'The High Price of Lowering Health Costs for 150 Million Americans' Transcript

February 18, 2021

Note: This transcript has been created with a combination of machine ears and human eyes. There may be small differences between this document and the audio version, which is one of many reasons we encourage you to listen to the episode!

Dan Gorenstein: A quick warning, there is some sensitive language used in this episode.

DG: Health insurance ain’t what it used to be.

At least not for some 150 million Americans who get their insurance through work.

Marilyn Bartlett: It’s time to quit raising co-pays, quit with the high-deductible health plans, quit with that. 

DG: For years, most employers have saddled workers with higher and higher health care costs.

Now a small but growing group of companies, unions, and public employers says it’s time for a reckoning.

To fight sky high prices, they’re using data — facts and figures that’ve been hidden in plain sight — and taking a stab at new ways to buy health care.

It’s a mission that has them on a collision course with hospitals, insurers…even their own employees.

From the studio at the Leonard Davis Institute at the University of Pennsylvania, I’m Dan Gorenstein and this is Tradeoffs.


DG: We’re excited about today’s show. It’s something a little different we’re trying this year. Think of it like a magazine feature but for your ears. For this one, Senior Producer Leslie Walker and I have been working at it since December. She’s gonna join us today to help tell the story. Leslie, excited to have you here. 

Leslie Walker: Happy to be here, Dan.

DG: So, this story, it’s about some people who are laser-focused on one thing: beating back health care costs for employers and their workers. And it starts…where lots of great stories start: at a bar. 

LW: So here’s the scene: the back corner of a dark, kitschy tavern in Denver, Colorado. It’s the summer of 2018 and Gloria Sachdev is having drinks with the woman of her dreams.

Gloria Sachdev: I was speechless. I was in awe. I wanted to get to know her. I mean, I was in love, right?

LW: Earlier that day, at a health care conference, this dream woman, Marilyn Bartlett, had told Gloria and a room full of employers how she’d accomplished the unthinkable. She’d rescued the state of Montana’s employee health plan from going into the red and saved them more than $30 million in just three years.

For Gloria, that sounded like winning the Olympics!

GS: I mean, I was just in awe of her that she was able to do this.

LW: And tonight, Gloria’s sitting right next to Marilyn, practically a health care folk hero. She’d unearthed the root of Montana’s rising costs: hospital prices. And she’d gone toe-to-toe with hospital executives, and won. 

DG: And Leslie, there’s two things that strike anyone who meets Marilyn right off the bat. One, she can be easy to miss.

Marilyn Bartlett: Oh, well, I say I’m five foot two, but I think I’m five foot one. And how much do you weigh? 110.

DG: And, she’s tough as hell.

MB: I asked my grandkids if I was pushy and finally, little Vinny said, “Well, yeah, but you’re pushy in a good way.” I don’t. give. up. 

DG: And that’s exactly the person Gloria met that night.

GS: She didn’t hold back and I mean, she cusses with the best of them. And honestly, I think our friendship was forged around vodka.

DG: So what exactly had this small fiery lady managed to do back in Montana that had Gloria on the edge of her bar stool? It started with a pile of receipts. 

Basically, Marilyn had rounded up a year’s worth of hospital bills Montana had paid on behalf of its workers. And then she tried to find something to compare them to, some sort of benchmark. Because without that, how would you know if you were getting a good deal or not?

LW: Right, most prices are trapped in secret contracts. But Medicare, the federal health program for seniors, does publish how much it pays hospitals.  

DG: Yep, so when Marilyn compared what hospitals charged the state to what hospitals charged Medicare, she found Montana was paying two, three, even four times more — for the exact same care.

MB: I was shocked by that difference, but I also then knew we had room. We definitely had room to negotiate.

LW: Now remember, Marilyn’s responsible for the solvency of the state’s health plan and it was facing a $9 million dollar shortfall. So, she made this bold decision.

Rather than have the hospitals name their price, as they’d been doing for years, Marilyn was gonna set the price. And she was gonna use Medicare as her benchmark.

