Monday, February 25, 2013

Bitter Pill: Every American Needs to Read this Article

Go Read the Cover Article

I was reading the Time cover article "Bitter Pill" by Steven Brill this morning. It's all about how screwed up our medical system is and how the billing works. It's super long, it will piss you off, and you need to read it. Seriously, go read it!

Jon Stewart also interviewed Steven Brill and had an extended interview, it is worth watching as well.
Part 1
Part 2
Part 3

I'm not really sure what else to write about here, as I was reading the article I highlighted some quotes that I figured I'd share here, but mostly I just want everyone to read this article. If you have a blog of your own, I highly encourage you to read the article and do a post on it as well, even if it is pretty simple and just let's all of your readers know it exists. I really would like everyone in america to see this thing. Regardless of your political position, I imagine you are hard pressed to not find the problems in this article compelling. We might disagree on the solution, but we should at least be able to agree that there is a huge fucking problem. If you don't have a blog, share it on twitter, facebook, and all of those other social media ker'jiggers that you young folk do nowadays.

From page 1:

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?
And what is so different about the medical ecosystem that causes technology advances to drive bills up instead of down?
In the U.S., people spend almost 20% of the gross domestic product on health care, compared with about half that in most developed countries. Yet in every measurable way, the results our health care system produces are no better and often worse than the outcomes in those countries.
According to the Center for Responsive Politics, the pharmaceutical and health-care-product industries, combined with organizations representing doctors, hospitals, nursing homes, health services and HMOs, have spent $5.36 billion since 1998 on lobbying in Washington. That dwarfs the $1.53 billion spent by the defense and aerospace industries and the $1.3 billion spent by oil and gas interests over the same period. That’s right: the health-care-industrial complex spends more than three times what the military-industrial complex spends in Washington.
From page 2:

According to the hospital’s latest filing (covering 2010), its total expenses for laboratory work (like Janice S.’s blood tests) in the 12 months covered by the report were $27.5 million. Its total charges were $293.2 million. That means it charged about 11 times its costs.
In relation to the chargemaster (a list of the prices of things in the hospital)
“It’s a list we use internally in certain cases, but most people never pay those prices. I doubt that Brian [Grissler] [a hospital CEO] has even seen the list in years. So I’m not sure why you care.”
Orstad also refused to comment on any of the specifics in Janice S.’s bill, including the seemingly inflated charges for all the lab work. “I’ve told you I don’t think a bill like this is relevant,” he explained. “Very few people actually pay those rates.”
But Janice S. was asked to pay them.
An “NM MYO REST/SPEC EJCT MOT MUL” was billed at $7,997.54. That’s a stress test using a radioactive dye that is tracked by an X-ray computed tomography, or CT, scan. Medicare would have paid Stamford $554 for that test.
From page 3:
there is little patient pushback against higher costs because it seems to (and often does) result in safer, better care and because the customer getting the treatment is either not going to pay for it or not going to know the price until after the fact.
In health care, being nonprofit produces more profit.
60% of the personal bankruptcy filings each year are related to medical bills.
From page 5:
 A note at the end of an Ernst & Young audit that is attached to Mercy’s IRS filing reported that the chain provided charity care worth 3.2% of its revenue in the previous year. However, the auditors state that the value of that care is based on the charges on all the bills, not the actual cost to Mercy of providing those services — in other words, the chargemaster value.
Pharmaceutical and medical-device companies routinely insert clauses in their sales contracts prohibiting hospitals from sharing information about what they pay and the discounts they receive. 
MD Anderson’s charge of $7 each for “ALCOHOL PREP PAD.” This is a little square of cotton used to apply alcohol to an injection. A box of 200 can be bought online for $1.91.
From page 6:

