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Ron Radosh

In the current issue of Time, Steven Brill — founder of Court TV and The American Lawyer — has a report that is over thirty pages long, running 24,000 words, on the state of our nation’s health care. It is the kind of investigative report that good journalists used to do, and has been absent far too long from American journalism. If it wins the Pulitzer Prize, Brill and the magazine’s editors will have rightfully earned it. It proves that in some regard, the mainstream media is not dead yet.

The report is not an ideological screed in which the author writes to either support or oppose Obamacare. Rather, Brill travels throughout the nation simply to explore why health care costs so much. He goes to hospitals and doctors’ offices, and he visits individuals whose lives have been ruined by the cost of the care they had to have. He argues that America does not have a health care system based on the free market, in which individuals have a choice about which product to purchase and what vendor to go to. Instead, he argues that health care is a seller’s market — often a monopoly — in which the prices of products they sell have no relationship to the actual cost.

Here are some examples from Brill’s article: Acetaminophen — Tylenol being the most well-known brand — is marked up 10,000% when a hospital patient gets a pill. Niacin costs five cents per pill at a drugstore; hospitals charge $24.00. And with Medicare, the taxpayer picks up the entire tab, medication being just one part of a giant bill.

I am not a policy wonk, and I hope that Yuval Levin or James Capretta, the two best conservative analysts who write for National Affairs and other publications, will address some of the issues Brill raises. Conservative critics will undoubtedly differ with some of Brill’s suggested remedies and agree with others, but his solid report and the facts he presents are inarguable. Our health care costs exceed that of all the other advanced nations, and they are far out of line with the actual costs of the product that is dispensed.

The main find that Brill presents is something few of us have previously been aware of: a list referred to by those in the know as “the chargemaster.” This is the private internal price list for products and services that every hospital administrator has in his or her office.

If you have private insurance or Medicare, what you pay will come far from the price listed on this secret internal list. If you do not have insurance, or have a bad policy, the hospital will try its best to make you pay close to the price on their list, regardless of whether or not it is based on reality.

I urge everyone to read Brill’s entire piece. There is no way an article of this depth or length can be summarized. As he goes through his research, there are moments in the article in which he shockingly — for liberals — praises the approach taken by  Republicans and conservatives. On the issue of malpractice suits and the need for reform, he asks: why are so many CT scans given to patients when evidence indicates they are not needed? Why did one patient receive a nuclear-imaging test rather than a less-expensive stress test? The answer is the “defense” strategy — the need to avoid malpractice suits. The hospital can say they administered every possible test and are not responsible if a patient dies. Brill writes:

The most practical malpractice-reform proposals would not limit awards for victims but would allow doctors to use what’s called a safe-harbor defense. Under safe harbor, a defendant doctor or hospital could argue that the care provided was within the bounds of what peers have established as reasonable under the circumstances. The typical plaintiff argument that doing something more, like a nuclear-imaging test, might have saved the patient would then be less likely to prevail.

When Obamacare was being debated, Republicans pushed this kind of commonsense malpractice-tort reform. But the stranglehold that plaintiffs’ lawyers have traditionally had on Democrats prevailed, and neither a safe-harbor provision nor any other malpractice reform was included.

Later, Brill writes:

Finally, we should embarrass Democrats into stopping their fight against medical-malpractice reform and instead provide safe-harbor defenses for doctors so they don’t have to order a CT scan whenever, as one hospital administrator put it, someone in the emergency room says the word head. Trial lawyers who make their bread and butter from civil suits have been the Democrats’ biggest financial backer for decades. Republicans are right when they argue that tort reform is overdue. Eliminating the rationale or excuse for all the extra doctor exams, lab tests and use of CT scans and MRIs could cut tens of billions of dollars a year while drastically cutting what hospitals and doctors spend on malpractice insurance and pass along to patients.

