Article 43


Medical Emergency


Consumers Often Pass on Health Care When Costs are High

By Lisa Zamosky
Web MD
October 11, 2012

Two new reports highlight how inextricably linked HEALTH AND MONEY are in this country, and how many people are making medical decisions based on the state of their finances.

The first survey (below), conducted by consulting firm, Hill & Knowlton Strategies, found that nearly 1 in 3 people put off medical treatment or a checkup because of cost. The survey included 800 people, 85% of whom had some type of health insurance coverage; 11% were temporarily unemployed.

According to the survey:

45% of people questioned said they worry a lot about paying medical bills in the event of a catastrophic illness or accident

36% are very concerned about paying for health-insurance coverage

53% said cost is the number one problem with health care in the U.S.

Given those numbers, perhaps not surprisingly, most people expressed a greater interest in health care companies figuring out ways to lower costs than finding new medicines or cures.

Health Care Costs Eat Away at Savings

Another recent STUDY conducted by the Employee Benefits Research Institute found that cost was the main reason behind in the increase in the percentage of Americans who rate the U.S. health care system as poor.

Particularly troubling in the research findings is that rising health care costs are eating away at Americans ability to plan for their financial security. Of those who saw their health costs rise, 31% say they’ve started to contribute less money to their retirements plans. More than 50% have reduced the amount of money they sock away in savings.

And when they look down the road, Americans expect a LOWER LEVEL OF CONFIDENCE in their future ability to afford health care than they have now. Today, 34% of Americans claim to feel confident that theyll be able to afford the health care they need. Put another way, nearly 7 in 10 people believes they can’t afford needed medical care.

Only 17% of Americans expect theyll be able to afford needed health care once covered by Medicare.



Health-Care Costs Keep 1 in 3 Americans From the Doctor

By Shannon Pettypiece
October 02, 2012

Health-care costs are keeping patients away from the doctor with about 1 in 3 Americans saying they put off a medical treatment or regular checkup because of the expense.

Medical costs were the most important factor in making a health-care decision for 27 percent of people, outweighing ADVICE from their physician, according to a survey of 800 people by New York-based Hill & Knowlton Strategies. The results were released today at the Bloomberg Healthcare Innovations Conference in New York.

The price of insurance premiums have risen 97 percent since 2002 with families now contributing about $4,300 a year to employee-sponsored health plans, according to a report last month by the Commonwealth Fund. Still, most Americans said they arent willing to cut back on choice to save money and don’t want companies to scale back innovation to keep costs down.

“What the public needs and what it ultimately values - and will pay for—are not always the same thing,” said Susan Thiele, U.S. health-care practice director at Hill & Knowlton. In this environment, it’s critical to understand shifting public opinion so that new advances are developed and positioned in a way thats meaningful to consumers.Ҕ

In the survey, 45 percent of people said they worried a lot about paying medical bills in the event of a catastrophic illness or accident, and 36 percent said they are very concerned with paying for health-insurance coverage. When asked what the biggest problem facing health care in the U.S. was, 53 percent said cost.

Most respondents weren’t concerned about having access to the latest and most cutting-edge treatments. Instead, they said they would rather see companies come up with innovative ways to lower costs rather than finding new medicines or cures.

Of those surveyed, 85 percent had public or private health insurance and 11 percent were temporarily UNEMPLOYED.



Study Links Medical Costs And Personal Bankruptcy
Harvard researchers say 62% of all personal bankruptcies in the U.S. in 2007 were caused by health problems, and 78% of those filers had insurance

By Catherine Arnst
Business Week
June 4, 2009

A recent HARVARD STUDY tells us that health problems cause more than half of America’s bankruptcies, and that the vast majority of people seeking bankruptcy protection have health insurance. The study paints a hauntingly familiar picture: people get sick, insurance covers nothing, so they’re forced to mortgage their homes to stay alive.

Medical problems caused 62% of all personal bankruptcies filed in the U.S. in 2007, according to a study by Harvard researchers. And in a finding that surprised even the researchers, 78% of those filers had medical insurance at the start of their illness, including 60.3% who had private coverage, not Medicare or Medicaid.

