THE WALL STREET JOURNAL. **** Tuesday, July 30, 2019 |A
Hospitals would have to
disclose the discounted prices
they negotiate with insurance
companies under a Trump ad-
ministration rule that could
upend the $1 trillion hospital
industry by revealing rates
long guarded as trade secrets.
Hospitals that fail to share
the discounted prices in an on-
line form could be fined up to
$300 a day, according to the
proposal. The price-disclosure
requirements would cover all
the more than 6,000 hospitals
that accept Medicare, as well
as some others, and is likely to
face fierce industry opposi-
tion.
Comments on the proposal
would be due in September
and, if completed, the rule
would take effect in January.
The initiative represents
the Trump administration’s
growing effort to shift away
from rolling back the Afford-
able Care Act and put its own
stamp on health care instead.
Central to that strategy is the
notion that more price trans-
parency will inject greater
competition into the market
and lower costs.
Industry groups have ar-
gued the requirement goes be-
yond the executive branch’s
statutory authority and could
backfire by causing prices to
rise if hospitals see their com-
petitors are getting higher in-
surer payments. The White
House has lost in court before:
A rule requiring drug makers
to post list prices in television
ads was blocked in June by a
federal judge who said the ad-
ministration overstepped its
regulatory authority.
Some Republicans praised
the administration’s focus.
Sen. Lamar Alexander (R.,
Tenn.) said the proposal com-
plements provisions in legisla-
tion he sponsored with Sen.
Patty Murray (D., Wash.) to
lower health costs.
“We will carefully review
how the proposed rule and our
legislation interact,” he said.
The Trump administration’s
move contrasts with proposals
by some Democratic presiden-
tial contenders who say Medi-
care for All will drive down
costs by lowering administra-
tive overhead, curbing spend-
ing and leveraging the govern-
ment’s negotiating clout.
Hospitals would have to
disclose the rates for services
and treatment that they have
negotiated with individual in-
surance companies such Cigna
Corp.,AnthemInc. andCVS
HealthCorp.’s Aetna under
the proposal released Monday.
“It’s a turning point in
health care and a turning
point to the free market in
health care,” Seema Verma,
administrator of the Centers
for Medicare and Medicaid
Services, said in an interview.
Tom Nickels, executive vice
president of the American
Hospital Association, said it is
“a radical approach.”
“This really is an extreme
proposal in terms of what we
all expected,” he said.
“Publicly disclosing com-
petitively negotiated, proprie-
tary rates will push prices and
premiums higher—not lower—
for consumers, patients and
taxpayers,” said Matt Eyles,
CEO of America’s Health In-
surance Plans, an industry
trade group.
The proposed rule is esti-
mated to cost hospitals around
$6 million total. It would af-
fect hospitals as well as their
subsidiaries, including outpa-
tient health clinics. Hospitals
must already post their list
prices for services.
The proposal would expand
that requirement to include
not only gross charges before
discounts but also insurer-spe-
cific negotiated charges for all
items and services. The
charges would have to be
linked to the name of the in-
surer and data would have to
be displayed in a machine-
readable format.
The rule would reveal how
widely costs vary in the U.S.
for care. A magnetic-reso-
nance image of the lower back
costs $141 at an imaging cen-
ter in Jefferson, La., but runs
$47,646 at a hospital in Tor-
rance, Calif., according to data
from Clear Health Costs, a
company that publishes infor-
mation about health-care
costs.
BYSTEPHANIEARMOUR
Hospitals
May Have
To Reveal
Rate Deals
Souring Market
AnincreaseinimportsofTurkishtartcherriesishurting
thedomesticmarket.Total value of U.S. tart cherriesSources: U.S. Department of Agriculture (value); Dried Tart Cherry Trade Committee (imports)Turkish tart
cherry imports
2.00.1.1.million pounds2016 ‘17 ‘$120 million03060902013 ’14 ’15 ’16 ’17 ’of tart cherries worth about
$56 million were produced in
Michigan last year. Almost the
same amount was worth $
million in 2014, according to
USDA data. Tart cherries are
used for pie filling and juice,
or are dried and put into ce-
real and breakfast bars. Neat
rows of cherry trees resem-
bling Mediterranean groves
line the highways around the
region. The sandy loam soil
and proximity to Lake Michi-
gan, which moderates the cli-
mate, creates rich ground for
the fruit to grow. Tart cherriesare a small crop compared
with the much larger sweet
cherry industry, which pro-
duced 344,400 tons of fruit in
2018 worth $638 million.
