Walgreens Pulls Out of Mediciad Program

Walgreens announced that it was pulling out of Washington state's Medicaid program because the state was paying prices that did not cover the actual cost of many of the program's medications.

For many years the government programs (Medicare and Medicaid) have paid lower prices than other payers. They are able to do this because of the hidden subsidies that other payers pay to make up for short falls in government program payments.

With health reform upon us, we will need to closely watch these trends. Part of the reform package brings Medicaid payments up to Medicare levels. But will this create even more pressure to further lower Medicare rates?

On top of the hidden subsidies, the private payers will now pay a premium tax too.

Does this ultimately push the private insurers out of business and leave us with a single payer option? Or does the government v. private pay differential grow enough that we end up at a two tiered system?

Time will tell, but as providers refuse to deal with certain payers, politicians and the markets will react.

We welcome the provider feedback (Walgreens as an example) that incentives can change provider behavior. If politicians and the markets would incorporate more consumer incentives, then maybe we will end up with a value based system that patients will embrace.

Health Reform and Consumerism

Regardless of your position on the current health reform, it will soon impact consumerism movements that have been shaping the healthcare landscape and helping to hold prices down.

Consumerism provides individual patients with some economic responsibility as they make decisions regarding their healthcare; hoping to strike a balance between making care affordable but also making sure those paying for care are getting value for the resource they spend.

The reform legislation will probably change over time, but as of today, based on the Senate's bill; here are some of the impacts on consumerism:

Promoting consumerism:

Linking payments to hospitals to providers based upon quality of care instead of volume of services (2012).

Linking payments to physicians to providers based upon quality of care instead of volume of services (2013).

Taxing high cost insurance plans (2013).

Increasing the threshold for claiming itemized deductions for medical expenses (2013).

Limiting Consumerism:

Eliminating Lifetime Limits and Restricting Use of Annual Limits (2010).

Covering Preventive Health Services at 100% (2010).

Reducing the Part D “Donut Hole” or Coverage Gap (2010).

Limiting Health Flexible Savings Account Contributions (2011).

Eliminating Annual Limits on health insurance coverage (2014).


It will be interesting to see how the final legislation changes over time and what its ultimate impact will be on consumerism.

Based upon patient usage of the Healthcare Blue Book, we know that many patients are very capable of finding high quality care at reasonable prices when they have an incentive to do so.

Save Big

Elisabeth Leamy who is the Consumer Correspondent for the Good Morning America show has a new book out called Save Big.

In addition to tips on expenses around housing, transportation, loans and grocery shopping, she has an entire section devoted to healthcare costs.

It is definitely worth reading and can help consumers with health insurance suggestions as well as suggestions for finding care and prescriptions.

Not surprisingly she recommends negotiating with your doctor.

We were glad to see that she suggested using The Healthcare Blue Book as a great place to find out how much your care should cost. As Leamy reports, the Healthcare Blue Book's fair price is "a great starting point for discussion- and negotiation."