s really wide scale known among patients, they have the right to see these prices and among employers and unions as they compare, what is that third party insurance carrier negotiating on their behalf? And why is the carrier allowing gouging at 10 times more? Because there’s certainly profit in the lowest price.
Joe Selvaggi: I want, yeah, of course, that’s right, they, nobody’s providing services at law, so you, you’re 100 percent you’re not eliminating. Profit or reasonable profit, I want to push back. There’s one thing that I think was missing in my, layperson observation of this phenomenon.
To me, again, to use my grocery store analogy again, let’s imagine the grocery store. It’s just like you want it. Everybody, all the prices are posted and they’re all fair and they’re all the same for all of us. Okay, we’ve gotten there. But I go to the checkout and all I do, regardless of how much is in my cart and what I’ve chosen, I pay a hundred-dollar copay and the rest goes to my insurance company.
What then, in that sort of. that’s me making an analogy to an insurance company. Once I get to my. Limits of [00:29:00] my copay, my incentive to shop has gone away. You don’t really address that in any of your papers. What would you say to those people? Again, you, I’m old enough to remember when medical insurance used terms like major medical, meaning, yeah, if you got really sick, we cover it.
But, you’re on your own for the basic stuff. We’ve gone to now almost the first dollar payment. Doesn’t that make the consumer and those of us who might benefit from prices indifferent to the difference in what we pay?
Cynthia Fisher: you raise a good point, Cho, and it can, absolutely, but where we’re not indifferent is what we make in our jobs and what we have in our savings and take-home pay, so when we can see actual prices and price comparisons, the real world.
Inflection to change is going to be coming from the employer and the unions as groups, as a collective with, for instance, SEIU 32BJ, 200,000 employees. And so when they were able to save [00:30:00] a hundred million dollars, that’s real money, and they’re able to be able to lower everyone’s cost of what comes out of their paycheck.
Joe Selvaggi: And when the consumer is exposed to the prices, again, they make better choices. Of course, we have all kinds of studies, like LASIK studies, where if insurance doesn’t cover it and you’ve got to shop around, magically, LASIK prices have come down, 95%, because you’ve got to pay it. you can’t just push that off.
I think, at least having the information, it’s going to govern prices. And of course, we all know, as amateur economists, that prices are determined at the margin. There’s some people who never buy something, some people will buy at any price. Prices are determined by the person at the margin, just someone who is influenced by price.
And if it’s the SEIU, great, they’re going to influence price, even if I, as Joe Consumer, might not have an interest. it will work even if I don’t care.
Cynthia Fisher: exactly. And, what’s really amazing is, look, it’s a lot of large employers too, and medium and small employers are [00:31:00] starting to get ahold of these numbers.
And they also need access to control the checkbook because when the employers share in our billing and charges, they need to make sure they’re accurate. And, look, there are some provisions in a lot of insurance contracts that shouldn’t be signed, like anti-audit provisions. Can you believe that?
Many of the insurance, big insurance companies say you can’t audit what you’re deciding with the hospitals we’re going to charge you. that’s, crazy. The employers that are actually saving 30 to 46 percent for all of their workers on what they were paying for coverage costs get a hold of the billing and they look at those charges before they’re paid to make sure they’re not being overcharged.
And the other part of it is to make sure the prices are right. Let me give you an example. Rosencare down in Orlando, Florida, Harris Rosen, 6, 000 employees, [00:32:00] pays less than half of the national average. for coverage for all of his workers. And how did they do that? For all of their families, they were front-loaded with great primary care and access to physical therapy, occupational therapy, and training, readily available to their employees, and they got a hold of the prices.
and they directly contracted and cut out many middle players with many of the hospitals. So they have been able to save over decades and put that into higher wages and growth for their hotel chains.
Joe Selvaggi: So we agree that, okay, I hope our listeners are excited about this, brave new world of, price transparency.
But yeah, you’ve, and your analysis is, this is a three-year-old law, we only get 30 to 36 percent compliance, and actually, your analysis suggests some hospitals are slipping backward, meaning, they don’t voluntarily choose to make less money, so surprise, surprise, if nobody’s [00:33:00] watching, they become less transparent.
What else is going on beyond the CMS rule? I’ve read something about something going on in the Senate, which is going to, rather than an executive oversight, executive branch oversight of CMS, we’re talking about the legislative branch passing laws that will actually have some teeth that might influence price transparency.
What can you tell us about what’s going on in Congress?
Cynthia Fisher: Yes, in Congress, it’s, this is such a bipartisan issue, and first of all, the polling for across the country, time after time, is over 90 percent of Americans want prices in healthcare, because they believe, very firmly, they will lower their costs when they have the ability to choose where to go, and at what price.
The last polling came in at 94%. Bipartisan. for Americans wanting health care price transparency. Congress has been frustrated that the Health and Human Services has not robustly enforced the law. [00:34:00] However, President Biden did increase the fines to over two million dollars. And when he did, they fined two hospitals.
Look, nearly two-thirds are yet to show all of their prices. Most of the hospitals in the country do have pricing files, but if they’re missing swaths of pricing data, then we can’t have a functional competitive market yet, right? but we did find that when the Biden administration fined two hospitals over a million dollars, It worked.
That higher fine worked because those two hospitals came into compliance within weeks. And today, they still have exemplary files, and that was two years ago. However, we have not seen that level of fining and rapid enforcement. I think they’ve only looked at around 20 hospitals, but having de minimis fines, and so it’s been slow walked.
So Congress has come [00:35:00] forward to put forth two bills. And the House passed a bipartisan bill for lowering costs through more transparency. And the Senate, Senator Braun from Indiana, and Bernie Sanders, who’s chairman of the Senate Health Committee, came together and even went further to create a better bill that allows for all actual prices to have to be, provided by hospitals and insurance companies and much higher fines, as well as a daily feed of the billing information and claims and electronic funds so that the industry has wanted to give estimates.
And why the Senate bill is so important is the Senate bill has actual prices and we just saw Health and Human Services roll back actual prices to being able to be [00:36:00] substituted with an estimate. Estimates have no accountability, Joe. Estimates do not allow for a true market or market forces. And so that’s why the Sanders Braun bill is so critical because it says actual prices.
So we have an actual market and when patients are given an estimate, I’ll give you an example. Cindy Reddy in Colorado came forward and testified. She was given an estimate for 5,000 and her actual bill came at 74,000. The insurance company that told her in advance the estimate and that they would cover denied her care after the fact.
So the hospital put a lien on her home for 74,000. She came to us, and [00:37:00] we have all of the country’s hospitals’ prices online. And fortunately, the hospital had complied and had her plan and those prices. And line item by line item, when she compared her bill, it should have been around 8,000 by the plan with an 800 copay.
She was able to prove to the insurance company and the hospital that they way overcharged her. It took seven months. But she finally got them to release the lien on her home, and the insurance company did cover at the prices they negotiated with the hospital.
Joe Selvaggi: I think that’s an interesting point, a very salient point, because, again, an estimate is by all rights, nonbinding.
You, if I estimate you change the oil in your car, it would be 25 bucks and now it’s 250 bucks. I’m like, what do you say? Oh, I gave you an estimate. That’s no promise. If the price is the price, that’s a contract. It’s saying, I will do this for that. so you’re saying with [00:38:00] the Senate, bill, you can’t slip in estimates and as a sort of, a catch-all phrase to say, and by the way, whatever we charge.
Regardless if it’s, as you described, 15 times more than the estimate, sorry, it was a bad estimate, but it was an estimate, so you don’t have that sort of escape hatch in the new bill.
Cynthia Fisher: That’s correct. And the other part of it is that prices, actual prices, are negotiated. And so we find those actual prices today in the insurance part of the insurance companies have to post all of their prices.
And so when we don’t see them missing in the hospitals, why then should the hospital be able to, in the new rule change in 2025, be able to substitute an actual price with an estimate? That’s a rollback, that’s harmful, and that’s what the Biden administration just did in their latest rule, is they allowed for [00:39:00] an estimate substitute.
Cynthia Fisher: That would throw a big wrench. in all of the progress that’s been made thus far. And for people like Cindy Reddy, who because she saw the actual prices, was able to prove that she was overcharged and that the estimate was meaningless.
Joe Selvaggi: Yeah. so what you’re saying is CMS did a little bit of backsliding by allowing estimates and I think it’s important for our listeners, you know, again, I don’t know, we know what we say, but we don’t know how it’s heard. It’s not that we’re price fixing. We’re saying, look. charge what you want, just let everybody know, and let, then they have, of course, the right of exit, they can go somewhere else, or not do the procedure at all, or go to a neighboring hospital.
we’re not looking for some philosopher king to determine what things should cost, we’re just saying, tell us what you plan to charge us, and give us a choice of, you Choosing where we want to go, right? I mean, this isn’t a command economy. This is a market economy that we’re advocating for.
Cynthia Fisher: Absolutely. let’s let the market [00:40:00] forces work. And instead of after the fact, the prices are known by the insurers in the hospitals, and they have traditionally not let us know until after the fact. It’s about moving those prices to the front. And 90 percent of care is planned. And even in emergent care, when you have prices, you normalize and have market forces work, right?
So, this is to pull back the curtains, let the market forces work, and restore trust and accountability in our healthcare system.
Joe Selvaggi: Yes, of course, it’s strange bedfellows when you have Bernie Sanders and a Republican Senator agreeing, but I think, again, from my perch, I see, People presented with the same exact facts that you and I have discussed and seeing two different worlds.
You know, my friends who are market-oriented understand prices are what constrain all producers, right? the Wheaties aren’t six dollars instead of four dollars because you buy something else. You can choose, choice is what [00:41:00] constrains prices in markets. We don’t have prices in healthcare, so it’s not constraining.
So, this is market dynamics going out the window, and essentially hospitals can charge whatever they can get away with. Your price strategy, and transparency, will impose the same market discipline on hospitals that are imposed on every other producer. On the left, I think they think, Someone like a Bernie Sanders I can imagine seeing this as a really good idea, largely because they imagine all markets to be, or capitalism itself, to be predatory in a sense to, the rich and powerful preying on the weak and powerless.
And in his mind, I imagine price transparency offers an opportunity to expose and shame, people who are rent-seekers, all the way, all the middlemen who are making quote-unquote too much money. If you have price transparency, there’s no normative, element here. Sure, you charge as much as you can get away with, and the consumer goes somewhere else.
you don’t need someone to police the system if you have price transparency. You’ve got markets. You’ve got, the discipline of markets. Do I have it about right, or do you see this sort of [00:42:00] seeing your advocacy for transparency seen through two different lenses, but at the end of the day, it doesn’t matter?