DG: Hospitals have claimed for decades that Medicare rates are too low to keep the lights on. And Marilyn factored that in, more than doubling the rate she was offering to about 230% of what Medicare pays. If the hospitals didn’t play ball, they’d lose the whole Montana state health plan…the biggest book of employer business in the state. 

LW: Gloria could barely believe what she was hearing.

GS: I didn’t know anyone in the country that was negotiating based on a percent of Medicare. And then I hear her and she’s not just doing it. She’s done it.

LW: The problem Marilyn had seemingly solved was the exact same one Gloria was trying to fix. Gloria’s the CEO of the Employers’ Forum of Indiana, a coalition led by big businesses worried about the cost of health care. She talks fast, brings a Powerpoint deck with a hundred slides wherever she goes.

And thanks to some data sleuthing of her own, Gloria had discovered that Indiana hospitals were also charging employers more than Medicare. 

GS: We were struggling to get anywhere with our hospital CEOs. 

DG: The best lesson Marilyn shared that night with Gloria was about the power of one tiny word: no. It was a lesson Marilyn learned at a meeting up in Billings.

MB: I said there’s more presidents and vice presidents here than there are in the European Union.

DG: She and her colleague Sheila Hogan had driven four hours from Helena to meet with a bunch of executives from one hospital. 

MB: And Sheila and I walk in and I’m sitting there saying my numbers are right, my numbers are right. 

DG: But the hospital executives weren’t listening. Not really. 

MB: And so Sheila stood up and she said, get your stuff, we’re going. And the CEO said, “Well, where are you going?” And she said, “Well, it’s obvious you don’t have any desire to work with us on this. So we’re just  going to go shopping.” And I looked at her like, “Go shopping? You don’t say that!” Well, sure enough, we went to the mall, we shopped and drove back to Helena. 

DG: Marilyn realized that afternoon that her numbers, no matter how persuasive, how thorough, wouldn’t mean anything if Montana didn’t start saying that one little word. It was a word those hospital executives had rarely heard. And when Sheila uttered it, she almost seemed to break a spell.

MB: She made that call and it was the right call. We’ve got the other hospital down the street, we’re going to move forward without you so we’re leaving. 

DG: Eventually every single hospital agreed to the rates Marilyn set. 

LW: Standing up, walking away, saying ‘no’, these were new muscles and more employers from Seattle to Raleigh were starting to flex them. 

Gloria was hoping her members would find those muscles too. But a few months after Denver, she wasn’t having much luck with hospitals or employers.

The data she’d been sitting on since before she’d even met Marilyn seemed pretty damning, to her. The nonpartisan think tank RAND had published it, finding Indiana employers were paying hospitals nearly triple what Medicare paid for the exact same services.

GS: I was furious, frankly. because if nothing was going to change why are we doing these price transparency studies?

LW: Gloria was coming to understand how hard it was for employers to put into practice what Marilyn had pulled off.

DG: She would get frustrated and sometimes she’d call up another buddy she’d met in Denver, Bob Smith. 

Bob Smith: Gloria and I, Marilyn, we talk quite frequently. It’s kind of like AA, you know, it’s kind of like mental health groups. 

DG: Bob spent 30 plus years working in hospitals and has the white hair to show for it. These days, like Gloria, he runs a coalition of employers but in Colorado looking to control health care costs.

LW: Now Dan, in this story, when we’re talking about employers, we’re talking Fortune 500 companies, state and local governments and unions…the big fish! They spend millions, sometimes billions a year on health care for their workers.

DG: Right. And Bob’s got a theory why so many employers end up sitting on the sidelines. He chalks it up to three things.

BS: One: size. OK, no employer — even the state of Colorado — is big enough to offset the power that these large health systems have.

DG: Employers just really don’t have much leverage at the negotiating table.

BS: The second challenge they have is sophistication. The employers are pretty good at evaluating Cigna or Anthem or Aetna. They have no idea how to evaluate hospital services. They just don’t. 

DG: In other words, even if employers drop their insurer and want to negotiate on their own most have no clue where to start.

LW: So it’s easier to just stick with the status quo, lean on their insurers and cross their fingers they’re gettin’ a good deal.

DG: And that takes us to the last challenge…fear.

