Health and Wealth Why Didnt I Think of That? Secrets of an Industry Insider

Education — As wealth increases, more people get educated, which increases wealth; So there's a lot of money in comms, and Real Estate and Construction — As the rampant explosion in the global population continues India and China are expected to hit 1. Of the experts, As the success stories just keep coming, The 19 countries with the most millionaires. Features Millionaires industry Sector Growth.

The 16 industries most likely to make you a millionaire The 16 industries most likely to make you a millionaire The industries that will create the most You are logged into Facebook Social: You are logged in with Google Social: Registration on or use of this site constitutes acceptance of our Terms of Service , Privacy Policy , and Cookies Policy. Stock quotes by finanzen. Marilyn Bartlett spent two years running Montana's employee health plan.

She made better deals with hospitals and drug benefits managers and saved the plan from bankruptcy. Mike Albans for NPR hide caption. Marilyn Bartlett took a deep breath, drew herself up to her full 5 feet and a smidge, and told the assembled handful of Montana officials that she had a radical strategy to bail out the state's foundering benefit plan for its 30, employees and their families.

The officials were listening.

It needed a savior, but none of the applicants to be its new administrator had wowed them. Bartlett came with some unique qualifications. She had just spent 13 years on the insurance industry side, first as a controller for a Blue Cross Blue Shield plan, then as the chief financial officer for a company that administered benefits. She was a potent combination of irreverent and nerdy, a certified public accountant whose smart car's license plate reads "DR CR," the Latin abbreviations for "debit" and "credit. Most importantly, Bartlett understood something the state officials didn't: Everyone, she had observed, was profiting except the employers and workers paying the tab.

Now, in the twilight of her career, Bartlett wanted to switch teams.

In her view, employers should be pushing back against the industry and demanding that it justify its costs. They should ask for itemized bills to determine how prices are set.

And they should read the fine print in their contracts to weed out secret deals that work against them. This story is part of a series from ProPublica and NPR investigating little-seen aspects of the health insurance and health care industries. Previous stories have examined how health insurers profit from big medical bills and how the industry captures patients personal lifestyle data to rate how much patients' care may cost. Have you worked in health insurance?

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ProPublica and NPR want to hear from you. Please complete our brief questionnaire. The way health care works in America, most employers cede control of costs to their health insurers, the hospitals that treat their employees and the companies they pay to manage their benefits. The costs are a dense thicket that few employers feel equipped to hack through. This failure helps explain why Americans pay the highest health care costs in the world — and why the tab continues to increase, year after year.

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Employers fund these costs through employee compensation packages, so the math is typically bad news for workers: Rising health costs mean fewer wage increases and less take-home pay. Montana was no different. And so Bartlett pitched a bold strategy. Tell the state's hospitals what the plan would pay.

Take it or leave it. Demand a full accounting from the company managing drug costs. If it won't reveal any side deals it had with drugmakers, replace it. Bartlett's strategy would expose a culture in which participants fail to question escalating costs and the role each part of the health care industry plays in them. These little-seen aspects of the health insurance industry and the way Americans pay for medical care are the focus of an ongoing series from ProPublica and NPR.

As Bartlett laid out her plan that day in July in a conference room in Helena, Sheila Hogan, then-director of the state's Department of Administration, liked what she was hearing. They needed something radical. To her knowledge, no one had ever tried anything like this. Bartlett would be taking on some of the state's power players: If her plan didn't work, the state and its employees were in trouble.

If it did, it could create a blueprint for employers everywhere. Bartlett knew employers have negotiating power that few of them use. The health care system depends on the revenue produced by the surgeries, mammograms, lab tests and other services it provides, and it can ill afford to lose it. Bartlett got the job. She would call the industry's bluff. Employer-sponsored health benefits are almost as old as America itself. In , John Adams, the second U. After the Civil War, lumber, mining and railroad companies in the American West withheld money from employee paychecks to pay for doctors and hospitals.