It works for both sides.
Cynthia Fisher: It does work for both sides. And, you mentioned, Bernie Sanders. He’s been very advocating to have the government pay for most of healthcare, and he advocates very strongly for price transparency because he doesn’t want the government to overpay when you get to see prices and markets come and function because they are functional, that the purchaser, the true purchaser, is the patient and the American worker and employers.
When we are able to see prices have choices and have competition, then we benefit. Competition benefits us all. And when markets are consolidated too, then oftentimes prices get higher. because it comes to be about, but without knowing the prices at all, you could almost say it’s extortion. Making every consumer sign a blank check, that they will open [00:43:00] up their checkbooks and their family savings and be responsible with all their assets to pay for that health care without having a price.
Joe Selvaggi: Well, we’re running out of time. I’ve enjoyed our conversation. I’m sure we’ve piqued the interest of our listeners. They might be interested to read this report that we cited and several of the others that talk about the range of prices and the lack of transparency in your analysis of how hospitals’ prices differ.
All that’s a really valuable resource. Where can listeners go to read more about a patient rights advocate?
Cynthia Fisher: Yes, they can go to our website at PatientRightsAdvocate. org, and they can see how to shop in these new times, by getting prices, and how to be protected from overcharges on our site, and also become an advocate.
And we encourage the Senate bill, anyone who wants to go to their senator and write their senator, encouraging them to sign on the bill and see these two bills come together to allow for price transparency [00:44:00] everywhere. True price transparency is a great way to take action, and it is effective.
Joe Selvaggi: That trillion dollars could be better spent elsewhere.
Again, the entire defense budget is, 800 billion. So this is, every year we spend, 25 percent more than the entire, we waste, not spend, waste more than the entire defense budget. Plus 25%. So that’s a lot of money. That’s a real dollar. It’s a trillion here, trillion dollars there. You got real money. So I’m very excited about the upside potential.
we’re on our way and I think you’ve, your advocacy is, helping to move the ball, and who knows, we may, I’ll invite you back in the future and you can see, tell us that we’ve succeeded. Now we know exactly how much we’re going to pay before we walk through the hospital’s front door.
So thank you very much for joining me today, Cynthia. You’ve been a really great guest. Thanks so much, Joe. This has been another episode of Hubwonk. If you enjoyed today’s show, there are several ways to support Hubwonk and Pioneer Institute. It would be easier for you and better for us if you subscribe to Hubwonk on your iTunes Podcatcher.
It would make it easier for others to [00:45:00] find us if you offer a five-star rating or a favorable review. We’re always grateful if you share Hubwonk with friends. If you have ideas, comments, or suggestions for me about future episode topics, you’re certainly welcome to email me at Hubwonk at pioneerinstitute.org. Please join me next week for a new episode of Hubwonk.
Joe Selvaggi interviews entrepreneur, philanthropist, and founder of PatientRightsAdvocate.org, Cynthia Fisher, discussing her research and advocacy for enhanced healthcare price transparency. This initiative has the potential to improve life expectancy and save Americans over a trillion dollars annually.
Guest:
Cynthia A. Fisher is Founder and Chairman of PatientRightsAdvocate.org, a nonprofit organization seeking healthcare price transparency, giving power to American consumers – patients, employers, and unions – to lower their costs of care and coverage through a functional marketplace and choice. Cynthia is best known for her pioneering work as Founder and CEO of ViaCord, Inc., a leading, price transparent umbilical cord blood stem cell banking company which she started in 1993. In 2000, she co-founded and was president of the cellular medicines company, ViaCell, Inc., of which ViaCord became a division. ViaCell went public in 2005, was acquired by PerkinElmer, and exists today under the ViaCord brand. Cynthia also serves on the public company boards of the Boston Beer Company, Inc. and Easterly Government Properties, Inc. She serves on the Florida Council of 100 and the board of the National Park Foundation, and she previously served on the board of directors of Water.org. Cynthia holds an MBA from Harvard Business School and a BS and honorary Doctorate of Science from Ursinus College.
Pioneer Institute Statement on the Commonwealth of Massachusetts’ March Tax Revenue Collections:
Preliminary March tax revenue collection numbers were released on Wednesday (4/3/24) by the Massachusetts Department of Revenue (DOR). The Commonwealth took in $4.065 billion in total tax receipts for the month. This figure is $129 million or 3.3% above the current monthly benchmark – the first time this fiscal year that actual revenues exceeded estimates.
While the slight uptick is good news because it breaks an eight-month streak of declining revenues, let’s not queue up the confetti quite yet. All major tax revenue categories other than withholding taxes are below estimates. Withholding tax collections are likely buoyed by the worker shortage and higher salaries that workers can now command. The weakening in other categories is troubling given stock market performance over the past year, record high housing prices that increase capital gains and the general health of the economy.
It is important to note that the tax revenue benchmark for FY2024 was revised downward in January to $39.834 billion from $40.41 billion to reflect the $576.8 million reduction in revenue from the recently enacted tax package and the decline in year-to-date tax receipts as well as the $1 billion revenue estimate for the 4 percent income surtax. Despite this downward revision, year-to-date revenue collections totaled $27.531 billion and fell short of the revised benchmark by $145 million. Without the money from the income surtax, this year-over-year decline in tax collections would be greater still.
March is a month when many corporate and business taxpayers are required to make estimated payments and could be a harbinger of things to come. Both categories were below projections. Corporate and business tax collections brought in $1.235 billion – $2 million, or 0.1%, below benchmark, and $5 million, or 0.4%, less than March 2023.
Estimated income tax payments, often called non-withholding income, that includes dividends, interest and capital gains, totaled $96 million for March. This is $6 million, or 5.6%, below benchmark, and $0.2 million, or 0.2%, less than March 2023.
Even sales and use tax collections, at $664 million, were $26 million, or 3.8%, less than March 2023, and $5 million, or 0.8%, below benchmark despite persistent inflation that raises the cost of goods.
The catch-all category of “all other” taxes fared slightly better. Collections for March totaled $175 million, $3 million, or 1.9%, above benchmark, but $19 million, or 10.0%, less than March 2023.
In response to these weakening revenue collections, the Healey administration implemented a hiring freeze for certain positions in the executive branch of state government. Whether this action is enough to balance the FY2024 budget will largely be determined by whether the rebound continues with April tax collections.
One thing is certain. Unforeseen and added spending, coupled with the exhaustion of federal funds, will make FY2025 budgeting much more challenging than in recent years. The only question is how much lawmakers will have to tighten the purse strings for FY2025.
This week on The Learning Curve, guest co-hosts University of Arkansas Prof. Albert Cheng and Charlie Chieppo interview U.S. Chamber Foundation VP, Hilary Crow. She discusses the state of K-12 civics, emphasizing the Chamber Foundation’s role in addressing America’s wide civic education deficits. Crow highlights a recent national civics survey, alarming civic literacy gaps, and links between political unrest and our nation’s educational shortcomings in K-12 civics. Ms. Crow also stresses the importance of local engagement and initiatives like the Chamber Foundation’s National Civics Bee.
Stories of the Week: Albert addressed a video from CBS News on Johnathan Haidt’s new book The Anxious Generation; Charlie reviewed an article from The Hill about wasted COVID relief funds.
Guest:
Hilary Crow is Vice President of Civics at the U.S. Chamber of Commerce Foundation. Her responsibilities include leading The Civic Trust, an initiative focused on civics literacy, civics at work, and elevating civics as a national priority. As part of this work, Hilary oversees the National Civics Bee, an annual competition aimed at increasing civics literacy among middle school students, their families, and communities. The Bee is currently running in more than 100 communities across 28 states in partnership with state and local chambers of commerce. The Bee will scale to all 50 states by 2026. Hilary earned dual bachelor’s degrees in political science and philosophy from The American University in Washington, D.C.
Tweet of the Week:
Posting Patient Prices: Transparency Cure for Hospital Blank Checks
/in Featured, News, Podcast Hubwonk /by Editorial StaffClick here to read a transcript
Posting Patient Prices: Transparency Cure for Hospital Blank Checks
Joe Selvaggi: [00:00:00] This is Hubwonk. I’m Joe Selvaggi. Welcome to Hubwonk, a podcast of Pioneer Institute, a think tank in Boston. Consider a policy shift that promises to enhance healthcare for Americans, extending their lifespans, and generating savings of up to a trillion dollars. Advocates for healthcare price transparency argue precisely this.
Their proposals hinge on the belief that clear pricing fosters competition, drives down costs, elevates quality, and ensures accountability in services rendered. This concept of transparency is commonplace in modern consumerism, from online groceries to international flights. However, healthcare, unlike retail, lacks upfront pricing, leading to unchecked expenses and errors.
The ramifications of this absence of market discipline are evident in the U. S., where healthcare expenditure per capita is double that of other affluent nations, despite similar or lower [00:01:00] life expectancies. How might price transparency reshape healthcare costs? What obstacles impede efforts to empower consumers with pricing information?
And how might individuals and organizations eager to realize savings seek value in the future? My guest today is Cynthia Fisher, an accomplished entrepreneur, philanthropist, and founder and CEO of PatientRightsAdvocate. org, a nonprofit dedicated to healthcare price transparency. Ms. Fisher, along with Dr.
Arthur Laffer has co-authored a new report titled “Healthcare Price Transparency and Competition, How Real Price Transparency Can Reduce American Healthcare Costs by Over a Trillion Dollars Annually, and Extend Life Expectancy.” This report argues that consumer choice and market discipline can realign healthcare costs with historical norms while delivering the quality and accountability consumers demand.
We will delve into the obstacles facing price transparency reform and examine the [00:02:00] efficacy of regulatory and legislative initiatives driving change. When I return, I’ll be joined by the founder and CEO of PatientRightsAdvocate. org, Cynthia Fisher. This is Hubwonk. I’m Joe Selvaggi, and I’m now pleased to be joined by the founder and CEO of PatientRightsAdvocate.org Cynthia Fisher. Welcome to Hubwonk, Cynthia.
Cynthia Fisher: Thank you, Joe. Pleasure to be here.
Joe Selvaggi: Okay, well, I’m thrilled to have you. today we’re going to drill down into the need and potential benefits of price transparency in healthcare. Very, interesting topic. But before we go into detail, you are a founder of an organization.
let’s start off by, learning a little bit more about the patient rights advocate that you started. what’s your, mission? Joan.
