Confronting the Affordability Crisis: Unmasking the True Cost of Healthcare

Join us as we examine the heart of the healthcare affordability crisis. 

In this episode, Michael Navin and Randy Vogenberg, PhD discuss the hidden costs exacerbating healthcare access and decision-making. 

Listen in as they set the stage for a compelling conversation about healthcare's lack of price transparency and how this obscurity fuels an ongoing affordability crisis.

Key Discussion Points:

• Examining how opaque pricing impacts patient decisions and the healthcare system.
• Insights into technological advancements that could revolutionize how patients and plan sponsors view and manage healthcare expenses.
• Discuss the pivotal role of price transparency in improving healthcare outcomes and reducing unnecessary expenditures.

Hosted by:
Michael Navin & Dr. Randy Vogenberg

Michael's LinkedIn

Randy's LinkedIn

Sponsored by:
Peek: A game-changing prescription shopping solution that allows its members to view all their prescription cost options across cash discount programs and their insurance in one easy-to-use platform. Peek is currently being offered to organizations to help both employees and plan sponsors save money on their prescription spend. https://peekmeds.com/.

Institute for Integrated Health (IIH): Health care benefits, insurance coverage regulations, and doing business in the healthcare industry can be complicated. At IIH, Dr. Randy Vogenberg and his team understand these unique challenges and provides strategic guidance customized to every client. To help overcome your unique challenges, IIH delivers education, planning and advisory on market trends, and U.S. health care market intelligence. The firm’s decades of proven success are due to strategic collaboration with associates from the business, clinical, and scientific communities. https://iih-online.com/.