The tart-cherry industry
collectively agrees to freeze or
destroy a percentage of their
crops annually to ensure price
stability for the overall mar-
ket. Some Michigan proces-
sors—the companies that pit,
freeze and dry the cherries—
are now selling old inventories
of frozen cherries at dis-
counted prices because keep-
ing them is too expensive dueto the flood of cheap Turkish
product. That has put even
more low-cost cherries on the
market.
A fourth-generation Michi-
gan cherry farmer, Mr. Amos
cut down 60 acres of tart-
cherry trees last year because
proceeds from selling the fruit
wouldn’t even cover his costs
of harvesting the crop.
He isn’t sure what he will
do this year. He is hoping he
has enough money to harvest
the rest of his 375 acres,
which is done by applying a
mechanical shaker to a tree.
The loosened cherries fall into
another machine.
If he can’t harvest all the
fruit, he might have to aban-
don some of his orchards, a
practice that can allow pests
to fester and make their way
to nearby trees and neighbor’s
farms.
Turkish imports of tart
dried cherries have nearly
doubled annually over the last
three years to 1.5 million
pounds in 2018, selling at 89
cents a pound. U.S. processors
sell the same product for
about $4.60 a pound, accord-
ing to data from USDA.
The average price per
pound that growers could
command for tart cherries
dropped from 27 cents a
pound in 2016 to 20 cents a
pound last year, according to
USDA data.
In a May letter to the De-
partment of Commerce, the
Turkish government disputed
the charges leveled by the U.S.
cherry industry. The letter
said the programs provided to
Turkish cherry farmers are ei-
ther no longer in use or pro-
vide negligible support. Tur-
key also said it is concerned
about the growing number of
trade investigations by the
U.S. government. A represen-
tative for the Turkish embassy
to the U.S. declined to com-
ment.
The U.S. International
Trade Commission made a
preliminary ruling in June that
Turkish imports “had a signifi-
cant adverse impact on the
domestic industry.” A final
ruling is expected early next
year. The Department of Com-
merce will simultaneously de-
termine the duties to be im-posed if Turkish imports are
determined to be injurious to
the U.S. market.
For this region of northern
Michigan, cherry farming is
often a family affair. Farms
and processing plants have
been owned for generations.
Thousands of employees work
in the processing plants year
round, pitting, freezing and
drying cherries.
Nels Veliquette, chief finan-
cial officer for Cherry Ke Inc.,
works with his brother, Bruce,
to run the orchards and pro-
cessing plants that werefounded by his father and un-
cles in 1969.
Earlier this year he had to
lay off 20% of the employees,
or about 25 people, who work
all year at his dried cherry
plant.
If the industry loses its case
against Turkey, he thinks a
few cherry growers will make
it, but it will be nothing more
than a niche tourist attraction.
“All this beauty exists be-
cause I can make a living at
it,” he said. “If I can’t make a
living, there won’t be a farm
here.”WILLIAMSBURG, Mich.—
Dorance Amos pulls handfuls
of tart red cherries out of large
tanks filled with cold water,
looking for blemishes. “These
will grade well,” he says.
The apparent bounty hides
a grim reality: He hasn’t made
a profit in three years.
Mr. Amos is one of many
Michigan tart-cherry farmers
struggling amid a flood of
low-price dried cherries from
Turkey. The industry peti-
tioned the U.S. government to
impose duties on the imports,
claiming Turkish importers
underprice the fruit and the
Turkish government unfairly
subsidizes the industry. The
U.S. government said in June
that there was enough evi-
dence to proceed with an in-
vestigation.
