Time Magazine explores the destruction of American health care

February 26, 2013 | By | 6 Replies More

Check out the feature article in this week’s Time Magazine. It’s called “Bitter Pill,” and it’s written by Steven Brill, a savvy insider.  In addition to making me apprehensive that health insurance costs are about to spike upward due to Obamacare’s lack of any meaningful price controls on health insurance, it gives an insider’s look into the massively arbitrary pricing of health care services.  In the absence of any competitive market, big hospitals (including the so-called non-profit hospitals) are freely allowed to concoct the prices they charge.  They quietly maintain their made-up pricing on their non-public “chargemaster” price lists.  This system is well known by those in the industry.  The prices charged by hospitals are typically many multiples of the actual cost to the hospital, and there is absolutely no justification for much of this pricing.

You might fall out of your chair repeatedly as you read Brill’s article. Based on discussions with a number of my friends recently, Brill’s article is the hottest read in town, and deservedly so.  I learned more about health care in the hour it took me to read than I had in the entire past year.

I learned that hospitals function as a public good yet there is no meaningful regulation–it’s as if your state and local governments decided that they were going to stop regulating the electric company, which promptly quadrupled its rates, and promised to do it again next year.   Further, hospitals specialize in keeping its consumers in the dark with regard to the prices they charge and the actual value of these goods and services.  Those using hospitals typically have no idea what financial damage they are about to incur.  It could by in

Image by John247 at Dreamstime.com

Image by John247 at Dreamstime.com

excess of $50,000 for one day of service.  The poster boy for the price gouging is the CT scan, which typically costs several times what a CT scan costs in most European countries.  Why does it cost so much?  Well, those of us who have insurance might not pay the full price–that is reserved for the working poor and lower middle class.  They get hammered the worst in our disgraceful system.

In this article, you’ll read about more than a few people who went into bankruptcy even though they HAD health insurance. You’ll read about people who had the good sense to hire a patient advocate, and it literally saved them, cutting 80% from the massively inflated bill.

For a quick review of the main themes of “Bitter Pill,” check out the video by author Steven Brill.    He characterizes the entire health care pricing system as “irrational.” He gives the example of a pack of gauze pads that you can get at Walgreens for $1, but a hospital will charge you $77.

Are things about to get better thanks to the Affordable Care Act?

Obamacare does very little to solve any of these problems, which is probably why it got through Congress. It doesn’t do anything to control the prices of prescription drugs or medical devices such as CT scans. In fact, if anything, it will increase the profits of all the players in the market by making sure that more people have insurance and therefore more people are in the marketplace with the funds from insurance companies to buy all these products.

Warning:  “Bitter Pill” might keep you up all night, unless you are in a good position to pay 50% more for your health insurance premiums for the coming year.   I’m sad to say that I saw this crazy spike of insurance costs coming–I was not convinced by anything I read over the past four years that Obamacare had any meaningful price controls.  And what fool would think that adding tens of millions of people to the insurance rolls and mandating new benefits wouldn’t affect the prices of health insurance?  It’s not like the very wealth administrators of big non-profit and for-profit hospitals are going to willingly give up any of their huge salaries.  Brill also has some unkind words for the business of strategy of those big “non-profit” hospitals:  they are buying up smaller hospitals and private medical practices with all of that money they squeeze out of their patients in order to control the market.  When they own most of the market, the don’t need to push down their rates when health insurance companies come knocking.  Another villain to this story is big Pharma, who has been coddled by Congress.  Oh, and Congress is thoroughly corrupt, in case you’ve failed to pay attention for the past few decades.

One can only hope that this slow motion train crash will convince Americans and their leaders that they need a single payer system (if we can’t afford gold-plated policies for everyone, we should at least mandate a minimum/humane set of benefits for everyone).   It would seem like the catastrophe described by Brill (and I’ve barely touched on the horrors he describes) would make something akin to Medicare-for-All the guiding star.



Category: Health, Health Care Reform, Medicine

About the Author ()

Erich Vieth is an attorney focusing on consumer law litigation and appellate practice. He is also a working musician and a writer, having founded Dangerous Intersection in 2006. Erich lives in the Shaw Neighborhood of St. Louis, Missouri, where he lives half-time with his two extraordinary daughters.

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  1. The horrendous cost of health care : Dangerous Intersection | May 23, 2013
  1. Jim Razinha says:

    Not only are those “not for profit” hospitals snapping up competitors, but they’re tax exempt and that’s a lot of money borne by surrounding businesses to support the municipalities.

    When providers bill at the oft-repeated Department of Defense toilet seat and hammer levels for items and services that actually cost fractions…well, the phrase “health care reform” is far from accurate. Care is hardly reformed, and prices certainly aren’t.

    And, as long as we remain the only industrialized country in the world that still has for profit health insurance, costs will rise to satisfy share holders.

  2. Niklaus Pfirsig says:

    Our for profit health care system is marvelous in it’s arcane complexity. It is also broken by design.

    The system is run by and for the profit of the insurance companies run amok with greed, The ACA was written by and for the benefit of the insurance industry, by The Heritage foundation, an ultraconservative policy institute with the intent of guaranteeing profitability to the insurance industry.

    Parts of the ACA “came online” in 2012. One provision, requires that insurers fully cover preventative screening, included full coverage of colonoscopic examination for colon cancer. The insurance companies, however, are allowed to redefine such procedures as diagnostic procedures if, during the examination, a polyp is found and removed for biopsy. This is a blatant fraud perpetrated by the insurance companies against their own customers. A patient enters with the confidence that the procedure will be covered, and leaves with a $10,000 bill he is less able to pay because of increases in mandated insurance coverage.

    As more parts of the ACA come online, we can expect to be F**ked over even more by the insurance companies, while their puppet Republican legislators are screaming “Blame Obamacare! Blame the Democrats!”

  3. Erich Vieth says:

    BTW, I cannot conceive of any better evidence that the U.S. political system and the American news media are massively dysfunctional and corrupt than the fact that the information in “Bitter Pill” was not front and center during the debate over whether we should enact the so-called Affordable Care Act. Why was it that the health care industry, including our huge so-called non-profit hospital systems, received a free pass to price gouge Americans needing health care?

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