Multi-million dollar salaries, taxpayer subsidized spanking new facilities, patrons numbering in the millions……..Nah, not talking about professional sports but the state of health care in the United States of America. More specifically this is about the COST of that care, cost that is extremely high and that greatly exceeds the costs of similar and equally if not more effective care in other advanced nations.
Here I wrote about a comparison of our health care spending with these other nations such that about 18% of our GDP goes to health care while that portion is about 12% elsewhere. Many of these other nations have older populations than us who utilize health care providers more frequently, contrary to what conventional wisdom would have you believe. http://umoc193.wordpress.com/2012/05/04/our-insane-health-care-costs/
Now along comes a cover story from Time by one Steven Brill titled Bitter Pill: Why Medical Bills Are Killing Us that explores these costs in detail through tracing the experiences of several different patients and their families. Their insurance coverage was either non-existent or was through private insurers or Medicare. http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/2/
In just about all these instances Brill’s probing put him up against the Chargemaster. Not Master Charge, the predecessor of Master Card, but Chargemaster. This somewhat secretive and possibly arcane entity is what is essentially a hospital’s list of billing rates for each and every service and item it provides patients.
Stamford Hospital’s chargemaster assigns prices to everything, including Janice S.’s blood tests. It would seem to be an important document. However, I quickly found that although every hospital has a chargemaster, officials treat it as if it were an eccentric uncle living in the attic. Whenever I asked, they deflected all conversation away from it. They even argued that it is irrelevant. I soon found that they have good reason to hope that outsiders pay no attention to the chargemaster or the process that produces it. For there seems to be no process, no rationale, behind the core document that is the basis for hundreds of billions of dollars in health care bills.
What is unique about this price list within the context of billing patients is that virtually no one pays list price. It is not like the MSRP on the side window of the Hupmobile at your local Megasized auto dealer which is nearly always a mere starting point for negotiation. And neither does the hospital then try to add on for undercoating (though if they read this they may begin doing so.) But there is plenty of padding for the hospital equivalent of “dealer prep” that any sane person would think was or at least should be included in the room charges for a hospital stay.
Instead Brill found numerous and absurd examples of charges such as $24 for a niacin pill that sells for a nickel each at Walgreens or $30 for a blanket that could be purchased for much less outside the hospital but which will also be re-used with the next patient being charged the same amount for it.
How does one escape these charges? Well uninsured individuals, those most often with the least resources (we’re not talking millionaires here) are usually charged full price for these services and meds and, of course, for the replacement hips or spinal stimulators implanted in them.
But what is not automatically told to these patients is that the hospital is perfectly willing to negotiate a lower price and will that be cash check or money order? Patients, or their vigilant family members, have to initiate the process and, in fairness to hospitals, they usually can reduce the final bill substantially. However, that substantial reduction may be say, $100,000 from a $400,000 bill.
Private insurers frequently have the power to negotiate much lower charges for what their coverage buys. In those cases the patient deductible or co-pay is the same no matter what so the patient herself may not even know, let alone care, how much was overcharged in the first place.
Now comes the interesting part. The same government inclined to buying $900 toilet seats and $600 hammers is pretty damned watchful of taxpayer dollars when it comes time for Medicare reimbursments.
Brill covers the specifics in his article but let’s say a service would be billed in the amount of $179.74. Medicare pays only $13.92 for it. Medicare pays lower room rates, lower rates for physicians for surgeries, for pills, for nearly everything in the way of treatment for patients covered under this program.
Medicare has negotiated these prices under guidlines in its regulations and the prices may be pegged to cost for the hospital. An example of this might be that a certain cancer treatment drug is determined to have an average cost to hospitals of $3000. Medicare will pay a percentage on top of that.
Ah, you say, but hospitals probably lose money on Medicare patients and provide these services as their share of public interest or due to laws requiring them to do so. No, Colonoscopy Breath, neither is true.
Hospitals treat Medicare patients because they still make money from them, and nearly all hospitals elect (their option) to treat Medicare patients. After all, there are over 50,000,000 Medicare enrollees and one does not lightly dismiss such a huge base of potential customers.
In fact, many hospitals do quite well financially and that is true whether they are non-profit or for profit facilities.
A common misconception is that Medicare is just another bureaucracy ass deep in red tape. In reality, as Brill finds:
The process is fast, accurate, customer-friendly and impressively high-tech. And it’s all done quietly by a team of nonpolitical civil servants in close partnership with the private sector. In fact, despite calls to privatize Medicare by creating a voucher system under which the Medicare population would get money from the government to buy insurance from private companies, the current Medicare system is staffed with more people employed by private contractors (8,500) than government workers (700).
The efficiency of Medicare payment processing, the much lower price paid for services and devices, and the simple fact that Medicare is nearly fifty years old and every wage earner is already eligible for services upon attaining the right age, suggests to me that the ideal would be to extend Medicare eligibility to all who have payroll taxes deducted for it.
Yes, that sounds like single payer. So what?
I see two main advantages of using Medicare as a basis for health insurance coverage of all Americans.
First of all the reduction in spending on health care (remember the U.S. spends $2000-$3000 more per capita for health care with no better outcomes) would be tremendous.
Second the premiums citizens would pay for coverage would be substantially lower than what they are currently charged and what they are likely to pay when the Affordable Care Act (ACA) becomes fully effective in 2014.
Now the structure of this single payer system will differ to a large degree from what exists at present. For instance premiums may need to be higher for younger enrollees though still less than what they are billed through private insurers either via their employers or by meeting the mandate under the ACA. But that is an actuarial concern, not a reason to not adopt such a system.
Of course the single payer system may not need to be placed under Medicare. And most assuredly this new system would not be a panacea, but then neither the ACA or our private insurer system…especially the latter…are panaceas at present.
The notion that a single payer system might work better than what we have is not anathema even to some of the folks in the current system who would seem at first glance to have antipathy to it.
“If you could figure out a way to pay doctors better and separately fund research … adequately, I could see where a single-payer approach would be the most logical solution,” says Gunn, Sloan-Kettering’s chief operating officer. “It would certainly be a lot more efficient than hospitals like ours having hundreds of people sitting around filling out dozens of different kinds of bills for dozens of insurance companies.”
Brill acknowledges that any such change is fraught with difficulties.
Maybe, but the prospect of overhauling our system this way, displacing all the private insurers and other infrastructure after all these decades, isn’t likely. For there would be one group of losers — and these losers have lots of clout. They’re the health care providers like hospitals and CT-scan-equipment makers whose profits — embedded in the bills we have examined — would be sacrificed. They would suffer because of the lower prices Medicare would pay them when the patient is 64, compared with what they are able to charge when that patient is either covered by private insurance or has no insurance at all.
That clout is not only with the hospitals and doctors but with our politicians. Whatever the practical and financial advantages of single payer they may not offset the advantage to politicians from the largesse cast upon them by the health care/industrial complex.
No matter how convinced I am that single payer is the direction we should be heading, I have no illusions about it being implemented in my lifetime. After all, the push for health care reform that eventuated in the passage of the Affordable Care Act took close to forty years to develop.
At this stage of the political nonsense season much blather abounds that Medicare is overburdening the public fisc and drastic cuts are called for. What is ignored is that our entire system of health care payments is overburdening our economy as well as the public fisc and is simply not sustainable for the nation’s financial health.
The sooner we eliminate the pie in the sky idea that we have the best system in the world the sooner we can travel the road to a meaningful system that serves the vast majority of Americans.
Single payer would be a singular accomplishment.