What Consumers Should Know About Rising Health Care Costs
In 2013, Steven Brill brought new clarity to the American health care system with his award-winning TIME cover story, "Bitter Bill: Why Medical Bills Are Killing Us." Now he's out with a new book on the same theme: "America's Bitter Bill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System." In it, Brill explores how the American health insurance system has evolved, the special interests that shaped the Affordable Care Act, the slow and troubled implementation of health care reform, and challenges we still face. He spoke to Money reporter Kara Brandeisky about his book and the key takeaways for health care consumers. (TIME and Money are sister Time Inc. publications and share a website. This conversation has been edited for length.)
Money: Your book is a comprehensive look at how the Affordable Care Act came to be. But it starts with this personal story about the experience you had as a health care consumer. How did your own open-heart surgery influence the way you thought about health care policy?
BRILL: Well, it sort of drove home something that I knew intellectually, which is that if—when—you're a consumer in the health care marketplace, it's not like being a consumer in any other kind of marketplace. We like to live in the illusion—or some people do—that health care can be bought and sold on the market the way any other product can because consumers can make a choice and they know what they're doing and all the rest of it.
And the fact is that when I was lying there on that gurney, I didn't know—and I didn't care—what the price of anything was. I had no idea what I needed. I had no idea what the bills were going to be. When I got the bills, I had very little idea of what they meant—and I'm supposed to be, you know, an expert on this now. And when I got my explanations of benefits, not only did I have no idea, but—as you read in the book—the CEO of United Healthcare had no idea what it meant.
Who should Americans hold responsible for rising prices?
The members of Congress that, for example, passed a law that doesn't allow Medicare to negotiate the price of prescription drugs. The members of Congress and local legislators and regulators that allow so-called nonprofit hospitals to enjoy very high profits and charge $77 for a box of gauze pads. It's a matter of the United States deciding that it is going to join the rest of the developed world in controlling health care costs because it is not a free market that can function as a free market.
Obama said in his State of the Union that health care inflation is at its lowest rate in 50 years. [Former director of the White House Office of Management and Budget] Peter Orszag responded to your book, "The cost curve in health care is bending more drastically than I even believed possible in the fall of 2009." What's your response to that? Do you think we're making enough progress at this point?
No, we're not. And as the book recounts, Peter Orszag and his staff, until the very end, were writing memos complaining to the President and to the political staff that there's next to nothing in this law that's going to control costs. So he sort of is on both sides of the issue. And, you know, Peter wrote another piece in Bloomberg several months ago complaining that the law's panel that was set up to judge comparative effectiveness is doing nothing to judge the comparative effectiveness of expensive treatments, and it's time that we do something about that.
But saying health care inflation is low is not saying that costs are coming down. It's just that health care inflation is now maybe two or three times overall inflation in the United States. And all that data that they cite are from the years 2011, '12, and '13, which are all before the core of Obamacare, the exchanges, even went into effect at the beginning of 2014. So I don't know what they're talking about.
But more important, if you take the trouble to read the law, all 965 pages of it, you will be hard-pressed to find anything except at the edges that does anything to address cost. There's nothing in there that addresses prescription drug costs. There's nothing in there that addresses what hospitals can charge and profits of hospitals, except for one provision that allows the IRS to restrict the billing collection practices of nonprofit hospitals for people who need financial aid.
And that is a provision—it's very important. It's a big deal. Senator Grassley, a Republican from Iowa, is the one who added that provision to the law. And that provision could have taken effect in March of 2010 when the law was passed, and it took the Obama Administration nearly five years, just until very recently, to write the regs to put that into effect. I could have written those regs in an hour and a half.
I thought some of the saddest stories in your book were about sick people who were burdened with outrageous bills because the Affordable Care Act regulations weren't in effect yet or they hadn't been written. What took so long?
You tell me. One of the motifs of the book is that the Obama people, from the President on down, are maybe really good at policy, but they're just really bad at the nuts and bolts of governing. There is no explanation for why it would take five years to write that provision. It is not complex. It's either that they were still in the grip of the hospital lobby or they were just not paying attention, just the way they weren't paying attention to launching a website that would work.
You went and talked to Americans who could benefit from health insurance reform, and you found that they were pretty misinformed about some of the basic tenets of the law. What were some of the biggest misconceptions you encountered?
Well, it starts with the notion that this is a government takeover of health care. It's exactly the opposite. It's a plan that has its roots in something that Richard Nixon proposed in the 1970s that is a government subsidy of the private health care marketplace. Basically the government is subsidizing millions of Americans—which I think is a good thing—to go buy health care from private insurance companies who are going to insure them for services provided by private health care providers: hospitals, drug companies, medical device makers. So it buttresses the private sector. It certainly doesn't interfere with it, let alone take it over. That's one misconception.
The other misconception—and this is the Administration's fault—is that a lot of the reporting talks about the premiums and says the premiums are $1,000 a month for a certain kind of plan. Well, they are, except for the fact that 87% of the people who are going on the exchanges are getting a subsidy, so that if you're a family making $60,000 a year, a family of four, that $1,000 a month premium might actually cost you $300 because the government is chipping in a $700 subsidy.
The Obama Administration was really reluctant to talk about that because they were embarrassed that this was a major income-redistribution program, which is what it is. Once upon a time, the Democrats would have been proud of that. Now they're really gun shy about it. As I point out in the book, just the Medicaid expansion in the law called for more people to get free health care—to get money from the government for health care—than the entire welfare program that Ronald Reagan ran against in 1980. And yet you didn't see much about that. The Administration didn't talk about it, and the press didn't write about it.
