Bitter Pill: Why Medical Bills Are Killing Us

http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/

by OGinparadise • 13 years ago

78 81 13 years ago

healthland.time.com

like $283.00 for a “CHEST, PA AND LAT 71020.” That’s a simple chest X-ray, for which MD Anderson is routinely paid $20.44 when it treats a patient on Medicare, the government health care program for the elderly.

A 20+ times difference? how can they justify it

Shivetya• 13 years ago

Because the government can force a cost upon a hospital that is not sustainable? Which in turn requires the hospital to recoup the costs elsewhere. One of the claims opponents have to ACA is that it will force private insurance out because the government will mandate its costs forcing private payers; companies and individual alike; to pick up the tab through higher billing from service providers.

Still one has to flinch when you see the pay some NON doctors get. Then again, its the same in education too. Some of the highest paid people in public and college education are not educators.

sneak• 13 years ago

The article addresses that.

The real question is why new hospitals don't open up and charge less than these hyper-inflated retail rates and compete on price?

I'm only on page 3, maybe that's addressed too - but I doubt it.

jdotjdot• 13 years ago

But you also see absurd discounts with private insurance companies - - eg you get testing done by Quest and get an $1000 bill, and then the insurance discount is $900 before the insurer even pays anything. That's not the government forcing unsustainable pricing, that's simply nonsense.

In no other industry is there such a difference between the sticker price and "discount", where those who can least afford to pay have to pay the most.

king_jester2• 13 years ago

> Because the government can force a cost upon a hospital that is not sustainable? Which in turn requires the hospital to recoup the costs elsewhere.

Is this accurate? It was my understanding that payment practices with insurance providers is what causes the high sticker price of any given medicine or service in hospitals, even though insurance companies and programs like Medicare do not pay those prices, only those who pay out of pocket do.

FireBeyond4• 13 years ago

Except that the hospitals themselves say that the Medicare cost is typically around 10% less than the cost of the service/product.

The solution to a 10% shortfall is not to gouge those not responsible for that for at least a 150% minimum profit (up to 800%).

michaelochurch3• 13 years ago

A 20+ times difference? how can they justify it

It's not right, but I know how they justify it.

Health insurers negotiate a "discount" rate, that doctors tolerate for two reasons. The first is that the insurer will actually pay. The second is that, since insurers direct patients, they have leverage. One might call it extortion, in that the physician either needs to accept the insurer's rates, or end up "out of network" and get no patients from that insurer.

Uninsured patients have no leverage, and the vast majority of them never pay their medical bills, so the people who do pay get marked up severely.

lucidrains• 13 years ago

You should contrast the cost of a CT/MRI here vs in other countries like India or Japan.

The funny thing is, I ask healthcare professionals the same question and it is always just chalked up to the broken economics.

FireBeyond4• 13 years ago

Somewhat unsurprisingly, doctors who own an investment interest (or outright ownership of equipment / facility) are 3.7 times more likely to order CT/MRI scans.

That is purely human "greed".

I somehow doubt that self-selection of patients needing such imaging is occurring.

OGinparadise3• 13 years ago

my math was off --a little :)--but still

skore5• 13 years ago

A very good article that reminds me of an understanding that I've come to a couple of years ago - that free market capitalism and health care just don't mix.

Having the option to choose against a service, or being physically able to choose another service vendor if one is ripping you off are some of the core rules keeping the worst absurdities of capitalism in check.

Without them, the result is that people are being held hostage - pay here or die here. People aren't usually inclined to choose the second.

jpadkins2• 13 years ago

How is the US Healthcare system in anyway like a free market? It's by far the most heavily regulated industry, every aspect of it. I believe government pays ~ 1/3rd of all healthcare costs.