Cynthia Fisher: Yes, our mission is to have price transparency throughout our healthcare system and empower patients and all consumers of healthcare and coverage to be able to lower their costs.[00:03:00]
by benefiting from competition and consumer choice, and to be able to be protected from overcharges in medical billing and claims payments. So if you think about it, price transparency is truly transformative because it shifts power to the consumer to be protected from overcharges and to be able to greatly lower their costs.
Joe Selvaggi: Well, that’s a great summary. I enjoyed reading your most recent report. You wrote it with well-known economist, Dr. Arthur Laffer, Professor Laffer. It’s entitled, it’s a pretty bold title, “Healthcare Price Transparency and Competition How Real Price Transparency Can Reduce American Healthcare Costs More Than 1 Trillion Annually and Extend Life Expectancy.”
That’s a big claim. So it caught my attention. I found the piece to be a very persuasive read. our listeners, we talk about healthcare a lot on the podcast, and our listeners probably already know. We spend about $4 trillion a year. That’s T trillion. But t [00:04:00] in an economy that’s only $27 trillion large.
So we know that we spend a lot, but we also know about half of that is in the private sector. Half of that it’s public, Medicaid, and these kinds of things. But you’re gonna, out of that $4 trillion, you’re gonna save us. A trillion. At a high level, where does that number, that amount, come from?
Cynthia Fisher: Joe, there was an article in the Journal of American Medical Association about 25 percent of our healthcare costs are purely administrative waste. 25 percent of an over 4 trillion a year spend is a trillion dollars. And in today’s world, we have not had. a functional market in healthcare. It is extremely dysfunctional because the true purchasers of all of healthcare, which is the patient and the employer and union [00:05:00] plan, as well as the federal government, when we look at the purchasers have had no concept of actual prices that they would pay in advance of care, or to see what the competitive prices are, In a market economy, that has enabled both hospitals and insurance companies to keep hiding prices and many middle players in between those prices and bills that add administrative waste and administrative costs.
to procuring care. And what have we seen over the past couple of decades? If we’ve seen high single and double-digit increases in coverage costs and premiums that have increased so much when you look at the share of workers wages and employers’ growth or budgets, public sector budgets, they’ve been harmed by these runaway costs that have been [00:06:00] far greater, three to five times.
That’s higher than inflation. That’s ridiculous. So that’s a big part of it because it’s really quite simple. So the true purchasers haven’t seen any prices, but now we have that right by law, which is a really transformative change.
Joe Selvaggi: Some would push back and say, yeah, we spend a lot on healthcare, but we’re a wealthy nation.
We like healthcare. So we’re spending all this money and therefore we should be healthier. is there any evidence that all this extra spending we do, is improving our health?
Cynthia Fisher: Well, let’s look at the numbers on a macro level, Joe. If we look at the American spending on health care, we’re spending over two times more than any other developed nation.
And yet we’re dying four years earlier than the average life expectancy of other developed countries. That [00:07:00] says, if you look at the correlation of our death rate, that perhaps we are, quality of care isn’t as high as other nations as we’re dying earlier is one of the factors. But why? Why are we paying and why has it even been tolerable to pay over two times more?
And a lot of that is because as long as hospitals and insurance companies and all the middle players continue to hide prices, they can charge whatever they want. And quite frankly, it’s the industry. moving toward profits over patience and keeping the billing data and the prices away from the true purchasers.
the good news is, this is all starting to change. And that is because of the Implementation Bylaw of Price Transparency over three years ago. Look, Jeff, every one of us, everyone who [00:08:00] gets CARE, simply wants to know what are we going to get and what’s it going to cost. When we see prices and price transparency will clearly usher in the next question is what are you going to get for that price?
And that would be quality discovery as well.
Joe Selvaggi: I found your paper very persuasive. Some of the graphs very early on in the paper talk about this. LifeCross or HealthCross. It shows an inverse relationship between what we spend and our life expectancy. What we spend is consistently going up. Our life expectancy, relative to that, spending is going down.
clearly, we’re not getting good value. You also point to a historical trend that we, relative to our wealthy peers, again, if we’re talking about life expectancy, if we’re spending, if we’re dying earlier than our peers, We’re spending far more, I think, in some of your observations, nearly twice as much as our wealthy peers in this world.
Was this always the case? Has the U. S. always spent twice what our peers spend, or is this a recent phenomenon [00:09:00] with an inflection point?
Cynthia Fisher: This is more of a recent phenomenon over the past couple of decades, and a lot of it’s due to government policies, that have enabled a broken system, and the system’s broken as long as the consumer, who’s the patient, employers, and unions, as long as the consumer has been not able to have access to prices in it and actually also have accountability and integrity in the billing practices. none of us would tolerate that in any other facet of our lives. Every other facet, whether we go to the grocery store or the gas station or buy online retail, has prices and markets and then when we get the bills we check it to the price we agreed we thought we would pay and we have the ability to have remedy and recourse.
However, in healthcare, that’s been blocked because the information has been blocked all along, and that’s game over now. We’re in a new revolutionary time where now prices are beginning to be revealed by law by all [00:10:00] hospitals and insurance companies. And we’re finding substantial, interesting findings from all of this discovery.
Joe Selvaggi: So I want to go there, but I want, let’s, I want to drill down a little bit more. We’ve got, the provider, the doctors, and hospitals that are, curing us, and we’ve got our, us, but there’s so many people in between. we’ve talked in this, A lot about these intermediaries or these middlemen.
Of course, we have insurance companies. We don’t enter the healthcare system by ourselves. We seem to always be guided by our health, insurance. We have, intermediaries like pharmacy benefit managers who decide which drugs we can have and at what price. To what extent is this sort of, blurring of lines?
Let’s imagine in a brave new world where the hospital does offer prices. Aren’t all these intermediaries they say they represent us, but at some level they’re, shielding us from what we spend and the choices we make? Isn’t that part of the problem?
Cynthia Fisher: Absolutely. Absolutely. In fact, the first question you asked has this been the case over time.
You go back earlier, [00:11:00] Singapore adopted our model from the 60s, and they’re only spending around 5 percent of gross domestic product on health care. And they’ve engaged also the consumer living a healthier life as part of a cash model as well, cutting out many of those middle players. and compared to the U.S., we’re approaching 20% Gross domestic product spend somewhere between 18 and a half, but it’s projected to be at 20 percent and even, and several years in the future, it’s even projected to be as high as 25%. But when you look at that, the American worker is working at 20 percent of gross domestic product spend.
That means we’re working one day a week just to pay for health care. One in five days is working just to pay for health care. compare that to Singapore, at 5 percent of gross domestic product, it actually harms the American workers, it harms the American [00:12:00] businesses on growth, because we’re hemorrhaging on overpaying for healthcare, which could otherwise go into wages, and otherwise go into school budgets, more teachers, better academic programs, and maybe infrastructure bill, bridges, road repair when we look at having opportunity cost of loss because we’re way overspending for healthcare.
And so this is a moment in time where we’re at this incredible inflection point, Joe, where price transparency is truly revolutionary because it enables all of us to be able to, for the first time, consider the ability to shop And the ability to put a halt and question our bills to make sure that they were charged at the right price and it wasn’t price gouged or an error or overcharge.
Joe Selvaggi: I want to take that, I like to use simple analogies that our listeners might understand. And I’d say, okay, I like to compare healthcare [00:13:00] maybe to a grocery store where we walk into a grocery store. None of us would walk into a grocery store. Where there were no prices, right? You want to know whether the Wheaties or the Weetabix are more expensive, ultimately, so that you can choose what you want to spend on, right?
You, maybe you want the premium product for this and not for that, or you may want something on sale, a lot more of it, or less of it if it’s not. say more about why price Whether it’s healthcare or anything else, why it’s so valuable for an individual consumer when they enter any market and then take it to healthcare.
Why is that information, I mean, can’t someone argue against this saying, look, I need what I need. I need new hips or a knee or a, MRI. I may have a choice in a grocery store. I don’t have a choice in healthcare. why is health, why is the price so valuable even in healthcare?
Cynthia Fisher: no matter what type of healthcare system we have, prices create a sense of fairness and allow for the consumer to have financial certainty. Think [00:14:00] about it. When anybody goes in to get care today, we have been, until we get these prices, across the country, and we see full compliance by hospitals and insurers, without the price, a patient and a consumer are blind to no prices and often surprised by bills blindsided far higher than they expected to pay. And then I question this, Joe, why do we all have to go in and pick up that electronic pen? and sign a blank check? Goodness, the healthcare system now that’s gone electronic doesn’t even show us what we’re signing anymore and allows us to read what we’re signing.
But we are signing that we will be financially responsible to pay whatever the hospital chooses to charge us. even beyond what our insurance coverage would carry. And so in the world where there [00:15:00] are high deductible health plans and co-pays and co-insurance and do know, the American worker pays for almost all of healthcare because we pay for out of wages automatically deducted as a portion of share with our employers.
And then we pay for the federal government and the state and local government. healthcare plans with our taxes. So we have to have these prices in order to benefit from competition and choice. And look, a simple example is an MRI. What is a fair market price for an MRI? And what we’re learning is that in stand-alone imaging centers, a cash price, all in, for the MRI, including the read, is around 300.
And yet, you could go to Mass General Brigham, and our Blue Cross plan, our charge in our insured [00:16:00] rate is over 7,000 for that same MRI.
Joe Selvaggi: Right.
Cynthia Fisher: I think this is a That’s a big difference.
Joe Selvaggi: This is a profound point because I think it when some of our listeners hear prices and they say look I need what I need What difference is the price?
that’s what they’re charging. But I think what you’re powerfully saying is you have a choice if you want to get an MRI, for instance, as you quote unquote need one. It’s not, where in Mass General I’ll go. It’s Mass General versus BU Medical or the MRI center down the street.
If you have the prices of all of them, you may still opt, just like you may fly first class or drive around a gold-plated Cadillac. But, ultimately it’s money spent. We all spend it. You can choose to be more efficient if you’re provided with the price. You can still disregard the price. It’s great, but you ultimately have an opportunity to save yourself, your plan, your deductible, all the way down the road, and collectively, all of us, a lot of money if you have at least the information to make an informed choice for a value.
Is that fair?
Cynthia Fisher: That’s [00:17:00] absolutely fair, and I’ll tell you a funny story. My husband needed two MRIs, and in Massachusetts, It was a pretty high price if he stayed at Mass General. And then we started saying, what if we looked around Massachusetts as a market? What is the lowest price we could find?
And we found 950 is the lowest price. Woonsocket, Rhode Island, 250. So we happened to be on vacation in Florida, and I said, you know what? Let’s look for a cash price and why don’t you get your MRI nearby? We found one for 300 and a double read because a radiologist was going to provide two reads. My husband was very proud of his second MRI, he was able to lower that to another center and get it for 250.
