Time Magazine on Solving Health Care’s #1 Problem: “All the Prices Are Too Damn High”

By Patrick O’Leary

The cover story of the March 4, 2013 issue of Time Magazine is a piece by Steven Brill titled Bitter Pill: Why Medical Bills Are Killing Us. The article has apparently made a pretty big splash: in an interview (Part 2, Part 3) with Brill last week, Jon Stewart of Comedy Central’s The Daily Show told his audience that the article was so good that it “should be required reading for . . . not only every individual in this country, but lawmaker in this country.”

What most seems to fascinate Stewart, and what Brill emphasizes, is an insight that is old hat to health law types: the market for health care is just plain screwy. Brill explains that health care consumers “have no choice in what you’re buying, you have no idea what you’re buying, you have no idea what the price is, even when you get the bill you have no idea what it says.” The starting point for the article was Brill’s observation that in all the debate over the last few years about health care, “we seem to jump right to the issue of who should pay the bills, blowing right past what should be the first question: Why exactly are the bills so high?”

The real focus of Brill’s article – or in any case, the one that seems to have most captured readers’ attention and raised their ire – is not actually on health care pricing in general; it is on health care pricing for the uninsured and underinsured. Brill’s sharpest allegation is not that health care is too expensive, it is that “those least able to pay are the ones singled out to pay the highest rates.”

While I’m not sure I agree with Jon Stewart’s comparison of Brill’s article to Silent Spring, there’s undoubtedly merit in asking hard questions about medical pricing and about the propriety of non-profit hospitals turning substantial profits. It’s also undoubtedly the case that Brill takes some shortcuts. For example, he frequently compares profit margins and other metrics at health care companies to other industries, but he fails to account for real differences between them. Take Brill’s statement that the Biogen Idec has a lower incremental cost of sales for its cancer drug Rituxan than most software companies have, notwithstanding that “software companies usually don’t produce anything physical or have to pay to ship anything.” True enough, but software companies also don’t have to navigate a scientific and regulatory process that is riddled with uncertainties and that, according to Deloitte and Thompson Reuters, means the average cost of bringing a new product from discovery to launch is now $1.137 billion.

After taking on and pointing out some of the complexities of our byzantine health care market, Brill (rather boldly) ends his article with half a dozen concrete proposals for how to fix health care. I’ll leave the assessment of and responses to these proposals to other (far better qualified) folks on this blog and in the health policy world, but precisely because Brill’s article has gotten such public play, it’s worth noting them here:

  1. “[T]ighten antitrust laws related to hospitals to keep them from becoming so dominant in a region that insurance companies are helpless in negotiating prices with them.”
  2. “[T]ax hospital profits at 75% and have a tax surcharge on all nondoctor hospital salaries” that exceed a certain limit, e.g. $750,000.
  3. Eliminate (and outlaw) the hospital chargemaster, and instead set prices using “a process that reflects actual and thoroughly transparent costs.”
  4. Amend the patent laws or set price- or profit margin- limits on drugs, “so that makers of wonder drugs would be limited in how they can exploit the monopoly our patent laws give them.”
  5. “[T]ighten what Medicare pays for CT or MRI tests a lot more and even cap what insurance companies pay for them.”
  6. Enact meaningful medical-malpractice reform by providing safe-harbor defenses for doctors to eliminate the incentive for over-testing.

Some of these proposals may be wonderful, others flawed, and others so unrealistic that they’re substantially irrelevant. But thanks to Brill, they’re all part of the public conversation about health care in a more meaningful way than they were even a few weeks ago. And that is almost certainly a good thing.

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