Free market healthcare is veterinary, plastic surgery, lasik or maybe even dentists. Those sectors haven't seen skyrocketing costs.

michaelochurch3• 13 years ago

Corporate capitalism exists to provide the best of socialism and capitalism for the well-connected, entitled corporate elite and the worst of both systems for everyone else.

hamburglar3• 13 years ago

You have apparently never been handed a $93k estimate for dental work, and are probably not aware that it is nearly impossible to find a dental plan that will pay for more than a couple thousand dollars of work (they all have caps that can easily be exceeded by getting work done on a single tooth).

robbiep2• 13 years ago

You may be interested to look at the Australian health system, with a dual system of free cover for all, and the option of private insurance and private treatment (option of staying in a hospital with nicer rooms and the ability to choose your own doctor) -

Good care is incentivised for all

(many of the expensive drugs mentioned in the article, for example rituximab and the breast cancer treatment drug Herceptin, and many other drugs that would cost >$50,000 for an individual, are bought by the government and made available for anyone who needs them for a maximum cost of $36.10)

And doctors can still earn good money in private practice if they so desire

As a side note I am currently an Australian medical student taking a surgical placement in a Boston hospital. A surgeon in Australia can easily make the same amount of money as an American surgeon; they will earn on average twice as much during their training years (base salary for a first year graduate in aus is ~$56,000 extending up to ~$80,000 with overtime (paid hourly) vs ~$45k for an intern in the states who is salaried and not paid overtime.

First year attendings/consultants in Australia generally take home $200-250k, exactly on par with US doctors

With the added advantage of not having 200-500k in student debt (I have been a student for 10 years by the time I graduate later his year and will have $45k in student debt)

skore5• 13 years ago

I believe the system we have here in Germany is quite similar and yes, I think it's working rather well.

marknutter5• 13 years ago

Very few medical expenses are related to life and death scenarios, so I think you're being a bit dramatic. When it comes to basic care, there's absolutely no reason why a capitalist approach wouldn't work, and work well. And insurance was supposed to be the way to protect against catastrophic life and death scenarios but it has become synonymous with basic health coverage.

skore5• 13 years ago

True, but even if they're not life and death - the implication is that you don't cut costs on health care, because somewhere down the line, you might regret it.

Also, of course, a lot of the things that may be minor in comparison to true life-and-death scenarios have very real consequences concerning the ability to take part it everyday life or being able to work.

Having two fingers cut off might not kill me, but I'm quite sure how I would react - even if somebody offered me a hefty cost to reattach them, I'd choose that over spending the rest of my entire life with only eight fingers.

king_jester2• 13 years ago

> When it comes to basic care, there's absolutely no reason why a capitalist approach wouldn't work, and work well.

I disagree completely. Providing basic care as early as possible to people is the best way to catch problems earlier and reduce overall cost of treatment. Anything that gets in the way of a person seeking basic care, such as payment or wrangling with insurance, means that some people will choose not to seek or will delay seeking basic care. Universal health care options that do not require individuals to pay at time of service are far better for removing barriers to accessing basic care.

michaelochurch3• 13 years ago

Private health insurance and hospital bills are a brilliant, evil robbery.

Who is least likely to fight back against robbery? Sick people.

Health insurers get the best part of the deal. Knowing that sick people often don't have jobs and, as a group, rarely have money, they take the money when people are well.

DanielBMarkham• 13 years ago

Very interesting case study in how simple changes lead to emergent complex systems. Who would have thought that taking health insurance away from the person and assigning it to the employer would lead here? With every band-aid we put on the system, it just flows around and makes itself more complex. All of these systems, the paymaster, the insurance companies, the employers, the drug companies, the trial lawyers, etc -- they live in an ecosystem we have created over time. This ecosystem was continually adjusted to solve one problem, thereby creating more complexity for all other areas.

For that reason, I do not believe a list of remedies is the way to go here. Especially trying to increase hospital taxes -- that has as much chance of working as spitting in the ocean increasing global sea levels.

Whatever we do, we have to fight the complexity actively -- even if it doesn't directly lower costs. We can understand these things as basic software architecture principles. A couple of small suggestions:

- Eliminate needless architectural tiers. Make it illegal for anybody but the patient to pay healthcare providers. If you have insurance, fine. The insurance company pays you, then you pay the provider.