BS: They don’t want to disrupt their employees so they’re afraid of blowback or pushback. And those are the three challenges.

LW: Gloria got all of that…but she wasn’t about to let go of the price problem she knew Indiana employers had.

She wasn’t sure exactly what to do so she doubled down on data, asked RAND researchers for a follow-up study…RAND 2.0.

GS: We started inviting other states to participate. Are we high, are we low? What’s a regional average? That was my goal, like trying to touch five, six, seven states around us. 

LW: Gloria’s looking for a sort of benchmark of her own to help Indiana employers see how they stack up. She spends half of 2018 criss-crossing the country collecting this price data. And for the first time, she gets a sense of momentum.

She manages to collect claims for care received by 4 million people at nearly 1,600 hospitals in 25 states.  

DG: Real quick, Leslie. As hospitals point out, that represents around 1 percent of everybody covered by employer insurance.

LW: That’s true. But it was a lot more than Gloria expected. Employers handed that data over to the researchers. Then Gloria waited, having no idea where Indiana would land.

GS: And I couldn’t believe it. Indiana was the highest price state of twenty five states. And I was just I mean, I should have been, I had, like 18 things on my to-do list to do for the conference the next day, but I was just speechless. We thought we would be middle-to-low. We were stunned.

DG: Rarely does an economics paper get headlines coast to coast, but this one did. 

News clips: That’s according to a new study from the RAND Corporation…they’re charging four-times what they get from the federal government…Wyoming hospitals charge private insurance more three times on average than what Medicare pays for the same service.

DG: Notice the theme? Medicare.

For the first time, employers could see how much more that hospital across the street was charging compared to this benchmark.

Bob Smith in Colorado says RAND 2.0 helped some less savvy employers see their hospital deals in a new light. Like when he talked to a small school district that had just been bragging about the sweet 60 percent discount they had gotten…  

BS: And they said, “Can you imagine that? They must be going broke! I mean, they are clearly subsidizing us.” Well, we calculated, what, 60 percent off their charges were, and they’re paying 360 percent of Medicare. But if you don’t have these data, how do you know? 

LW: And for more sophisticated employers, it gave them in black and white a number to express a hunch they’d had for years…that they were getting ripped off.

Elizabeth Mitchell: It’s one thing to suspect, it’s one thing to think, wow, I didn’t get a great deal. It’s another thing to see it quantified. 

LW: Elizabeth Mitchell, there, runs the Purchaser Business Group on Health. It represents some really big employers like Microsoft and Wal-Mart.

DG: Gloria had finally gotten the full attention of most of her public and private employers. Like Candace Shaffer, who heads up benefits for Purdue University.

Candace Shaffer: It was just like OK, yep, there’s a problem here.

DG: And the employers did something they hadn’t done before…in the fall of 2019 they joined together to demand better prices. The goal was to improve care and save money for themselves and their workers — workers who’d seen health care costs rise two times faster than wages. 

One of the first things they did was ask for a sit-down with their insurance company Anthem.

CS: One word for those meetings: awkward, right? I mean, hands down, awkward. I just remember being in the room and us being like, “How does this happen? Surely you saw this, right?”

DG: The pressure was on.

Anthem had already agreed to stop negotiating some prices down from the seemingly arbitrary prices hospitals offered and start negotiating up from Medicare rates, just like Marilyn had done back in Montana. 

But the employers wanted more. 

Anthem was renegotiating with Parkview Health, a hospital system that RAND showed was charging four times Medicare. The employers made it clear – they wanted those prices to fall. 

News clip: Negotiations between Parkview Health and Anthem continue with their relationship on the brink

DG: Parkview was refusing to budge and some employers were getting cold feet. Candace says Purdue, as one of the states biggest employers, decided to take a page from Marilyn Bartlett’s Montana playbook.

CS: Parkview needed to come down in their pricing and if they weren’t willing to do that, we were going to figure it out for our employees and members. It was a bold statement that we needed to make as an employer.

DG: Purdue channeled the big power of that little word: n-o.

LW: And in July of 2020, after months of public drama, Parkview blinked.

News clip: Contract negotiations between Anthem of Indiana and Parkview Health came to a long anticipated end today

LW: The five-year deal is expected to save $700 million.

