What’s wrong with our Health Care? / Reading TIME’s “Why medical bills are killing us” – How to Fix It? (Part II)

Our last post What’s wrong with our Health Care / Reading TIME’s  “Why medical bills are killing us” (Part I) provides Steven Brill’s analysis of the state of our Health Care.  Here in Part II, we’ll provide the author’s Analysis Summary and his thoughts on how to fix the system.

Health Care Analysis Summary

According to Steven Brill, “unless you are protected by Medicare, the health care market is not a market at all. It’s a crapshoot.“  He elaborates:

  • “People fare differently according to circumstances they can neither control nor predict. They may have no insurance. They may have insurance, but their employer chooses their insurance plan and it may have a payout limit or not cover a drug or treatment they need. They may or may not be old enough to be on Medicare or, given the different standards of the 50 states, be poor enough to be on Medicaid.”
  • “If they’re not protected by Medicare or they’re protected only partly by private insurance with high co-pays, they have little visibility into pricing, let alone control of it.”
  • “They have little choice of hospitals or the services they are billed for, even if they somehow know the prices before they get billed for the services.”
  • “They have no idea what their bills mean, and those who maintain the chargemasters couldn’t explain them if they wanted to. “
  • “How much of the bills they end up paying may depend on the generosity of the hospital or on whether they happen to get the help of a billing advocate.”
  • “They have no choice of the drugs that they have to buy or the lab tests or CT scans that they have to get, and they would not know what to do if they did have a choice.”

Therefore, “they are powerless buyers in a seller’s market where the only sure thing is the profit of the sellers.

And now he addresses the free market issue, as follows:

“The bills tell us that this is not about interfering in a free market. It’s about facing the reality that our largest consumer product by far — one-fifth of our economy — does not operate in a free market.”

How to Fix It?

Steven Brill provides multiple ideas of how to fix problems described above. Here are some of them.

  • “We should tighten antitrust laws related to hospitals to keep them from becoming so dominant in a region that insurance companies are helpless in negotiating prices with them. The hospitals’ continuing consolidation of both lab work and doctors’ practices is one reason that trying to cut the deficit by simply lowering the fees Medicare and Medicaid pay to hospitals will not work. It will only cause the hospitals to shift the costs to non-Medicare patients in order to maintain profits — which they will be able to do because of their increasing leverage in their markets over insurers. “
  • “We should tax hospital profits at 75% and have a tax surcharge on all nondoctor hospital salaries that exceed, say, $750,000. Why are high profits at hospitals regarded as a given that we have to work around?  Why shouldn’t those who are profiting the most from a market whose costs are victimizing everyone else chip in to help?”
  • “We should outlaw the chargemaster. Everyone involved, except a patient who gets a bill based on one (or worse, gets sued on the basis of one), shrugs off chargemasters as a fiction. So why not require that they be rewritten to reflect a process that considers actual and thoroughly transparent costs?”  “But for patients, the chargemasters are both the real and the metaphoric essence of the broken market. They are anything but irrelevant. They’re the source of the poison coursing through the health care ecosystem.”
  • “We should amend patent laws so that makers of wonder drugs would be limited in how they can exploit the monopoly our patent laws give them. Or we could simply set price limits or profit-margin caps on these drugs. Why are the drug profit margins treated as another given that we have to work around to get out of the $750 billion annual overspend, rather than a problem to be solved?”  “Reducing drugmakers’ prices to what they get in other developed countries would save over $90 billion a year. It could save Medicare — meaning the taxpayers — more than $25 billion a year, or $250 billion over 10 years.“

Obamacare

Reviewing Obamacare, the author emphasizes that with all its positive changes, it “changed the rules related to who pays for what, but we haven’t done much to change the prices we pay”. Higher insurance premiums (including taxpayer’s expenses for Obamacare’s subsidies) will probably follow as a result of three Obamacare provisions:

  • the prohibitions on exclusions for pre-existing conditions
  • the restrictions on co-pays for preventive care
  • the end of annual or lifetime payout caps

And there is no attempt to reduce the dominant position of hospitals. As a matter of fact, their dominance may increase.

The author concludes his report as follows:

“Over the past few decades, we’ve enriched the labs, drug companies, medical device makers, hospital administrators and purveyors of CT scans, MRIs, canes and wheelchairs. Meanwhile, we’ve squeezed the doctors who don’t own their own clinics, don’t work as drug or device consultants or don’t otherwise game a system that is so gameable. And of course, we’ve squeezed everyone outside the system who gets stuck with the bills.”

We’ve created a secure, prosperous island in an economy that is suffering under the weight of the riches those on the island extract.”

Couldn’t be said better! You may or may not agree with Steven Brill’s recipe of “how to fix it”, but his perceptive, deeply documented analysis that makes transparent what is normally hidden, makes it a seminal work in journalism and an important event in our social development.

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