“The Ultimate Seller’s Market”: How Big Medicine Plays Us All For Suckers
Sometimes the best journalism explains what’s right under our noses. In Steven Brill’s exhaustive Time magazine cover article “Bitter Pill: Why Medical Bills Are Killing Us,” it’s the staggeringly expensive, grotesquely inefficient and inhumane way Americans pay for medical care.
“In the U.S.,” Brill reminds us, “people spend almost 20 percent of the gross domestic product on health care, compared with about half that in most developed countries. Yet in every measurable way, the results our health care system produces are no better and often worse than the outcomes in those countries.”
Obamacare or no Obamacare, ever-increasing prices show few signs of abating. For all the fear and uncertainty the president’s health insurance reform will eliminate from people’s lives, it’s almost incidental to the overall question of costs.
Moreover, had the law attempted to seriously restrain profiteering hospital chains, pharmaceutical companies and medical equipment manufacturers that Brill depicts as largely responsible for the current morass, there’s no way it could have passed.
Yes, it’s a fiscal issue. If Medicaid and Medicare paid the same amounts for health care as, say, Switzerland or France—the economist Dean Baker has repeatedly pointed out—the Federal budget deficit would virtually disappear. (Although the two federal programs are infinitely more frugal and efficient than the rest of the system.)
But it’s an economic and moral issue as well. Brill was inspired to research the article after noticing the gleaming spires of the Texas Medical Center in Houston, of which M.D. Anderson is the brand name. It’s a great hospital, dispensing world-class care (at world-class prices). But how exactly, Brill wondered, had hospitals become five of Houston’s 10 largest employers? It’s a pattern repeated nationwide, as hospital chains have come to dominate local economies.
Essentially, he found, by gaming what the article describes as “the ultimate seller’s market”—an economic realm where buyers (i.e. hospital patients) are normally ignorant, often frightened and sometimes literally helpless. And who often think they’ve got adequate insurance, until they examine the fine print.
Granted, nobody bargains over a cancer diagnosis or heart attack. Even so, Brill wondered “why should a trip to the emergency room for chest pains that turn out to be indigestion bring a bill that can exceed the cost of a semester of college? What makes a single dose of even the most wonderful wonder drug cost thousands of dollars? Why does simple lab work done during a few days in a hospital cost more than a car?”
Good questions, all. Brill answers them by taking readers on a guided tour of the Alice-in-Wonderland world of medical billing as experienced by ordinary patients for whom getting the bill became an ordeal equal to and sometimes surpassing the illness itself.
Such as “Steve H.,” who never asked the cost of outpatient treatment for his ailing back because his union-sponsored health insurance plan had $45,000 remaining on its annual $60,000 spending limit. “He figured, how much could a day at Mercy [hospital] cost?…Five thousand? Maybe 10?”
The bill came to $89,000—including $45,000 for an electronic stimulator Brill learns that Mercy Hospital bought from the manufacturer for $19,000, which spent roughly 25% of that amount making and shipping it. (An arbitrator persuaded the hospital to settle for $10,000 of the $44,000 it said Steve H. owed.)
Moreover, as medical markups go, Steve H. got off relatively easy. The “chargemaster” computerized system hospitals use to prepare bills routinely assesses patients 10 times and more what commonly used items like gauze pads and surgical gowns actually cost. If baseball teams treated their captive audiences like that, they’d be selling $40 beers.
At times, Brill’s mordant deconstruction of hospital bills can be grimly funny—even if Alice D., left facing a $900,000 bill for her dead husband’s futile cancer treatment, can be pardoned for not laughing. In the end “her losses from the fixed poker game that she was forced to play in the worst of times with the worst of cards,” persuaded Alice she could never afford to remarry.
Even chemotherapy patients who survive can be staggered to learn that a miracle drug cost Genentech roughly “$300 to make, test, package and ship to M.D. Anderson for $3,000 to $3,500, whereupon the hospital sold it to [patient Steve] Recchi for $13,702.33.”
Ultimately, many of these humongous bills are never collected; the industry average is around 35 percent, although prestigious hospitals like M.D. Anderson collect 50 percent of what they charge. Most are “non-profits” only in the sense of having no stockholders; instead, administrators are paid princely multi-million-dollar salaries. They occupy themselves with building empires.
In the end, Brill concludes that Americans pay an enormous price for refusing to admit that “because the health care market deals in a life-or-death product, it cannot be left to its own devices.”
He and Time have done a great public service.
By: Gene Lyons, The National Memo, March 13, 2013
“People Are More Than Numbers On A Page”: The Healthcare Lessons Mark Kirk Learned From His Stroke
Walk a mile in someone else’s shoes.
