Health Care Costs: The Hard To Swallow Pill

(2 pm. – promoted by ek hornbeck)

Journalist Steve Brill wrote brilliant cover story for Time magazine, Bitter Pill: Why Medical Bills Are Killing Us, which lays out the reason US health care costs are out of control, just follow the money. He explains how the hospitals and their executives are scamming the system through billing to maximize profits. As an examples of the absurd charges, for a 15 cent Tylenol tablet hospitals charge as much as $1.50, $6 for a marker used to mark the body before surgery and as much as $77 for each of four boxes of gauze used. In hospital a patient can be charges as much as $450 for an electrocardiogram that in a doctor’s office would only cost $150.

This doesn’t happen in other countries where costs are controlled by government set rates for what both private and public plans can charge for various procedures. The problem here in the US isn’t that we don’t have single payer, it’s that the government doesn’t regulate the prices that health-care providers can charge. But in an article at the Washington Post by Sarah Kliff for the Wonkblog writes that we don’t need to look to other countries:

Maryland has succeeded in controlling costs for about four decades now. It is the only state that sets rates for hospitals, with the state government deciding what every Maryland hospital can charge for a given procedure..

That system started in 1976, when Maryland had hospital costs 26 percent higher than the rest of the the country. In 2008, the average cost for a hospital admission in Maryland was down to national levels. “From 1997 through 2008, Maryland hospitals experienced the lowest cumulative growth in cost per adjusted admission of any state in the nation,” the state concluded in a 2010 report (pdf).

Here is a brief summery of the article and what you should know about why health care in this country costs so much (and it isn’t malpractice lawsuits, as some would have you believe):

Hospitals arbitrarily set prices based on a mysterious internal list known as the “chargemaster.” These prices vary from hospital to hospital and are often ten times the actual cost of an item. Insurance companies and Medicare pay discounted prices, but don’t have enough leverage to bring fees down anywhere close to actual costs. While other countries restrain drug prices, in the United States federal law actually restricts the single biggest buyer-Medicare-from even trying to negotiate the price of drugs.

Tax-exempt “nonprofit” hospitals are the most profitable businesses and largest employers in their regions, often presided over by the most richly compensated executives.

Cancer treatment – at some of the most renowned centers such as Sloan-Kettering and M.D. Anderson – has some of the industry’s highest profit margins. Cancer drugs in particular are hugely profitable. For example, Sloan-Kettering charges $4615 for a immune-deficiency drug named Flebogamma. Medicare cuts Sloan-Kettering’s charge to $2123, still way above what the hospital paid for it, an estimated $1400.

Patients can hire medical billing advocates who help people read their bills and try to reduce them. “The hospitals all know the bills are fiction, or at least only a place to start the discussion, so you bargain with them,” says Katalin Goencz, a former appeals coordinator in a hospital billing department who now works as an advocate in Stamford, CT.

Recently, Mr Brill sat down with Hardball guest host Michael Smerconish  and Neera Tanden from Center for American Progress to discuss how the rising health care costs are killing Americans:

   And it actually that bears on the conversation we’re having, because a chunk of that money is paid by Medicare. Medicare is I point out in the article is very efficient at most things. It buys health care really efficiently, which is a great irony, because it’s supposed to be the big government of bureaucracy.

   Where Medicare is not efficient is where Congress, because of lobbyists have handcuffed Medicare. Medicare can’t negotiate what it pays for any kind of drugs. It can’t negotiate what it pays for wheelchairs, diabetes testing equipment. And if Congress took those handcuffs off of Medicare, you could get about half of the spending cuts that we’re sitting around here talking about.

Raising the eligibility age and/or applying a means test as ways to reduce the cost of Medicare will not fix the rising costs. Only government regulation of the hospitals and the ability of Medicare to negotiate pricing for procedures, equipment and supplies will cut the cost for the patient and the tax payers. Take the profit motive out of saving lives and keeping Americans healthy.