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All Comments   (15)
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Free market economics don't work in medicine. That's why the rest of the world does so much better than we do in providing health care to everyone. Brill's work simply reiterates the old messages about health care policy The American health care system is an abomination that only exists because our political system is broken. If only the Republican party would disband, we'd be able to sort things out in short order...
1 year ago
1 year ago Link To Comment
Actually, Mr. Radosh, the healthcare market is not one of monopoly (a single seller) but of monopsony (a single buyer). And that single buyer is, you guessed it, the federal government. The government has extensive bargaining power through Medicare, so much so that health insurers base their rates on what Medicare will charge for a service. Usually, Medicare undercuts pricing for health insurers and pays a flat rate to healthcare providers. Providers in turn mark up all of their services with the intention of maximizing how much they can get based on Medicare rates.

Why is Tylenol marked up 10,000%? A better question is why does it cost $100 simply to see a doctor for five minutes? Pricing is out of whack in the healthcare market; getting to a true market would require a repeal of Medicare at best or, at worst, a law that severely curtails that program to a service for the indigent or truly needy.
1 year ago
1 year ago Link To Comment
There is no end to the expense and no society can have the means to provide every perceived need to stave off unpleasantness, discomfort, dissatisfaction with one’s inherent health, physique, or age, and the inevitable death of every individual under widely different circumstances and degrees of unpleasantness. The issue of governmental subsidy of “orphan drugs” is an example of these issues at play. Do we socialize every personal problem? On the other hand, who should draw the line limiting how far to go? A “death panel” in some bureaucracy? The ultimate fact to remember is that denial of coverage is not denial of care. Insurance companies do not kill people. Living results in death. As William Penn said, “We can not learn to live until we learn to die.”
1 year ago
1 year ago Link To Comment
A sizable fraction of the patient pool have chronic problems of obesity, substance abuse, nutritional neglect, and problems related to live-style. Certainly many lower-income people and elderly people fall in this category. The implicit expectation held out by the health activists is that all people have some inherent right to the same condition of health (not just access to care) as the “privileged.” This is an impossible goal, and to engender that hope in the popular mind is to blame poor health, and ultimately death, on class difference. This is absurd and guaranteed to persist as a source of unending social division
1 year ago
1 year ago Link To Comment
The problem with medical care by government fiat actually is not failure to resort to market forces but rather that the government wants to extend comprehensive care to a huge segment of the population who can not (or even if they could, won't) pay for medical care. These include the people presently serviced by hospital "emergency" departments and those who would not pay $1 for a routine exam instead of a drug fix, fast food, the NY Times, or a tattoo, i.e., they are not in the market for medical care. To be responsive to market forces, one has to be a player in the market. These folks are not in the market and will not be so under the new government "plan," which ordains that comprehensive medical care is not something one chooses but has inherently.
1 year ago
1 year ago Link To Comment
Mr. Radosh,
Your point on the integrity of the article is very well taken.
When I read this, I couldn't believe I was reading main stream JOURNALISM again, TIME, no less. This could have appeared at PJ's or COMMENTARY. He followed the topic and layed it out cogently, deliberately and, I think, fairly. Call it 'journalism' or call it 'chops.' Maybe TIME will take serious note. Somebody at TIME thought this was worth publishing. Maybe they'll do it again.
1 year ago
1 year ago Link To Comment
Well, if you don't think traditional journalism is dead, look at what they are promising to do to Bob Woodward "after he is dead" and can't respond to their character assassination. He'll have a lesser reputation than a troll at Huffington Post.
And due to "sequestration", band aids will be removed slowly, creating much pain. And you really don't want to experience a "waxing" at any VA facility!
1 year ago
1 year ago Link To Comment
"He [Brill] makes an argument that lowering rather than raising the age in which Medicare kicks in will actually help lower costs, and make the market more competitive."

That is an argument for single-payer--with Medicare as the single-payer system. The New Republic was correct: A low eligibility age for Medicare is equivalent to a single-payer system.

If you lower the eligibility age for Medicare way down, then most Americans will be on Medicare.

In fact, that's what the advocates for single-payer are now proposing: Keep lowering the eligibility age for Medicare gradually, a bit lower year after year, until we're all on Medicare. "Medicare for All" is their new slogan.
1 year ago
1 year ago Link To Comment
"...America does not have a health care system based on the free market..."

This is certainly not some new revelation! The Nixon administration and the Heritage Foundation was on this problem way back then and was the birthplace of most of Obamacares framework.