- Decouple the hospital (building and administrative staff) from the services being provided

- Standardize components. Mandate that all services provided must be in a free and open market. That means open pricing (bidding), public consumer reporting, outsourcing if possible, and so forth.

- Require interoperability. One provider cannot require that another provider be used. It's the provider's responsibility to interface with other providers

- Establish naming conventions

You get the idea.

The point here is that we've been playing whack-a-mole. Some guy goes out and writes a wonderful article about the complexities and problems with the market. So new adjustments are made to fix them. They only create more problems, which some other guy goes out and writes about. Each iteration may take many years. Over time the amount of cruft and inefficiencies is staggering. If we continue with this strategy of fixing the problem it's just going to get worse.

This method of problem solving hurts. Let's not do that anymore.

jivatmanx• 13 years ago

I'd add, the cost of medical education before one can practice in the U.S. has multiplied over the years and seems excessive compared to Europe, where medicine is traditionally a 6-year undergraduate program.

As a result, doctors needs to get paid far more, especially specialists.

robbiep2• 13 years ago

You're right about the cost however the time issue is changing in many places: Much of Europe: 6y med school then 4-6y specialist training (10-12 years)

Cost: minimal depending on country

Australia and the UK: 6 med school, or an undergrad and 4 years postgrad (min. 4y) + 2 years general training + 5-6 years specialist training (12-13 years)

Cost (aus): 7k per year of undergrad study Pay (aus): 56k starting salary (up to 80 w/ overtime)

The US/Canada: 4 years undergrad, 4 med school, 5-6 years training - 14 years

Cost (us): 30-50k per year study Pay (us) : ~45k intern

So the time taken to training completion is not drastically different (a year or two) but the total debt rung up does weigh on not just he doctors but everyone employed with a degree in the us:

Having said that, it is often said that doctors in the US earn more than their colleagues overseas: this is not true; although the top 0.05% may have higher earning capacity on average the US doctor earns about the same as elsewhere (certainly between the US and Australia anyway)

When you take int account lifetime debt and interest payments i feel that US doctors are getting a raw deal really

JulianMorrison3• 13 years ago

Just switch to a national health service. The whole idea of paying as an individual, or having individual insurance, is just wrong. Society should insure society.

jebblue3• 13 years ago

So the government can tell you how to run your own personal life health care like they can tell you how fast you can drive, how powerful (weak) your cell phone can be, etc.? That's not a world I want to live in. Isn't that the kind of world liberal loons thought Bush was going to lead us to? LOL too funny and too ironic. It seems liberals think as long as a liberal is in the Whitehouse then it's ok for government to take over our lives. Either way having our lives controlled by a conservative government or a liberal government; they are _still_ the Government which is supposed to be _us_!

axusgrad• 13 years ago

I don't think that solved the problem of cost, it simply changes who pays for it. Less scarcity, lower barriers to entry, and more competition are what decrease costs. That could be done with the government paying, but it's harder.

sageikosa4• 13 years ago

The reason for high medical prices is high medical costs, which includes the insurance premiums doctors pay to maintain coverage should they be sued. A "national health service" sidesteps this by making it hard to sue the provider, who ultimately is the state, which also runs the court system. To "safeguard" people (and provide a sense of cost containment), a national health service designs regulatory processes and guidelines to control and manage costs.

Might work in the short run in a small and homogenized enough population, where everybody basically only needs the same type of care; beware if you ever get a rare condition, since there is no incentive to specialize, and the regulations for "edge cases" are written as they are discovered.

The real solution to high medical prices is to lower costs, foremost of which would be insurance premiums doctors need to pay to cover their practices. This can be accomplished through tort reform. The best part of this is that if you don't like insurance companies taking money, this reduces that purely by market action.

thinklarge• 13 years ago

I work on a government contract. I've seen how much money the government can waste in general and I think this is the wrong solution.

