Bitter Pill: Why Medical Bills Are Killing Us

[PA Democrat]

I am cross-posting this because of the treasure trove of information in this week's Time magazine article on health care costs. Be warned that if you have high blood pressure, you need to make sure you have taken your medication prior to reading this.

I strongly encourage every DUer to take the time to read this very informative article on why our health care costs so much more than it should. It will open your eyes and infuriate you. The problems go much, much deeper than the greedy insurance companies.

The article goes into case studies of what people are billed, how much the treatments/ care actually cost, and the obscene profits being raked in by CEOs and top managers at hospitals (including "non-profits&quot , medical device companies, and drug companies.

Highlights include:

- Uninsured patient billed $7,997.54 for a stress test using a radioactive dye for which Medicare will pay $554

- Patient billed $49,237 for a Medtronic stimulator, which cost the hospital no more than $19,000

- Medtronics, which manufactures the device has a 75.1% gross profit margin on its devices.

- Patient is billed $13,702 per dose of Rituxan, a cancer drug, for which the hospital paid less than $4,000.

- Rituxan costs about $300 per dose to make, test, package and ship

- Average profit margin for "non-profit" hospitals is 11.7%, even when including hospitals operating at a loss

- Uninsured patient billed $157.61 for a CBC for which Medicare pays $11.02

- 71% more CT scans per capita are performed in the US than in Germany due to profit motives

Excerpt from the article:

Unless you are protected by Medicare, the health care market is not a market at all. It’s a crapshoot. People fare differently according to circumstances they can neither control nor predict. They may have no insurance. They may have insurance, but their employer chooses their insurance plan and it may have a payout limit or not cover a drug or treatment they need. They may or may not be old enough to be on Medicare or, given the different standards of the 50 states, be poor enough to be on Medicaid. If they’re not protected by Medicare or they’re protected only partly by private insurance with high co-pays, they have little visibility into pricing, let alone control of it. They have little choice of hospitals or the services they are billed for, even if they somehow know the prices before they get billed for the services. They have no idea what their bills mean, and those who maintain the chargemasters couldn’t explain them if they wanted to. How much of the bills they end up paying may depend on the generosity of the hospital or on whether they happen to get the help of a billing advocate. They have no choice of the drugs that they have to buy or the lab tests or CT scans that they have to get, and they would not know what to do if they did have a choice. They are powerless buyers in a seller’s market where the only sure thing is the profit of the sellers.

Indeed, the only player in the system that seems to have to balance countervailing interests the way market players in a real market usually do is Medicare. It has to answer to Congress and the taxpayers for wasting money, and it has to answer to portions of the same groups for trying to hold on to money it shouldn’t. Hospitals, drug companies and other suppliers, even the insurance companies, don’t have those worries.

Moreover, the only players in the private sector who seem to operate efficiently are the private contractors working — dare I say it? — under the government’s supervision. They’re the Medicare claims processors that handle claims like Alan A.’s for 84¢ each. With these and all other Medicare costs added together, Medicare’s total management, administrative and processing expenses are about $3.8 billion for processing more than a billion claims a year worth $550 billion. That’s an overall administrative and management cost of about two-thirds of 1% of the amount of the claims, or less than $3.80 per claim. According to its latest SEC filing, Aetna spent $6.9 billion on operating expenses (including claims processing, accounting, sales and executive management) in 2012. That’s about $30 for each of the 229 million claims Aetna processed, and it amounts to about 29% of the $23.7 billion Aetna pays out in claims.

The real issue isn’t whether we have a single payer or multiple payers. It’s whether whoever pays has a fair chance in a fair market. Congress has given Medicare that power when it comes to dealing with hospitals and doctors, and we have seen how that works to drive down the prices Medicare pays, just as we’ve seen what happens when Congress handcuffs Medicare when it comes to evaluating and buying drugs, medical devices and equipment. Stripping away what is now the sellers’ overwhelming leverage in dealing with Medicare in those areas and with private payers in all aspects of the market would inject fairness into the market. We don’t have to scrap our system and aren’t likely to. But we can reduce the $750 billion that we overspend on health care in the U.S. in part by acknowledging what other countries have: because the health care market deals in a life-or-death product, it cannot be left to its own devices.


Read more: http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/#ixzz2LdnarWT9