Ep36 -- The Education of a Good Value

 I heard this story a while back on my local NPR station about a family with a special needs child who just couldn't really make ends meet in their home state. So they decided to move to another state with a lower cost of living.  I'm deliberately not mentioning the names of the states because it doesn't really matter for the purposes of this episode.

The point is that they moved thinking they'd end up with a net increase in their quality of life,  since they could buy a bigger house, or rent a nicer place for less, maybe eat out every once in a while, and, in all other ways, just get a little more for their money in their new, cheaper state.  It sounded like a great plan,  but remember their special needs child?

Well, it turns out there were significantly fewer resources available to help their child. And what services were available were lower quality and much further away.  So they had to supplement with private help, all while driving hours each day to access lower-quality services that used to be available right around the corner.

In the end,  their total monthly outlay was actually higher than it was in their home state. Plus, they had the added stress of long daily drive and coordinating different organizations to secure the same care they used to get all in one place.  I'm not bringing this up to make the case that their original home state is better than the one they moved to,  but rather just to point out that there were benefits and services that they used on a daily basis, much of it funded by the state, that they just took for granted.

When they thought about how expensive it was to live there, they just looked at their obvious costs. They didn't calculate the net expense by also looking at the benefits available to them through public programs.  When I think about stuff like this, a song lyric immediately pops into my head, from the 1970 Joni Mitchell classic, "Big Yellow Taxi":

Don't it always seem to go
That you don't know what you got 'til it's gone?
They paved paradise and put up a parking lot

So this week I want to talk a little bit about those most of the time invisible things we take for granted until they're gone, specifically in the context of public affairs.  And also, kind of a flip side to that, the people who do the kinds of jobs we only notice when things go wrong, and how we fail to appreciate the amazing work they do to try and make our realities uneventful.  

Stay tuned.  

I'm Craig Boreth, and this is The Great Ungaslighting, a podcast about how we get conned into accepting a man-made culture that's out of sync with our human nature and how we can fight back and put the kind back into humankind.  

But first, a word about a sponsor.  
This week's episode of The Great Ungaslighting is not brought to you by OptumRx, and also Express Scripts, and also Caremark, three companies you've probably at most thought about for a few seconds as you pick up your prescription at the pharmacy, but which control 80 percent of prescription administration, and are currently being sued by the Federal Trade Commission for their role in jacking up insulin prices.  Now keep in mind, this isn't just about insulin. These companies, which are known as pharmacy benefit managers, or PBMs,  are responsible for a big chunk of the increase in the cost of almost all drugs.  So reining them in on insulin could have a massive effect on drug prices across the board.  

Okay,  it is really difficult to understand how PBMs work. I've read and re-read two recent articles. One by Matt Stoller on his excellent monopoly-focused sub stack that's monopoly the business strategy not Monopoly the game, and an overview of that article by Cory Doctorow at Pluralistic. net.  And when my head stopped spinning, I think I almost had a cursory sort of understanding of how PBMs might work.  I'll put links to both articles in the show notes, and you should definitely read them to try and understand for yourself what's going on. 

But just to give you a sense of how outraged you should be at how our healthcare system works, here's a very high-level overview.  Back in the George W. Bush years, there was a lot of talk about how workers and others who got cheap health insurance were abusing the system,  going to the doctor for the slightest ailment and jacking up the cost of health care.  So, in order to make sure people only went to the doctor when they really needed to, there was a big push for high deductible, high co-pay insurance plans.  With high deductible plans, you pay a certain amount out of pocket, usually a couple thousand dollars, Before your insurance kicks in and starts to cover much of the expenses. 

When Obama's Affordable Care Act went into effect, requiring everyone to have health insurance, these types of plans became much more common because they seemed to be the cheaper option.  

So we've got four players in our little drama here.  We have the patient, that's you, the insurance company, the drug maker, the pharmaceutical company, and the pharmacy benefit managers.  We're going to leave the pharmacies themselves out of it for our purposes.  The job of the PBM is to facilitate the distribution of the specific drug that insurance companies will cover. And they do this in exchange for a kickback from the drug companies in the form of some percentage of the list price of the drug. 

And this is not like a 10 percent commission, it's upwards of 80%.  Now, why is it so high? Because PBMs are gatekeepers, and if they don't distribute your drug, it won't get to patients.  Now, as anybody knows, if you get paid by the seller of a product, based on the price of that product, your interests are aligned with the sellers, and you're going to want that price to be as high as possible. 