Music by:
Hanu Dixit, https://www.youtube.com/hanudixit

Transcript

Mar 20, 2025
(0:00) You are listening to the only healthcare podcast created to inform you on the why's, how's, (0:07) and what's of healthcare. Hosted by industry leaders, Michael Maven and Dr. Randy Bogenberg, (0:13) discussing why costs and risks are so high and who should be held accountable. How will technological (0:19) advancements merge with the quality of care? And when does the public gain access to advanced (0:25) medical treatments? Listen in as Michael and Randy answer industry concerns for the public (0:32) and all stakeholders involved.
Welcome to another episode of the only healthcare podcast. (0:51) Thank you for joining us today and please share with your friends and colleagues. (0:56) Today, Michael and I tackle a crucial aspect of healthcare, transparency in pricing and data.
(1:04) We're diving into how transparency not only affects business decisions, (1:08) but also plays a pivotal role in ensuring equitable access to healthcare across America. (1:15) Stay with us as we unravel who should be held accountable and the changes needed to foster (1:20) a more transparent healthcare system. To start off with, I'm going to share a few recent tidbits (1:30) that came out from an acuity report, as well as some other aspects that we've been talking about (1:36) in previous episodes.
So when we look at what has been happening in the pharmacy benefit and (1:43) retail pharmacy, in general, through the end of 2024, the total market grew less than 9%. (1:51) We see a slowing in the generics in terms of their costs. We're also seeing an increase in drug (2:01) shortages, particularly generics for the last two years.
And we're also noticing that launches (2:10) of new products are not as successful in today's landscape. Generics are slower to end of the (2:17) market is one particular aspect that's important to acknowledge that relates to our transparency (2:23) conversation today. There are a lot of other activities happening within the pharmacy benefit (2:30) and retail pharmacy, including closings of retail pharmacy over the last two years, (2:36) are over 2,600 stores have closed and more are expected to close in 2025.
From a planned (2:45) sponsor perspective, the employers and commercial health plans, we've been always expecting changes (2:54) about every 30 years, more or less, but we really haven't had a lot of significant change for the (3:02) last 30 years. We've had a lot of band-aids put on, which has made it difficult to know, (3:07) not only for the patient, but also for plan sponsors. So what are our real costs within (3:13) healthcare, which is part of this whole transparency question that many people are (3:17) talking about.
We're also seeing changes in demand that have been brought about by some of these (3:22) band-aids. And then ultimately, if we don't have good data, we don't have good information, (3:29) we don't understand the pricing, that could really make or break a business, whether you're (3:34) a manufacturer or whether you're the plan sponsor as an employer. So this becomes a very important (3:41) issue.
And I'm going to have Michael start out with talking about some of the basic aspects and (3:49) some of his thoughts around the impact of transparency, particularly on business and (3:54) business decisions. Thanks, Randy. I appreciate that.
And yes, it's a big challenge. The only (4:00) innovation that we've seen in price transparency in the last 30 years has been the cost shift onto (4:05) patients. And in really being able to figure out a way to afford whatever services or whether (4:13) it's a pharmaceutical or healthcare, the patient have taken on more of the costs over the last 20 (4:18) to 30 years, echoing your point in the last 30 years.
What I think has been the big gap there (4:25) is patients have no idea what things cost. And there hasn't been technology to provide patients (4:31) with information that they could actually see in a consumable way and a way that allows them to (4:37) actually make a decision with their doctor. So the affordability crisis is real, both on the employer (4:42) and the patient side.
Incentives are completely misaligned. Administrative waste is deep, (4:49) to about $266 billion. And really, where is that going to help a patient get access? So (4:57) over the last few years, and the Consolidated Appropriations Act that came into play (5:02) in 2021 and signed into legislation in 2022, is a way for machine-readable files to be (5:11) deployed by health insurers and plan sponsors to allow for companies with technology to bring that (5:22) information to light.
One of the companies we do work with is Talon Healthcare, and they're (5:27) really a leader in the transparency space. And really, what they've done is created technology (5:33) that, as we just said, allows for that information to be shared and then for better healthcare (5:38) decisions to be made across the board. What it's exposing is information that people would be very (5:45) about.
Getting an MRI a mile from your house might cost $1,300, and five miles from your house might (5:53) cost $200. There's all these very big, huge gaps in how health systems have been charging and getting (6:00) paid for those services. There's really some key points that, what can people do about it, right? (6:07) And selfishly, from our perspective, we have a platform called Peak that we do for pharmacy (6:13) pricing transparency technology.
And that's something that we're working directly with (6:18) employers and manufacturers to provide. And I'm just going to give credit to Talon for a minute. (6:24) They have some core principles that they're using when they're navigating these challenges.
One is (6:29) price discovery, right? So that is, how do I use technology to know what things cost in my (6:36) marketplace? The second is price equity, right? So it's, what are the fair prices? What is the (6:42) average to ensure that the fair value for both consumers and providers is there? (6:47) Price settlement, what's the actual final cost of these services? What's the actual claims (6:52) that are being paid for these types of services to make sure that you're creating that equal (6:57) opportunity? And then obviously the transparency, right? So no hidden charges, (7:04) real-time clarity for patients, no balanced billing down the road, after you've already paid (7:10) your bill for your ER visit or hospital visit. So all of those things are in place. And it's (7:15) really just a matter, I think, of educating the market.