In your original TIME story ["Bitter Pill"], chronicled how these hospitals were charging these outrageous prices, and hospital executives are making multimillion dollar salaries. So I think readers might be surprised that in your book, you say a solution is to let these hospital systems get even bigger and start insuring patients, as well. How did you come to that conclusion?
Well, because you've only described half of the solution. I say let them do that, but then treat them like the oligopolies or monopolies that they are, and stringently regulate their profits, their prices, even the salaries of their executives. In other words, if they're going to be monopolies and oligopolies, and they're going to keep their tax exemption as nonprofits, you can take a much different regulatory stance. I mean, it is totally beyond me that we have antitrust laws on the books that are supposed to regulate monopolies, and yet, Yale New Haven Health System, which is a monopoly by anybody's definition when it comes to providing health care in New Haven, is not regulated.
And so my answer is, well, not only regulate Yale New Haven, but tell them to sell health insurance. In other words, if I live in New Haven, I'd rather buy my health insurance from Yale New Haven because it's a great brand, it's a great hospital. They've bought up so many of the doctors and clinics in and around New Haven. They own the Bridgeport Hospital. They own everything. So I could go to them and say, "Here's my $10,000 a year for my health insurance. You keep me healthy." And if that happens, they have no incentive to over-test or over-bill or keep me in the hospital an extra day because they'd only be charging themselves for that because they'd be the insurance company. And that all works fine again if there is real regulation, there are ombudsmen in place who really make sure that they don't skimp on care now that they've gotten my $10,000.
But I think that is a realistic solution because it's happening anyway. All these hospital systems are expanding and buying up doctors' practices. Something like 70% of the doctors in the country are in practices owned or affiliated with the hospitals, owned by the hospitals or having some financial relationship with the hospitals.
And you also seem hopeful that tort reform could help drive down health care costs.
It would do a decent share of it, because it's not about malpractice rates. It's about the fact that if you go into an emergency room today and just use the word "head" as in "I have a headache," "I fell on my head," or even "I have to head to the bathroom," if you use the word "head" you're getting a CAT scan. And indeed, if you go on Google—or at least it used to be true, I haven't done it lately—and type in "emergency room CAT scans," all the ads on the right-hand side will be for trial lawyers. And so hospitals either have the excuse or the reason to over-test. And in the United States, we use CAT scans and MRIs three or four times as much per capita than they do in Germany, in France, in Japan and all those other places. And again, our results are no better.
[Since you're a lawyer] I'm curious how specifically you think the system could be reformed.
Just have higher bars to lawsuits, penalize the frivolous suits, make it easier to get them thrown out. You could even have special courts which have doctors sitting as jurors. There are all kinds of proposals. The idea is not to make it impossible for someone to collect for actual malpractice, but to drive away the current system where in many places if there's any kind of a bad result in a hospital or in a doctor's practice, there's a lawsuit and people have to settle it to keep going. And what doctors will do and hospitals will do is again they'll say to someone who talks about a head, “Let's give him a CAT scan so if anything bad happens we can always say, ‘Hey, we gave him a CAT scan,’ ‘We gave him an MRI. We did all this. We did belts and suspenders.’” That's your defense. And that's a very expensive defense for a lawsuit that doesn't even necessarily happen.
You told [NPR's] Terry Gross that as costs continue to rise you think there's going to come a point where “something is going to snap” because “we can't pay for this.” I wonder if you could talk a little bit more about what that breaking point might look like for consumers.
Well, we're getting to a point where, in your own health insurance, your deductible keeps going up, your co-pays and your coinsurance keep going up, the amount you have to chip in for prescription drugs keeps going up. And that's not because the insurance company profits are going up. It's because their costs are going up, and so they have to keep raising their premiums and your employer can't afford those premiums.
At some point, that's going to become—I mean, I think it is becoming—unsustainable for people who even have good health insurance. And by the same token, it's unsustainable for the federal government to be subsidizing ever-increasing insurance premiums for people who are buying insurance on the exchanges. So there's nothing in the law that does anything about the core costs, the hospital costs, the drug costs. And it's going to keep going up, and the share that the taxpayers are paying and that individuals are paying is going to go up even faster. And I think at some point, someone is going to organize a campaign around this.
Fifty years from now, how do you think historians will view the Affordable Care Act and what it did for consumers?
As a milestone, as an important milestone. Because at the bottom line, it went a long way toward erasing a national embarrassment, or disgrace even, which is that we're the only developed country that hasn't made some provision for all or most of our citizens to have access to health care. Now, in theory at least, every American has access to an insurance policy that will be affordable—although it's not as affordable as it should be—and that will cover them part of the way so that they won't either not get care and therefore have their health in peril, or even their lives in peril, or be sued into bankruptcy if they end up in the emergency room with a $9,000 bill for a bunch of CAT scans and an hour and a half of waiting.
Is there anything else that you hope consumers will take away from your book?
Well, I think consumers reading the book will certainly have a better understanding of how to read their own health care bills, how to complain about them, how to try to do something about them, how to ask the right questions. So there's a consumer-friendly aspect of the book, too, I think.
What are the "right questions"?
“Why did I need that?” “What did that cost you?” Well, the first thing is, “What does that mean?” since most hospital bills are in code. It took me months to figure out what different hospital bills meant. But now there's enough of a movement around that, after my article and after the stuff that Libby Rosenthal did [in her New York Times series, “Paying Till It Hurts”], that hospitals are finding they have to answer those questions.
And the power of embarrassment is not to be dismissed. If you start asking your hospital, “What is that mucus control device on the bill that's $18?” And they say, “Well, that's the box of tissues you got.” They may say, “You know what? Forget the mucus control device. We'll take that off the bill.”