A January editorial in the Leader-Telegram misses the mark on the issue of white bagging. Additionally, the scenario the paper laid out is contradictory to the public testimony heard at a recent hearing on Senate Bill 753 – a bill that would ban a variety of cost-containment measures when it comes to health care.
Currently, employers are challenged to provide quality, affordable health care to their employees and their families. Nine in 10 plan sponsors say high drug prices already jeopardize the affordability of employer-provided health coverage. The Wisconsin Legislature should be doing all it can to promote innovation and price transparency in order to create more competition, not less.
Largely pinning the blame on health insurers by saying they “bully health care providers,” as the Leader-Telegram does, drastically underestimates the role that hospitals play in unaffordable health care costs for patients. The truth is that the hospitals’ actions to bully insurers and employers – in addition to massive markups of medications – are inexcusable.
The high cost of health care has consistently been a top concern of Wisconsin’s employers over the years and for good reason – Wisconsin is an outlier. A 2021 study by WalletHub found that Wisconsin is the ninth-highest state for the cost of health care nationwide. Often, we hear that the cost of health care is high because our quality of health care is much better than other states. Unfortunately, that is not quite the case. The same WalletHub analysis shows Wisconsin has slipped to 13th for health care outcomes. That is down four spots from WalletHub’s same analysis in 2018.
The good news is that it is possible to be a high-quality, low-cost state. For example, Rhode Island is the fourth-lowest in cost and the eighth-best in outcomes. Even our neighbor, Minnesota, is better than Wisconsin, ranking second-lowest in cost and ninth-best in outcomes.
Wisconsin needs to keep its employer-based health insurance system and promote consumer-driven health care. Creating additional hurdles, as is done in SB 753, eliminates employers’ ability to innovate and provide quality, low-cost health care to their employees and their families.
SB 753 removes important tools that can reduce health care costs for employers, while still providing a high quality of care. The bill eliminates a process called white bagging, which health insurers and employers have sometimes implemented to deliver clinically administered drugs directly to providers. This process allows payers to control the costs of these drugs since hospitals impose massive markups on these medications.
A study by The Moran Company shows that 83% of hospitals charge patients and insurers more than double their acquisition cost for medicines. But, shockingly, the analysis is even worse when more closely examined. One in 10 hospitals mark up drugs 900% or more, with 320 hospitals marking up medicines over 1,000%. These markups are indefensible.
Health insurers and employers do not bully health care providers into using select medication providers as the Leader-Telegram would like you to believe. Instead, these employers and health insurers are forced to innovate to lower costs because hospitals are using their patients to create a profit, with little incentive to come to the table and negotiate lower prices. Specialty pharmacies are able to safely provide the same drugs at a much lower price with minimal or no markups, meaning that patients and employers have lower costs.
If SB 753 would become law, there would be no tool to get hospitals to the table and negotiate the price of these drugs. And, as the data shows above, it is imperative that the hospitals are held accountable for their markups on prescription drugs.
It is quite shocking that the Legislature would consider giving hospitals a monopoly on these drugs and push other competition out of the market. In doing so, they are giving hospitals a license to engage in price gouging for life-saving medication. That is a recipe for skyrocketing healthcare costs, and it is unfair to patients. WMC and many other organizations are opposing this legislation because employers need to have the flexibility to provide low-cost, high-quality care to their employees, and the Legislature should not insert itself in private contract negotiations to hinder health care innovation.
Ver Velde is director of Workforce, Education & Employment Policy at Wisconsin Manufacturers & Commerce – the combined state chamber and manufacturers’ association.