So that case in point, you can’t teach an old dog a new trick, Joe.
Joe Selvaggi: Oh, no, that’s good. Good on you, husband. I also didn’t want to glide over the other point you made, which is accountability. Meaning, if I go in again, I’m stuck on this grocery store analogy. If I go into a grocery store, and [00:18:00] the Wheaties say, Hey, it’s me, Four bucks and ultimately I’m scanning through and it comes up eight bucks, I’ve got something, to go on I said look this the price shows there on the shelf for you just charge me You just overcharged me, if you don’t in a sense have information You are literally writing a blank check You have no idea what it should be costing you so you have no idea if you’ve been overcharged.
Is that a fair assessment?
Cynthia Fisher: Absolutely. And what if those charges when you went to the grocery store were thousands of dollars higher than you expected when you were thinking, I got two bags of groceries? Maybe it’s 120 a spend total. And then you get a 1,200 bill. If you went to the grocery store it would be, built like healthcare, right?
All the middle players in between, and then figuring out the maximum amount that you could be charged. think about it. Hospitals now have departments called Revenue Cycle Optimization, which to me is interpreted as charging whatever you can, as high as you can get away with at each patient encounter.
And then every middle player in between is looking at how can they profit from it. [00:19:00] Even more with additional modifiers or spread pricing on that patient encounter. And so the next thing you know, you’re paying thousands of dollars for something that should only be a couple of hundred. And so the other part on prices is Joe, now all of the hospitals are three years into having to show all of their actual prices and compare them by every insurance carrier and every plan as well as a discounted cash price. And we’ve learned a lot. Around the country, we do it every six months and a consumer-type report. And the last report we did, we showed that About 34. 5 percent of the nation’s hospitals are fully complying with the law where they’re showing all of their actual prices, so we could start to see tech developers, the more prices that are out there, We could see tech developers create, say, a Google [00:20:00] search engine for things like an MRI or a colonoscopy.
Joe Selvaggi: And Cynthia, I want to go, yeah, I’m glad you brought that up because, this is not a, an episode of despair. we’re not just going to throw up our arms and say that nothing good is happening, because as you say, some are complying with the CMS requirement. you, in your paper, mentioned an organization, a large organization.
I think one was a municipal, like a state, insurance for their employees. One was a union and the other was just a private insurer. They have used the power of price transparency to substantially save, in one case you say it saved them from insolvency, but it saved them a ton of money.
Share with our listeners at least, one of the examples of where price transfer transparency is actually working to inform large For instance,
Cynthia Fisher: we gave the example of S E I U 32 B J. 200, 000, workers in the New York, New Jersey area that are in real estate buildings. Janitors, doormen, and women that, tend to these buildings.
They were [00:21:00] able to save by getting the billing information and negotiating with hospitals that provided great care at reasonable prices. Looking at childbirth, hip replacements, those types of things. Cancer treatments are very expensive and find you where the same quality of care is better priced.
They save 33 million dollars a year for three years. And what did they do with that money? They increased wages to the highest wage increase ever and gave a 3,000 bonus to every employee.
Joe Selvaggi: That’s a small amount for someone who cleans office spaces. That’s a lot of money.
Cynthia Fisher: That’s a lot of money and a lot of happy people, a lot of happy workers that love their health plan.
And on top of it, the real estate building owners because this is a combined plan with the ability owners and the workers got to save a two-month premium each year of not having to pay for two [00:22:00] months because they saved so much money in addition to raising wages and bonuses. So this is a huge win. we’ve seen the states of Montana and Maryland Bartlett ran that health plan, and just by getting a hold of the numbers and running her health care plan by the numbers and creating pricing that was really What was a fair price for her state workers, 30,000 state workers?
She saved 121 million in 18 months for the state plan and put money back into the tax coffers, into reserves.
Joe Selvaggi: That’s your money, that’s my money. It’s people’s hard-earned pay that’s otherwise wasted. you, we’re, I love the success stories, but again, we’re going to focus on the success and then talk about where we still have to go.
We’re talking about the sort of fruit of the rule that was put in by CMS. This is, as you say, it came into effect, on January 1st, 2021. I think it was two parts. It required that all hospitals [00:23:00] post a machine-readable file with prices for all services and items they offer.
And they also had to have a cost estimator tool for the 300 most shoppable services. Say more about the rule and, what your thoughts are on it. is this the answer or, a hell of a start?
Cynthia Fisher: the true, important part of this rule is, that machine-readable file that posts all of the actual prices by every service and every code and code name and code, across every insurance carrier and plan that the hospital offers. And you can compare that to the discounted cash price if you just want to pay cash. So being able to have every hospital post those files in standard format, allows a tech economy to create mobile shopping tools.
And the whole goal here, think about what we have in the airlines, for instance. We can go and we can trust when we buy an airline ticket and we have [00:24:00] choices to be able to purchase. And just like healthcare, airlines have wide variation, look right now, we’re in storms, we have weather that might cause more turbulence or delayed flights, whatever, but we know that the airline prices have wind to deal with, fuel costs differ, wide variation, however they’re able to price.
And price, prices in airlines since the deregulation back in the 70s, when prices weren’t known for airlines, only by the travel industry, and once prices became transparent, And we purchased them directly, you cut out the middle player, which was the travel agent, right? And we went directly online, directly accessing prices for airlines, and what happened is that the real value of pricing of airlines in real dollars is now half of what it was in the 70s. And hundreds of millions of [00:25:00] people are flying, and planes are safer. And this is competition, this is choice, and it is readily available access to the consumers. And you have trust and accountability in those billings. The same can happen for health care with these hospital files being unleashed.
And you can imagine even an Uber platform. Let’s go back to the MRI. I would love to see an Uber-type platform for you, Joe, or me. If we needed an ACL looked at for our knees for an MRI image, why not allow a platform like an Uber type of platform to let the healthcare sector bid on our business at a time that we could go get that care and show us at what price and what quality of service that they would choose to provide us.
So you can imagine that.
Joe Selvaggi: You make a great point. You actually wrote an, I’m referencing one paper, but I’m now going to reference another paper by PRA that I think is also compelling. You took that [00:26:00] information again, now some of it’s online, not all of it, not as much as you want, but you looked at. In the information that’s provided, you found huge discrepancies.
Call it MRI. I don’t remember which procedure was in your paper, but you saw not just, again, we use BU and Mass General as a sort of, okay, I would rather go to one than the other. But even within, let’s say, Mass General, again, I’m using that just because that’s our local hospital.
For the same procedure, a difference of 10 times, 20 times, for the same exact procedure based on who it is. again, to use my crazy grocery store analogy, can you imagine, one customer being charged 10 times more for Wheaties than another customer? It would be absurd, and yet, it’s going on all the time.
Say more about your observations about the range of prices, intra-hospital and inter-hospital.
Cynthia Fisher: Well said. Intrahospital, what we were finding is that on average that is a ten times difference for the same service by the same providers for different patients. As you said, [00:27:00] none of us would tolerate that in a grocery store to see someone pay 5 for a half gallon of milk and another person pay 50.
Worse, let’s look at the gas station. I like to think about if I pulled up to pump my gas and got 15 gallons of gas, say it was 50, and you got the same gas right behind me, filled up your tank for the same exact amount of gas, and you were charged 500. In using the same gas station, you would be outraged.
I would even get out of my car to help you to get the appropriate price. That’s what we’re finding, right? All of us want each other to be treated fairly. None of us want to have a ten times difference in pricing, than the next person for the same service with the same surgical team, for instance. And it’s happening every day because we have been blind to know this.
And, [00:28:00] once it’s really wide scale known among patients, they have the right to see these prices and among employers and unions as they compare, what is that third party insurance carrier negotiating on their behalf? And why is the carrier allowing gouging at 10 times more? Because there’s certainly profit in the lowest price.
Joe Selvaggi: I want, yeah, of course, that’s right, they, nobody’s providing services at law, so you, you’re 100 percent you’re not eliminating. Profit or reasonable profit, I want to push back. There’s one thing that I think was missing in my, layperson observation of this phenomenon.
To me, again, to use my grocery store analogy again, let’s imagine the grocery store. It’s just like you want it. Everybody, all the prices are posted and they’re all fair and they’re all the same for all of us. Okay, we’ve gotten there. But I go to the checkout and all I do, regardless of how much is in my cart and what I’ve chosen, I pay a hundred-dollar copay and the rest goes to my insurance company.
What then, in that sort of. that’s me making an analogy to an insurance company. Once I get to my. Limits of [00:29:00] my copay, my incentive to shop has gone away. You don’t really address that in any of your papers. What would you say to those people? Again, you, I’m old enough to remember when medical insurance used terms like major medical, meaning, yeah, if you got really sick, we cover it.
But, you’re on your own for the basic stuff. We’ve gone to now almost the first dollar payment. Doesn’t that make the consumer and those of us who might benefit from prices indifferent to the difference in what we pay?
Cynthia Fisher: you raise a good point, Cho, and it can, absolutely, but where we’re not indifferent is what we make in our jobs and what we have in our savings and take-home pay, so when we can see actual prices and price comparisons, the real world.
Inflection to change is going to be coming from the employer and the unions as groups, as a collective with, for instance, SEIU 32BJ, 200,000 employees. And so when they were able to save [00:30:00] a hundred million dollars, that’s real money, and they’re able to be able to lower everyone’s cost of what comes out of their paycheck.
Joe Selvaggi: And when the consumer is exposed to the prices, again, they make better choices. Of course, we have all kinds of studies, like LASIK studies, where if insurance doesn’t cover it and you’ve got to shop around, magically, LASIK prices have come down, 95%, because you’ve got to pay it. you can’t just push that off.
I think, at least having the information, it’s going to govern prices. And of course, we all know, as amateur economists, that prices are determined at the margin. There’s some people who never buy something, some people will buy at any price. Prices are determined by the person at the margin, just someone who is influenced by price.
And if it’s the SEIU, great, they’re going to influence price, even if I, as Joe Consumer, might not have an interest. it will work even if I don’t care.
Cynthia Fisher: exactly. And, what’s really amazing is, look, it’s a lot of large employers too, and medium and small employers are [00:31:00] starting to get ahold of these numbers.
And they also need access to control the checkbook because when the employers share in our billing and charges, they need to make sure they’re accurate. And, look, there are some provisions in a lot of insurance contracts that shouldn’t be signed, like anti-audit provisions. Can you believe that?