Medically related bankruptcies have been rising steadily for decades. In 1981, only 8% of families filing for bankruptcy cited a serious medical problem as the reason, while a 2001 STUDY of bankruptcies in five states by the same researchers found that illness or medical bills contributed to 50% of all filings. This newest, nationwide study, conducted before the start of the current recession by Drs. David Himmelstein and Steffie Woolhandler of Harvard Medical School, Elizabeth Warren of Harvard Law School, and Deborah Thorne, a sociology professor at Ohio University, found that the filers were for the most part solidly middle class before medical disaster hit. Two-thirds owned their home and three-fifths had gone to college.

But medically bankrupt families with private insurance reported average out-of pocket MEDICAL BILLS of $17,749, while the uninsured’s bills averaged $26,971. Of the families who started out with insurance but lost it during the course of their illness, medical bills averaged $22,658. “For MIDDLE-CLASS Americans, health insurance offers little protection. Most of us have policies with so many loopholes, co-payments, and deductibles that illness can put you in the poorhouse,” said lead author Himmelstein. “Unless you’re Warren Buffett, your family is just ONE SERIOUS ILLNESS AWAY from bankruptcy.”

The study UNDERSCORES President Barack Obama’s arguments in calling for health-care reform legislation this year. In a letter to Democratic Senate leaders this week, the President said:

“Health-care reform is not a luxury. It’s a necessity we cannot defer. Soaring health-care costs make our current course unsustainable. It is unsustainable for our families, whose spiraling premiums and out-of-pocket expenses are pushing them into bankruptcy and forcing them to go without the checkups and prescriptions they need.”

Highest Costs for Diabetes, Neurological Illness

The study was funded by the Robert Wood Johnson Foundation and published online June 4 by the American Journal of Medicine. It will appear in the Journal’s August print edition. The researchers examined the court records of a random sample of 2,314 bankruptcy filings across the nation during early 2007, and also contacted those filers for written explanations. The researchers then followed up with extensive phone interviews of 1,032 of those filers.

They found that a number of medical factors contributed to a family’s financial disaster. More than 90% of medically related bankruptcies were caused by high medical bills directly or medical costs that were so high the family was forced to mortgage their home. The remaining 8% went bankrupt because a medical problem caused them to lose income. The authors were not able to track credit-card defaults caused by medical bills, but a 2007 study found that, of low- and middle-income households with credit-card debt, 29% used their plastic to pay off medical expenses.

Individuals with diabetes, one of the most common chronic diseases in the U.S., and those with neurological illnesses such as multiple sclerosis had the highest costs, an average of $26,971 and $34,167, respectively. Hospital bills were the largest single expense for half of all medically bankrupt families.

Dr. Woolhandler, an ADVOCATE of a single-payer health-care system, said lawmakers in Washington should reconsider health-care reform in light of the study. “Covering the uninsured isn’t enough,” she said. “Reform also needs to help families who already have insurance by upgrading their coverage and assuring that they never lose it.”



Insured, but Bankrupted by Health Crises

By Reed Abelson
NY Times
June 30, 2009

Health insurance is supposed to offer protection both medically and financially. But as it turns out, an estimated three-quarters of people who are pushed into personal bankruptcy by medical problems actually had insurance when they got sick or were injured.

And so, even as Washington tries to cover the tens of millions of Americans without medical insurance, many health policy experts say simply giving everyone an insurance card will not be enough to fix what is wrong with the system.

Too many other people already have coverage so meager that a medical crisis means financial calamity.

One of them is Lawrence Yurdin, a 64-year-old computer security specialist. Although the brochure on his Aetna policy seemed to indicate it covered up to $150,000 a year in hospital care, the fine print excluded nearly all of the treatment he received at an Austin, Tex., hospital.

He and his wife, Claire, filed for bankruptcy last December, as his unpaid medical bills approached $200,000.

In the House and Senate, lawmakers are grappling with the details of legislation that would set minimum standards for insurance coverage and place caps on out-of-pocket expenses. And fear of the high price tag could prompt lawmakers to settle for less than comprehensive coverage for some Americans.