The problems that have arisen are 3-prong in the private sector healthcare industry. 1) For profit insucrance companies, 2) employer provided healthcare subsidies and 3) employees have least stake in their healthcare.

For Profit Insurance Companies - They are enablers of the healthcares runaway circular and arbitrary inflation. They simply pass-through the inflation and adjust services covered to protect their profit line.

Employers Subsides - Employers who meet the employee numbers threshold are mandated under law to provide healthcare insurance for their employees. They, like insurance comapnies are helpless to combat the healthcare industries circular and arbitary inflation passed through from the insurance companies. They, like insurance companies are for profit and will pass along a portion of the inflated rates on to their employees to help buffer their profit.

Employees - Most employees, though they're 'boxed' in, have the least economic investment in their healthcare and are most often faced with insurance companies and employers selecting group policies with continuous reduced service benefits and increased monthly premiums.

Employers and employees become victimized by both the healthcare industry and insurance companies 'pass-through' circular and arbitrary inflation for goods and services. On average, the healthcare industry inflates at the rate of 3.5% to 5.5% per annum. That surpasses the national rate of inflation by multiples! Eventually, this circular and arbitrary inflation becomes ECONOMICALLY UNSUSTAINABLE!

Now, consider these facts and apply them to healthcare costs to municipalities, counties, States and the Federal Governments VA healthcare, Medicare and Medicaid, child healthcare programs, many of the military services healthcare programs and all public education institutions, all payed by the TAX PAYERS.

The core principal of free market enterprise is competitiveness. Among physicians and hospitals, there is virtually zero competitiveness! Among land and air ambulances, there is virtually zero competitiveness. Among medical device and equipment manufacturers, there is virtually zero competitiveness. Among pharmacuetical companies, there is virtually zero competition for branded drugs. Among generic pharmacuetical manufacturers, there is virtually zero competitiveness.

Primary care physcians have developed a 'formula' for which they use based on the 'desired income' they wish to make. Operational liabilities for office or clinic plus their desired income. They they apply this total to a standard insurance and co-pay rate per patient to see how many patients they must see and for how many minutes during their hours of daily operation. So, when you walk into many offices and get that feeling that you're cattle being pushed through a sales ring -- you are correct!

Stopping at this point, all I''l leave you to ponder is this! The entire healthcare industry is corrupted from top to bottom and every crook inbetween -- a by product of a monopoly 'industry' out of control with virtuall NO restraints placed on it as it travels at mach speed towards economic unsustainability and wrecking our nations economy.
1 year ago
1 year ago Link To Comment
The high mark-ups hospitals impose on patients carry lots of hospital overhead. True, one can buy Tylenol or a generic equivalent at the corner drug much more cheaply, but that isn't what is happening. That $1.50 per pill also covers the cost of the hospital maintaining its own pharmacy on premise and the cost of having somebody move it to your bedside, make a record of that, and give it to you.

Brill's notion of price controls carries all the folly that such schemes usually do. Distortions will be introduced; certain items or procedures will become unavailable because costs rise faster than the price controllers can react and the hospital or physician won't sell the procedure at a loss. I can remember the last time something like that was tried, during the Nixon Administration (!), when wage and price controls were implemented to fight inflation. While they lasted only about 18 months before everybody was ready to throw in the towel, even in that short time things disappeared out of the supermarkets, notably lots of meat products.

But I do believe we can never have a free market in complex medical care: it's just too complicated. One of the assumptions behind free-market theory is that consumers have good ("perfect") information. But how can that condition be satisfied when the whole matter is so complex only highly trained medical people can really know what's going on?

One thing is certain: it will be expensive and only more so. It's (highly trained) labor intensive, it's high tech, and it's third party pay.

1 year ago
1 year ago Link To Comment
I don't believe that the cost of nurses to give you the medicine and make a record of it is included in the cost of the Tylenol. The nursing budget is separate from the pharmaceutical budget.

What does make the pharmaceutical budget expensive is that it's a 24x7 pharmacy that can never run out of any medications. Even if your doctor prescribes some rarely used chemotherapy med, it has to be available--immediately.
1 year ago
1 year ago Link To Comment
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