Many of the insurance, big insurance companies say you can’t audit what you’re deciding with the hospitals we’re going to charge you. that’s, crazy. The employers that are actually saving 30 to 46 percent for all of their workers on what they were paying for coverage costs get a hold of the billing and they look at those charges before they’re paid to make sure they’re not being overcharged.
And the other part of it is to make sure the prices are right. Let me give you an example. Rosencare down in Orlando, Florida, Harris Rosen, 6, 000 employees, [00:32:00] pays less than half of the national average. for coverage for all of his workers. And how did they do that? For all of their families, they were front-loaded with great primary care and access to physical therapy, occupational therapy, and training, readily available to their employees, and they got a hold of the prices.
and they directly contracted and cut out many middle players with many of the hospitals. So they have been able to save over decades and put that into higher wages and growth for their hotel chains.
Joe Selvaggi: So we agree that, okay, I hope our listeners are excited about this, brave new world of, price transparency.
But yeah, you’ve, and your analysis is, this is a three-year-old law, we only get 30 to 36 percent compliance, and actually, your analysis suggests some hospitals are slipping backward, meaning, they don’t voluntarily choose to make less money, so surprise, surprise, if nobody’s [00:33:00] watching, they become less transparent.
What else is going on beyond the CMS rule? I’ve read something about something going on in the Senate, which is going to, rather than an executive oversight, executive branch oversight of CMS, we’re talking about the legislative branch passing laws that will actually have some teeth that might influence price transparency.
What can you tell us about what’s going on in Congress?
Cynthia Fisher: Yes, in Congress, it’s, this is such a bipartisan issue, and first of all, the polling for across the country, time after time, is over 90 percent of Americans want prices in healthcare, because they believe, very firmly, they will lower their costs when they have the ability to choose where to go, and at what price.
The last polling came in at 94%. Bipartisan. for Americans wanting health care price transparency. Congress has been frustrated that the Health and Human Services has not robustly enforced the law. [00:34:00] However, President Biden did increase the fines to over two million dollars. And when he did, they fined two hospitals.
Look, nearly two-thirds are yet to show all of their prices. Most of the hospitals in the country do have pricing files, but if they’re missing swaths of pricing data, then we can’t have a functional competitive market yet, right? but we did find that when the Biden administration fined two hospitals over a million dollars, It worked.
That higher fine worked because those two hospitals came into compliance within weeks. And today, they still have exemplary files, and that was two years ago. However, we have not seen that level of fining and rapid enforcement. I think they’ve only looked at around 20 hospitals, but having de minimis fines, and so it’s been slow walked.
So Congress has come [00:35:00] forward to put forth two bills. And the House passed a bipartisan bill for lowering costs through more transparency. And the Senate, Senator Braun from Indiana, and Bernie Sanders, who’s chairman of the Senate Health Committee, came together and even went further to create a better bill that allows for all actual prices to have to be, provided by hospitals and insurance companies and much higher fines, as well as a daily feed of the billing information and claims and electronic funds so that the industry has wanted to give estimates.
And why the Senate bill is so important is the Senate bill has actual prices and we just saw Health and Human Services roll back actual prices to being able to be [00:36:00] substituted with an estimate. Estimates have no accountability, Joe. Estimates do not allow for a true market or market forces. And so that’s why the Sanders Braun bill is so critical because it says actual prices.
So we have an actual market and when patients are given an estimate, I’ll give you an example. Cindy Reddy in Colorado came forward and testified. She was given an estimate for 5,000 and her actual bill came at 74,000. The insurance company that told her in advance the estimate and that they would cover denied her care after the fact.
So the hospital put a lien on her home for 74,000. She came to us, and [00:37:00] we have all of the country’s hospitals’ prices online. And fortunately, the hospital had complied and had her plan and those prices. And line item by line item, when she compared her bill, it should have been around 8,000 by the plan with an 800 copay.
She was able to prove to the insurance company and the hospital that they way overcharged her. It took seven months. But she finally got them to release the lien on her home, and the insurance company did cover at the prices they negotiated with the hospital.
Joe Selvaggi: I think that’s an interesting point, a very salient point, because, again, an estimate is by all rights, nonbinding.
You, if I estimate you change the oil in your car, it would be 25 bucks and now it’s 250 bucks. I’m like, what do you say? Oh, I gave you an estimate. That’s no promise. If the price is the price, that’s a contract. It’s saying, I will do this for that. so you’re saying with [00:38:00] the Senate, bill, you can’t slip in estimates and as a sort of, a catch-all phrase to say, and by the way, whatever we charge.
Regardless if it’s, as you described, 15 times more than the estimate, sorry, it was a bad estimate, but it was an estimate, so you don’t have that sort of escape hatch in the new bill.
Cynthia Fisher: That’s correct. And the other part of it is that prices, actual prices, are negotiated. And so we find those actual prices today in the insurance part of the insurance companies have to post all of their prices.
And so when we don’t see them missing in the hospitals, why then should the hospital be able to, in the new rule change in 2025, be able to substitute an actual price with an estimate? That’s a rollback, that’s harmful, and that’s what the Biden administration just did in their latest rule, is they allowed for [00:39:00] an estimate substitute.
Cynthia Fisher: That would throw a big wrench. in all of the progress that’s been made thus far. And for people like Cindy Reddy, who because she saw the actual prices, was able to prove that she was overcharged and that the estimate was meaningless.
Joe Selvaggi: Yeah. so what you’re saying is CMS did a little bit of backsliding by allowing estimates and I think it’s important for our listeners, you know, again, I don’t know, we know what we say, but we don’t know how it’s heard. It’s not that we’re price fixing. We’re saying, look. charge what you want, just let everybody know, and let, then they have, of course, the right of exit, they can go somewhere else, or not do the procedure at all, or go to a neighboring hospital.
we’re not looking for some philosopher king to determine what things should cost, we’re just saying, tell us what you plan to charge us, and give us a choice of, you Choosing where we want to go, right? I mean, this isn’t a command economy. This is a market economy that we’re advocating for.
Cynthia Fisher: Absolutely. let’s let the market [00:40:00] forces work. And instead of after the fact, the prices are known by the insurers in the hospitals, and they have traditionally not let us know until after the fact. It’s about moving those prices to the front. And 90 percent of care is planned. And even in emergent care, when you have prices, you normalize and have market forces work, right?
So, this is to pull back the curtains, let the market forces work, and restore trust and accountability in our healthcare system.
Joe Selvaggi: Yes, of course, it’s strange bedfellows when you have Bernie Sanders and a Republican Senator agreeing, but I think, again, from my perch, I see, People presented with the same exact facts that you and I have discussed and seeing two different worlds.
You know, my friends who are market-oriented understand prices are what constrain all producers, right? the Wheaties aren’t six dollars instead of four dollars because you buy something else. You can choose, choice is what [00:41:00] constrains prices in markets. We don’t have prices in healthcare, so it’s not constraining.
So, this is market dynamics going out the window, and essentially hospitals can charge whatever they can get away with. Your price strategy, and transparency, will impose the same market discipline on hospitals that are imposed on every other producer. On the left, I think they think, Someone like a Bernie Sanders I can imagine seeing this as a really good idea, largely because they imagine all markets to be, or capitalism itself, to be predatory in a sense to, the rich and powerful preying on the weak and powerless.
And in his mind, I imagine price transparency offers an opportunity to expose and shame, people who are rent-seekers, all the way, all the middlemen who are making quote-unquote too much money. If you have price transparency, there’s no normative, element here. Sure, you charge as much as you can get away with, and the consumer goes somewhere else.
you don’t need someone to police the system if you have price transparency. You’ve got markets. You’ve got, the discipline of markets. Do I have it about right, or do you see this sort of [00:42:00] seeing your advocacy for transparency seen through two different lenses, but at the end of the day, it doesn’t matter?
It works for both sides.
Cynthia Fisher: It does work for both sides. And, you mentioned, Bernie Sanders. He’s been very advocating to have the government pay for most of healthcare, and he advocates very strongly for price transparency because he doesn’t want the government to overpay when you get to see prices and markets come and function because they are functional, that the purchaser, the true purchaser, is the patient and the American worker and employers.
When we are able to see prices have choices and have competition, then we benefit. Competition benefits us all. And when markets are consolidated too, then oftentimes prices get higher. because it comes to be about, but without knowing the prices at all, you could almost say it’s extortion. Making every consumer sign a blank check, that they will open [00:43:00] up their checkbooks and their family savings and be responsible with all their assets to pay for that health care without having a price.
Joe Selvaggi: Well, we’re running out of time. I’ve enjoyed our conversation. I’m sure we’ve piqued the interest of our listeners. They might be interested to read this report that we cited and several of the others that talk about the range of prices and the lack of transparency in your analysis of how hospitals’ prices differ.
All that’s a really valuable resource. Where can listeners go to read more about a patient rights advocate?
Cynthia Fisher: Yes, they can go to our website at PatientRightsAdvocate. org, and they can see how to shop in these new times, by getting prices, and how to be protected from overcharges on our site, and also become an advocate.
And we encourage the Senate bill, anyone who wants to go to their senator and write their senator, encouraging them to sign on the bill and see these two bills come together to allow for price transparency [00:44:00] everywhere. True price transparency is a great way to take action, and it is effective.
Joe Selvaggi: That trillion dollars could be better spent elsewhere.
Again, the entire defense budget is, 800 billion. So this is, every year we spend, 25 percent more than the entire, we waste, not spend, waste more than the entire defense budget. Plus 25%. So that’s a lot of money. That’s a real dollar. It’s a trillion here, trillion dollars there. You got real money. So I’m very excited about the upside potential.
we’re on our way and I think you’ve, your advocacy is, helping to move the ball, and who knows, we may, I’ll invite you back in the future and you can see, tell us that we’ve succeeded. Now we know exactly how much we’re going to pay before we walk through the hospital’s front door.
So thank you very much for joining me today, Cynthia. You’ve been a really great guest. Thanks so much, Joe. This has been another episode of Hubwonk. If you enjoyed today’s show, there are several ways to support Hubwonk and Pioneer Institute. It would be easier for you and better for us if you subscribe to Hubwonk on your iTunes Podcatcher.
It would make it easier for others to [00:45:00] find us if you offer a five-star rating or a favorable review. We’re always grateful if you share Hubwonk with friends. If you have ideas, comments, or suggestions for me about future episode topics, you’re certainly welcome to email me at Hubwonk at pioneerinstitute.org. Please join me next week for a new episode of Hubwonk.
