Monday, February 25, 2013

Steven Brill: Why Medical Bills Are Killing Us

I recommend you take time to read Steven Brill’s piece “Bitter Pill: Why Medical Bills Are Killing Us” at TIME. The story is lengthy but an important piece of journalism, one I wish had been written three years ago when the country was embroiled in the health care debate. As Brill points out in the piece, the discussion about healthcare that we had in 2010 was limited to who ought to pay but ignored the critical issue of health care’s escalating cost. As he writes, Obamacare “changed the rules related to who pays for what, but we haven’t done much to change the prices we pay.”

The piece exposes how and why heath care costs have risen and it has quite a few quotable lines and some enraging case studies of average citizens struggling with medical bills. One of the most interesting sections deals with so-called non-profit hospitals that are often anything but. Brill writes:
In fact, when McKinsey [& Co., a consulting firm], aided by a Bank of America survey, pulled together all hospital financial reports, it found that the 2,900 nonprofit hospitals across the country, which are exempt from income taxes, actually end up averaging higher operating profit margins than the 1,000 for-profit hospitals after the for-profits’ income-tax obligations are deducted. In health care, being nonprofit produces more profit. . . . Under Internal Revenue Service rules, nonprofits are not prohibited from taking in more money than they spend. They just can’t distribute the overage to shareholders — because they don’t have any shareholders.
The fact that non-profit organizations are generating tremendous income highlights the core of what is wrong with American health care and the degree to which politicians and the news media have missed the point. The examining table is tilted but no one seems to notice.

Brill concludes that the fundamental debate to be had over health care isn’t about nonsense like death panels or partisan talking points fearing a government takeover of the medical system. His final argument is one that that is essentially conservative: restoring the integrity of a free market system. Brill writes:
The real issue isn’t whether we have a single payer or multiple payers. It’s whether whoever pays has a fair chance in a fair market. Congress has given Medicare that power when it comes to dealing with hospitals and doctors, and we have seen how that works to drive down the prices Medicare pays, just as we’ve seen what happens when Congress handcuffs Medicare when it comes to evaluating and buying drugs, medical devices and equipment. Stripping away what is now the sellers’ overwhelming leverage in dealing with Medicare in those areas and with private payers in all aspects of the market would inject fairness into the market. We don’t have to scrap our system and aren’t likely to. But we can reduce the $750 billion that we overspend on health care in the U.S. in part by acknowledging what other countries have: because the health care market deals in a life-or-death product, it cannot be left to its own devices.

Put simply, 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.
It’s my modest hope—and as modest as it is, I’m afraid it’s too much to hope—that if we get into another health care debate during Obama’s second term or during a future presidential administration, the issue of cost and the fleecing of patients and taxpayers becomes the central issue. Fixing the health care system need not only be a concern of liberal bleeding hearts. When capitalism is functioning it maximizes institutional efficiency and unleashes human potential. But when it malfunctions it becomes a tool for exploitation that ends up dragging the entire society down.

Brill appeared on The Daily Show to discuss his article:

Part 1

Part 2