News clip: The multi-year agreement provides Anthem members with continued in-network access to all Parkview health providers and facilities.

LW: What that group of employers threatened to do, says Elizabeth Mitchell…it’s no small feat. It’s something even the jumbo businesses she represents are scared to do.

EM: It takes a lot of fortitude to carve a marquee brand hospital out of a network. But if you can’t do that, you have very little leverage. 

DG: In a survey last year by the Kaiser Family Foundation just 4 percent of employers said they’d dropped a hospital and shrunk their health care network to cut costs. 

After the break…one worker’s journey through one of those narrow networks…Gloria goes to the statehouse…and Marilyn’s second act.


DG: Ok, Leslie, we’re back. 

LW: And we’re heading from Indianapolis to the Big Apple…New York City…where Dan, your interview got off to a rough start.

DG: I’m a Bulls fan. I’m from Chicago.

Will Haynes: Oh, no, we can’t talk – interview over 

DG: That’s Will Haynes, he’s 41, lives in the Bronx and sad to say he’s a die-hard Knicks fan. He’s also a member of 32BJ, a union with 160,000 members in 11 states, primarily New York and New Jersey. These are folks who work jobs like security, office cleaning and building maintenance.

And when Will got his job on May 23rd, 2016, he says he actually thinks he kissed the floor he was so happy. 

WH: That day was overwhelming, yeah, it was one of the best days of my life.

DG: The job meant making $20 an hour and just as important to him: great health insurance with no monthly premiums.

LW: But over at the union office, Sara Rothstein says their health plan was in trouble. 

Sara Rothstein: At the point at which I came in, hospital costs were increasing about eight percent a year.

LW: Sara manages the union health fund, where more than 5,000 different employers each chip in and together, they pay for  health care for the union members. She was hustling to keep employers’ contributions in check and preserve high-quality benefits for people like Will.

Tough to do when employers’ contributions are rising 7 or 8 percent a year.

In another time, Sara might have just passed those costs on. But seeing employers around the country digging into their data and cutting out expensive hospitals. It gave her a roadmap and confidence. 

She started to say no.

To steer workers away from pricey places, Sara started small. The health plan cut a direct deal with New York City-based Mt. Sinai for joint replacements and bariatric surgeries. If members went there, they’d pay nothing out of pocket and get extra perks.

SR: We weren’t telling people that they couldn’t go to the more expensive hospitals. They were just going to have to pay more if they wanted to go.

LW: Sara hoped that price difference would be persuasive and the health plan would save money. But the fear that changing benefits will anger and harm workers is what has slowed down so many other employers. Sara was worried.

SR: This was a radical change for us in terms of our approach to benefits 

LW: Sara decided the only way forward was to be straight with her members.

SR: At New York Presbyterian, we were paying almost eighty three thousand dollars on average for a hip replacement. Whereas in other New York City hospitals, we were paying on average a little over fifty seven thousand dollars. And we shared that data with our members and they said, wow.

LW: This was tricky, though…most people don’t want to think about money when they’re picking a doc for a major surgery. They wanna go with what they know. 

But, the health plan moved ahead, rolling out its bariatric surgery deal in the middle of 2018. That was a few months before Will landed in the hospital.

WH: It’s the worst thing, it’s like being drowned, you know, and you can’t get no oxygen in your body.

DG: Will had suffered a terrible asthma attack. At the time, he weighed 375 lbs and his weight had made that attack nearly fatal. 

WH: I’m like, oh, my goodness, I don’t believe, I’m about to die and I haven’t accomplished what I want to accomplish, I have so much to live for. 

DG: Will was lucky. He survived. The moment he left the hospital, Will wasted no time and started searching out a bariatric surgery center to lose the weight.

Will says he booked an appointment at one of the first places he found.

WH: If I got to pay out of pocket. I would have to pay out of pocket. I didn’t care. I need to save my life. I’m trying to live.

DG: So Will starts the long process of getting approved for the surgery and they give him this checklist to start working through…tests, labs, visits. Then someone from the union’s health plan calls. 