If we do go to a government based system we need a way to make the government accountable for KEEPING costs down while still providing the best care they can to everyone. I don't think that just saying "let the government handle it" is the right mentality. We must first establish a mission for that (emerging) department of the government and keep them to it.

Also, how can we switch to a national health service, while we are over budget by about 40%? Sure, let's do it, but that would mean a reduction of government elsewhere by 40% first and THEN we could being to take other parts away while adding a national health service...

joe_the_user• 13 years ago

Who would have thought that taking health insurance away from the person and assigning it to the employer would lead here?

I would interject "who would think that a complex set of interlocking incentives would lead to improvements?" Who?

The whole arrangement seems like Ayn Rand's bad acid trip despite there being many articulate and intelligent people who have bought Coolaid, with and without personal gain involved.

Pile incentive on incentive till things are ready to break, rationally rearrange things up a bit till the process of exploiting perverse incentives takes hold again and things are once again ready to break.

And this situation "interesting" only from the outside. The intellectual irony is lost those dying or having their lives ruined.

A substantial portion of the country can see that marketization is simply something doesn't scale for medical care. State health care has pretty much been shown itself to be the only sensible way to organize health care in a modern industrialized society.

That won't take us there because the population of opportunists who make tremendous profits from exploiting the present perverse incentives is huge and they have essentially completed regulator capture and virtual state capture.

What will happen? It's mostly the relationship between a parasite and host. The parasite has an incentive to keep the host alive but an incentive to keep the host healthy. Sounds like the future.

rogerbinns• 13 years ago

It amuses me that the US is considered the land of free markets and competition. The complete opposite is the case for hospitals. For example if you wanted to open a new hospital that is more cost effective you most probably couldn't. You would have to get a certificate of need which essentially ensures that the existing hospitals remain profitable. http://en.wikipedia.org/wiki/Certificate_of_need

Due to most health care being employer based or provided by the government (medicare/caid, military, veterans etc) there isn't really any individual choice, and you can't really take your business elsewhere.

marknutter5• 13 years ago

I blame a large part of our problems on barriers to entry for the medical field. The AMA keeps doctor supplies artificially low and there's an enormous amount of red tape involved with providing medical services to people. The lower the barriers are for an industry, the higher the innovation and efficiency. Although, lower regulation does mean more risk for the consumer, so the game becomes making it easy for the consumer to navigate a risky terrain.

JumpCrisscross• 13 years ago

A significant step forward would be requiring hospitals to disclose the cost of each procedure and then aggregating those data at the state and national levels. The marginal cost for this compliance should not be astronomical, given they're already itemising receipts. Or is there a Medicare cost database?

refurb• 13 years ago

This is exactly what Castlight Health is doing. They are collecting cost and outcome data and partnering with employers to setup the most cost effective insurance they can.

dougk162• 13 years ago

I live in the US and am currently in Poland with my wife and 1-year-old visiting friends and family. Shortly after arriving, my son got a bad enough fever that we sought medical care. This past Monday night, at 9PM, an hour after the call, in the suburbs of a mid-sized city, a doctor came to our house and treated him (he's fine now). Cost us 140 zlots, or about 45 bucks. No bullshit paperwork where you fill out your name and address 4 times either...quick, professional, in and out.

I experience situations like this again and again while travelling abroad from the US, but this one put me in shock.

danielharan• 13 years ago

It seems... civilized.

OGinparadise3• 13 years ago

Yes, but how much is $45 in Poland? You can find clinics in USA that treat you for a flat $50-$100 fee, problem is specialized care.

gambiting2• 13 years ago

It's an equivalent of 2 days of work for an average person.