But patient advocates argue it is crucial for the final legislation to guarantee a base level of coverage, if people like Mr. Yurdin are to be protected from financial ruin. They also call for a new layer of federal rules to correct the current state-by-state regulatory patchwork that allows some insurance companies to sell relatively worthless policies.

“Underinsurance is the great hidden risk of the American health care system,” said Elizabeth Warren, a Harvard law professor who has analyzed medical bankruptcies. “People do not REALIZE they are one diagnosis away from FINANCIAL COLLAPSE.”

Last week, a former Cigna executive warned at a Senate hearing on health insurance that lawmakers should be careful about the role they gave private insurers in any new system, saying the companies were too prone to “confuse their customers and dump the sick.”

The number of uninsured people has increased as more have fallen victim to deceptive marketing practices and bought what essentially is fake insurance,” Wendell Potter, the former Cigna executive, testified.

Mr. Yurdin learned the hard way.

At St. David’s Medical Center in Austin, where he went for two separate heart procedures last year, the hospitals admitting office looked at Mr. Yurdin’s coverage and talked to Aetna. St. Davids estimated that his share of the payments would be only a few thousand dollars per procedure.

He and the hospital say they were surprised to eventually learn that the $150,000 hospital coverage in the Aetna policy was mainly for room and board. Coverage was capped at $10,000 for “other hospital services,” which turned out to include nearly all routine hospital care - the expenses incurred in the operating room, for example, and the cost of any medication he received.

In other words, Aetna would have paid for Mr. Yurdin to stay in the hospital for more than five months as long as he did not need an operation or any lab tests or drugs while he was there.

Aetna contends that it repeatedly informed Mr. Yurdin and the hospital of the restrictions in policy, which is known in the industry as a limited-benefit plan.

The company says such policies offer value by covering some hospital expenses, like surgeons’ fees or a stay in the intensive care unit. Aetna also says all of its policyholders receive significant discounts on the overall cost of hospital care. But Aetna also acknowledges that a limited-benefit plan was inappropriate in Mr. Yurdins case because his age and condition - an irregular heartbeat made him likely to require more comprehensive coverage.

“Limited benefits arent right for everyone, and it clearly wasn’t right for Mr. Yurdin, said Cynthia B. Michener, an Aetna spokeswoman.

Charles E. Grassley, the ranking Republican on the Senate Finance Committee, which is taking a lead on health legislation, says Congress needs to make “meaningful insurance coverage more affordable and accessible. But until that happens,” he said, “any presentation of limited-benefit plans ought to be completely straightforward, and not misleading in any way.”

Insurers like Aetna generally defend limited-benefit policies as a byproduct of the nation’s FLAWED HEALTH CARE SYSTEM, which they say makes it too expensive to adequately insure someone like Mr. Yurdin.

IF EVERYONE in the country were required to have insurance, the industry says a mandate that Congress is contemplating the costs and risks of insurance would be spread over a large enough pool of people to let insurers provide full, affordable coverage even to people with pre-existing medical conditions.

Mr. Yurdin worked at TEK SYSTEMS, which employs people for short periods as contractors for other companies. TEKsystems says it does not pay for the contract workers health benefits, but it does enable them to purchase individual policies with limited benefits so they have at least some coverage.

“Theres no way we make this sound like regular coverage,” said Neil Mann, an executive vice president at Allegis Group, which owns TEKsystems.

Although Mr. Mann acknowledged that the plan Mr. Yurdin purchased excluded routine hospital care, he said he thought it still provided value to employees who wanted peace of mind.

True peace of mind, however, comes with a much higher price tag. When Mr. Yurdin no longer qualified for the Aetna coverage after he left TEKsystems and his eligibility eventually ended, his only option was a special state plan in Texas for people who are at high risk for expensive medical care. He has been paying more than $1,000 a month for comprehensive coverage, compared with the roughly $250 a month he was paying for the Aetna plan.

But as of Wednesday, his future insurance problems are largely solved: he qualifies for Medicare because he turns 65.