WH: So she is like, “Hey, William I see you’re going to get your bariatric surgery done.” And then she just come straight out like, “Look, I’m gonna let you know, you can go and have your surgery with them, but if you come with us…you get way more benefits than when you go there with them.” In my head, I’m like, “I’m not doing this, I’m already starting with this other doctor I’m not going to do this.” But she started describing things that they could offer me…

DG: Things like free rides to his visits…no out of pocket costs…and the new doctor would pick up where the old one left off.

WH:  She just sold this whole thing to me, she sold it to me…it felt like a treat, like I was like being drafted by the NBA…

DG: It’s more like you’re a free agent. 

WH: Yeah, there we go, like they were fighting for me. They wanted me to come, there you know, wow, they took time to call me and provide me with the information.

LW: You could say, Dan…that Will took his talents to South Beach….

DG: Almost…he went to Mount Sinai…a little less balmy…but it’s where the union had that special contract.

The surgery went smoothly. All Will’s costs covered. 

LW: And now a year out, Will’s doin’ well.

DG: Yeah. He says he’s lost more than 100 pounds and no longer has diabetes or high blood pressure.

WH: I went from size I believe seven-x t shirtsto a two-x tshirt, from a 54 waist yo a 40, 38 waist. You know, like I can see, like I’m choking up now, like I feel awesome, like you don’t understand like it’s a different feeling…It’s a different feeling.

DG: And, Leslie, here’s the part that Sara Rothstein would love. Will was thrilled the health plan got involved.

WH: It’s not like they sent me some to some nasty dungeon. You know, the quality of health is affordable and it’s a high quality. The place they chose, was an upgrade. I applaud them.

LW: As of March 2020, those Mt. Sinai contracts had saved the Fund a little more than 9 million, roughly $20,000 per surgery.

What’s even more impressive is there’s been almost no blowback from workers. But the problem, says Sara, is that 32BJ spends more than $1 billion a year on health care…and that keeps growing.

SR: We need more savings across the board and we’re going to have to take a bigger step.

LW: Sara ultimately redesigned the health plan to make members like Will pay more for all kinds of care at New York’s most expensive hospitals. But she says even that’s not enough.

DG: And you know we found that’s actually a common concern among this set of employers trying to cut new kinds of deals. Like at Purdue, where Candace Shaffer has made a bunch more benefit changes that she expects will save as much as $5 million a year. A nice chunk…but when costs keep climbing year after year, it can feel like you’re sinking in slow motion.

Over the last few years, many of these pioneering employers have come to see the power of this new data like benchmarking their prices…and its limitations.

LW: And Dan, that takes us to our last chapter. Employers and advocates have realized they need help. And they’re turning to lawmakers.

DG: Gloria is working with Indiana Republican State Representative Donna Schaibley. Donna says the RAND study changed the conversation.

The best example: Donna had introduced a price transparency bill back in 2016. Her colleagues decided it was too radical. But in 2020…

Roll call vote: Senate Bill 5, Representative Schabiley. Thank you Mr. Speaker and Members of the House… 

DG: Those same measures and even a few others….

Roll call vote: Tally the roll. Roll call shows 94 Ayes – 0 Nos, bill is passed.

DG:…passed unanimously.

Donna Schaibley: The main difference is we have data now. I mean, we’ve heard from employers that their insurance costs are high but until you see it..it didn’t hit home for us. 

DG: It also helped that employers were raising a stink and that high health care costs could be a drag on the state’s whole economy. 

It’s hardly full speed ahead, though…a bill Donna sponsored this legislative session eliminating anti-competitive language in hospital contracts is already facing stiff opposition from the Indiana Hospital Association. 

Schaibley: It’s a little slow for my liking. But, you know, you roll the ball uphill sometimes it takes a while but you’re going to get to the top eventually.

DG: And it’s not just state capitals. One year after Gloria and Marilyn swapped stories in that tavern in Denver…Marilyn Bartlett was in the U.S. Senate testifying.

Senate hearing: The Committee on Health, Education, Labor and Pensions will come to order.

DG: In June 2019, a Senate Committee took up a bill tackling issues that had been driving employer costs up like anticompetitive business practices and opaque prices. Marilyn had actually helped draft the bill. And at least one Senator saw her as a health care folk hero too.