But how many of us actually do that? At least by choice?
Over a year ago Sen. Mark Kirk suffered a debilitating stroke. And his medical condition has sparked his interest in the experience of people on Medicaid. Kirk reminds me of the character William Hurt played in the movie The Doctor, a tale of a physician with no bedside manner who suddenly cares about his patients, once he himself becomes the patient, suffering with cancer.
Well D.C. isn’t Hollywood and Senator Kirk’s stroke was not something manufactured by Hollywood studios. The Illinois Republican had an opportunity he now realizes not everyone who suffers a stroke has: the opportunity to get his life back. Senator Kirk had that opportunity this week as he returned to Capitol Hill for the first time in a year, joining the new 2013 Senate.
Kirk’s illness made him realize that the unlimited medical care, access, and not to mention ability to have as many rehabilitation sessions as he needed to have a complete recovery from the stroke he suffered, is not available to most people, especially the poor—those who are on Medicaid. In the state of Illinois, if you are on Medicaid, you are only eligible for 11 rehab sessions following a stroke.
In an interview with the Chicago Sun Times, Senator Kirk said, “Had I been limited to that [referring to the 11 rehabilitation sessions], I would have had no chance to recover like I did. So unlike before suffering the stroke, I’m much more focused on Medicaid and what my fellow citizens face…I will look much more carefully at the Illinois Medicaid program to see how my fellow citizens are being cared for who have no income and if they suffer from a stroke.”
Senator Kirk has, by no choice of his own, walked a mile in another’s shoes…but not entirely. As a senator, he benefits from the very best medical care. He had undoubtedly the best doctors and access—and that access included unlimited rehabilitation sessions—as many as he needed. Each of us is unique and individual—our bodies respond differently one from another, even if we share the same illness or injury.
Although it is admirable that Senator Kirk has woken up to the reality that so many Americans face daily and struggle with so frequently, it’s sad that it took a stroke for him to come to this realization. So we must ponder the question: Does every GOP member of the House and the Senate need to become ill or have a family member become ill to fully understand that it is not only a right, but a necessity that any American have access to not only healthcare, but more so, proper healthcare? What type of society are we if only the rich are allowed to survive such things as a stroke? Or dare I say, only a politician?
Senator Kirk realized this. I know there are those critics out there who feel that Kirk is tapping into a group of potential voters that the GOP has largely ignored, and the GOP largely voted against legislation which would help this group of people.
As a liberal, a progressive, and a Democrat, who is married to a physician and who believes that all of us are truly created equal and should have equal access to the best medical care possible, it saddens me that it seems only when it affects an individual or someone they love, especially those politicians on the right, that they can see what we on the left have been speaking of: fairness.
It isn’t fair that a senator has a stroke and returns to work one year later, when so many in Illinois and elsewhere may not be able to return to work or their lives as they knew them; and some don’t survive at all.
Senator Kirk at one time, as his colleagues, never looked at the people behind the term ‘patient,’ for they were just numbers to slash in cutting spending. Let’s hope that those in the GOP don’t need to suffer as Senator Kirk did to come to the realization that people hurting and in pain are more than numbers on a page.
By: Leslie Marshall, U. S. News and World Report, January 4, 2012
“Lives Hang In The Balance”: Americans Must Stop Stigmatizing Mental Illness
Of all the outrages to decency and common sense during National Rifle Association president Wayne LaPierre’s bizarre press conference following the Sandy Hook Elementary School massacre, the most offensive may have been his depiction of America as a dark hell haunted by homicidal maniacs.
“The truth,” LaPierre insisted, “is that our society is populated by an unknown number of genuine monsters — people so deranged, so evil, so possessed by voices and driven by demons that no sane person can possibly ever comprehend them. They walk among us every day. And does anybody really believe that the next Adam Lanza isn’t planning his attack on a school he’s already identified at this very moment?”
Monsters, evil, possessed. Demons, for the love of God.
Is this the 21st century, or the 17th? In LaPierre’s mind, like many adepts of the gun cult, it follows that every grown man and woman must equip themselves with an AR-15 semi-automatic killing machine with a 30-round banana clip to keep monsters out of elementary schools. Die Hard: With a Blackboard.
To be fair, polls show that most gun owners support reasonable reforms like closing the “gun show” loophole allowing no-questions-asked sales that evade FBI background checks. It may be politically possible to ban high-capacity magazines and to reinstate something like the assault weapons ban allowed to expire in yet another of President George W. Bush’s many gifts to the nation.
