Health Tips / PIGS AT A TROUGH

I regularly revisit my battered copy of a 2013 Time Magazine Special Report, “Why Medical Bills Are Killing Us”, with the same conflicted feeling I had at about age six when I learned that something painful, like picking a scab or jiggling a loose tooth, also afforded a secret pleasure that could not be shared with friends.

Author Steven Brill, a seasoned investigative journalist, revealed much about healthcare finances were (and still are) truly painful to read. He later expanded his findings into the book, “America’s Bitter Pill.”

Once I thought there might be some glimmer of hope in healthcare’s future, but now, in 2024, with Americans unhealthier than ever (more chronic illness, obesity, shorter lifespans) and continuing to spend over 17% of our Gross Domestic Product (GDP) on healthcare ($13,500 per person). Brill spent months deciphering hidden costs in the health care system (focusing especially on hospital billing practices) to find out why Americans had been spending $4.5 trillion annually on their care while getting so little health benefits in return.

If Brill singled out one villain in his piece, it was the system of hospital pricing you’ve likely never heard of called the “chargemaster”, an internal and extremely secret price list of everything a hospital can charge you for. It’s the hospital’s chargemaster that will list the $77 box of four gauze pads on your bill, $580 for that hour of oxygen you never used, and tens of thousands of other items and procedures. The skin marker used to write, “this one”, on your knee so your surgeon didn’t operate on the wrong leg? A bargain at $25.

A few years later, Big Pharma would push its way into the feeding trough of health care resources. Newer medications for cancer and autoimmune diseases routinely reach half a million to a million dollars a year.

I once wrote a Health Tip about an uninsured student who meandered into Northwestern’s emergency room with a bladder infection and left with five bucks worth of generic antibiotics and a $10,000 bill. That’s chargemaster in action.

There’s virtually no system to check this unmitigated greed except Medicare, which sends every hospital its own chargemaster and basically tells the hospital, “You’re charging $74 for gauze pads? Silly fool! We’ll pay you $3. Period.” Medicare’s maximum reimbursements to a hospital are a fraction of the hospital’s usual charges, though your Medicare supplement policy can help the hospital make up some of the difference. Generally when you’ve got both Medicare and a supplement, the hospital will accept the sum of the two policies as “enough” and not bother you for more money.

Don’t fret if the Medicare payment looks low to you. Hospitals are still raking in plenty of coin.

Insurers Negotiate Individually

Private insurers like Blue Cross, Aetna, and dozens of others individually negotiate their rates with hospitals, paying somewhere between the Medicare bargain-basement rate and the full retail “rack rate” of a hospital’s chargemaster. The real losers in this system are uninsured patients, who often are billed the chargemaster price (hence the $10,000 bladder infection). Kicking and screaming with the hospital will usually trigger a 50% discount, which sounds good until you realize it translates into a still-crazy $34 for four gauze pads.

These not-for-profit hospitals aren’t particularly charitable either. Of Northwestern’s 2010 tax-exempt revenue of $1.16 billion, a pathetic 1.85% was spent on charity care. They did even better in 2011, with $270 million in tax-free profits on $1.3 billion in revenue. As I wrote my property tax check this week I thought that if someone reversed the tax-exempt status on Northwestern’s juicy lakefront property, the hospital could single-handedly support county-funded John H. Stroger Jr. Hospital (formerly Cook County).

What Brill suggests toward the end of the Time article is a total ban on the concept of chargemaster fees and pegging all reimbursements from everyone (Medicare, Blue Cross, the uninsured) to the fees established by Medicare. This is the glimmer of hope I referred to earlier, because personally I think it will eventually occur. It has worked for years in France, where even though there are competing health insurance companies the reimbursements to hospitals and physicians have been standardized by the government.

Whatever the Market will Bear

And while Brill did a remarkable job alerting us to the financial sinkhole our health system has become, I do want to add that outrageous prices and over utilization of services extends far beyond the hospital setting.

Because there are so few consistent controls on the pricing of any health service, from an Urgent Care Center office visit when you have the flu to a lab test, x ray, CT scan, prescription drug, or piece of medical equipment (like a cane), health care costs are usually based on whatever the market will bear. If it can bear a lot (i.e., you’ve got great insurance), expect more of everything: diagnostic tests, prescription drugs, referrals to specialists, and possibly minimally useful or altogether unnecessary surgical procedures.

