The Big Lie

There is a wonderful expression in politics, “If you say something often enough, it becomes the truth.”  Of course, it doesn’t really become the truth.  A lie retold is still a lie.  But, you can succeed in diverting political attention, especially in today’s news environment, when reporters are not given enough time and bandwidth to really explore issues.

Take today’s New York Times story about Massachusetts health care costs by Abby Goodnough and Kevin Sack.  The thesis is that the introduction of capitated, or global payments, will offset cost increases resulting from universal health care access.  The reporters give credence to the premise, even though there is not empirical support for the conclusion.  Indeed, such support as exists in Massachusetts suggests that the manner in which global payments were introduced resulted in higher, rather than lower, costs.  The story also fails to discuss consumer concerns about such plans, which would limit choice.

But then, the reporters retell the big lie, the one that suggest that concerns about the cost trends of the dominant provider group have been alleviated by a recently signed contract.  Ready?  Here you go:

Under market and political pressure, Partners also agreed to renegotiate its contract with Blue Cross Blue Shield and accept lower reimbursements, which is expected to save $240 million over three years. … Blue Cross Blue Shield of Massachusetts said payments to Partners would increase at about 2 percent a year rather than the previously anticipated 5 percent to 6 percent.

Let’s deconstruct this.

First of all, the PHS contract had one year to run, not three years.  Whatever rate renegotiation they accepted for the last year of the contract, they would have been smoking something to think that they would have received 5 to 6 percent going forward.  Also, as previously mentioned here, the base on which they get their “about 2 percent” increase is substantially above the market.  Other hospitals that were at or below market rates also received rate increases in the “about 2 percent range” — starting one or two years ago.  Indeed, with other, non-dominant hospitals, BCBS started those negotiations by offering negative or zero change in rates.  Partners, then, didn’t give up anything going forward.  It was permitted to keep its huge bolus of embedded, above-market rates.

Oh, and what’s this “about 2 percent,” anyway?  Remember that it was reported as “between 2 and 3” percent?  This week, it’s been rounded down to 2 percent.  At this rate, in a month, they will describe it as “practically zero.”

One thing the reporters get right is this:  “The politically powerful hospitals clearly hope to persuade lawmakers that price controls are not needed.”

Likewise, the insurance company, it appears.  Whether it is fear of government regulation or a desire to go along to get along, a tremendous opportunity to truly control costs has been squandered.

But you will never see that story.  The big lie persists.  Welcome to the spin cycle.

Paul Levy is the former President and CEO of Beth Israel Deconess Medical Center in Boston. For the past five years he blogged about his experiences in an online journal, Running a Hospital. He now writes as an advocate for patient-centered care, eliminating preventable harm, transparency of clinical outcomes, and front-line driven process improvement at Not Running a Hospital.

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BobbyGDeterminedMDBarbara Duck Recent comment authors
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“If you believe in Occam’s Razor as a concept to explain complex issues in the simplest way, then the simplest answer is this: they conspired with the Democrats to find a covert way to make the same if not twist the numbers to make even more money.”

It doesn’t really even require THAT assumption. AHIP would have done the same with the Republicans nominally in power. I wrote about this long ago.



Question: how do for profit entities like health care insurers and the pharmaceutical industry agree to support PPACA if the premise of the legislation was to save money, and that would mean less profit? If you believe in Occam’s Razor as a concept to explain complex issues in the simplest way, then the simplest answer is this: they conspired with the Democrats to find a covert way to make the same if not twist the numbers to make even more money. If that lie gets exposed and these two partners to PPACA end up profitting even more, than what does… Read more »

Barbara Duck

It’s all about the math. I said a long time ago why do we not certify the algorithms used by the payers/insurers like we certify medical records? Makes sense to me as we cover one end and not the other, but are kind of stuck with “trust me”? http://ducknetweb.blogspot.com/2011/05/hhs-issues-final-rule-for-health.html This is becoming more evident all the time with marketing and deceptive formulas in some areas, now we have a ton of good stuff out there by all means but there’s bad apples everywhere. I looked at the insurance game software being marketed, so tell me realistically, would you see someone… Read more »