Tuesday, January 17, 2006

Always Low Health Care Prices

Last week the Maryland legislature passed a law requiring employers with 10,000 or more employees to spend at least 8% of their payroll on employee health care benefits, or contribute the difference into the state’s Medicaid fund. The bill applies to only one company, Wal-Mart.

This was a clear victory for the promoters of the bill, primarily unions and Wal-Mart Watch. I debated Tracy Sefl of Wal-Mart Watch a couple of times last winter, and she and her organization are nothing if not organized.

The bill does raise an interesting question.

If Wal-Mart, who by its size was the clear and only target of this bill, is forced to pay into a state Medicaid fund, shouldn’t they have some say in how those funds are spent? Might that be a good thing?

No one has ever accused Wal-Mart of being inefficient or having high costs. Most state Medicaid plans are famously guilty on both these points. Wouldn’t it be a good idea to apply Wal-Mart’s vendor negotiation skills and buying power to health care?

I recently had a routine stress test from a cardiologist. 1,200 bucks. If Wal-Mart were negotiating that fee, I bet I would pay half that. Imagine Wal-Mart calling Maryland radiologists to Bentonville, and telling them that if they don’t lower their fees they’ll have all that imaging business routed over the internet to North Carolina, where doctors will read them cheaper. Do you think the Maryland radiologists would cut their fees? You bet they would.

This would not be practical in all areas of medicine, i.e. emergency patients can’t be sent somewhere else. But diagnostic procedures can, and are, a great place to start.

I wonder how pharmaceutical companies would feel about having Wal-Mart negotiate their contracts? Ouch.

What’s done is done. The Maryland bill is law. But Maryland might be advised to take a look at Wal-Mart in a different light as regards health care. Don’t look at them as a money trough. Look at Wal-Mart strengths, and use them as a resource.