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Health care price gouging

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By Optic Editorial Board

If we had a voice in selecting the next Pulitzer Prize for outstanding investigative journalism, this year we’d nominate Steven Brill and Time magazine for their lengthy, searing special report titled “Bitter Pill: Why Medical Bills Are Killing Us.” It’s an indictment against the cost of health care in America, with first-rate reporting by Brill and courageously published by Time (a mainstream media magazine that gets more than its share of health care-related ads).

Brill’s report has the potential of changing the health-care debate for the better. Instead of asking what can be done to contain costs, Brill asked why are costs so high to begin with.

The answer, he found, is contained in a complicated billing process based largely on the chargemaster — little-known but widely used internal price lists hospitals use to price their products and services. Brill points out with great detail how these chargemasters overcharge patients on everything from a box of gauze pads ($77 at one hospital) to an emergency room visits ($21,000 at another hospital, for a woman’s chest pains that turned out to be heartburn).

And that’s just the beginning, as Brill meticulously dissects one hospital bill after another while also pointing out the enormous profits margins that hospitals and pharmaceutical and equipment manufacturers are making. He even reported some of the seven-figure salaries and stock options that many hospital administrators make, which just adds to the outrage.

The nearly 25,000-word article first appeared in Time’s March 4 issue, then got plenty of air time on CNN, Time’s media partner, the following week. Two weeks later, Time published a page of reactions to the piece, including some rather defensive health-care executives who nipped around the edges of Brill’s piece but came nowhere close to the heart of the issue — the absurd costs they are charging patients on a regular basis.

Here are some basic points we think our readers should know:
• The original hospital bill that you get, which is generally based on chargemaster rates, is generally negotiable. Medicare absolutely will not pay off the chargemaster, and insurance companies negotiate for lower charges all the time. Uninsured or underinsured people can do the same thing, and there are even people out there who will do it for you (for a fee, of course).

• When it comes to hospitals, there’s really not much of a practical difference between the for-profits and the nonprofits. They both turn tidy profits and, at least at the larger facilities, their top executives make enormous salaries.

• Health care is a seller’s market, and it shows in the profits hospitals and others make. Health care is a $2.8 trillion business that protects its interests — for every member of Congress, for example, there are at least seven health care industry lobbyists.

• When it comes to costs, the best insurance to have is Medicare. It pays reasonable rates and it pays quickly, and there are numerous examples of providers who accept Medicare and still turn good profits. So don’t believe the spindoctors who say it’s breaking the system, because it isn’t. It’s actually helping to keep costs down.

For years, it seems the question has been, how do we contain health-care costs? Now the question should be, how much profit is too much profit? We say, gouging vulnerable patients crosses that line every time.