Bartlett's license plate reflects her dedications to accounting. DR and CR are Latin abbreviations for "debit" and "credit" respectively. After World War II, such plans became mainstream. Today, about million Americans get their health benefits through their employers. Half a dozen health insurers currently sit near the top of the Fortune , with combined annual revenue of about half a trillion dollars. Despite the money at stake, many employers have, wittingly or not, deferred to the industry.

Decisions about health benefit plans are usually made by midlevel human resources managers who may not understand the forces in the medical industry operating against them. They're often advised by insurance brokers, who are traditionally funded by the industry. And they're trying to keep the peace for employees — who demand convenient access to the care they need. It's a recipe for inertia. The conventional wisdom is that insurance companies want to reduce health care spending.

In reality, insurers' business plans hinge on keeping hospitals and other providers happy — and in their networks — often at the expense of employers and patients. Employers often feel caught between rising costs and concern that changes they make will be bad for their employees, says Michael Thompson, president of the National Alliance of Healthcare Purchaser Coalitions, which represents groups of employers who provide benefits to more than 45 million Americans.

And, he says, they rely on the advice of industry experts instead of digging into the details. This is not a small issue. It's a huge issue. Bartlett arrived in Helena, the state capital, in fall as an outsider navigating a minefield of established relationships.

A Tough Negotiator Proves Employers Can Bargain Down Health Care Prices

From the start, she knew she would have to tackle the staggering bills from the state's hospitals, which made up the largest chunk of the plan's expenses. It wouldn't be popular because they also made up a significant chunk of hospitals' profits. Montana, like many large employers, self-funds its plan. That means it pays the bills and hires an insurance company or other firm to process the claims.

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More than half of American workers are covered by self-funded plans. As the boss in this arrangement, Bartlett assumed she would have access to detailed information about how much the plan, which was managed by Cigna, paid for procedures at each hospital. But when she asked Cigna for its pricing terms with the hospitals, Cigna refused to provide them.

Its contracts with hospitals were secret, Cigna representatives told her. That didn't sit well with Bartlett, she recalls. A cumbersome querying process set up by Cigna allowed her to get individual claims and other limited information. But the company would only give her aggregate data, with things lumped together, to show what she paid each hospital.

It was like telling a family trying to reduce its grocery spending that it could only see what it spent in a year, not a breakdown of what bread and fruit and other items cost at each market. When Bartlett continued to demand information, Cigna balked; it needed to balance what she wanted with keeping the hospitals happy. Cigna declined to answer questions about its relationship with Montana's plan, but it said in a statement that it had prioritized the plan's preferences and needs.



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Bartlett ultimately settled on a radical solution: The plan would set its own prices for the hospitals. In the illusory world of hospital billing, the hospitals typically charge a high price for a procedure, then give insurers in-network discounts. These charges and discounts might be different for each procedure at each hospital, depending on who has more leverage during negotiations. The discounts, however, are meaningless if the underlying charges aren't capped. Bartlett recalled wondering why anyone would think this was OK.

Under Bartlett's proposed new strategy, the plan would use the prices set by Medicare as a reference point. Medicare, the federal government's insurance for the disabled and patients over 65, is a good benchmark because it makes its prices public and adjusts them for hospitals based on geography and other factors. Montana's plan would pay hospitals a set percentage above the Medicare amount, a method known as "reference-based pricing," making it impossible for the hospitals to arbitrarily raise their prices.

Fed up, Bartlett ended the plan's relationship with Cigna. Her battle to upend the status quo riled some employees of her own office, who complained that she was demanding too many changes. Bartlett didn't let up. That Christmas, the Cigna representative sent each employee in Bartlett's office a small gift, a snow globe. Bartlett didn't get one. Allegiance had been studying variation in hospital prices for years and had twice sent reports to Montana hospitals showing how their prices for the same procedures differed significantly.