Joe Selvaggi interviews entrepreneur, philanthropist, and founder of PatientRightsAdvocate.org, Cynthia Fisher, discussing her research and advocacy for enhanced healthcare price transparency. This initiative has the potential to improve life expectancy and save Americans over a trillion dollars annually.
Guest:
Pioneer Institute Statement on the Commonwealth of Massachusetts’ March Tax Revenue Collections
/in Featured, News /by Editorial StaffPioneer Institute Statement on the Commonwealth of Massachusetts’ March Tax Revenue Collections:
Preliminary March tax revenue collection numbers were released on Wednesday (4/3/24) by the Massachusetts Department of Revenue (DOR). The Commonwealth took in $4.065 billion in total tax receipts for the month. This figure is $129 million or 3.3% above the current monthly benchmark – the first time this fiscal year that actual revenues exceeded estimates.
While the slight uptick is good news because it breaks an eight-month streak of declining revenues, let’s not queue up the confetti quite yet. All major tax revenue categories other than withholding taxes are below estimates. Withholding tax collections are likely buoyed by the worker shortage and higher salaries that workers can now command. The weakening in other categories is troubling given stock market performance over the past year, record high housing prices that increase capital gains and the general health of the economy.
It is important to note that the tax revenue benchmark for FY2024 was revised downward in January to $39.834 billion from $40.41 billion to reflect the $576.8 million reduction in revenue from the recently enacted tax package and the decline in year-to-date tax receipts as well as the $1 billion revenue estimate for the 4 percent income surtax. Despite this downward revision, year-to-date revenue collections totaled $27.531 billion and fell short of the revised benchmark by $145 million. Without the money from the income surtax, this year-over-year decline in tax collections would be greater still.
March is a month when many corporate and business taxpayers are required to make estimated payments and could be a harbinger of things to come. Both categories were below projections. Corporate and business tax collections brought in $1.235 billion – $2 million, or 0.1%, below benchmark, and $5 million, or 0.4%, less than March 2023.
Estimated income tax payments, often called non-withholding income, that includes dividends, interest and capital gains, totaled $96 million for March. This is $6 million, or 5.6%, below benchmark, and $0.2 million, or 0.2%, less than March 2023.
Even sales and use tax collections, at $664 million, were $26 million, or 3.8%, less than March 2023, and $5 million, or 0.8%, below benchmark despite persistent inflation that raises the cost of goods.
The catch-all category of “all other” taxes fared slightly better. Collections for March totaled $175 million, $3 million, or 1.9%, above benchmark, but $19 million, or 10.0%, less than March 2023.
In response to these weakening revenue collections, the Healey administration implemented a hiring freeze for certain positions in the executive branch of state government. Whether this action is enough to balance the FY2024 budget will largely be determined by whether the rebound continues with April tax collections.
One thing is certain. Unforeseen and added spending, coupled with the exhaustion of federal funds, will make FY2025 budgeting much more challenging than in recent years. The only question is how much lawmakers will have to tighten the purse strings for FY2025.
U.S. Chamber Foundation’s Hilary Crow on K-12 Civics Education
/in Education, Featured, Learning Curve, News, Podcast /by Editorial StaffRead a transcript
The Learning Curve – Hilary Crow
[00:00:00] Albert Cheng: Well, hello everybody, and welcome to this week’s episode of the Learning Curve podcast. I’m one of your co-hosts this week, Albert Cheng from the University of Arkansas. And Charlie, good to see you. Well, good to see you, Albert. I haven’t co-hosted with you in a while. It’s great to be back. yup, that’s Charlie Chippeo, co-hosting with me this week, hope you’re doing well.
[00:00:43] So let’s talk news, let’s jump right into it. For this week, I just wanted to give a little shout-out to Johnathan Haidt’s new book, The Anxious Generation. I don’t know, maybe some of our listeners are familiar with it already, it’s been getting quite a lot of press. You can see a link to one of the news stories on the Pioneer website here, I don’t know if this is a little news to you, but you know the rates of anxiety and depression are skyrocketing these days, particularly with younger folks, adolescents, folks in their 20s.
[00:01:14] The Anxious Generation really is one of the books to make sense of all of this. Jonathan Haidt is essentially making two arguments in this book. One is that we’ve gone away from what he calls Play based childhood. I don’t know, maybe this is how you and I grew up, where our parents just sent us out and had a lot of unsupervised play.
[00:01:34] And how we moved into what Hyde calls phone-based childhood, where certainly with the release of the smartphone and development of social media, you had kids being on screens. And that’s really replaced, play-based childhood. Hyde is making the argument that’s what’s causing a lot of the mental health issues that we have today.
[00:01:54] So anyway, I know there’s a lot of spirited conversation and debate over what’s going on, but I certainly find personally his arguments compelling and really amazing. Lots of questions for me as I raise my young kids too. So I don’t know. have you paid attention much to this topic and heard about the book?
[00:02:13] Charlie Chieppo: I had heard just a little bit about the book. I’ve certainly paid some attention to the topic because I have Two anxious kids, but I think it’s true. I think, as I was listening to what you were saying, Albert, all I could think was, I’m definitely from the day where you got home, you put yourself down, you went out in the next interaction you had with a parent was when one by one, they all looked out the front door and, yelled to wherever in the neighborhood they were because it was time to come home for dinner.
[00:02:43] I think there may be something to it myself, but then again, I’m just an old guy.
[00:02:47] Albert Cheng: Yeah. Anyway, I guess this is a book that is worth picking up and I don’t know that we can go back to what things were like before, but we certainly need to maybe think about how to reimagine raising kids in today’s day and age.
[00:03:02] Charlie Chieppo: Yeah, I think that’s right. And look, I think we can’t go back, but there are tips we can take from things we can apply. What did you see in the news? So the thing I saw that caught my eye was a piece that was, an opinion piece in The Hill from Aaron Garth Smith and Christian Barnard.
[00:03:20] It’s about the item in President Biden’s budget calling for an 8 billion program to further support COVID recovery. The goals are to increase student attendance and use expanded tutoring and additional learning time. Now, during the pandemic, we had 190 billion in emergency, education funds, K 12 education funds that came in three rounds.
[00:03:45] The biggest was the last one, the, 122 billion from President Biden’s American Rescue Plan. Just to give you an idea. What kind of money we’re talking about? That’s more than three times what the total federal K-12 budget was in 2020. And it came out to about 3, 800 per student. So the thing was that when it came to that, the American Rescue Plan, Congress required only 20 percent of it to be spent on learning loss.
[00:04:14] And look, I’m, I really am somewhat sympathetic on this. It’s what nobody expected during the pandemic. And when it hit, we did all had to do a lot of things really fast. And I think it’s certainly a lot to ask to get precision out of how these things were done. But I would say that, by the third round of this stuff, we had a little bit of an idea where things were going, which we certainly didn’t in the first couple.
[00:04:39] And I think it’s unfortunate that. This 122 million kind of ended up being a slush fund with no real coherent purpose to it. the data suggests that federal money was spent on things with little connection to student learning, no central office, and a lot of facility stuff. Look, I understand that ventilation in particular was a big issue then.
[00:05:02] But backfilling budgets, the thing that is my sort of bugaboo about all this kind of stuff is that you just knew that when this money came down, unfortunately, they were going to take a lot of one-time money and use it to plug holes for recurring expenses. And you get this fiscal cliff, it’s I’m shocked.
[00:05:20] Shocked that this, and I just look, I just really think that’s unfortunate. And today we’ve got. Students in the United States volunteer to cover about a third of their learning loss in math, and a quarter in reading. And the thing that got me was that it seemed to me that when you’re trying to deal with this learning loss, this kind of high-dosage tutoring would seem to be option one, right?
[00:05:40] Yeah. But only 37 percent of public schools do that. Used any relief money for that, which I thought was amazing. I think it was really a missed opportunity to prioritize learning loss when the money was there and to really focus on that money. And I think it’s, I think it’s terribly unfortunate, and if I could say something controversial, I just think that the degree to which content in academics is the focus of our schools.
[00:06:06] is diminishing, I think. And I think that concerns me as a parent. I sound more like my parents every day, but I guess that’s a fact. So there you go.
[00:06:15] Albert Cheng: yeah. we’ve talked about these topics in a couple of recent episodes on LearningCurve. I think it was a couple of weeks ago, when I talked about a tweet from Marguerite Rosa about how there’s a Wide variation in the relationship between spending and outcomes of these ESSER funds, right?
[00:06:30] Some schools spent a lot and grew a lot, and some schools spent a lot and didn’t grow at all. And I like to tell these beginning PhD students that come into our program here that, ed reform’s hard because there are certain institutional practices and ways of doing things that are entrenched and old habits die hard.
[00:06:45] Charlie Chieppo: Yeah. You bring up a good point there. I do think it’s certainly important to highlight the places that really did get really good results too. I don’t want to make us sound like we’re just getting down on the ones that didn’t.
[00:06:57] Albert Cheng: Yeah but this is the perennial question. How do we spend the money well?
[00:07:03] Charlie Chieppo: I haven’t figured that out but Albert, this is why I am increasingly, as I get older, I’m increasingly convinced that I should be the one to decide.
[00:07:12] Albert Cheng: As the host here, I’m gonna decide that we’re gonna go to our break and, tell our listeners on the other side, we have Hillary Crow, who is Vice President of Civics at the US Chamber of Commerce Foundation, so stick around for that interview.
[00:07:39] Hilary Crow is Vice President of Civics at the U. S. Chamber of Commerce Foundation. Her responsibilities include leading the Civic Trust, an initiative focused on civics literacy, civics at work, and elevating civics as a national priority. As part of this work, Hilary oversees the National Civics Bee, an annual competition aimed at increasing civics literacy among middle school students, their families, and communities.
[00:08:05] Notes The Bee is currently running in more than 100 communities across 28 states in partnership with state and local chambers of commerce. The Bee will also scale to all 50 states by 2026. Hilary earned dual bachelor’s degrees in political science and philosophy from the American University in Washington, D.C. Hilary, welcome to the show. It’s great to have you on.
[00:08:30] Hilary Crow: Thank you so much. I’m delighted to be here.
[00:08:32] Albert Cheng: So let’s give our listeners some background here first. You’re the U. S. Chamber Foundation’s Vice President of Civics. Could you first talk about just what’s the state of play of K-12 civics in the country?
[00:08:45] And what’s the Chamber Foundation’s role in helping drive basic understanding of our systems of government among school children?
[00:08:54] Hilary Crow: Civics literacy in America is at an all-time low. We know from the National Assessment of Educational Progress report that came out last year that nearly 80 percent of 8th graders cannot pass a civics test or are below proficient in civics.
