Guv wannabees: ‘It’s health care costs, stupid!’

You would think at least one of the candidates for governor of Wisconsin would by now have laid a glove on the underlying costs of health care.

It’s the No.1 affordability issue in the minds of voters. How could it not be when the price of premiums on the Obamacare exchange rose to an average of 58% in 2026 in the absence of enhanced federal subsidies?

Average deductibles on the ACA exchanges rose by more than $1,000 to $3,786. One bad medical case could bust a family financial structure.

As I wrote when the Affordable Care Act passed in 2010, it should have been called the "Unaffordable Care Act." It increased coverage, but didn’t touch costs.

Wisconsin is not immune. It ranked third highest in a just-released "Health Cost Initiative" report. Rand Corp., a venerable research shop, put Wisconsin hospital costs at sixth highest in the nation.

As always, the Democrats want higher government subsidies for consumers of care, but, as usual, the candidates duck the cost/price dynamics.

That’s most unfortunate, because there are available solutions for dealing with a marketplace that has become thoroughly uncompetitive.

Most sectors of the U.S. economy are subject to the disciplines brought to bear by competition. Raise your price above the competition, and you lose business. And, business at the margin is where profits are won or lost.

Unfortunately, over a couple of decades, rampant mergers and collusions have eroded competition in the health care sector, now approaching 20% of the economy.

The ever-larger lineup of care providers and health care insurers resist fundamental reform, especially on price. They love the status quo.

In reality, they are often in bed with each other. Providers own their own insurers/health plans. They negotiate with themselves. Example: Froedtert Health owns Network Health, an insurer. Example: UW Health and Gunderson Health System own big chunks of Quartz, a health insurer.

Another reality: Consolidations of providers have reached frenzy levels.

Example: Aurora of Wisconsin became part of Advocate of Illinois and then both became part of Atrium Health of North Carolina.

In the face of consolidations in the pursuit of market power and higher prices, leading to decades of unrelenting price hyperinflation, our political leaders have to step back and entertain a fundamental structural upheaval. What would Teddy Roosevelt, the legendary trust-buster, do?

Here’s what he and his disciples would do or are doing:

Establish price controls, using price caps on procedures, as Oregon and Indiana are already doing as part of sweeping reform packages. Require cost accounting on high-volume treatments. Example: cost/price for new hips. One major accounting firm put total costs for a hip replacement at about $6,000. Prices/charges run as much as $50,000 or way more. Medicare once had a cap of $30,000 for a joint replacement.

Create a new public service commission, as Wisconsin did in 1907 to regulate uncompetitive public utilities in power and telecommunications.

How else does society discipline those monopolies or near monopolies?

Bust the existing combinations of providers and health insurers. Force them to divest of their collusive partners. Mergers have always resulted in higher prices.

Insist that Medicare, the largest and best managed public health plan, set caps on a broad range of procedures that can then be used as benchmarks for prices for other plans.

Example: Some plans set price caps at no more than 200% of Medicare. Note that some larger self-insured private companies also bargain for lower fixed prices.

Require that all health plans, public or private, stress primary care at on-site, near-site or community-based clinics. Use artificial intelligence to improve and streamline primary care diagnoses and treatment plans. Costeffective AI technology exists. (I am an investor in Intellivisit Solutions, a Wisconsin startup, that does just that.)

To prevent doctor overload, expand the service reach of nurse practitioners, advanced NPs, physician assistants and nurses. Sharply increase tuition aid to encourage such medical careers. The Medical College of Wisconsin led the way by creating satellite campuses in Wausau and Green Bay. There is no good reason for doctor or nursing shortages.

The PSC could also oversee standards for public health. Wisconsin, once a leader for public health, has been falling in state rankings for critical metrics, such as immunizations, infant mortality disparities and opioid deaths compared to other Midwest states.

The new PSC could insist that providers install and execute lean disciplines, the same methods that have dramatically improved outcomes and costs in the manufacturing world. Initiate audits for accountability on costs and quality. Such audits are standard practice in other sectors.

As part of the regulatory oversight, rein in administrative bloat and excessive executive compensation.

Reestablish the former Wisconsin high-risk insurance pool to have society as a whole pay for catastrophic injuries or illnesses. Every health insurance policy would include a modest surcharge to cover the high-risk cases. We can’t be bankrupting families that incur a catastrophic incident. Many of these cases can’t be prevented by wellness tactics; they are called "acts of God."

That’s a ground-shaking set of necessary reforms. Sweeping reforms would need a big political push, but could be forged into a long-term manifesto for a broad Wisconsin strategy for world-class health care. (Stipulation: The medical side of health care in Wisconsin is mostly very caring and often brilliant; it’s the economic side that is "sick.") The next governor could call a summit of health care stake-holders across the state. Katherine Lyall, an economist and former University of Wisconsin president, did just that with four consecutive yearly summits from 2000-2003 to address the then-lagging Wisconsin economy.

Several of the seven Democratic governor candidates have called for a fuzzy concept called a "public option."

It would open access to the Employee Trust Fund that covers health care for state and some municipal employees.

It is not known for innovation, cost and price effectiveness. A well-staffed summit could slice and dice that undervetted option.

Long and short, tweaking the convoluted, cocked-up economic structure for health care in America will not move the needle on out-of-control costs. Sweeping reform is needed.

Further, health cost policy moved away from the states to Washington, D.C., in 2010 with the passage of the ACA, and nothing has happened since at the federal level to lower costs.

Sweeping reform has to move back to the states.

Why not get started in Wisconsin, once a leader in large-scale public policy reform?

(John Torinus is retired CEO of Serigraph Inc. in West Bend and blogs regularly at www.johntorinus.com.)

Long and short, tweaking the convoluted, cocked-up economic structure for health care in America will not move the needle on out-of-control costs.

Sweeping reform is needed.

JOHN TORINUS