“[Steven (a patient with lung cancer)] kept saying he wanted every last minute he could get, no matter what. But I [Steven's wife Alice] had to be thinking about the cost and how all this debt would leave me and my daughter.” By the time Steven D. died at his home in Northern California the following November, he had lived for an additional 11 months. And Alice had collected bills totaling $902,452. The family’s first bill — for $348,000 — which arrived when Steven got home from the Seton Medical Center in Daly City, Calif., was full of all the usual chargemaster profit grabs: $18 each for 88 diabetes-test strips that Amazon sells in boxes of 50 for $27.85; $24 each for 19 niacin pills that are sold in drugstores for about a nickel apiece. There were also four boxes of sterile gauze pads for $77 each. None of that was considered part of what was provided in return for Seton’s facility charge for the intensive-care unit for two days at $13,225 a day, 12 days in the critical unit at $7,315 a day and one day in a standard room (all of which totaled $120,116 over 15 days). There was also $20,886 for CT scans and $24,251 for lab work.
From page 7:
In fact, Palmer — echoing a constant and convincing refrain I heard from billing advocates across the country — alleged that the hospital triple-billed for some items used in Scott’s care in the intensive-care unit. “First they charge more than $2,000 a day for the ICU, because it’s an ICU and it has all this special equipment and personnel,” she says. “Then they charge $1,000 for some kit used in the ICU to give someone a transfusion or oxygen … And then they charge $50 or $100 for each tool or bandage or whatever that there is in the kit. That’s triple billing.”
“People, especially relatively wealthy people, always think they have good insurance until they see they don’t,” says Palmer. “Most of my clients are middle- or upper-middle-class people with insurance.”
From page 8:
The pharmaceutical industry’s common explanation for the price difference is that U.S. profits subsidize the research and development of trailblazing drugs that are developed in the U.S. and then marketed around the world. Apart from the question of whether a country with a health-care-spending crisis should subsidize the rest of the developed world — not to mention the question of who signed Americans up for that mission — there’s the fact that the companies’ math doesn’t add up.
According to securities filings of major drug companies, their R&D expenses are generally 15% to 20% of gross revenue. In fact, Grifols spent only 5% on R&D for the first nine months of 2012.
All the numbers tell one consistent story: Regulating drug prices the way other countries do would save tens of billions of dollars while still offering profit margins that would keep encouraging the pharmaceutical companies’ quest for the next great drug.
From page 10:
A $121,414 Stanford Hospital bill for a 90-year-old California woman who fell and broke her wrist became $16,949. A $51,445 bill for the three days an ailing 91-year-old spent getting tests and being sedated in the hospital before dying of old age became $19,242. Before Medicare went to work, the bill was chock-full of creative chargemaster charges
From page 11:
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. 
We should outlaw the chargemaster.
we should embarrass Democrats into stopping their fight against medical-malpractice reform and instead provide safe-harbor defenses for doctors so they don’t have to order a CT scan whenever, as one hospital administrator put it, someone in the emergency room says the word head.
They know what the core problem is — lopsided pricing and outsize profits in a market that doesn’t work. Yet there is little in Obamacare that addresses that core issue or jeopardizes the paydays of those thriving in that marketplace. In fact, by bringing so many new customers into that market by mandating that they get health insurance and then providing taxpayer support to pay their insurance premiums, Obamacare enriches them. That, of course, is why the bill was able to get through Congress.
Put simply, with Obamacare we’ve changed the rules related to who pays for what, but we haven’t done much to change the prices we pay.
Have you gotten to the bottom of my post and haven't read the source article yet? Dude, go read it, seriously!


  1. I wrote a bit on Purgatory on the Time article.

    1. awesome :) gonna go check it out right now

  2. I think I'm going to be sick... but I'll do it at home!

    1. Seriously, this makes me not want to go to the doctor even though I have insurance. If I get cancer I'm not sure I would want to bother treating it at all. I don't want to leave my family with nearly a million dollars in bills when I'm gone.

  3. This is eye opening Hausdorff and I've suspected it for a long time. Even on Medicare my out of pocket costs keeps going up every year. I think this may be the way our government has been running for decades also, very inefficiently and expensive for those it serves.

    1. Thanks Anna,

      It is crazy that costs just keep going up completely out of control. The difficulty is that sometimes costs to legitimately go up, so how do we know what is reasonable and what is not? I think this article does a great job showing us places where it is completely unreasonable.

  4. I did see the daily show interview and I know I need to read this article. It's one of those things where I know I'm going to be really angry by the time I finish it. It's basically legal extortion and is really sad. It bothers me when people talk about how great our medical system is the "best in the world." Maybe it is, I don't know. But other countries like Germany do basically the same things for a fraction of the cost. Thanks for posting!

    1. You actually bring up a good point here, a lot of people do say that we have the best medical system in the world, are they right? As with most thing, it really depends on what metric you use. They were talking on planet money a while ago about the difference between medical equipment in the USA compared to other countries. They used an example of an imaging machine that takes images much faster and therefore gets better pictures that what is typical of other countries. So in that respect america really is the best. On the other hand, the better equipment almost never makes a difference, so it's better in a way that doesn't help very much. But on those occasions that do matter you want to be here.

      If you look at cost, ours is shit. No where near best in the world. If you figure in the cost, a lot of people get worse care than they would elsewhere because they avoid going to the doctor for fear of medical bills and wind up not getting treated at all.

      So, best in the world? I would say it depends on exactly what is meant by that and what portion of the population you are talking about.


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