[00:09:13] And this represents actually an all-time low that started assessing civics scores back in 1998. So now more than 25 years ago, for the record, adults aren’t doing much better, 70 percent of adults also fail a basic civics quiz. So the problem at hand, when it comes to civics in America is truly multigenerational.
[00:09:39] And it has led to many significant challenges that we’re seeing across the country. But for students in particular, the challenging thing is that whether you’re learning civics in school and to what degree really varies greatly based on the state that you’re in, and a lot of times even down to the school district that you fall in, the specific school that you go to.
[00:10:03] Civics now has an interesting interactive map that shows current state policies regarding civics education. for each state, you can click on that state and it’ll pull up information about whether or not they require civics in middle school, civics in high school, and whether it’s required for a full year or only half a year, etc.
[00:10:23] Their latest data shows that only 8 percent of the U. S. population States requires civics in middle school. So that doesn’t say that only eight states are teaching civics, but a lot of times those other states are not, it’s not a specific civics class, so they’re lumping it into some part of a social studies curriculum or other related, history, things like that.
[00:10:45] But the amount that they’re getting and the standards of which they’re being taught are very inconsistent, which is probably why only 21 percent of eighth graders are proficient. Civics today. And then at the high school level, the numbers go way up. So 37 states require civics in high school. Only six of those states require it for a full year.
[00:11:08] So 31 of those 37 states only require it for half a year or less of their high school. And so I think this paints a pretty bleak picture in terms of the state of civics in K through 12. In addition to this, It’s important to note that access to civics education and opportunities across types of communities is also highly unequal.
[00:11:32] Surveys by Brookings have shown that students in high-poverty areas as well as rural areas have significantly less access to civics. In fact, Tufts found that 60 percent of youths who live in rural areas are living in what they call civic deserts, which are defined as places that don’t have access to any resources or at the most one resource in terms of opportunity for civic and political learning and engagement.
[00:12:06] And unfortunately, this means that a large portion of young people in America have fewer opportunities to observe, participate, and learn about civic and political engagement. And our long-term competitiveness as a country depends on the strength of our democracy, our economy, and our workforce. And you asked the question about what the Foundation is doing to help address civics knowledge for young people.
[00:12:32] Back in 2022, we launched the National Civics Bee to address these declining rates of civic knowledge. This is a competition aimed at improving civics education and literacy among middle school students primarily, but also their families and communities. We believe that. All young people, no matter what job they dream of doing in the future, should understand how our democracy works and how to be active and engaged citizens.
[00:12:59] We’re on a mission to elevate civics and mobilize the business community to help us improve civic knowledge in every state across America. So we started with a pilot of the National Civics Bee in five places, and we’re driving toward expanding to all 50 states and reaching 50, 000 plus students per year, and hosting this as a nationally televised competition to increase public interest in civics, making civics fun and cool and exciting, which leads to greater demand for civic literacy and engagement.
[00:13:35] Through the Bee, we’re highly focused on reaching those students I mentioned in those civic desert-type areas. focusing on kids in rural and low-income communities. To do this, we’re working to form partnerships with key organizations like 4 H, Future Farmers of America, Boys and Girls Clubs, YMCAs, and others.
[00:13:55] So it’s a fun competition for kids, but it’s also a serious strategy to reach parents and educators and elected officials and business and community leaders. And it’s a nonpartisan way to bring these people together. around elevating civics. In addition to the students participating in the quiz competitions, the audience plays along as well as an audience track of the quiz.
[00:14:20] So we get to educate adults at the same time and track the data on the back end on how well they’re performing. And. we’re really focused on impact. So we’ve retained Johns Hopkins University to conduct a longitudinal study on this so that we can measure the impacts that we can have in each of these communities over the long term.
[00:14:41] Albert Cheng: That’s great to hear. You’ve just talked about how civics has been marginalized in a lot of state education systems, and you just talked about the Civics BE. Now, part of your responsibility at the Chamber Foundation is also running the Civic Trust. So this is an initiative. focused on elevating civics as a national priority.
[00:15:01] Could you talk about what that effort looks like? The initiative, the Civic Trust, how is that going to remedy the civic and historical knowledge deficits among young people today?
[00:15:10] Hilary Crow: Our work on the Civic Trust really started back in 2018. We started looking at declining support for democracy, increasing levels of polarization, and.
[00:15:23] An overall lack of understanding of both how those systems work, our political and economic systems. And what we found was that it was really tied to this multi-generational decline in civics knowledge. We simply aren’t teaching this stuff anymore in the way that we used to about 40 years ago when we really stopped investing in civics.
[00:15:45] I’m a parent and I didn’t have civics when I was in school. I have a daughter in middle school right now and until I started introducing it to her, She had no idea what a democracy was or how our government is supposed to work. As a country, when we started investing in STEM, which was a good thing, unfortunately, our investment in civics education plummeted.
[00:16:07] We traded one for the other instead of. prioritizing both. And even with some increases in funding for civics in the last year or so, we’re still only investing about 50 cents per student when it comes to civics education compared to 67 per student per staff. So that sustained de-prioritization of civics has had real consequences.
[00:16:31] So the stat I mentioned before of nearly 80 percent of eighth graders below proficient in civics as well as 53 percent of Americans, adults, can’t name the three branches of government. 26 percent of adults can’t name a single First Amendment, like I said, these are multi-generational challenges and they’re significant when we think about The long-term strengths of our democracy and our competitiveness.
[00:16:56] We hear concerning stats like this all the time. One that was published last spring by the Reboot Foundation showed they had asked 13 to 17-year-olds and 18 to 24-year-olds, if they had to choose between giving up social media for a year or giving up their right to vote, which would you choose?
[00:17:20] Albert Cheng: Okay, I think I know where this is going.
[00:17:22] Hilary Crow: Yes, I’m sure, more than 60 percent of both age groups said they would choose to give up their right to vote in order to keep social media.
Albert Cheng: Wow. That makes you laugh, but it’s pretty sad at the same time.
[00:17:35] Hilary Crow: Yeah and so despite all of this, we’ve been optimistic and we’ve been seeing this complex challenge as an opportunity to turn what a lot of Americans are feeling as worry into work.
[00:17:49] And We launched the Civic Trust. Our mission is to catalyze the business community to act, to improve civic knowledge, and to educate Americans about the important relationship between democracy and capitalism. when we examined the field in 2018, we found that business has not been a real player here.
[00:18:09] Even though research shows employers are at stake when civil dialogue and polarization enter the workplace. And business, as we’ve seen year after year through the Edelman Trust Barometer, is one of the most trusted institutions in America. So there’s a real opportunity here for employers, specifically, to significantly move the needle regarding civics knowledge and skills in this position of their workers and the communities that they serve.
[00:18:37] With the Civic Trust, we have three pillars. One is civics literacy, which you’ve already heard me talk about with the National Civics Bee, really focused on increasing civic knowledge through the bee. The other two pillars are civics at work, in which we’re arming employers with tools and resources to make civics a reality.
[00:18:56] A workplace priority, engaging employees in civics learning and participation opportunities. And then the third pillar is more broadly elevating civics as a national priority. So leading and elevating conversations about civics throughout our programs, our events, our digital content, and research.
[00:19:14] And we know that through these three pillars, we will be able to reach young people. We’ll be able to reach multiple generations of adults through the workplace, as well as leaders across the country in a meaningful way.
[00:19:27] Albert Cheng: So Hilary, you just talked a little bit about the civic unrest that we’re facing today.
[00:19:32] And, we see that across the political spectrum. So from your view as this national leader in civics, I’d like to hear your thoughts about the relationship between civic unrest and the connection to the educational trends you’ve talked about. The way we’re teaching civics or not teaching it is one a direct cause of the other and what might be done to fix that if it is.
[00:19:52] Hilary Crow: Absolutely. It all ties back to knowledge. We simply cannot fix what we do not understand. We see challenges in our communities or in our country, things that we want to improve, but we’re stuck when we don’t know what to do or how to engage or how to effect change. And. There is a correlation, studies have shown, between polarization and civics literacy.
[00:20:19] Those studies have said that increased levels of civics literacy lead to decreases in levels of polarization. it’s a virtuous cycle. The more someone understands how our government is supposed to work, how to participate at the local level, who their local council members are, and their local and state representatives, the more likely They can be, the more empowered they are to reach out to them, to do something to effect change in their community, instead of maybe just venting about it on social media, or, starting an argument with somebody online, and, We know that the more we can educate people about civil discourse, civic skills, and dispositions, how to disagree without being disagreeable, that there’s a greater likelihood that people with opposing points of view can have productive discussions.
[00:21:07] With our Civics at Work program of the trust, we see a huge opportunity here for employers because more than 160 million Americans in the workforce, there is a huge opportunity to reach adults across generations through their employers. So we’re really reaching out and inviting. employers, organizations of all kinds and sizes to join us in elevating civics as a national priority.
[00:21:35] Because as I said, as the most trusted institution in America, businesses have a significant opportunity to create real impact and cultivate a working environment with improved knowledge, skills, and disposition. So thank you. To us, we see that the polarization and the knowledge levels are directly tied to each other and that there’s an opportunity that we can do something about it.
[00:21:59] Charlie Chieppo: Hilary, this is Charlie Chippeo. Thank you for joining us. You just mentioned a little bit about the role that employers can play in promoting civics. So I was wondering if I could ask you a little bit more about that. the chamber obviously has local affiliates around the country. Can you talk about particular state or big city chambers that are most engaged in advancing civics?
[00:22:18] What are the ways in which they’re promoting a better understanding of civics in schools?
[00:22:24] Hilary Crow: Thanks, Charlie. I think you’re trying to get me in trouble on this one asking me which one of my three children is my favorite. No, you’re right. The U. S. Chamber has a federation of incredible local and state chambers in every state across the country. To date, about 115 of them across 28 states have worked with us to bring the National Civics bee to their state, so we’ve had an opportunity to get to know all of those chambers really well. We initially piloted the bees in five places, so those five chambers that have been with us since the beginning definitely hold a special place for us.
[00:23:03] These include the Kentucky Chamber of Commerce, the Maryland Chamber of Commerce, the Brownsville Chamber, which is in Texas, and the North Iowa Chamber. And each of these has done tremendous work to elevate civics in their communities, in addition to the well and above. Kentucky and Iowa actually hosted their state competitions, I have to mention, at the Kentucky and Iowa State Championships.
