Thank you, Matt Yglesias, for cutting to the core of Stephen Brill’s huge Time magazine story on the profiteering orgy we call the U.S. healthcare system:
The framing device, which is clever-but-wrong, says we spend too much time debating who should pay for U.S. health care and not enough time debating why the prices are so high.
The analytic core of the article shows that when it comes to hospital prices, who pays determines how high the price is. When an individual patient comes through the door of a hospital for treatment, he or she is subjected to wild price gouging. Insane markups are posted on everything from acetaminophen to advanced cancer drugs to blankets to routine procedures. Because these treatments are so profitable, internal systems within the hospital are geared toward prescribing lots of them. And even though most hospitals are organized as non-profits, most of them in fact turn large operating profits and their executives are well-paid….
I can see two reasonable policy conclusions to draw from this, neither of which Brill embraces. One is that Medicare should cover everyone, just as Canadian Medicare does. Taxes would be higher, but overall health care spending would be much lower since Universal Medicare could push the unit cost of services way down. The other would be to adopt all-payer rate setting rules—aka price controls—keeping the insurance market largely private, but simply pushing the prices down. Most European countries aren’t single payer, but do use price controls. Even Singapore, which is often touted by U.S. conservatives as a market-oriented forced-savings alternative to a universal health insurance system relies heavily on price controls to keep costs down.
For reasons I do not understand after having read the conclusion twice, Brill rejects both of these ideas in favor of meaningless tinkering around the edges. He wants to alter medical malpractice law, tax hospital operating profits, and try to mandate extra price transparency. That’s all fine, but it’s odd. His article could not be more clear about this—health care prices are high in America because, by law, we typically allow them to be high. When foreigners force prices to be lower, they get lower prices. When Americans force prices to be lower (via Medicare), we get lower prices. If we want lower prices through new legislation, the way to get them is to write laws mandating that the prices be lowered.
Yglesias has it right. The problem is both complex and simple: By following a philosophy of market-driven healthcare and commie-control paranoia, we’ve allowed the creation of a Byzantine bazaar of profiteering in which the market plays virtually no role. The market plays no role because the entire system is fixed so that even health insurance companies have little market leverage and individual consumers have virtually none. When you need care, you enter not a market but a con game in which you’re first a guarantor and source of profit, and second a patient. If you don’t believe me, read Brill’s account. It opens with the appalling but perfectly representative story of a man who made the mistake of developing cancer when he had a crap insurance plan even though the plan ate a fifth of his household income. The hospital told him it didn’t take such discount insurance, and would need most of his projected treatment cost — some $83,000 and more — up front.
Brill has more such stories, which are ripping perfectly responsible lives to pieces as we speak.
But well, OK, this guy had cancer. Chemo is expensive. Maybe the sharks don’t bite so aggressively on smaller prey?
Let’s experiment. What would happen if we throw, say, my 7-year-old daughter into the shark pool with something minor?
Actually we don’t need to toss her in, because she fell in last year. And small though she be, and minor as her problem was, the sharks are still ripping at us, even now, trying to extract more blood.
Here’s what happened. Last April, I took my two youngest kids to visit family in Houston. On the second day there, my 7-year-old daughter fell two feet from the snaking branch of a live-oak tree, landed awkwardly, and injured her foot. She could not walk and was in pain. While a sprain seemed most likely, she clearly needed an X-ray to rule out fracture. So I iced and talked nice, wrapped her ankle in an Ace, and drove her to the nearest urgent-care facility.
Thus I entered … what, a market? No way, no how. No search on Google Maps or Yelp would have yielded me prices for the care she would need; as Brill’s article notes, no such service could possibly give me prices, because the clinics and hospitals and urgent care places not only fail to declare their charges ahead of time but charge any two patients wildly different fees depending on God knows what. So no market there; no cost-value information available.
So I took her to the nearest urgent-care facility. I chose it not only because it was near, but because it was a satellite clinic run by the big hospital where my father trained long ago as a surgeon and often operated, where I and three of my siblings were born, where my siblings and I would later sometimes join my father for lunch in the unexpectedly good cafeteria, where my mother stayed in her penultimate hospital stay before her death. A friendly place. So I thought.
We entered, and to get past the first counter, of course, I had to surrender not just proof of ability to pay (a Blue Cross card) but a promise to make good on the charges, even though we didn’t know what the charges would be. Non-market sign number one.
