By Jeffrey Young
Time magazine this week is out with a mammoth, 24,000-word story on the state of the U.S. health care system written by Steven Brill, an author who many best be known as the creator of CourTV. According to the story, Brill spent seven months researching why health care costs so much in America.
What he found isn't pretty. While the overarching themes may not be new -- like that Americans pay higher prices for medical products and services than people in other nations, that perverse financial incentives can lead health care providers to over-treat and patients to demand treatments they may not need, and that private health insurance companies operate less efficiently than Medicare -- Brill lays them out in stark, personal terms rich with detail. The entire story is worth a close read.
Brill attempts to confront problems with the health care system he believes routinely are taken for granted.
When we debate health care policy, we seem to jump right to the issue of who should pay the bills, blowing past what should be the first question: Why exactly are the bills so high?Perhaps the most important detail Brill addresses over and over in his article is the so-called chargemaster, the list of prices for everything a hospital does. That may seem mundane but these document (or, more accurately, these computer databases) drives much of how the business of health care is conducted in this country.
In short, those prices mean practically nothing in reality -- unless you have no health insurance. Private health insurance companies pay less. Medicare pays much, much less. But if you're uninsured, those are the prices that wind up on your bill. "If you are confused by the notion that those least able to pay are the ones singled out to pay the highest rates, welcome to the American medical marketplace," Brill writes.
Although it's sometimes possible to negotiate a discount from the hospital, the doctors and the other medical providers involved in treatment, patients can still be left owing staggering amounts with no real recourse.
In some cases, the prices on the chargemaster are used as the starting point for negotiations with private health insurance companies. Overall, though, Brill couldn't find any consistent justification from hospital executives and physicians for how those prices are determined or what purpose they serve.
No hospital's chargemaster prices are consistent with those of any other hospital, nor do they seem to be based on anything objective -- like cost -- that any hospital executive I spoke with was able to explain. "They were set in cement a long time ago and just keep going up almost automatically," says one hospital chief financial officer with a shrugHere's how Brill describes the plight of patients in this system: "They are powerless buyers in a seller's market where the only sure thing is the profit of the sellers."
Brill astutely cites specific examples of out-of-whack prices charged to real patients that illustrate his observations.
- $1.50 for 325 mg of acetaminophen (generic Tylenol). For one penny less, you can buy 100 of those pills on Amazon.com, Brill found
- $283 for a chest X-ray compared to the $20.44 Medicare pays
- $199.50 for a blood test on which Medicare would spend just $13.94
- $7 for an alcohol prep pap when a 200-count box retails for $1.91
The article contains much more, including an examination of the wealth and clout of the hospital industry, a comparison of prescription drug costs in the U.S. and other countries, and an examination of how Medicare keeps its administrative costs down.
Brill also offers some cures to the problems he diagnoses while acknowledging the political roadblocks. For one, he calls for hospital chargemasters to be banned. He also recommends Medicare be given the authority to pay lower prices for drugs and medical equipment. And Brill maintains that Medicare should be opened to anyone willing to buy into it.