But my dad had to have few operations for cancer,and now takes a very expensive drug called Glivec($3000 for a box of 30 pills, needs two boxes per month), everything is completely refunded by the government as a part of public health care. He also needs to travel to Warsaw at least once per month to pick up his medicine from the hospital there(you can only do it in person because of how much it costs), which means he has to take a 4 hour train journey - he gets it completely refunded.

dougk162• 13 years ago

Fair enough point...it's actually more like ~$100 in a relative sense, as far as my working experience in Poland went. But even saying it's the same relative price as in America, consider that this is a foreigner, calling at 8PM for a 9PM home appointment, very quick paperwork, and cash payment like the doctor delivered a pizza (we even tipped her). Everyone else here that I know has public healthcare that's largely reimbursed, so they were actually appalled by the price...go figure.

sageikosa4• 13 years ago

I would love to see how rarely doctors are sued for malpractice in Poland. Probably very little if at all.

anuraj• 13 years ago

India had a process patent regime earlier. The result - generic rituximab costs around 0.7$ in the country. Compare it with the story where the price was $13702. http://www.healthkartplus.com/details/drugs/30975/reditux-50...

Futurebot• 13 years ago

"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.” 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."

A big lesson here is that once you create an industry - no matter how destructive it turns out to be - you cannot easily get rid of it without huge political costs due to the number of people who would wind up unemployed if you got rid of said system/industry (and who would wind up hating your and your political party, which may mean you start losing elections.) Who is going to risk that except for fanatics?

toolslive• 13 years ago

An economist called Akerlof has shown in 1970 that markets whose players have asymmetric information are doomed.

The private health insurance market is a well known example of this.

http://en.wikipedia.org/wiki/The_Market_for_Lemons

gambiting2• 13 years ago

As a person coming from a EU country, I have absolutely no words for this. Like seriously, what the actual fuck America?? You will fight to the death to preserve your right to bear weapons,but any suggestion to make health care public and not let idiotic situations like this happen are fought with ferocity. What the hell.

astrodust6• 13 years ago

If only the Second Amendment was "A healthy and fit population being necessary to the security of a free state, the right of the people to universal health-care shall not be infringed."

OldSchool• 13 years ago

The billing practices of medical providers in the US are appalling. I have seen statements where the "billed" amount was $15K and the "contract" amount actually paid (and accepted as full payment) was $1300 for one aspect of a one hour outpatient procedure.

The $1300 seems reasonable considering the people and resources involved but the game of financially destroying people without insurance in a nation where people are denied independent coverage for something as trivial as allergies needs to end.

Access to group health insurance alone can be reason enough to choose a corporate job over an entrepreneurial lifestyle once you have dependents.

viveutvivas• 13 years ago

The cherry on top: 100,000 Americans die from hospital-acquired infections each year.

FireBeyond4• 13 years ago

As an EMS provider, I see the same thing. I saw a man the other night who was "sick". An older gentleman, not a "frequent flier", but someone who genuinely should be in the hospital. He was suffering dizziness, and had passed out getting out of bed, and was now experiencing abnormally high blood pressure, a racing pulse, and while an ECG was clear, there was concern over heart issues.

I suggested we take him to the hospital. He refused. "I can't afford that. They're already chasing me for $16,000". He worried that they'd refuse to treat him. I informed him that legally, they were obligated to, but of course that would cost money.

In the end, he stayed home. His wife promised to either call us again if he got particularly worse, but both of them were reluctant, even then, for him to go via ambulance - "At least that way we can save about $1,000".

It is a sad day in a civilized, modern society when fundamental decisions on healthcare are made purely on finances, not quality of life.

jrogers65• 13 years ago

> It is a sad day in a civilized, modern society when fundamental decisions on healthcare are made purely on finances, not quality of life.

I don't understand how you were sold on the idea that you are in a civilised society when one of the fundamental aspects of living in one is that your neighbours will help you when you can't help yourself.

booz• 13 years ago

This part really upset me - "Unlike those of almost any other area we can think of, the dynamics of the medical marketplace seem to be such that the advance of technology has made medical care more expensive, not less. First, it appears to encourage more procedures and treatment by making them easier and more convenient. (This is especially true for procedures like arthroscopic surgery.) Second, there is little patient pushback against higher costs because it seems to (and often does) result in safer, better care and because the customer getting the treatment is either not going to pay for it or not going to know the price until after the fact."

Bitter Pill: Why Medical Bills Are Killing Us

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