I know from our perspective, (7:19) we see a lot of lack of information, a lot of lack of education. A lot of our clients aren't (7:25) even aware of what the price transparency laws are and what they're supposed to do to (7:32) tackle that issue. So we help guide a lot on the technology that's out there and able to integrate (7:41) into existing benefit plans.
And really from our perspective, it's something that we've seen that (7:47) it sits on top of the benefit. It's not a specific benefit. It's not tied to the insurance company (7:53) that you're working with.
It's really for you, for the plan sponsor and for their employees, (7:58) so that they have some technology to take advantage of, hey, I'm curious, if I have a (8:04) $5,000 deductible and I have a lot of out-of-pocket expenses, what should I be paying for this (8:09) particular service? And so having data and information at your fingertips in a consumable (8:14) way allows the patients to make better decisions and not just save money for them, but saving money (8:20) for their plan sponsor employer. So thinking about what you just talked about, (8:28) who should be responsible for ensuring transparency in healthcare? (8:33) We're all kind of responsible, in my opinion, right? If you can take advantage of a situation (8:38) and you know what's happening, you should try to find resources and services to do it. (8:44) There's just the general, hey, I have to pay a bill.
I should know what's going on. (8:49) The other part is there's the legal aspects of it, right? So you have the fiduciaries of the plans (8:56) who are the responsible party to pay the bill appropriately and know that the spending on that (9:03) particular service is in line with what fair and customary pricing is. So I think that you kind of (9:10) take both ends of that spectrum, right? In order to change a very dynamic market, we all have a (9:18) level of responsibility.
And really, because as I started this conversation out with you is as the (9:22) costs have shifted to the patient, I mean, it's dramatic. I don't have the data in front of me, (9:28) but it's dramatic on how much patients have now taken on from a cost of care perspective. If you (9:34) add up their premiums, you add up their deductible, and then you add up any other out-of-pockets, (9:38) coinsurance, things of that nature, they're paying a huge amount that they weren't paying 20 years (9:44) ago.
So the resources have to be readily available to the consumer and allow them to then (9:52) take that responsibility along with the plan fiduciaries. Yeah, and then I think a future (9:58) episode, we'll dig deeper into the coinsurance issue, which will be an increasing problem for (10:06) patients as well as providers and health plan sponsors, because the market's moving in that (10:12) direction with higher cost therapies, cell and gene therapies, et cetera, where coinsurance really (10:19) comes into play as opposed to a copayment, which is what we're used to. But thinking about what (10:24) you were talking about around the current state with data transparency being really bad, there's (10:32) not good availability or accessibility to the data, particularly by the patient, let alone a plan (10:37) sponsor.
What are the implications of some of the things that you've been talking about with (10:43) transparent data on patients' choices and the overall competition that could exist in the marketplace? (10:53) Well, I mean, obviously, just like any other competitive market, you know, having an open (10:58) marketplace in health care is really critical. It's part of what I believe the administration (11:04) is moving towards. And also, the resources are available to do that.
And what does that really (11:10) mean? What does that mean is the patient has to educate themselves a little bit, right? Because (11:14) typically, you're used to just going to the same provider, getting the same service or treatment (11:19) that you're getting, and then kind of moving on, right? You don't really know. A lot of people (11:23) don't think to say, well, gee, I should shop for this. What am I really getting the best, you know, (11:28) bang for the buck in this particular situation? So I think that that will create providers (11:34) having more consistent payment and billing practices, less worried about the third party (11:43) and more worried about the consumer and how do they engage in a relationship with that consumer (11:47) to make sure that they're back, you know, they come back to them, just like any other marketplace.
(11:52) So when you think about how they reduce those costs, the competition is going to be what drives (11:58) the cost down. But ultimately, for the provider, they're also going to have a better relationship (12:04) with their patient. They're also going to get paid faster.
They're not going to have to wait for (12:08) that claim to get processed and pushed in. So I think there's a lot of benefit as you get to (12:14) this transparent solutions that are there. And when you get people saying, hey, I'm going to (12:18) use these technologies to purchase my health care.
But as we all know, change is very difficult. (12:25) You know, generationally, we're used to different types of, you know, when when you and I were (12:30) growing up, it was everything was five dollars. And no one said anything about the cost to health (12:36) care over the last 20 years.
It's oh, my gosh, I'm paying fifty thousand dollars a year for a (12:42) family of five. And my deductible is twenty five grand. And it's like you could never have imagined (12:48) that 20, 25 years ago.
So. I think you're going to get more competitiveness, but also a greater (12:57) sense of transparency and cost savings for the patient. Also, they're going to be using (13:01) information at their fingertips better.
So things like HSA plans, right? Just like you're using a (13:08) 401k for retirement or a 529 for your children's college. You know, an HSA plan allows you to save (13:15) money in a similar way and use those dollars, you know, as it's needed. But it's also building, (13:21) you know, and you're not just paying those dollars to a premium to that go to zero the next year and (13:26) start over again.