That these actions would have limited short-term effect is no reason not to act. Nobody’s Second Amendment rights would be compromised either. America can’t achieve sensible gun laws without first politically isolating extremists.
But there’s another way that LaPierre’s appalling rhetoric helps make a bad situation worse. Loose talk about possession and demons serves only to deepen the stigma and shame surrounding mental illness and contributes to society’s refusal to deal seriously with its effects.
Newtown mass shooter Adam Lanza hasn’t been, and probably can’t be, diagnosed with any certainty. But all the signs point to paranoid schizophrenia, a devastating brain disease whose victims are no more possessed by demons than are cancer patients or heart attack survivors.
Psychiatrist Paul Steinberg writes that early signs of the disease “may include being a quirky loner—often mistaken for Asperger’s syndrome,” the less-stigmatizing diagnosis Nancy Lanza reportedly told friends accounted for her son’s peculiarities.
Schizophrenia is a physiological disorder of the prefrontal cortex of the brain, resulting in disordered and obsessive thinking, auditory hallucinations and other forms of psychosis. Sufferers often imagine themselves to have a special connection with God or some other powerful figure. It’s when they start hearing command voices telling them to avenge themselves upon imagined enemies that terrible things can happen.
Ronald Reagan’s would-be assassin John Hinckley, Jr. suffers from schizophrenia; also John Lennon’s killer Mark David Chapman. More to the point, rampage shooter Seung-Hui Cho, who killed 32 students and teachers at Virginia Tech in 2007, had been in and out of treatment for paranoid schizophrenia, but never hospitalized for long enough to bring him back to reality.
Nobody knew what to do about Jared L. Loughner, who killed six people while attempting to murder Rep. Gabby Giffords in Tucson. Same disease. After James Holmes began showing signs of advancing psychosis, University of Colorado officials more or less, well, “washed their hands of him” would be a judgmental way to put it. Then he killed 24 strangers attending a Batman movie in Aurora, CO. He reportedly mailed a notebook describing his mad plans to a university psychiatrist, which she received only after the fact.
With the possible exception of Lanza, all of these killers had exhibited overt symptoms of psychosis previous to their explosive criminal acts. They belonged in locked-down psychiatric hospitals under medical treatment — whether voluntarily or not. Nobody in Seung-Hui Cho’s or James Holmes’ state of mind can meaningfully decide these things for themselves.
Properly speaking, psychosis has no rights.
Yet the biggest reason people don’t act is that for practical purposes, ill-considered laws make involuntary commitment somewhere between difficult and impossible. Sources told New York Times columnist Joe Nocera that Connecticut makes it so hard to get somebody committed to a psychiatric hospital against their will that Nancy Lanza probably couldn’t have done anything had she tried. (And risked antagonizing her son in the process.)
“The state and federal rules around mental illness,” Nocera writes “are built upon a delusion: that the sickest among us should always be in control of their own treatment, and that deinstitutionalization is the more humane route.”
A liberal delusion, mainly. The good news is that anti-psychotic medications work; diseased minds can be treated. Putting somebody into a psychiatric ward for 30 days shouldn’t be as simple as a 911 call, but neither should it require the near-equivalent of a criminal trial.
Just as with gun control, lives hang in the balance.
By: Gene Lyons, The National Memo, January 2, 2012
“Another Anti-Obamacare Headline”: Beware The Great Health Insurance Scam Of 2014
The anti-Obamacare world is atwitter over comments made last week by Aetna CEO, Mark Bertolini, who predicts that some insurance markets will “go up as much as much as 100 percent” when Obamacare takes hold in 2014—with the average increases running between 25 percent and 50 percent in the small group and individual segments of the business.
Mr. Bertolini has dubbed this phenomenon “premium shock”.
To be sure, this is a great headline for those who remain committed to defeating the Affordable Care Act with nothing better to suggest in its place. However, the facts reveal that Bertolini’s comments—while just maybe true for a very few participants buying coverage on the exchanges in the individual markets—are completely misleading with respect to the individual markets and likely completely untrue as applied to the small group market.
So, how is Mr. Bertolini arriving at his dire predictions?
Apparently, it’s all about (a) the new tax placed on health insurance company sales, (b) the community rating requirements that now prohibit older participants in a health insurance pool to be charged more than 3 times what is paid by younger members and (c) the new minimum standard of benefits that will need to be provided to those who purchase health coverage on the exchanges.
Pretty scary, yes?