Many insurers, as part of the Congressional overhaul of their business, say they expect the demand for limited-benefit policies to fall. “Until the nation achieves the universal coverage that we strongly support, some individuals will want to be able to choose limited indemnity products, but with comprehensive health reform we think that need should diminish,” said Simon Stevens, an executive at UnitedHealth.

UnitedHealth drew criticism last year for selling policies with sharply limited coverage through AARP, the advocacy group for older people. One of the plans capped reimbursement for an operation at $5,000, for example, although many procedures cost at least several times that amount. After Senator Grassley began investigating its sales practices, UnitedHealth agreed to stop offering the limited AARP plans.

Mr. Yurdin and his wife say it was not clear that he was liable for tens of thousands of dollars in hospital bills until after he had the first two of what would eventually be four operations. St. Davids says it tried to persuade them to apply for charity care, under which the hospital would absorb much, or all, of the unpaid bills.

But the couple says a lawyer advised them to turn to bankruptcy as the way to be certain they would not be left with too much debt. “I knew we were getting way, way over our heads,” Mrs. Yurdin said.

While Aetna disputes the Yurdins’ and the hospitals version of events, it also says it has tried to clarify the language it uses to describe the coverage. In its most recent brochure, the fine print describing the limits to “other hospital services” now defines what they are in a footnote on the same page and warns that the excluded expenses could be significant.

Senator John D. Rockefeller IV, Democrat of West Virginia, who is also on the Finance Committee, has introduced legislation that would require insurers to be more clear about what they do - and do not cover. He says he advocates such a change, even if Congress cannot agree to a more sweeping overhaul of the health insurance industry.

But advocates for broad changes to the health care system say Congress can succeed only by making sure health reform goes beyond giving every American a buyer-beware insurance card. One such person is Len Nichols, a health economist for the New America Foundation.

“Conceptually,” he said, ”insurance means normal people should not go bankrupt from serious medical conditions. “



When Health Insurance Doesn’t Insure

By Andrea Orr
Economic Policy Institute
July 14, 2009

A recent HARVARD UNIVERSITY STUDY found that 62% of personal bankruptcies resulted in part from medical costs and some 78% of those people who filed for bankruptcy had health insurance, in most cases private coverage.

It is an alarming statistic, underscoring why health care reform is needed not just for the millions of Americans who do not have health insurance, but for many others who are insured.

Following are some of the major reasons that health insurance seems to provide little financial insurance against bankruptcy:

Job loss While the CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT (COBRA) was designed to help people who lost their jobs retain their employer-provided health insurance by paying for it themselves for 18 months, the proposition is prohibitively costly for many who have lost their incomes. Since the cost of employer-provided insurance is usually shared between the worker and the employer, COBRA premiums tend to be significantly higher - often double, triple, or more - what individuals pay when they are working. Average monthly COBRA payments for a family typically exceed $1,000, while the average monthly unemployment insurance payment, calculated from weekly average payments, is $1,316.81.

The economic stimulus package Congress approved in February provided for the government to temporarily subsidize 65% of those premiums, and also increased weekly unemployment benefits by $25, but that still means most families’ monthly health insurance bills exceed $350, a significant amount that many cannot afford on a tight budget.

And while many laid-off workers are able to pick up coverage when they find a new job, allowing coverage to lapse even temporarily can be costly. According to the Harvard study, the single most important predictor of medical bankruptcy was a gap in health insurance coverage for any family member. As long-term unemployment rises, these lapses in employer-sponsored health coverage are likely to last longer as well.

High out-of-pocket costs The New York Times recently profiled a couple whose health insurance provided for $150,000 a month in hospital coverage,Ӕ but excluded nearly all the routine care that hospital patients typically receive such as tests, medication, and operating room care, essentially meaning that the insurer treated hospital stays like hotel visits, covering room and board but very little treatment. In the Harvard study on medical bankruptcy, the average out-of-pocket medical costs incurred with those who had private health insurance was close to $18,000.