In an area where prices are relatively low and fixed, such as Florida, with its older Medicare population, speed is the name of the game. Primary care doctors in a group will see 50 to 60 patients a day, referring as many as possible for further testing (using equipment owned by the hospital) and also to the group’s specialists for more procedures. A small skin cancer removed from a patient’s cheek may ultimately cost thousands of dollars as various pre-surgery clearances are totted up from internists, cardiologists, neurologists, and ophthalmologists, plus post-operative wound care nurses and dermatologic pathologists.

Let’s face facts. With this much money involved, it seems as though everyone in the income-generating segment of health care (i.e. fee-for-service) has the potential to get sullied if they don’t watch themselves. Obviously the vast majority of physicians and other health care providers are hardworking, dedicated to the health and well-being of their patients. But if you read the medical journals, as I do, you come across all too frequent stories of surgeons doing unnecessary surgery, hospital administrators encouraging doctors to “fill up a few beds” and red flagging physicians who did not. Believe me, there are plenty of physicians doing time in the clink for submitting false insurance claims. Money does indeed poison the brain.

Where’s Mine?

With healthcare spending a staggering $4.5 trillion annually, let’s recall the late Chicago Daily News columnist, Mike Royko, concerning Chicago’s motto, which he suggested be changed from the boring, “I Will” to a salivating “Where’s Mine?”. $4.5 trillion spent in health care every year? Pigs at a trough.

Cogitating on all this, I located a dust-covered book I’d bought over 40 years ago, The Great Billion Dollar Medical Swindle, actually a best-seller when it first appeared in 1980. I even remember the full-page ad that appeared in the now long-gone Chicago Tribune Book Section when the book was released. I’d immediately bought a copy because its author, Keith Lasko, MD, was a pre-med and med school classmate of mine.

In the third year of medical school, in alphabetical order, the class separates and moves into different hospitals. Given my “E” to his “L”, I never again crossed paths with Lasko. Had he written his book today, though, he’d have to change the title’s “billion” to “multi-trillion”, and with these musings I was curious to discover what had become of him. I remember the emotion that coursed through me as I read Swindle back in 1980. Lasko, writing like the proverbial loose cannon, was convinced the entire health care system was corrupted by financial greed. No one was exempt. He took on everyone and everything: medical schools, doctors, hospitals, drugs, alternative medicine, health insurers. He was very angry and very public about his views, and for a while a regular on talk shows.

Then he vanished. He didn’t appear at any of our class reunions and I occasionally wondered about the consequences of taking on the entire health care system. For all I knew he was wearing cement boots on the bottom of the Chicago River. After some investigating, I found out what had happened.

Interesting story. But that’s for next week.

Be well,
David Edelberg, MD

2 thoughts on “PIGS AT A TROUGH

    An argument can be made that having a single pathway for paying the medical bills of everyone, i.e. having a single insurance pool rather than multiple smaller pools (see below) would provide the leverage, planning and coordination needed to save 20-30% of costs and provide healthcare to everyone. What do you think?
    Different pools:
    old/disabled (Medicare),
    low-income (Medicaid),
    employed (employer-negotiated commercial insurance),
    in-the-middle (marketplace commercial insurance),
    hoodwinked old (Medicare “advantage”)

    Donald Kollisch, MD
    Posted June 5, 2024 at 8:18 am

    Patients can receive “charity care” if they have a family income below 300% of the Federal Poverty Level. The 300% of the Federal Poverty Level (FPL) for 2024 is $45,180 for a household of one person, $61,320 for a household of two people, and $77,460 for a household of three people.

    Many middle-class income households will qualify. Don’t let the term “charity care” dissuade you from applying. As Dr. Edelberg said most of these not-for-profit hospitals are multi-billion-dollar enterprises. They are required by law to provide financial assistance to eligible patients who can’t afford to pay. The hospital’s financial assistance policy should be on its website.

    Susan Hall
    Posted June 4, 2024 at 6:15 am

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