Short Takes On News & Events

Brill: Health Law Won’t Bring Prices Down For Patients

By Alvin Tran

June 18th, 2013, 4:32 PM

At a Capitol Hill hearing Tuesday, journalist Steven Brill, who examined the issue of the high cost of health care in a much quoted March 2013 Time magazine article, told Senate Finance Committee members that President Barack Obama’s health care law will do very little to lower prices for consumers.

Photo by Karl Eisenhower/KHN

Joined by a panel of health policy experts at the hearing to explore ways to make health pricing more transparent, Brill said that while he views efforts to disseminate prices for health services to consumers favorably, he believes that increasing transparency has its limits. “[Transparency] starts the conversation about prices that we didn’t have in the debate over Obamacare. It’s only a start,” Brill said. “Obamacare does nothing about these prices. Nothing to solve the problem – Zero.”

In his article, Brill looked at several patients with inadequate insurance and went through their medical bills line by line to explain why their care was so expensive. Among the many reasons he identified were massively inflated charges for common drugs and services and the hospital chargemasters that bore little resemblance to true costs.

Committee Chairman Max Baucus, D-Mont., praised Brill’s efforts. “The chargemaster is like the sticker price of a new car,” Baucus said. “It is inflated, and few would ever pay it. In the case of hospitals, the list price is not just a 5, 10, or 15 percent mark-up; it can be 100 times higher. But unlike new cars, some people have no choice but to pay the chargemaster price. Who are those people? The uninsured, and the under-insured.” Baucus, who was one of the main authors of the federal health law, said it would help address some of the issues faced by the patients Brill profiled, but added that there is still more that needs to be done to get costs down.

“Let us continue to make health care more transparent and affordable,” he said. “Let us not stop working until we finish the job we started with health reform.”

Sen. Orrin Hatch, R-Utah, expressed his own concerns that the federal health law will do little to solve the high costs of care and his concerns that doctors’ fears about being sued are causing them to increase the number of tests and procedures on patients — thus driving up costs. “Unfortunately, I think the president’s health care law missed a real opportunity to address these issues,” he said.

Paul Ginsburg, president of the Center for Studying Health System Change, added that while efforts to disseminate the prices of health services have raised awareness of the wide variation of health care costs, they have failed to lower prices to consumers. “The key to price transparency leading to lower prices for consumers is benefit designs that offer rewards to them,” he said. If enough consumers are involved, he added, there will be greater incentive for providers to improve their value.

17 Responses to “Brill: Health Law Won’t Bring Prices Down For Patients”

  1. RBalboa says:

    Price transparency is good for raising public awareness but it will not lower costs because most consumers do not pay for medical service through the chargemaster. Inflated prices only affect those paying the chargemaster prices; i.e. the uninsured; and supposedly the number of uninsured is expected to decrease in the coming years with PPACA.

  2. Cynthia says:

    RBalboa,

    That also affects people with high deductibles, which includes all Americans who purchase insurance through the exchanges. Bronze plans have very high deductibles, but even the platinum plans, the Cadillac among them, aren’t free of deductibles.

  3. Thomas says:

    I’m all for transparency, but Brill’s preoccupation with the chargemaster is ridiculous. It’s meaningless. And by the way, fewer and fewer hospitals base their prices for the uninsured off the chargemaster — most start with numbers at or near what the insurance companies pay.

    It always makes me nervous when journalists become part of the story and the way most of these politicians have wrapped their arms around Brill is disturbing.

  4. killroy71 says:

    The chargemaster is a bit of a red herring. But ACA will help as more people get covered, because they will have the benefit of the insurer doing their bargaining for them, as well as covering a set percentage of their costs.

    When people are exposed to costs, out of pocket, even when insured, THAT’s when they need the transparency ahead of time, so they can make choices BEFORE the money is spent.

  5. whatever5678 says:

    It’s not about rewards, it’s not about transparency or only transparency. It’s about the idea of rational ignorance. When people have both an understanding of what the cost is, and that they have a choice and can ask questions….AND have skin in the game in the form of coinsurance or a deductible then the tough questions are asked and consumerism is developed. I would personally love to see something besides fee for service in the provider side of things. Whether it is revisting the HMO or looking at pay for performance or whatever something that is not based on test test test and bill bill bill…which goes hand in hand with defensive medicine. That would help too.