Rescission, or customer dumping This widely-reported practice of insurers canceling policies after an individual becomes sick was confirmed recently when executives of three of the nations largest health insurers told the House Subcommittee on Oversight and Investigations that they sometimes did cancel medical coverage for sick policyholders and that the practice was not limited to individuals who engaged in fraud in order to conceal certain illnesses. A House committee investigation of the three largest insurers found they canceled coverage of more than 20,000 people, saving more than $300 million in medical claims over a five-year period. The hearing included testimony from one woman whose coverage was cancelled after she was diagnosed with breast cancer, allegedly for her failure to report a visit to a dermatologist.

Wendell Potter, a former senior executive for Cigna, also shed light on this practice during a recent Senate hearing. “They dump the sick, all so they can satisfy their Wall Street investors,” Potter said. “They look carefully to see if a sick policyholder may have omitted a minor illness, a pre-existing condition, when applying for coverage, and then they use that as justification to cancel the policy.”

Sham plans, or fake insurance The National Association of Health Underwriters warns that rising price tags on health insurance has paved the way for the creation of more sham plans, often which offer lower cost and coverage than the market standard. These plans, it says, are created to look like authorized health insurance plans but are never intended to pay benefits or abide by state insurance laws.

You or a family member gets sick A great irony of health insurance, as it is structured today, is that people are most challenged to keep their health insurance when they become ill. Even if the health insurance works, as designed, to insulate people from high medical bills, it does nothing to ensure that people remain employed after becoming sick. In fact, the Harvard study found that illness led to job loss for 38% of patients’ families.

In addition to resulting in an inability to work and a much higher health insurance bill under COBRA, a chronic illness could trigger a rescission, discussed above, or uncover loopholes that allow the insurer to deny coverage in a plan that had appeared watertight in times of good health.



Hospitals Stuck With Illegal Immigrants, Uninsured Permanent Patients at Massive Cost

The Blaze
January 4, 2012

An unpleasant new report claims that many hospitals in major metro areas are struggling with the growing problem of “permanent patients.”

Whats a “permanent patient?” According to the New York Times they are mostly illegal immigrants or people who lack insurance or their own housing that the hospital cannot turn away.

The Times defines a “permanent patient”:

...[someone who has] been languishing for months or even years in hospitals, despite being well enough to be sent home or to nursing centers for less-expensive care, because they are illegal immigrants or lack sufficient insurance or appropriate housing.

Of course, having dozens of patients hanging around that long means these hospitals are absorbing the bill for millions of dollars in unreimbursed expenses annually.

Unsurprisingly, the majority of these “permanent patients” are illegal immigrants because, as mentioned in the above, they have no housing or family in the area.

“Medicaid often pays for emergency care for illegal immigrants, but not for continuing care, and many hospitals in places with large concentrations of illegal immigrants, like Texas, California and Florida, face the quandary of where to send patients well enough to leave,” writes Sam Roberts of the Times.

What kind of cost are we talking about here?

“Care for a patient languishing in a hospital can cost more than $100,000 a year, while care in a nursing home can cost $20,000 or less [emphasis added],” Roberts reports.

“Patients fit to be discharged from hospitals but having no place to go typically remain more than five years,” says LaRay Brown, a senior vice president for New York City’s Health and Hospitals Corporation.

She says that there were about 300 patients in such a predicament throughout the New York City area alone, most in public hospitals or higher-priced skilled public nursing homes, though a few were in private hospitals, according to the Times.

“Many of those individuals no longer need that care, but because they have no resources and many have no family here, we, unfortunately, are caring for them in a much more expensive setting than necessary based on their clinical need,” said Brown.

The report goes on to cite an example where one patient from Queens, NY, has been at the Coler-Goldwater Specialty Hospital and Nursing Facility for 13 years because the hospital has no place to send him.

The patient, who is in his mid-60s, has been there since an arterial disease cost him part of one leg below the knee and left him in a wheelchair, according to the report.