The problem with Mr. Bertolini’s prediction is that it is completely and utterly at odds with not only the Congressional Budget Office (“CBO”) projections but with American Health Insurance Plans (AHIP) —the very lobbying organization that represents Aetna and was an active and hugely important supporter of Obamacare.
In 2009, the CBO projected that the Affordable Care Act will have little impact on small and large group policies. This is notable given the expectation that, by 2016, the small group market will represent 13 percent of the total insurance market while large groups will provide coverage for a full 70 percent of Americans with health insurance coverage. Do the math and you find that, according to the CBO, 83 percent of all covered Americans will experience little to no change in premium rates beyond normal increases that would occur had Obamacare never become the law of the land.
As for the individual markets, which will comprise 17 percent of the overall insurance market in 2016, premium rates are predicted to rise about 10 to 13 percent by 2016—considerably lower than the doubling Mr. Bertolini has suggested will take place in 2014.
What’s more, approximately half of those gaining coverage in the individual market will qualify for the government subsidies, thereby reducing the price of their insurance premiums below where they currently exist.
Of course, it is not uncommon for people to discount CBO projections and proclaim them to be biased when the projections fail to meet a desired political narrative.
So, let’s see what Aetna’s own trade association, AHIP, has to say.
A review of the AHIP website reveals that the sales tax imposed on the health insurance companies—and sure to be passed along to consumers—will account for a premium increase averaging 1.9 percent to 2.3 percent by 2014 and 2.8 percent to 3.7 percent by 2023.
Now, you may object to this potential increase—but it is a long way from the increases Mr. Bertolini is predicting.
On the subject of community rating—where insurance companies will now be prohibited from charging older participants in their health insurance pools as much as 10 times more than what they charge younger members even if the elder participants have no pre-existing health problems—AHIP indicates that limiting the rates for the older participants to only 3 times the rate charged the young will result in some younger insurance customers paying as much as 45 percent more in premium payments while older participants will pay 13 percent less.
No doubt, this is a large part of what Aetna’s Bertolini is relying on when trying to freak out the public.
The problem with Bertolini’s prediction is that even this large percentage increase, should it prove to be actuarially accurate, would not apply in the small and large group markets- it would apply only to a very limited number of people purchasing their health insurance on the exchanges who are (a) very young and (b) not qualified for subsidies.
The number is also misleading in its severity.
According to AHIP, the average premium paid by a 24 year old in the individual marketplace is $1200 a year. Using AHIP’s numbers, the price of making the cost of heath insurance more equitable for a 60 year old will potentially cost that 24 year old, on average, an extra $45 a month.
While I don’t mean to minimize this increase, as I recognize that every dollar counts when one is young and getting started, it is important to keep the actual price tag in perspective and weigh the equities when considering that those at the older age range have been overcharged for many years.
The reality is that the young have been paying unreasonably low premium rates for for a very long time—it being in the health insurance company’s profit interest to bring in as many young and healthy people as possible in the door by charging artificially low rates. The problem is that they make up for it by charging artificially high rates to the older people the insurance company would rather not have in the first place. What the ACA seeks to do is correct this situation so that 60 year olds are not precluded from gaining health insurance coverage by being priced out of the market.
Note that this problem could have been averted for younger Americans had we lowered the Medicare age to 55 however this was not acceptable to the Congressional GOP.
And that brings us to the topic of minimum benefits that must now be including in insurance policies offered on the health care exchanges, another area where large increases can be found in the effort to alarm the public.
According to AHIP, the additional costs attributable to health insurance companies actually having to provide a meaningful benefit ranges for as little as a tenth of a percentage point in Rhode Island to 33 percent in Maine where, apparently, health insurance policies do not provide much in the way of actual coverage. And, again, these numbers apply only to the individual marketplace on the exchange.
Thus, if you are one of the 8.5 percent of Americans who will be buying your coverage on the exchange in the state of Maine (making for a very, very tiny percentage) you may now have to pay more to actually get some health care coverage in exchange for what you pay.
So, what does all this tell us?
Gary Klaxon, Vice President of the Kaiser Family Foundation—one of the few health care think- tanks that just about everyone agrees is completely non-partisan and objective, had this to say about Mr. Bertolini’s predictions:
“That just seems silly. I can’t imagine anything going on in the small-group market that would change the average premium that much. On the individual market, there’s arguments for things changing, but those magnitudes seem high.”
Silly, indeed.
There is, of course, more to this than what the anti-Obamacare folks are choosing to report.
That would be the part where Bertolini noted in his ‘premium shock’ comments that this huge, one-time jump in premium rates to be expected in 2014 also includes increases in costs that would come even without the health care reform law.