[00:23:26] Policy was the most important aspect of the state’s affairs last year. So that was a lot of fun to see, really putting the importance of this front and center in their states. But specific to policy and civics in schools, just last month, lawmakers in Kentucky voted to enhance civics education in high schools.
[00:23:43] been raised standards for that testing. And the Kentucky Chamber President and CEO, Ashley Watts, actually testified in favor of the bill during the committee meeting in the House, noting the business community’s increased involvement in civic education in recent years, with the National Civics Bee in particular.
[00:24:01] But they’ve told us that the Bee has helped create public demand for this type of policy work at the state level. So that’s just one story we also know from the Erie Chamber in Pennsylvania that charter schools in their community decided to put civics back into their curriculums after their students participated in their local competition last year.
[00:24:23] And so we just have phenomenal chamber partners across the country. They are hosting these bees, but also taking the work to the state level and through policy and effecting real change for young people in their communities.
[00:24:40] Charlie Chieppo: But I’m sure hearing about the impact of the bee must have been music to your ears as well.
[00:24:44] Exactly. You’ve told us something about the bee. I was thinking before about how few, obviously it’s not enough, but at least. Students are, for the most part, studying some civics in high school, but talk to us a little bit about the importance of focusing on civics in the middle school grades.
[00:25:06] Hilary Crow: Sure. We chose middle schoolers for a few reasons. One, I don’t know if you know any middle schoolers. I have one at my home, but they are notoriously hard to reach and engage from an external perspective. So when we did some Studying in the field, we found that there are not a lot of competitions or opportunities for middle school students for this reason, because they are particularly difficult to get to participate in things like this.
[00:25:34] Of course, we saw that as an opportunity, but also because, as I mentioned earlier, There are only eight states that require civics classes for middle school students. We know that there is a significant lack of civic knowledge for these kids, and we wanted to provide an opportunity to really increase that in a big way.
[00:25:58] And we also did some research. and found that science shows that the preteen years are a critical second phase for brain development, where there’s more rapid learning happening during early adolescence than at any other age besides early childhood. And so high school is simply too late to have the greatest impact on developing these kids’ understanding of civics and ultimately their identities as citizens.
[00:26:27] And then finally, because it also meant that it would, Give us access to curates. We wanted to make sure that we were also reaching adults and high school kids. Many of them can drive themselves to compositions or to participate in things pretty asynchronously. Whereas middle school kids, the parents have to be much more involved, right?
[00:26:47] They’re sitting down with them. They’re helping them make the flashcards, and studying together, and they’re more engaged. based on the age of the student. And so we took all of that into consideration and decided that focusing on that age group in particular would be important.
[00:27:02] Charlie Chieppo: Interesting and with some of the feedback you’ve been getting, it sounds like that was clearly the right decision.
[00:27:06] Hilary Crow: There’s nothing more inspiring I have found than seeing young people on these stages. Talking excitedly, and passionately about issues in their community and how they can use civics to solve them. And learning for the first time, how they can work with local officials toward improving their communities and just seeing the spark, in their eyes.
[00:27:30] We’ve heard parents say from rural communities in particular, that opportunities like this just don’t exist for kids like ours. And this is so exciting to be part of. And now my son or daughter is talking about running for governor one day, or how to help teach their fellow classmates about how the government works, and being really excited about it.
[00:27:52] And so there’s a lot of inspiration there and We’re excited to continue to expand this across the country and reach even more communities like that.
[00:28:01] Charlie Chieppo: Yeah, I certainly remember when my kids were that age. And being that is a tough age at which to reach kids, that when you do reach them, it’s even more rewarding.
[00:28:13] Absolutely. I hear you there. A significant part of America’s democratic success has been our free market economy and its alignment with our constitutionalism and commitment to the rule of law. Would you talk about how civics should include students acquiring a basic familiarity with our economy, how it works, and some of the major historical figures that played key roles in our economic ascent, people like Alexander Hamilton, Cornelius Vanderbilt, J.P. Morton and Carnegie, and I’m sure many more.
[00:28:43] Hilary Crow: Yes, absolutely. This is something that is very important to us, that Americans understand how both our democracy and free enterprise system works. In almost every recent survey, you look at across the country, asking people about the most important issues right now in America.
[00:29:02] The economy is at the top of the list, right? But so few people actually understand how our economic system works. We actually just concluded an economic literacy survey that we haven’t released yet, but spoiler alert, it shows that our economic literacy is even worse than our civics literacy.
[00:29:23] Charlie Chieppo: Wow.
[00:29:25] Hilary Crow: So what this means is we’re having significant challenges when it comes to the strength of our political and economic systems, but we don’t actually understand and therefore know how to fix either one.
[00:29:39] So this is not a good place to be. Again, we must start with knowledge. We have to ensure every American understands the basics of how our free market system works, and how capitalism works. And to show our commitment to this, we actually include questions in all of the civics quizzes at every local, national, and state competition through the B, related to the economy, because we want to make sure that students understand that information as well.
[00:30:08] To your question about incorporating figures such as Hamilton, Vanderbilt, Morgan, and Carnegie, Absolutely. Joining those with a civics curriculum will offer valuable insights into the historical context of our economic system, as well as the role of those individuals within it. So studying these figures presents a deeper understanding of economic principles and systems that have influenced our nation’s development.
[00:30:36] For example, Alexander Hamilton’s contributions to the establishment of the U. S. financial system and his advocacy for a strong central government can be examined to understand the foundations of American economic policy and so really understanding where it started and how it started and how it evolved to where it is today would be huge for young people to understand.
[00:30:59] And I think also just exploring the lives and legacies of these individuals offers students insight into the power dynamics present in our economic history. These figures were central to the rise of industries, such as transportation, Finance, and Steel, but we’ve also learned a lot about them related to monopolies and labor practices.
[00:31:22] So there’s been a lot of lessons that we’ve learned through them as well. So overall, integrating the study of major historical figures from our economic ascent into civics education really would enrich students’ understanding of not only the system but its historical roots and its larger implications for the current day.
[00:31:43] Thank you. It would empower them to be able to think critically about these topics and to really engage and participate effectively as they get older and develop how they can help shape the future of our economy and our society as a whole.
[00:31:57] Charlie Chieppo: Yeah, that is absolutely true. That is absolutely true. And it’s also, it’s great to learn about the different, real human characteristics that these people have.
[00:32:05] I think that really brings, The human element of studying other people, and once you humanize them, I think it really makes kids more interested in what they’ve done and, why they did it and those kinds of things. Yes. Finally, given the often radically balkanized state of the country and our schools, have the one major lesson drawn from American history, founding documents, Supreme Court decisions, or the civil rights movement that you think is most applicable for students and citizens alike in our current moment?
[00:32:34] And what’s the best mode for transmitting that civics lesson to students? That’s a tough one.
[00:32:39] Hilary Crow: Gosh, there are so many things. To pull from our very rich history of America, but drawing from the civil rights movement in particular, I think one major lesson for students and adults alike is the importance of collective action in the pursuit of positive change. So the civil rights movement, which spanned, of course, several decades and involved countless individuals and organizations really exemplifies the power of ordinary citizens coming together to challenge systemic problems and effectuate If we look at history from the Montgomery bus boycott to the March on Washington to Selma to Montgomery marches, the civil rights movement really demonstrated the transformative potential of grassroots organizing and coalition building.
[00:33:39] And so I think this lesson is particularly relevant in today’s very polarized America where social and political divisions often seem insurmountable. By studying the history of the civil rights movement, we can learn that progress is possible, even in the face of seemingly entrenched obstacles like those in that movement face.
[00:34:03] Charlie Chieppo: Yeah, I think so many, I was going to say so many young people, but so many of us generally really don’t have a handle on that. on just how entrenched that was and just what a hill to climb it was to seem to actually be able to make any impact on that system.
[00:34:19] Hilary Crow: Absolutely. And it also teaches that the civil rights movement also teaches us that change often requires not only legal and political reforms but also shifts in cultural attitudes and norms.
[00:34:32] The movement succeeded not just because of legislative victories, such as the Civil Rights Act of 1964 or the Voting Rights Act of 1965, but also because they challenged deeply ingrained prejudices and inspired a new awakening across the country. It helps remind us, if we really study it, of the power of unity and empathy and collective action in overcoming even our biggest societal divisions today, and how really working together, we can create a stronger democracy and stronger communities that benefit all people.
[00:35:12] Charlie Chieppo: Well, I tell you what, Hilary, that was a tough one, but you nailed it. I love it. Thank you so much.
[00:35:20] Thank you so much for joining us today. That was really interesting and enlightening, and I hope it can draw some attention to what is a really serious problem. And it’s great to hear about the sort of proactive things that you’re doing to try to combat it. Thank you.
[00:35:34] Hilary Crow: Thank you. I really appreciate the opportunity to speak with you both today and to be on the podcast.
[00:35:50] Charlie Chieppo: That was a very interesting interview. civics is obviously an extremely important and becoming a very controversial issue in public education. That was, I think, some important information there. And so the tweet of the week is from Education Next from March 29th, and it is about a piece that a good friend of mine and an old boss of mine, Jim Pizer, wrote for Education Next.
[00:36:15] It’s about bringing business leaders back to school. Their retreat from education reform has hurt them. Both sectors. It’s time to re-engage. Certainly, here in Massachusetts, the business community played a big role in a very successful education reform that was done here about 30 years ago now. And I think it’s worth reading, and I would say that Jim is a very good writer as well.
[00:36:37] Albert, it has been great to get to host with you again. Catch up a little bit. I always enjoy it. Thank you so much. Thank you. Yep. Good to be with you this week. And join us again next week. Our guest will be Robert Pinsky, the William Fairfield Warren Distinguished Professor at Boston University. He was also Poet Warrior of the United States from 1997 to 2000.
[00:36:59] Thanks very much. Join us again next week. See you all later.
This week on The Learning Curve, guest co-hosts University of Arkansas Prof. Albert Cheng and Charlie Chieppo interview U.S. Chamber Foundation VP, Hilary Crow. She discusses the state of K-12 civics, emphasizing the Chamber Foundation’s role in addressing America’s wide civic education deficits. Crow highlights a recent national civics survey, alarming civic literacy gaps, and links between political unrest and our nation’s educational shortcomings in K-12 civics. Ms. Crow also stresses the importance of local engagement and initiatives like the Chamber Foundation’s National Civics Bee.
Stories of the Week: Albert addressed a video from CBS News on Johnathan Haidt’s new book The Anxious Generation; Charlie reviewed an article from The Hill about wasted COVID relief funds.
Guest:
Tweet of the Week:
https://x.com/EducationNext/status/1773855200333197764?s=20