Category: Retirement

Originally published at Forbes.com on June 18, 2020.

When it comes to planning for retirement, the fundamental math is straightforward: your income in retirement (including reasonable savings spend-down) must equal or exceed your expenses.

Experts therefore worry about retirement readiness in terms of the degree to which Americans will have sufficient income in retirement — for example, the Center for Retirement Research calculates a National Retirement Risk Index by measuring the degree to which Americans are likely to reach or fall short of an objective of “maintain[ing] their pre-retirement standard of living in retirement.” But that’s only half of the equation; equally important but not addressed nearly as often is the other half, the expense side. And it’s for this reason that I want to share some bits & pieces of a recently-published book, The Price We Pay: What Broke American Health Care – And How To Fix It, by Marty Makary, as I clear out my bookshelf of library books in anticipation of my library’s re-opening.

Makary is a surgeon and professor and, according to his Wikipedia profile, “an advocate for high-consensus, common-sense reforms in healthcare.” His book, based on his own efforts at reform, profiles shocking ways in which healthcare costs are higher than they ought to be, and ways to reduce those costs without impacting — or even improving — quality of care.

The book begins with the example of a health fair at an African American congregation in Washington, D.C., where medical staff screen patients for “claudication” — a blockage of a leg artery which can be removed by a stenting procedure, the same sort of procedure that had become enormously popular for heart vessels, but now, thankfully, in decline after having been shown not to be beneficial in most cases, and subject to public scrutiny. This new income stream — costing patients modest sums and Medicare substantially more, $10,000 for a brief procedure (or triple the cost for private insurance) — “can generate $100,000 in one day when a doctor owns the facility,” Makary writes, and nearly always without genuine medical necessity, but instead by means of identifying prospective patients through health fair or after-church screenings.

Makary then backs up a bit to discuss the scandal of hospitals overcharging patients in any instance where they don’t have in-network insurance, whether they’re uninsured or simply out-of-network. Examples he gives of hospitals billing patients “chargemaster” rates that are as much as 3 – 5 times higher than what insurance companies pay, offering meager reductions for “financial assistance,” then taking to court patients who can’t pay are appalling enough (and are just as prevalent among nominally non-profit as for-profit hospitals) that Congress is already looking at remedies to “surprise billing,” or had been doing so, in a bipartisan effort, before the pandemic hit.

Another example that’ll make your blood boil is the escalating cost of air ambulances: rather than hospitals owning the helicopters, private companies moved in. The charges were no longer covered by insurance, or, at any rate, they were covered on an out-of-network basis so that patients were left with high residual costs, and patients opened up horrifically-enormous bills: $50,000; $100,000; or more — and, what’s worse, for cases where the air ambulance wasn’t even necessary, but medical staff recommend or insist on it, receiving kickbacks along the way, and patients have no idea of the cost they’re incurring.

And while price-gouging might be solved by putting all Americans on a government-run healthcare system with prescribed payscales, that’s only one component of the problem. Makary profiles obstetricians with excessively-high C-section rates because doctors want to avoid disruption to their evenings, doctors who counsel and perform back surgery for patients who (as is nearly always true) would be better off with physical therapy, doctors who perform an upper endoscopy and a lower colonoscopy on two separate days to maximize billing rather than both-at-once to maximize patient welfare; and more. He describes the overuse of opioid prescriptions for no other reason than lack of effort in the medical profession to determine what was actually best for patients rather than doing what they’d always done. He even cites his own experience being prescribed heartburn medication rather than diet modification, and cholesterol-reducing statins without addressing his particular health- and family history. “Medicare for All” offers no answers here, especially given its promises of unlimited medical care with any provider.

More rackets: health insurance brokers who sell their employer-clients on the insurance plan which pays them the largest commission rather than offering clients the best deal. (Employers are increasingly aware and moving to other business models.) Pharmacy benefit managers where rebates and “spreads” leave employers struggling to manage costs (especially since there are only three such firms bidding on employers’ business, stymying employers’ efforts to cut costs) and employees deceived as to the true cost of their medications. “Wellness programs” which don’t actually improve the well-being of employees.

What’s to be done? One of Makary’s own initiatives is simply to prod those doctors who are not cynically abusing the system, to reduce their overtreatment by educating them that they are far beyond the norm in their field. He also uses his position within his profession to educate his peers about what’s going on with medical costs that they may be wholly unaware of.

But the recommendation that’s the most promising is a complete re-do in terms of how healthcare is delivered, as illustrated by a new provider called Iora Health. This is a company, Iora Health, Inc., not a social services agency, but their business model is about improving their Medicare patients’ health in the long term by doing more than simply scheduling annual physicals or 15 minute visits and waving them away until the next appointment. Patients don’t simply have a doctor – they are assigned a health coach, and

“Iora doctors and nurses are free to take care of people in whatever way they see fit, ranging from home visits, to giving a ride to see a specialist, to enrolling their patients in one of their classes. They pride themselves in spending a lot of time with patients so they can understand the individual’s goals, struggles, and barriers. The Iora health coaches make everyone’s job a lot easier” (p. 157).

Their clinics have a community room where they host cooking classes and game nights. They follow up with patients who miss appointments, and provide rides if needed. They investigate the life circumstances of patients who don’t take their medication rather than writing them off. (How many of us have family members of our own who could have benefitted from this?)

Makary calls them the “Tesla of health care” — radically transforming healthcare, especially for Medicare enrollees with complex needs. And their results are impressive.

“After at least three months of engagement with an Iora care team, the number of patients whose hypertension was controlled increased from 59% to 74%. Results from a cohort of 1.176 Iora Medicare enrollees over an 18-month period showed hospital admissions cut in half and emergency department visits reduced by 20%. The totalmedical spending by the insurer declined 12%. Since that study, Iora has now reduced health care spending for the populations they care for by 15%. Imagine what a 15% reduction in Medicare’s roughly $1 trillion budget would mean for the country” (p. 164). Iora has practices in Texas, North Carolina, Atlanta, Phoenix, and elsewhere. A similar company, Oak Street Health, has 21 locations in Illinois, and a total of 36 elsewhere. ChenMed’s locations are primarily in Florida. All three provide services specifically for Medicare patients.

And their business model? The clinic is paid an annual lump sum.

Yes, they’re an HMO, more-or-less, though they work with insurers/Medicare, rather than directly with patient-customers — and, at the same time, HMOs were supposed to transform healthcare, decades ago, but didn’t. Why not? Are we ready for another try? Let’s hope so.

December 2024 Author’s note: the terms of my affiliation with Forbes enable me to republish materials on other sites, so I am updating my personal website by duplicating a selected portion of my Forbes writing here.