The Great Healthcare Scam (And The Future Of Journalism)

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Steve Brill’s Time cover story is, to my mind, what journalism should now be doing. There is surely going to be a backlash soon against listicles, GIF-swaps and corrupting “sponsor content” in favor of deep, thoughtful reported journalism. Steve Brill is pioneering the next wave in journalism – the long, deep-dive, debate-shifting essay that addresses our reality in an accessible, clear but compelling way. It pains me that The New Republic didn’t run this as its first cover-piece in its new incarnation. It would have been such a fantastic statement about where they want to go (the return of serious reported journalism) rather than a suck-up interview with the president (a media “get” that is so very last decade).

I have only skimmed it and intend to read the whole thing today, and will write soon about it. But the real beauty of the piece is that all it does is go through various healthcare bills line by line and point out the massive mark-ups hospitals put on routine procedures and various drugs. We all knew this already. But what great journalism does is force us to know it better and definitively. Money quote:

When we debate health care policy, we seem to jump right to the issue of who should pay the bills, blowing past what should be the first question: Why exactly are the bills so high?

What are the reasons, good or bad, that cancer means a half-million- or million-dollar tab? Why should a trip to the emergency room for chest pains that turn out to be indigestion bring a bill that can exceed the cost of a semester of college? What makes a single dose of even the most wonderful wonder drug cost thousands of dollars? Why does simple lab work done during a few days in a hospital cost more than a car? And what is so different about the medical ecosystem that causes technology advances to drive bills up instead of down?

Yglesias wants more radical reforms than Brill proposes:

He wants to alter medical malpractice law, tax hospital operating profits, and try to mandate extra price transparency. That’s all fine, but it’s odd. His article could not be more clear about this—health care prices are high in America because, by law, we typically allow them to be high. When foreigners force prices to be lower, they get lower prices. When Americans force prices to be lower (via Medicare), we get lower prices. If we want lower prices through new legislation, the way to get them is to write laws mandating that the prices be lowered.

Sarah Kliff’s related thoughts:

What sets our really expensive health-care system apart from most others isn’t necessarily the fact it’s not single-payer or universal. It’s that the federal government does not regulate the prices that health-care providers can charge. You can see this in Luxembourg, which had the lowest health-care cost growth — 0.7 percent — of any OECD country in the 2000s. Its system allows patients free choice of what doctor to see or what hospital to visit but has the government set all rates for what doctors get paid for those visits.

Martin Gaynor is unsure about the effects of price controls:

[W]e don’t know what the impact of rate setting (price controls) would be on health care spending in the US. It’s possible that rate setting could prevent some of the most egregious practices recorded in the Brill article, but that depends on what’s enacted and how it’s enforced. Whether rate setting would substantially slow the rate of growth of health care spending isn’t clear. Further, the question that must be asked is what is the alternative? There’s evidence to suggest that robust price competition, such as we had with managed care during the 1990s, can perform very well in controlling costs. Unfortunately there has been a tremendous amount of consolidation in health care markets since the 1990s, raising serious challenges to competition. Whether the US decides to go with competition or with regulation, we have some serious work to do to make the system we choose work effectively.

Felix Salmon’s proposal:

Americans should have access to Medicare’s discounted rates — either by being eligible for Medicare, or else by signing up for health insurance with an insurer who allows Medicare to negotiate on its behalf. All of this would be voluntary, of course. If you want your insurance to cover the kind of things that Medicare won’t pay for, then you can do that. But if you think that Medicare-quality coverage is good enough, then you should be able to get it, at only a modest premium to what Medicare itself pays.

The Bloomberg View editors want more price transparency:

If health-care payers — Medicare, Medicaid, insurance companies, public-employee health-care plans — were to make public the prices that they pay, then maybe fees for services, equipment, facilities and medicines would fall. They could also reveal how much their beneficiaries pay out of pocket. Aetna and the state of New Hampshire have started doing this. It is exactly this kind of transparency that will improve the health-care system. Unfortunately, many contracts between hospitals and insurers contain gag clauses prohibiting the public release of pricing information. These gag clauses should be prohibited.

And, after reviewing the data, Drum wonders why Brill considers doctors underpaid:

The bottom line is that compared to other rich countries—all of which pay Medicare rates or less for medical services—American doctors are pretty well paid. The report also shows compensation as a ratio of the average wage in each country, and the story is similar (though GPs look a little closer to the OECD average when you compare their pay to average wages).

So is this more or less than U.S. doctors “deserve”? On that score, it’s worth pointing out that most American doctors have to pay their own medical school bills, a cost that’s picked up by the government in most other countries. Despite that, it’s a little hard to argue that American doctors, especially specialists, have been squeezed to the breaking point.

My specific thoughts ASAP.