Driving a hard bargain for healthcare

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Some of our measures are unique, including a pet project of mine: an in-house health clinic that provides primary care for state workers. As far as I know we are the only state in America — in fact the only government, state, local or otherwise -- that does this. But successful companies like Google, Pepsi and others have done it for years.

Like most states (and many large companies), the state of Montana self-insures its workers, meaning that we must pay directly for all medical expenses. About two years ago I asked a simple question that nobody could answer: if we are paying directly for employee healthcare, why not open a state clinic, put a few good doctors on salary and provide free primary care to any state worker who needs it? It was easy to see that the cost would be far lower than the status quo, which was to keep forking over tens of millions of dollars a year to major hospitals, which operate monopolistically, view well-insured patients as cash-cows, run up the tab with unnecessary tests, and mark up every service so hospital and health insurance executives can pull down millions in salary.

In essence, we realized we were drinking so much milk that it made economic sense to buy a cow rather than diverting money so that insurance executives and hospitals could make more profit. Predictably, when we announced the clinic idea, the executives and lobbyists from the Hospital- Industrial Complex, as I like to call it, cried bloody murder. That's when I know I am doing a good job as governor -- when corporate lobbyists raise hell at an idea that saves the government money.  

So we proceeded with establishing our clinic, and it's worked great. We expect to save several million dollars in just the first few years, and far more in future years. It’s an optional facility, but the workers like it for its convenience and for the preventive medicine that is practiced, a big part of the cost-savings.  

Hopefully when they read this article, some governors and Mmayors will try it out for themselves, and save. But be ready for a tirade from the Hospital Industrial Complex. And no, it’s not “socialized medicine” even if that’s what Republicans like to call it in their futile attempts to try to poke holes in it. Rather, it’s a way to trim down a taxpayer expense, while getting better service.

Now I’d like to contrast this idea with a federal program, Medicare Part D.

In 2003, when the federal government was already borrowing about $1 trillion a year and had no cash on hand, Congress decided to subsidize prescription drugs for Medicare patients, at a 10-year cost of almost half a trillion dollars.

Helping seniors with prescription drug costs is a commendable idea, but at the time, it was a terrible business move because of the way it was done. In the law that Congress passed, the government pledged to pay retail rates--to never to ask drugmakers for any discount, any bulk rate at all, for these drugs. In fact, negotiations over drug prices between the pharmaceutical companies and the government were expressly forbidden in the law.

As a result, consumers pay thirty to forty percent more for their medication -- tens of billions a year more--than we would if the law had allowed for bulk rate buying and price negotiations. Part D is one of the many absurd chapters in the voluminous history of Congressional waste. It’s like signing a contract with a car dealer, to pay sticker price and never negotiate for a deal, for every car you buy for the rest of your life.

It’s only been with the passage and implementation of the Affordable Care Act that the Part D fiasco has begun to improve since the new law has gotten drug companies to provide discounts on name and generic drugs for seniors who are facing the coverage gap in Part D. But we still have a long way to go and even as the problem slowly gets fixed, we’re left scratching our heads wondering why Congress would pass a law that forces millions of seniors into a coverage gap where they have to pay thousands out of pocket annually to get their prescriptions.

We don’t have to look too far for an answer. The pharmaceutical companies, just like Wall Street firms, oil companies and other industries, own Congress by use of a huge campaign donation network and an implicit threat that anybody who votes against them will find themselves running against a well-financed opponent in the next election. The drug companies paid for this law, and they wrote it to pay themselves back.

For many members of Congress who allow pharmaceutical lobbyists to bribe them with fat campaign checks, it’s easy just to cave in to the industry and give them what they want, especially when only a tiny fraction of voters ever learn about the contents of a complex federal law.

Ten years after the Medicare Part D vote, not much has changed in Washington, but fiscal cliff negotiators would do well to draw a lesson from the Part D experience. Rather than haggling about what expensive health care program to cut, someone should suggest the novel idea of lowering the cost of healthcare by negotiating on the front end for lower prices for prescription drugs in Medicare and Medicaid. It might mean lower profits for drug companies, but it would mean affordability for consumers and a more manageable bill for government. To most people, that’s just common sense.

Schweitzer is the Democratic Governor of Montana, and a farmer and rancher.