    But, to say that transparency alone will do the trick no way. It will certainly open some doors towards a better path for reduction of cost increases for sure.

  6. Lenny says:

    If the remaining Neanderthal Republican governors ever get off their idealogical soapboxes and stop playing to their extreme right tea party bases, maybe hospitals will get the much needed relief that comes with Medicaid Expansion. Hospitals will be going bankrupt if they don’t soon get help paying for uncompensated care. Sadly, hospitals agreed to accept lower Medicare payments in return for Medicaid Expansion. Who would have imagined that a few Cro-Magnon GOP governors would walk away from billions in federal dollars just to prove some stupid idealogical point. If you ask me, hospitals in states like Texas, Wisconsin, Pennsylvania and Maine got royally screwed by their governors. Voters in these non-participating states need to take a long hard look at the idiots they elected.

  7. Paul says:

    if only Lenny would understand the big “boatload of money” coming to Medicaid. The states will have to match the money, AND if they don’t reach the feds’ “targets” the money must be paid back. Kitzcare in Oregon will be verrrry surprised when this occurs.

  8. Lenny says:

    Match the money? Are you suggesting 10 percent from the states is anywhere near a match? Huh? Are you saying a 9 to 1 ratio is not a great deal? Are you saying buying a new $1000 flat screen TV for $100 is something to avoid? Fact is, the feds pay 100 percent of the first 3 years of the Medicaid Expansion and then the fed “match” tapers down to 90 percent for all future years. Any governor that thinks a 90 percent discounted rate for the Medicaid Expansion is not a fabulous deal must certainly be a Tea Party Republican Neanderthal. Let me guess…you’re a Republican, right?

  9. JAF says:

    State money or Federal money, they both come from our pockets one way or another and throwing more money into a poorly run government system is not a solution in my opinion. States that avoid this mess in my opinion will be in less of a mess down the road and position themselves to be more competitive for jobs and wealth.

    I don’t consider myself a member of the Tea Party or even a republican I simply try to use logic and basic economic reasoning when evaluating a program. Both things it seems many people have lost in a country that values instant gratification over sustainable success.

  10. Brian Taylor says:

    The Chargemaster is indeed a problem. Those who slough it off because few pay those rates are missing a big point. As our health systems get bigger and gain more marketshare they leverage the insurers into reimbursements inching toward the Chargemaster rates and away from the Medicare floor. That is why rates are going up. When a system has 80 % marketshare as some do in certain areas they control the negotiations.

  11. Tibor Stella says:

    In his article, Brill just mentions that ACA will do nothing to reduce pricves but completely fails to acknowledge he various mechanisms in ACA to attemp to do just that:

    -Individual mandate: everyone pays into the system, so more money in makes it cheaper for everyone. People less likely to go to ER when they have a primary care doctor. Hospitals don’s charge as much to cover their ER losses so insurances can charge their customers less.

    - Health insurance marketplaces: Insurances compete against each other in public with price

    -Provider Payment mechanisms- Instead of just paying doctors by each test they run or each procedure they do, doctors will be paid by the diagnosis. This will lower the incentive for doctors to run test after unnecessary extra test. reducing prices overall.

    -ACOs- medical groups and hospitals align so patients have continuity of care within a system, which works aggressively to reduce costs while maintaining quality

    -Penalties- Penalties to hospitals that discharge patients who return to the ER very soon afterwards and nonpayment for care of diseases caught in the hospital are already leading to changes in hospitals to improve care and hygiene. Fewer diseases will mean fewer bills.

    The truth is the best way to reduce costs is a single payer, Medicare for all system as most of the developed world has already proven.