We were the only customers patients customers, and they took good care of her. Two kind, caring, competent people saw her, spending a total of about 20 minutes with us; a particularly sweet man, complimenting her on her good cheer and her one sandal, rolled her down the hall for a standard three-view X-ray of her foot (a $20 charge if Medicare pays for it); the examining doctor re-wrapped her ankle (handing my perfectly good Ace back to me); and they sized a pair of new crutches and sent us home.
The bill arrived a few weeks later.
It came to over $4,300.
* * *
When I stopped yelling (“Daddy,” my daughter said later, “you used a lot of car-repair language.”), I looked for what we were being charged for. Maybe they had her mixed up with an appendectomy, or, I don’t know, a multiple-victim car crash? I could find little clue. There was a line about X-rays, another about exam, and then about 20 lines that made no sense at all. Later, when the dunning calls started and I asked, barely restraining myself from using more car-repair language, for an itemized bill to replace the ledger of meaningless gibberish they had sent, I was told, “That’s the only bill we have.”
I told them, “You’re dreaming if you think I’ll pay this.”
Along with being incredibly greedy, this particular hospital has been incredibly incompetent. At first it repeatedly billed Blue Cross of Texas, even though my plan is administered by Blue Cross of Vermont, as is stated clearly right on the card they photocopied last April; that mistake alone took two months to recognize and correct. (They’d say, “Blue Cross says you have no policy.” I’d say, “But I do.” I didn’t think to ask which Blue Cross.) Once they got that right, they failed to send information to the right policy number and/or to provide information requested. Then Blue Cross of Vermont denied the charges because it was an out-of-state non-emergency visit; maybe they got the same opaque spreadsheet I had received, so had no idea what sort of visit it was? Who knows?
All along, meanwhile, they have been sending us dunning notices. Each notice accuses me of failing to respond to their prior notices — a lie meant to make me the bad guy. We’ve called several times and sent them corrective information and put them in touch with our insurers about five times. They call me every few weeks, and we have the same conversation that I had the last time with whomever called, because half the time they call me they say there’s no record of prior conversations.
This went on and on until finally, this January, 9 months after the visit, we contacted our actual insurer instead of its administrator (Blue Cross). Our insurer happens to be the State of Vermont. When we told the state what was going on, a beautiful thing happened. You know that joke about the guy who says “I’m from the government, and I’m here to help you.” Well, this guy was, and he was. This very nice man gave us his name and number and mailing address, and he told us If the hospital contacts you again, tell them that they are no longer to contact you; we are the insurer; we are the guarantor; they can deal with us.
Which I related to the hospital the very next time they called, gleefully, emphatically, but using no car-repair language.
Then the nice man did something even nicer. On a piece of State of Vermont letterhead he informed this hospital, citing state and national statute and regulations, that since this was an ER visit out of state for us, the hospital, as per cited laws and regulations, was entitled to collect only what it cost to stabilize the patient — and in fact only what it would cost to stabilize said patient in Vermont, not in whatever fantasy land the Hospital in question was operating in. He added (I especially like this part) that this was the one and only offer the hospital would receive, and that in accepting the payment offered in the letter the hospital agreed that neither the insurer nor the patient would be liable for any further charges.
I suspect the hospital will take this money, bringing a welcome end to this ludicrous non-market adventure, in which the hospital has spent about three times as much time trying to shake me down for its fantasy forty-three hundred than it did treating my daughter.
And why will it end with a payment of reasonable scale? Because I’m insured by an entity, the State of Vermont, that a) seeks to make sure my family gets good healthcare at reasonable cost, and b) has clout. It’s notable that only this achieved that goal. Only now does the hospital find itself billing a party that has the power to say, No: this is a fair payment. For years I was insured directly by Blue Cross of Vermont, and while BCV would ardently work to limit what it paid when my family incurred medical bills, it did not care a fig if a hospital or doctor went after us later, as they always often did, for the gap between Blue Cross’ compensation and their desires for profit.
You want a market-driven healthcare economy? You’ll get it when the payer has as much clout as the biller does. And as Yglesias notes, the name of that payer is government. Anything else, and walking into a hospital is like jumping into a shark tank covered in blood. Good luck negotiating.
Cited:
Stephen Brill, Bitter Pill: Why Medical Bills Are Killing Us | TIME.com
Matt Yglesias, Brill on health care: Steven Brill’s opus on hospital prices, at Slate.com
Featured image: bradjreynolds/flickr