Or another example:

Five years ago, Yu Kang Fu, 58, who lived in Flushing, Queens, and was a cook at a Chinese restaurant in New Jersey, was dropped off by his boss at New York Downtown Hospital, a private institution in Manhattan, complaining of a severe headache. Mr. Yu was admitted to the intensive-care unit with a stroke.

Mr. Yu remained in the hospital for over four years until he was transferred last spring to the Atlantis Rehabilitation and Residential Health Care Facility, a private center in Fort Greene, Brooklyn, after the federal government certified him as a permanent resident under color of law, essentially acknowledging that he could not be returned to China and qualifying him for medical benefits.

“This gentleman cost us millions of dollars,” said Jeffrey Menkes, the president of New York Downtown. “We try to provide physical, occupational therapy, but this is an acute-care hospital. This patient shouldn’t be here.”

“The fact of the matter is that hospitals in metro areas that host a large illegal immigrant population are unable to turn away patients who have neither insurance nor proof that they are in the United States legally” - two things necessary for discharge purposes and reimbursements, said Chui Man Lai, assistant vice president of patient services at a New York state hospital.

“These patients often arrive in the emergency room acutely ill and unaccompanied, and we have to treat them until they can be discharged safely,” Ms. Lai said. “The hospital is required, by law and its mission, to care for these patients.”

But even worse than “permanent patients,” those who essentially live in hospitals already operating on thin budgets, are what some refer to as “pop drops”: grown adults leaving their parents at the hospitals so that they can go on vacation.

“Hospitals are reluctant to complain publicly about such patients for fear of being perceived as callously seeking to dump nonpaying patients,” writes Roberts. “Elected officials are generally loath to be seen as encouraging illegal immigrants by changing reimbursement formulas. The issue was never addressed during the debate over national health care legislation.”

Read the full report HERE.



Healthcare Isn’t A Free Market, It’s A Giant Economic Scam

By Mike Masnick
Tech Dirt
February 22, 2013

Not long ago, someone I know who had no medical insurance, but who had some serious medical issues, ended up in the hospital for a few weeks. Some procedures needed to be done, but nothing that most people would consider too “drastic.” Eventually, the bills showed up, and they were in the range of half a million dollars, for someone who did not have anything close to that. You hear stories about crazy medical bills, but what very few people realize is that the reality of hospital bills can often be orders of magnitude more crazy than what most people expect. Just last week, a friend of mine posted the following image to Facebook, noting that when his normal medical insurance billing statement has room for seven digits (i.e., millions of dollars) something is clearly screwed up.
A few years back, the folks at Planet Money tried to dig in and demystify some of the secrets of medical bills, but that only scratched the surface.

Stephen Brill has a very long, but absolutely gripping, detailed analysis of the insanity of medical billing for Time Magazine. It’s a truly astounding piece, that hopefully will open many people’s eyes. It will take a while, but find some time to read it, just to get a sense of how totally screwed up the entire system is. I’ve been working on some other stories about some really sketchy activity on the pharmaceutical side of things, but this article really shines a light on the disgusting underbelly of the healthcare system. As Brill notes, so much of the debate about healthcare is really focused on “but who will pay for these things.” But what it tends to ignore is why are the prices absolutely insane.

When medical care becomes a matter of life and death, the money demanded by the health care ecosystem reaches a wholly different order of magnitude, churning out reams of bills to people who cant focus on them, let alone pay them. Soon after he was diagnosed with lung cancer in January 2011, a patient whom I will call Steven D. and his wife Alice knew that they were only buying time. The crushing question was, How much is time really worth? As Alice, who makes about $40,000 a year running a child-care center in her home, explained, “[Steven] kept saying he wanted every last minute he could get, no matter what. But I 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. Alice responded to my question about the obvious overcharges on the bill for items like the diabetes-test strips or the gauze pads much as Mrs. Lincoln, according to the famous joke, might have had she been asked what she thought of the play. “Are you kidding?” she said. “I’m dealing with a husband who had just been told he has Stage IV cancer. That’s all I can focus on.  You think I looked at the items on the bills? I just looked at the total.”

If we want a real fix to the mounting costs of healthcare (which are a massive drain on the economy), we need to start there. Unfortunately, those who are making out like bandits from this system have tremendous political clout, and they have no interest in letting the easy money go away.