  12. I have had MS for 10 yrs and Congestive Heart Failure for 8 yrs. Without insurance my medicine is over $125,00 a year. This is not including my husbands medicine. Together we pay $10,704 out of our pocket a year for health insuance. Our insurance only pays 90%, so more money is out of pocket. I was forced to go on Medicare for being on Social Security Disability, so that is more money I pay for insurance. So therefore, our health insurance is over $1,000 month. I know the Obama_Lama Care want pay over $125,00 for me. He thinks he is having a BIG DREAM that this will work. Well why don’t he and his family and all the BIG WHEELS at the Capitol have to live on a low income (say $1,200 a month) and see how the low and middle class have to live.

  13. Why is it this always becomes political? The fact is we or one of our family members will all be patients. We will all face the disaster our health system is today and getting worse.

    If hospitals are going bankrupt why did we see 33 million sq feet of new healthcare construction start in 2012? Why will that number grow this year? Why do hospitals in Florida advertise on billboards for Medicare patients?

    This is due to a broken system that allows health systems to over charge and non-profits to make huge sums of money. As a non-profit they have to spend that money which equals new facilities equalling more beds, gloves, needles, and most costly employees. Guess what that equals more spending in to a broken system.

    So you can fuss over being D or R but the fact of the matter is just like the device tax the consumer will ultimately be paying for this and worse a small percentage of the US population is funding it through outrageous taxes.

    If we want reform start incentivizing students to become Doctors, open more CHCs and give tax breaks to Doctors that volunteer their time to the CHC, this will get none insured out of the ER and help improve our populations health. Continue down the path of the triple aim focus of the ACA better patient care, patient satisfaction, and reduce cost. Get rid of the charge master and make healthcare a market where competition keeps prices and quality in check.

  14. Michelle says:

    See Oberlander and Marmor’s work,”From HMOs to ACO.s, The quest for the holy grail in health care.” SGIM

    Agree with comments that there isn’t anything in the Obama plan that is proven to control costs or reduce bureaucracy in the health system, currently1/3 of all health spending.

    Here is what would work and is proven effective around the world:
    - a single payer system (would eliminate the private insurance middleman – saving $400 billion annually, enough to cover all the uninsured and end cost-sharing).
    -Global budgets for hospitals – stop wasting money generating hospital bills
    - Negotiated fees for doctors – stop wasting money and time billing thousands of different insurance plans with different rules
    -Separate operating and capital budgets and real health planning (so as not to put two hospitals across the street from each other)
    - negotiate prices with the drug companies – every other country does
    - bar drug companies from advertising on TV

    Brill’s article was helpful in educating the public that prices are too high in US health care (something scholars have long known – see “It’s the prices stupid” in Health Affairs)
    As far as the solution goes, we need to end our failed experiment with market-driven health care and adopt something that works, non profit single payer national health insurance. A patient with MS should not be paying anything in medical bills, period. Illness is enough suffering; it is immoral to add financial worries on top of it.

  15. Lenny says:

    “State money or Federal money, they both come from our pockets one way or another and throwing more money into a poorly run government system is not a solution in my opinion”…

    Huh? That’s like continuing to argue that the ACA is bad law. Wake up people! Like it or not, the ACA is law! Like it or not, the Medicaid Expansion money is already spent! Like it or not, the ACA is expanding Medicaid! States that choose to not participate in the Medicaid Expansion are simply refusing to have (already taxed and spent) federal tax dollars returned to their state. It’s that simple! Republican Governors know this and yet they still refuse those (already taxed and spent) federal tax dollars. If that isn’t the perfect definition of insanity, then what is? FACT: Every state has been and will be taxed for the Medicaid Expansion. States that refuse to participate in the Medicaid Expansion don’t get excluded from paying federal taxes to support the Medicaid Expansion, they just won’t get to enjoy having those tax dollars returned to them. Talk about morons! Geez!

  16. Reggie says:

    The fact of the matter is, the Medicaid Expansion is completely paid for in the Affordable Care Act. The only thing left for state legislators and state governors to do is decide if they want their fair share of the Medicaid Expansion money. It appears, for some unexplained reason, that some states do not want to participate in the Medicaid Expansion. If they do not participate, they will not receive any of the federal Medicaid Expansion funding that rightfully belongs to them.

  17. RBalboa says:

    Cynthia,

    Those deductibles are charged based on the contracted rate – not the full chargemaster price.

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