Take Two Aspirins and Call The Chargemaster in the Morning

Calhoun's Cannons for March 1, 2013

If you want to make your head explode, pick up a copy of the March 4th one-topic special edition of Time magazine. Steven Brill spent 7 months researching and writing "Bitter Pill," and by the end of the article, you will have no head.

Brill noted that people who "work in the health care industry and those who argue over health care policy seem inured to the [sticker] shock [of high medical bills.] 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 the answer to that, as Brill found out, lies in the magical realm of made up Smoke & Mirrors, an imaginary place presided over by the Great and Powerful Chargemaster, the ephemeral but very real price setter to be found hiding in the attic of every hospital.  He's the guy -- a telephone-sized aggregate of made-up prices, actually -- who invents charges for every single thing on your hospital bill.   

Imagine, if you will, a creepy guy with endless greed and larceny in his soul, green eye-shade over his eyes, sitting in front of a computer who, without rhyme or reason, makes up numbers that have two distinct qualities: 1) they are disconnected from actual, real costs and 2), they are deliberately set higher than reality or adequate profit would require so that no matter how much they're discounted or manipulated, they will still remain high enough to create wonderfully obscene profits for the hospital and especially its CEO. And if they're paid in full by some hapless patient, well, that's just pure gravy on top of pure gold.

It's a business model Midas would love.  A write-your-own ticket Win-Win for the growing Big Pharma, Big Health Insurance, Big Hospitals, Big Medical Care Industries and lose-lose for the citizens. The Chargemaster  decides that you, the patient, will be billed $4.50 for a generic aspirin. Or $12.75. Doesn't matter which number is used, the higher the better since it's all fungible to him.  And if you can't pay, you go bankrupt.  If you have health insurance, your policy will pay and then raise insurance premiums on you and everyone else to cover the made up cost.  All of which explains why Americans pay "27% more than we would spend if we spent the same per capita as other developed countries, even after adjusting for the relatively high per capita income in the U.S. vs. those other countries."

And yet our health outcomes are worse than other "civilized" countries and our system, as created and driven by the Chargemaster, is heading the country into bankruptcy -- it is a business model that simply isn't sustainable, primarily because it's disconnected from reality and driven by greed -- the same forces that run housing bubbles and still run Wall Street.  And we know how well that worked out for all of us.

Yet Congress (and the huge, well-funded lobbying arm of The Great & Powerful Chargemaster) are working overtime to deflect the discussion from WHY over to Who will pay, as in, Let's decide who we push off the cliff first -- poor people or Granny.

Which is the wrong question.  It's the Why that will stop this train from going off the cliff and taking all of us with it. Case in point: WHY does the VA get drugs for their clients at a much lower cost than the rest of us?  Right.  They negotiate with Big Pharma and take advantage of price breaks for economies of scale.  So, Why doesn't Medicare do the same?  Because Congress passed a law forbidding them from doing that.  Can you guess who financed the lobbying effort?  Right, it wasn't your Grandma. But it does explain why Grandma is going broke paying for her overpriced meds. 

The one exception in this race to the cliff is Medicare.  Medicare doesn't pay the Chargemaster's made up prices.  It has it's own, reality-based metrics.  And while Conservative Pols (fully financed by the health care industry) decry "socialized medicine" and demand it be privitized, Medicare's reality-based pricing offers one fix that can begin to bend our imploding health care system -- lower the Medicare enrollment age to include more, younger members and suddenly, you not only increase the economies of scale for your members, you increase competitive (reality based) pricing from competing private insurance and increase the pressure on hospitals to have a little chat with their Chargemaster in the attic. 

That's only one fix of many excellent suggestions that Brill presents in his extraordinary article, fixes that are needed to avert a complete meltdown of our present unsustainable system. But none of those changes can begin until more voters begin to follow the money and ask the Chargemaster in the attic (and your Congressman) the one simple question  that neither wants to answer: Why?