Throughout the piece, Brill repeatedly discusses the “chargemaster,” which is basically the internal price list at every hospital, which has no basis in reality whatsoever, but which the poorest patients, and those without insurance, or with limited insurance, are often hit over the head with. Throughout the article, Brill details over and over and over again how hospital administrators and spokespeople all refused to address the chargemaster at all, constantly blowing it off as no big deal, because so few people actually pay the list price. But they completely ignore a bunch of points, including that some patients are charged upfront for these things, and no one is ever told that the prices are negotiable, even though they all are.

What you see is a system where supposedly “non-profit” and “charitable” institutions are raking in massive profits—while still begging the public for donations, and suggesting that any effort to reign in costs would put people at risk by cutting back on necessary hospital services. At times, these statements are so obviously bullshit, that it’s really sickening.

In December, when the New York Times ran a story about how a deficit deal might threaten hospital payments, Steven Safyer, chief executive of Montefiore Medical Center, a large nonprofit hospital system in the Bronx, complained, œThere is no such thing as a cut to a provider that isnt a cut to a beneficiary ҅ This is not crying wolf.

Actually, Safyer seems to be crying wolf to the tune of about $196.8 million, according to the hospitalԒs latest publicly available tax return. That was his hospitals operating profit, according to its 2010 return. With $2.586 billion in revenue җ of which 99.4% came from patient bills and 0.6% from fundraising events and other charitable contributions Safyerגs business is more than six times as large as that of the Bronxs most famous enterprise, the New York Yankees. Surely, without cutting services to beneficiaries, Safyer could cut what have to be some of the BronxҒs better non-Yankee salaries: his own, which was $4,065,000, or those of his chief financial officer ($3,243,000), his executive vice president ($2,220,000) or the head of his dental department ($1,798,000).

Sometimes these stories make you wonder if some of these “charitable” organizations deserve to be called charities at all:

Mercy Hospital is owned by an organization under the umbrella of the Catholic Church called Sisters of Mercy. Its mission, as described in its latest filing with the IRS as a tax-exempt charity, is to “carry out the healing ministry of Jesus by promoting health and wellness.” The overall chain had $4.28 billion in revenue that year. Its hospital in Springfield, Mo. (pop. 160,660), had $880.7 million in revenue and an operating profit of $319 million, according to its federal filing. The incomes of the parent companys executives appear on other IRS filings covering various interlocking Mercy nonprofit corporate entities. Mercy president and CEO Lynn Britton made $1,930,000, and an executive vice president, Myra Aubuchon, was paid $3.7 million, according to the Mercy filing. In all, seven Mercy Health executives were paid more than $1 million each. 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. Assuming that Mercyגs actual costs are a tenth of these chargemaster values they’re probably less all of this charity care actually cost Mercy about three-tenths of 1% of its revenue, or about $13 million out of $4.28 billion

While I actually think it’s a bit of a cheap shot to repeatedly show CEO salaries, the real issue is how these hospitals can ratchet up the prices with no basis in reality, simply because they know they can do so. Even if they recognize most people don’t pay those fees, they still send such bills out there, which creates a tremendous amount of stress.

The stories of obvious overcharging fill the piece and demonstrate a key point in all of this. For all the talk about “free market” healthcare, nothing in our healthcare system is anything resembling a free market. You have truly “captive” customers with almost no price elasticity, combined with a system whereby it’s rare for the buyers to actually be the ones “paying.” If you were to design the most fucked up economic experiment ever, this might be it. And you can see the results.

Steve H.’s bill for his day at Mercy contained all the usual and customary overcharges. One item was “MARKER SKIN REG TIP RULER” for $3. That’s the marking pen, presumably reusable, that marked the place on Steve H.’s back where the incision was to go. Six lines down, there was “STRAP OR TABLE 8X27 IN” for $31. Thats the strap used to hold Steve H. onto the operating table. Just below that was “BLNKT WARM UPPER BDY 42268” for $32. That’s a blanket used to keep surgery patients warm. It is, of course, reusable, and its available new on eBay for $13. Four lines down there’s “GOWN SURG ULTRA XLG 95121” for $39, which is the gown the surgeon wore. Thirty of them can be bought online for $180. Neither Medicare nor any large insurance company would pay a hospital separately for those straps or the surgeons gown; that’s all supposed to come with the facility fee paid to the hospital, which in this case was $6,289.