Translation—health insurance companies have been trying to raise rates at a ridiculous pace ever since the word ‘Obamacare’ first entered the American lexicon, always seeking to blame these increases on the law even before the law became the law. So, when 2014 arrives, you can be certain that they will do everything in their power to grab as large an increase as they can get away with in order to preserve their profits.
Mr. Bertolini is merely laying the groundwork for that effort as Obamacare has provided the health insurance industry with a wonderful scapegoat, perfectly suited and even more perfectly timed to cover the inescapable truth of health insurance—it is a business model whose time has passed.
The sooner the American public realizes that private health insurance companies no longer work, the sooner we can get busy with the solutions that, while politically uncomfortable, can actually solve the nation’s health care challenges.
In the meantime, if you are a part of a large or small business health insurance group, there is no reason to expect that there should be significant—if any— increases in your premium charges in 2014. If you are an individual who will be shopping for health insurance on the exchanges, the 50 percent of you that will qualify for subsidies should experience premium costs at a lower rate than what you are currently paying, If you are in that other half, you may, indeed, see some increase in your rate—but nowhere near the ‘doubling’ the insurance industry would like you to believe is in your future.
By: Rick Ungar, Op-Ed Contributor, Forbes, December 20, 2012
“It’s All Or Nothing”: The Obama Administration Plays Hardball On Medicaid
When the Supreme Court upheld the Affordable Care Act, it also gave Republican states a gift by saying they could opt out of what may be the ACA’s most important part, the dramatic expansion of Medicaid that will give insurance to millions of people who don’t now have it. While right now each state decides on eligibility rules—meaning that if you live in a state governed by Republicans, if you make enough to have a roof over your head and give your kids one or two meals a day, you’re probably considered too rich for Medicaid and are ineligible—starting in 2014 anyone at up to 133 percent of the federal poverty level will be eligible. That means an individual earning up to $14,856 or a family of four earning up to $30,657 could get Medicaid.
Republican governors and legislatures don’t like the Medicaid expansion, which is why nine states—South Dakota, plus the Southern states running from South Carolina through Texas—have said they’ll refuse to expand Medicaid (many other states have not yet said whether they’ll do it). But some states asked the Obama administration whether they could expand Medicaid a bit—maybe not cover everyone up to 133 percent like the law says, but add a few people to the rolls. And yesterday, the administration said no. It’s all or nothing: either you expand Medicaid up to 133 percent, or you get none of the new money. Was that the right thing to do? Well first, let’s talk about that money.
These Republican states offer worries about cost as their reason for rejecting the Medicaid expansion. But in truth, it’s an incredibly sweet deal for them. Right now, the federal government generally pays half of the cost of Medicaid, with the state picking up the other half. But the federal government will pay 100 percent of the cost of new Medicaid recipients signed up because of the expansion between 2014 and 2016. After that the federal contribution will step down to 90 percent by 2020, where it will stay forever more. So the state gets to insure a whole bunch of its citizens for nothing at first, and eventually for only 10 cents on the dollar. And in return they get reduced costs for uncompensated care, and a healthier, more productive citizenry with more money to spend. Some studies have projected that states will more than make up for their 10 percent contribution with health care savings they’ll get from an insured population; that’s likely to be particularly true among those states whose Medicaid eligibility standards are currently the stingiest, who not coincidentally have the highest rates of uninsured citizens (and, also not coincidentally, are precisely those states where the Republican leadership is refusing to accept the expansion).
And yet, the most conservative among them won’t take the deal. The federal government is saying to the states, Here is a bunch of free money for you to give health insurance to your uninsured poor citizens. And these states are saying, No way! Their justification of budget worries is so unpersuasive that it’s impossible to avoid the conclusion that they would rather see people have no insurance, and thus be poorer, sicker, and die sooner, than get Medicaid via Obamacare. It’s truly a moral abomination.
By playing a little bit of hardball and not letting states get away with a partial expansion, the administration is betting that before long the states will find all this free money to insure their citizens irresistible. And they may be right. That’s what happened when Medicaid was established in 1965; few states signed up at first, but before long they all did. Right now these governments are being pressured by some powerful interests to take the expansion, particularly the hospitals who have to deal with patients with no way to pay their bills. If they expanded Medicaid a little but not fully, that pressure wouldn’t be as intense and they could claim they expanded coverage. This way they won’t be able to hide behind a partial expansion and claim they did the right thing. Let’s hope the administration is right, because millions of Americans’ futures depend on it.
By: Paul Waldman, Contributing Editor, The American Prospect, December 11, 2012
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