So those dollars can be used, you know, down the road. So I think people are (13:32) going to get more savvy financially using tech and also creating more competitiveness within the (13:37) provider side of things. So you you definitely identify some of the potential benefits of (13:44) transparency around reducing health care costs.
That makes a lot of sense. How could it also help (13:52) with the service quality and how care is being delivered? Is there a benefit there as well? (14:00) I think that's yet to be seen only because I think you've seen providers practices shrink, (14:06) right? You're not necessarily seeing providers growing and providing back end services. (14:12) You're seeing a lot of those back end services done through telehealth and different things like (14:16) that.
So maybe more on the technology front, you can see some greater, you know, access to quicker (14:23) treatment or quicker care. But it doesn't necessarily, in my opinion, apply to like the (14:28) traditional practice that we've seen in place. And in fact, I do think those practices are (14:33) shrinking.
In fact, they're being purchased by, you know, large hospital organizations and hospital (14:38) groups and consolidating into, you know, a huge network. So I don't know how much that helps the (14:45) patient, right? Because are they really getting all the services they need or are they getting put (14:52) into a system that, again, is complex and doesn't provide, you know, the services that we've been (14:59) accustomed to or are advancing in our health care. So I think you've seen a lot of the data shows (15:05) while our expense of health care has gone up astronomically, the quality has still remained low.
(15:12) Like the outcomes in the country are still low in terms of the dollars being spent. So you can't (15:18) even equate the advancements in treatments or the advancements in care to, wow, we've gotten (15:25) better outcomes because we haven't. And that's one of the challenges.
Well, that leads me into (15:31) thinking about some of the campaign conversations we heard, as well as some of the early pronouncements (15:38) from the White House around the role of policy. So how's transparency going to fit in to this (15:46) fair treatment or better treatment as you're talking about, as well as access for all the (15:53) demographics, whether you're in a city, you're suburban or in a rural area. What do you see (15:59) happening around policy? Well, it's hard to say, right, because I think what we've talked about (16:05) in other discussions is policy tends to be sort of ready, shoot, aim, where it's we have to make (16:13) a change, make an announcement, the announcement's made, and then it's like, well, then how do we (16:17) implement this? Does it even get implemented in the way it was intended, right? So, and also, (16:24) sometimes it can tend to go too far, right? The unintended consequences is if you're reducing the (16:32) payments to providers, well, then they're not going to be motivated to do the treatment that (16:38) they're supposed to do, right? Or not necessarily motivated, but they're not going to have the (16:42) resources to help if they can't make money to run their practices, right? And so I think you have to (16:49) be really careful at what happens.
The money in the system, though, is sitting within the major (16:55) health plan. We know that, right? So the top four plans are United, Aetna, Cigna, and Humana. (17:03) They generate a trillion dollars a year in revenue between those four plans in and of itself.
(17:08) They generate about 400 billion in net profit, and that's $400 billion that's not being distributed (17:16) for people's care. So my hope is, as the policies start to come into play, (17:24) that that's where their focus is, that they're not reducing the amount of money that's available, (17:29) but that it's being put into work with the right resources, providers, manufacturers, (17:36) people who deliver care, caregivers, transportation companies, to your point about rural (17:43) disparities in care, things that can actually get people to get the best treatments and to (17:49) have the best outcomes. The best outcomes and the best treatments aren't going to come from (17:54) Cigna, Aetna, United, and Humana.
We can add in the big three PVMs to that list as well. (18:01) Yeah, and I should have said that, but they are all obviously owned by, and if everybody doesn't (18:07) know this, Aetna owns CVS, United owns Optum, and Cigna owns Express Scripts or vice versa, (18:15) right? So they've become a juggernaut and are the pain point for a lot of these challenges. (18:22) Well, let me ask one last question.
Whenever you talk about data and transparency, you have to be (18:29) thinking about AI these days. So what's the role of artificial intelligence and technology as we (18:36) start looking at this issue of transparency going forward? You know, AI is pretty scary for me (18:43) when it comes to actual healthcare. I think I'm still in old school.
I want to see the doctor. I (18:48) want to talk through the issues. But when it comes to pricing, I think it can play a role, right? (18:53) Because AI can certainly pull the data.
It can pull claims analytics and see what the out-of-pocket (18:59) should be. So I think it can have a role in saving money. And instead of dollars going to (19:06) the wrong people, it's going to the patients for care.
But I don't know if I personally want to (19:12) see AI have any role in actually outcomes and treatments. Yeah, I hear you. Well, this has (19:18) been a great conversation on data and transparency, Mike.
Why don't you take us out of this episode? (19:24) Yeah. So thanks everyone for joining us today as we dissect the vital role of transparency (19:29) in the shaping of the future of healthcare. It's very clear that for America to move forward, (19:34) we need robust mechanisms for transparency so that not only can we inform the consumer, (19:40) but empower them.
Don't forget to share this episode with friends and colleagues who are (19:44) passionate about transforming healthcare into a more equitable and transparent system. (19:49) Join us next time as we continue to provide insightful discussions (19:52) on the innovations and policies driving healthcare forward. Thanks, everybody.
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