“If we don’t have luck with
the tariffs, I don’t know how
any of us can survive,” Mr.
Amos said.
The fight centers on the
tart Montmorency cherries
grown around nearby Traverse
City, which is nestled along
Lake Michigan’s Traverse Bay,
about four hours northwest of
Detroit. The region has
crowned itself the cherry capi-
tal of the U.S., where it sup-
plies two-thirds of the coun-
try’s tart cherries. It battles
the state of Washington for
the title, where more sweet
cherries are grown.
About 300 million poundsBYSHAYNDIRAICECherry Farmers Squeezed as Imports Grow
Tart cherries being harvested last week at an orchard in Williamsburg, Mich. Owner Cherry Ke Inc. laid off 25 people this year as the domestic industry has taken a hit.KEITH KING FOR THE WALL STREET JOURNALThe industry wants
the U.S. government
to impose duties on
Turkish imports.said. He purchased a WASR-
AK-47-style rifle in Nevada
where such guns are legal and
can be sold to anyone 18 and
older, law-enforcement officials
said. He avoided the festival’s
public entrance where security
was checking bags by cutting
through a fence that surroundedthe grounds, police said.
The attack could have been
far more devastating if not for
three of the many officers
posted at the festival who were
on the scene in less than a
minute after the first reports of
gunfire at 5:41 p.m. The offi-
cers were able to kill him “de-spite the fact they were out-
gunned with handguns against
a rifle,” said Scott Smithee, Gil-
roy police chief, at a briefing
Monday.
“I can’t tell you how proud I
am of the officers for being
able to engage him so quickly,”
said Chief Smithee. “We hadU.S. NEWS
thousands of people there in a
very small area.” Investigators
have yet to uncover a motive,
he said.
Legan posted on his Insta-
gram account just before the
attack, writing “Ayyy garlic fes-
tival time Come get wasted on
overpriced shit.”
On Monday, Big Mike’s Guns
and Ammo in Fallon, Nev.,
where he bought the gun, said
on Facebook that Legan seemed
normal when he picked up the
rifle. Legan purchased his
AK-47-style rifle there on July
9, law-enforcement officials
said. In California, the legal age
for purchasing a rifle is 21.
Chief Smithee said investi-
gators haven’t found confirma-
tion that there was a second
suspect involved in the shoot-
ing. Dozens of police officers
were searching a wooded area
outside the fairgrounds for a
second suspect who may have
helped, the police said.
—Elisa Cho
contributed to this article.GILROY, Calif.—As the three-
day Gilroy Garlic Festival was
winding down Sunday, a 19-
year-old opened fire with an
AK-47 style semiautomatic ri-
fle, killing a 6-year-old boy, a
13-year-old girl and a man in
his 20s, and injuring 12 others,
police said.
The shooter did it in min-
utes, police said, even with
tight security, in a state where
such weapons are heavily re-
stricted and at a time when
many Americans are on guard
for the next mass shooting.
The suspect, Santino William
Legan, wasn’t on law enforce-
ment’s radar before the shoot-
ing, a law-enforcement officialBYALEJANDROLAZO
ANDZUSHAELINSONShooter Used Semiautomatic Rifle
Gunman in California
festival rampage had
legally bought firearm
in Nevada this monthChurchill PlaceChurchill PlaceW. 10th St.W. 10th St.
Princevalle St.Princevalle St.Suspect’s houseGILROY
HIGH
SCHOOLGILROY
HIGH
SCHOOLSecurity checkpointSecurity checkpointGarlic Festival siteUv
as
Pk
w
y.Uv
as
Pk
w
y.M
ill
er
Av
e.M
ill
er
Av
e.Sources: Google (image); Gilroy Garlic Festival Association; staff reportsGILROYGILROY1,000 feet1,000 feetCALIF.San JoseSan JoseSanta
CruzSan
FranciscoSan
FranciscoGilroyMASTER IN
FASHION ECONOMICS
Mentorship by Hirofumi Kurino