More Medical Monopoly: How Steve Brill Got It Wrong

March 1, 2013
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health_insurance_medical_costs: AlecI talked about Steve Brill’s epic TIME piece health_insurance_medical_costs: AlecI talked about Steve Brill’s epic TIME piece Bitter Pill: Why Medical Bills Are Killing Us last week. I’m still absorbing the cost data he uncovered in that piece, and the graphics and images alone are worth the $5.99 cover price to get a physical copy of the magazine. The stories he shares, and the healthcare industry’s Great & Powerful Oz – the hospital chargemaster price list – is indeed a big part of the out-of-control price spikes in US healthcare.

As brilliant, informative, and galvanizing as Brill’s piece is, I believe he dropped the ball just short of the goal line when, in his wrap-up recommendations, he talks up solutions that nibble around the edges of the cost problem, but don’t address its core cause: our crazy 3rd-party payer system. Take a walk with me through the hallways of US healthcare history. Here’s the timeline:

  • 1880s: Chloroform in use as surgical anesthesia (thank GOD).
  • 1900s: The American Medical Association (AMA) becomes a big player.
  • 1900s: Doctors no longer work fee-free in US hospitals (see bullet #2).
  • 1910s: America lagging behind European nations on health insurance (already?).
  • 1920s: Political complacency (must have been all the bathtub gin) leads to a “what, me worry?” attitude toward rising medical costs.
  • 1930s: Oops, we broke the stock market. Blue Cross, against insurance industry advice, starts offering hospital insurance coverage.
  • 1940s: Stiff wage controls in WWII defense plants leads to employers offering health insurance to their factory workers. President Truman draws up national health insurance plan, gets beat up on the White House lawn by Congress.
  • 1950s: Pharma industry becomes big player via antibiotic and vaccine development, along with meds for a variety of illnesses. Lots of proposals for national health plan, all get beaten up in public and sent home. Employer-based group insurance plans, offering coverage for “major medical” (hospitalization), become the norm.
  • 1960s: First incidence of the idea of a “doctor shortage”. Hospital costs have doubled since the last decade. Specialist MDs now are 70% of working doctors. Medicare passed.
  • 1970s: First HMOs established (rending of garments and gnashing of teeth followed swiftly behind). Medicare expenditures are growing faster than predicted. President Nixon proposes national health plan, gets beaten up on the White House lawn by Congress, complains about it on Watergate tapes. Starts “War on Cancer” instead.
  • 1980s: In the Corporate Decade, corporations start to take over, consolidating hospitals and health systems. Medicare shifts to paying by diagnosis rather than by treatment, private insurers follow suit. Private insurers start complaining that “fee for service” is being exploited by healthcare providers, but say nothing about the corporatization of healthcare.
  • 1990s: Healthcare costs now increasing at double the rate of inflation. President Clinton attempts healthcare reform, gets beaten up on the White House lawn by Congress. 16% of US citizens now uninsured. The AMA starts up the RUC (Specialty Society Relative Value Scale Update Committee), a star-chamber group that sets pricing for medical procedures in secret and hands it to Medicare. Price-fixing? Nope, cause Medicare publishes the list, not the AMA.
  • 2000s: Medicare starts to be judged as unsustainable. The RUC is still working in secret. Healthcare costs rise 100% for the average family during the decade. Employer-based group health insurance faces economic challenges due to changing workforce demographics. Insurance premiums for health coverage double. Oops, we broke the stock market AGAIN.
  • 2010s: Obamacare passes. President Obama’s repeatedly beaten on the White House lawn by Congress, but he gets a few lick in himself. Obamacare is a fat, wet kiss on the lips for the insurance lobby; how it affects the rest of us is a still-open question. Word starts spreading about the RUC.

In Bitter Pill, Brill’s “big bad devil” is hospital profiteering via the chargemaster. He highlights the hospital lobby as the most politically powerful group in any Congressional district, and calls out the high salaries of hospital administrators as a big driver of overall healthcare costs.

He also recommends that pharma patents should be limited in their blockbuster-drug Monopoly game, and that medical malpractice caps need to be put in place – both of which I agree with 100%.

However, Brill reserves most of his criticism for hospitals, and the chargemaster. I counter that the chargemaster arose as part of an overall structure problem in US healthcare: like the rest of US business, it’s bottom-line and shareholder-interest driven. Customers (commonly called patients) aren’t given a thought in the corridors of healthcare power other than as revenue units. And that’s because we aren’t directly paying the bills. It really is all about the dollars, and who hands them over, in a commercial transaction – healthcare, and everywhere else.

I’m not saying that doctors, and hospital administrators, need to work for minimum wage. I don’t think anyone should have to work for minimum wage – who could live on $7.75 an hour, which amounts to the princely gross sum of $310/week? What I do recommend is starting to put value into the equation for patients, not just for shareholders and employee bonus assessments. Healthcare customers – patients – need to be able to assess the value of the healthcare services they receive, beyond the fact that it might be saving their lives. Yes, that’s certainly a high-value item, but it’s not part of every healthcare encounter. Making that value apparent will require putting customers – patients – at the table for all parts of the healthcare conversation. Starting with (and yes, I know I’m a broken record on this) asking, always and everywhere, “How much is that?” when making a healthcare decision.

We also need to take a long, hard look at employer-based group insurance, and maybe put it out to pasture. I’m on record with my thoughts that we should all be buying our own insurance – when various groups shout about “job killers,” I wonder if they’ve ever had to buy group insurance for their employees. That’s a real job killer, right there. Access to cost information, hand in hand with outcomes information (available on Leapfrog’s hospital safety app and other outcome-metrics reporting tools), will reveal the value of a service.

That’s what will really reform the system: patients asking questions, and working to get the full answers to them. And killing off the RUC would be a great idea, too. Otherwise, we might as well go beat ourselves up on the White House lawn – hey, the Secret Service might help us out if we do.