So on one side, you've got drug companies who want to charge as much as possible, obviously, In the middle, you've got these PBMs aligned with the drug companies, but on the other side, you've got insurance companies who want drug prices to be as low as possible, right?  Well,  guess who owns the PBMs? That's right, insurance companies.

OptumRx is part of UnitedHealth Group, CVS Aetna owns Caremark, and Express Scripts is owned by Cigna.  So, you, the patient, are paying the insurance company a monthly premium, and when you're in the deductible phase of the year, you're paying full price, list price for those drugs, the bulk of which, you assume, is going to the drug company. Only about 20 percent goes to the drug company. The rest is divided up between this middleman distributor and an insurance company. Quite possibly your insurance company.  So for example, for a month's supply of insulin from drug company Sify,  you would pay out of pocket $403,  but the drug company will only get $64.  The rest is a kickback to PBM. So you may think when you're at the pharmacy paying for your drug that your $403 minus what the pharmacy takes is going to the drug company, but it isn't only a tiny percent is.  And, with this kind of system in place, it's not at all surprising that the cost of insulin is up well over 1, 200 percent in the last 20 years. 

So next time you hear someone talking about how prescription drugs are so much cheaper in other countries, you'll hopefully understand a little bit better about exactly why that is.  And hopefully, you'll be calling your members of Congress and the presidential campaign you support and demanding that they support the FTC's efforts to end these kinds of scams. 

And we're back.  

We are, hopefully, at the tail end of what has been a really tough wildfire season out here in California.  Given how awful things were back in June, I suppose you could say it hasn't been as bad as it could have been.  But that's not much comfort to those affected by the fires.  We know that controlled burns can help mitigate the prevalence of those massive, hugely destructive fires.

So, why don't we do more of it?  There are a lot of reasons. But one is, controlled burns have a lousy risk-reward profile.  If you do a lot of controlled burns that practically eliminate the occurrence of deadly fires, guess what? Almost nobody will notice it. There might be a story or two buried deep down in the paper or the website, but it's not a very sexy story. 

But, if your controlled burn gets out of control, as happened in New Mexico in 2022,  it's front-page news.  The New York Times headline blared, The Government Set a Colossal Wildfire. What Are Victims Owed?  Now that story has legs, and heads will roll.  So, if you work for the Forest Service, and you care deeply about the health of our forests, and understand fully just how important controlled burns are,  that risk-reward imbalance must really weigh on you. 

If things go right, life goes on just as before. If things go wrong, it's a monumental catastrophe.  A similar thing happens with a lot of government regulations.  The vast majority of these rules are enforced by poorly paid government employees.  When you come in complaining about some horribly unjust rule you have to follow, that public employee either Enforces the rule or risks losing their job.

What would you do in their position? And if they completely agree with you, they're hardly in a position to change things.  Agitating for change will most likely only piss off their boss and once again threaten their job.  And then there are public health workers.  You can complain all you want about lockdowns and heavy-handed government and all that during the pandemic, but you got to have some sympathy for public health officials.

They're in maybe an even worse situation than the Forest Service.  They see a virus spreading and have to figure out the best way to protect the most people. If they underreact, millions of people could die. If they overreact, everyone is pissed that they had to alter their behavior for apparently no good reason.

Even if they get it just right, if their prescriptions involve restricting public behavior,  people will still think it's too much and be pissed off.  I guess what I'm getting at is that we really fail to appreciate just how much government activity affects us for the better. We all know when we pay taxes and when something goes wrong,  When you have one of our two political parties basically saying for the last 50 years that everything the government does is wrong, I guess it kind of makes sense why so many of us take for granted the things it does right. 

That is, until those things go away, or someone threatens to take them away.  But even then, there's a good chance folks won't realize what's happening. Like every time there's a push for single-payer health care,  like Medicare for All, you'll invariably hear comments like, "Keep your government hands off my Medicare". 

So next time your parking meter runs out and you encounter a parking attendant writing you a ticket.  Or, there's a long line at the DMV or the post office. Remember, you only encounter public employees every once in a while, but they have to spend their entire working life dealing with...the public.  

Well, that's it for this week. If you liked this episode, please post it on your social somewhere. Or better yet, email it to a few deserving friends.  And until next time, be kind to yourself, cut each other some slack, and use your damn turn signal.