There’s a healthcare crisis in America, gosh darn it. Unless you’ve been blessed with that fast cellular regeneration superpower, you probably already know that healthcare procedure and insurance costs are skyrocketing. I’ve seen my policy rates go up some years by as much as twenty-five percent. These increases come at a time when the economy is down overall, non-medical technology costs are stable or decreasing, and per-hour physician salaries are rising at about the same level as in all other industries according to Census Bureau statistics. So why the crazy price increases?
Steven Brill attempts to answer that question in the March 4, 2013 “Special Report” issue of Time Magazine. His 24,000-word cover story, “Why Medical Bills are Killing Us,” looks specifically at the prices charged by hospitals and similar healthcare providers. You pay $84 for a bag of IV saline at the hospital when you can buy it online for about $5. A single Tylenol tablet is charged out at $1.50, but that the same hospital gets it for one-hundredth that price. CT scans are billed out at thousands of dollars when the equivalent charge to Medicare is around $300. The article estimates that Americans overspend more than $750 billion on healthcare, a number that rises annually, much faster than the rate of inflation.
The article focuses on the “chargemaster,” the mysterious charge list for parts and labor that hospitals bill for all procedures and equipment used when giving care. In many cases, individual entries on a provider’s chargemaster include obscene markups, and while some hospitals told the author that such rates were used as a “starting point for negotiation,” those with insufficient insurance or no insurance at all are often forced to pay the full bill. The anecdote-heavy article is shocking, infuriating, and leaves you with a sense of hopelessness.
Brill includes a few recommendations for solving the crisis, but some of these cures seem worse than the disease. He recommends putting a cap on medical care prices, similar to government actions during World War II that led to our current insurance-centric healthcare system in the first place. He also suggests a seventy-five percent tax on all hospital income, although it’s not clear how that would curb prices, since all businesses raise prices to account for taxation. Other suggestions make more sense, including his call for tort reform and the expansion of a Medicare pilot program that allows for more flexibility in shopping around for the best medical care. His suggestion of lowering the age for Medicare participation while simultaneously requiring that all participants fork out a reasonable minimum of their healthcare costs before Medicare kicks in is intriguing, even for a fiscal conservative like me.
The author also recommends a surcharge on non-doctor hospital administrative salaries over $750,000. He seems to have a particular distaste for high CEO incomes, and peppers the text with example compensation amounts of healthcare executives in an effort, I guess, to shame them and make his readers seethe with anger. The incomes do seem surprisingly high given the level of customer dissatisfaction, but once again, Brill doesn’t indicate how caps on CEO incomes would impact healthcare cost to any significant degree.
The article does a good job at laying out a major problem with healthcare prices, and laments the effect it has on most Americans. “Unless you are protected by Medicare, the health care market is not a market at all. It’s a crapshoot. People fare differently according to circumstances they can neither control nor predict.” He also faults Obamacare in that, while it “does some good work around the edges of the core problem,” it “hasn’t done much to change the prices we pay.”
These statements, however, only magnify the key feature I found lacking in the article. Brill’s journalism skills are to be applauded, and his anecdotes are heartrending. But the article never addresses the reason why hospitals can abuse their customers (patients) through the manipulative chargemaster system in the first place. If companies in other sectors of the economy—Microsoft, Starbucks, and Ford come to mind, but the possible examples are legion—engaged in similar practices, they’d go out of business in a heat beat, no medical pun intended. In part, the problem stems from sick patients being a captive audience to the emergency room, and the “lack of price transparency” when a hospital acts as the middleman for medical equipment. But there still seems to be a deeper issue that isn’t brought out in the text.
Why doesn’t the medical industry respond to the same capitalistic influences that guide prices for computer, coffee, and automobile companies? It’s an important question, and one that I would like to learn more about. Steven Brill’s article doesn’t completely diagnose the core disease afflicting medical care in America, but it does document a few of its symptoms.
If you want the real skinny, try “Kauai Stories: Life on the Garden Island told by Kauai’s People” at http://www.kauaistories.net. You’ll experience the Aloha spirit.
I visited the Iolani Palace while in Hawaii, and picked up a copy of “Hawaii’s Story by Hawaii’s Queen” from the palace bookstore. Looking forward to the great read.