Senator Cassidy: And by the way, Miss Bartlett, I once read an article about you and I just said, bestill my heart. You know what you did in Montana? You know, if I wasn’t married to my wife and I don’t know your status…

DG: True to form, Marilyn got right down to business. She told the Senators their bill needed to go bigger.

Marilyn Bartlett: I urge the committee to consider provisions to force hospitals to justify their prices, not just disclose them.

DG: And in a sign of just how much the landscape was changing…business leader Elizabeth Mitchell showed up with an unusual ask.

Mitchell: It may seem somewhat surprising that an organization representing large private sector companies would seek policy intervention and my members are committed to private sector market driven solutions. But in much of U.S. health care, the market is simply broken. 

LW: After the hearing, the lawmakers watered down the bill and it ended up a shell of its original self. Marilyn was not pleased.

MB: It was lame. So I was livid about it. And when I called, I said, everything is taken out of this. Just don’t do anything, and I said “who redlined this?”

LW: The bill…eventually died.

DG: While Marilyn and other employer activist types were obviously disappointed…the Senate fight and Gloria’s work at the statehouse did teach them that legislation is now an option, though an uncertain one. 

And that this push from employers has raised some uncomfortable and hard-to-answer questions for this country. 

Like…are Medicare rates the right benchmark? What is a fair price for a life-saving surgery? 

LW: And if employers and hospitals can’t lower these prices themselves, what should the government do? If anything?

Harvard economist Mike Chernew says it’s these questions that are fueling this moment…the hospitals’ angst, the employers’ outrage…and lawmakers caught in between. 

Chernew: We’re having a race between people who are trying to make markets work better and people who are trying to find government intervention to correct their flaws. America, in general, we tend to like it when markets win. But when the problems get really big, the government will need to intervene.

LW: As of today, that is not what most hospitals want to see. The American Hospital Association, the industry’s largest lobbying group, didn’t agree to an interview. 

DG: They did point us to Congressional testimony from 2019 saying that hospitals, insurers and employers should negotiate deals on their own. They oppose any price caps or the kind of Medicare benchmarking supported by employer groups like Gloria’s and Bob’s.

But the country’s most proactive employers are pushing ahead anyway. 

LW: Yeah, in New Jersey, the state just overhauled its health plan for teachers and expects to save $30 million a year. A group of public employers in Colorado just inked their first hospital contract using Medicare as a benchmark. And Marilyn and Gloria are teaming up with business groups from Houston to Maine to get employers even more data to use in contract talks.

DG: The goal, says Gloria, is to strike fair deals driven by data and evidence…not force hospitals out of business.

GS: I have a lot of respect for them and the work they do is tremendous. We need it, we value it. All we’re talking about is fair prices.

DG: Like we’ve heard today…there’s lots of reasons why most employers are standing on the sidelines. Worker pushback, hospital market power. But there’s one reason that rarely gets talked about. This work, says Marilyn Bartlett, takes courage. 

Bartlett: You’re going to face horrible obstacles. You know, you’re going to lose friends. and you’re going to be called names. You’re going to be laughed at, ridiculed, right. Written up in newspapers. DG: What are some names you were called? MB: A bitch, that was common that’s I mean, that’s probably every day. 

DG: Even at her lowest point, Marilyn understood she kept leaning in because she felt it was her duty.

MB: When you dig in and you follow the money and you see all the money inflated in the system, it’s not right and you can’t turn your back on that.

DG: Marilyn says if employers want to keep buying health care for millions of Americans, they have an obligation to use this new data, these new tactics and start getting better deals.

MB: The reality is this is hard, this is hard work, and it became harder than I ever anticipated would be. But the resources are there. And now it’s up to the employers to just stay focused and move forward.

DG: Marilyn knows the last two or three decades in health care are littered with the bones of splashy employer coalitions, beautiful bar graphs and promises never kept.

And maybe all this work, all her work, will go that way too, but for now she’s sticking with it.

I’m Dan Gorenstein.

LW: I’m Leslie Walker.

DG: And this is Tradeoffs.