Or how about this one:

His bill which included not only the aggressively marked-up charge of $13,702 for the Rituxan cancer drug but also the usual array of chargemaster fees for basics like generic Tylenol, blood tests and simple supplies - had one item not found on any other bill I examined: 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.

The article is chock full of these kinds of stories. They’re not anomalies, nor are they extreme outlier cases. They happen quite frequently. It’s standard operating procedure. And, contrary to what most people think, these things don’t just apply to those who are without insurance. While insurance may protect against some of these situations, often people discover that their insurance doesn’t cover nearly as much as they expected (in part because they never think that bills could possibly be so high. And, while some hospitals are more open to forgiving massive debt for those who are poor, when those who thought they were comfortably in the middle class suddenly realize they may owe hundreds of thousands of dollars unexpectedly, the hospitals are a lot less sympathetic.

Not surprisingly, nearly every hospital that Brill tried to speak to about all this refused to talk about it. Sometimes they gave completely bogus excuses, such as claiming that it’s “against the law” to discuss why they charge massive markups on basic items:

Wright said the hospital’s lawyers had decided that discussing Steve H.s bill would violate the federal HIPAA law protecting the privacy of patient medical records. I pointed out that I wanted to ask questions only about the hospital’s charges for standard items such as surgical gowns, basic blood tests, blanket warmers and even medical devices - that had nothing to do with individual patients. “Everything is particular to an individual patient’s needs,” she replied. “Even a surgical gown?” “Yes, even a surgical gown. We cannot discuss this with you. Its against the law.” She declined to put me in touch with the hospitals lawyers to discuss their legal analysis.

In one case where he finally got an administrator to speak about the chargemaster rates, the answers were astounding, and either completely mendacious or disconnected from reality (I’m not sure which one is scarier).

‘We think the chargemaster is totally fair, says William Gedge,” senior vice president of payer relations at Yale New Haven Health System. ‘It’s fair because everyone gets the same bill. Even Medicare gets exactly the same charges that this patient got. Of course, we will have different arrangements for how Medicare or an insurance company will not pay some of the charges or discount the charges, but everyone starts from the same place.” Asked how the chargemaster charge for an item like the troponin test was calculated, Gedge said he didn’t know exactly but would try to find out. He subsequently reported back that “it’s an historical charge, which takes into account all of our costs for running the hospital.”

It’s fair because we charge absolutely everyone insane amounts that have no basis in reality, and which we mark up ridiculously—and then we offer discounts to many, but certainly not all patients. This answer is bullshit. Not everyone starts from the same place, but even if we grant that ridiculous claim, having everyone start at insane prices doesn’t make it fair. It still makes it a giant scam.

And, of course, the hospitals know they’re getting away with all sorts of crap here. Even when they’re talking about things like Medicare, where the government is the “buyer,” the situation is crazy. While the hospitals, pharma companies and others complain that government supported healthcare artificially deflates revenue and limits their ability to provide patient care, the article goes into a fair bit of detail about how that’s hogwash, and the hospitals (and doctors) are massively profiting off of the taxpayer—sometimes in completely cynical ways.

One of the benefits attending physicians get from many hospitals is the opportunity to cruise the halls and go into a Medicare patient’s room and rack up a few dollars, says a doctor who has worked at several hospitals across the country. “In some places its a Monday-morning tradition. You go see the people who came in over the weekend. There’s always an ostensible reason, but there’s also a lot of abuse.”

If you know even the slightest bit about basic economics, the deeper you look at this system, the more and more you realize how insane it is. Nearly every single incentive is skewed, often dangerously so. The system is more or less designed to be abused, while making it increasingly difficult for people to get reasonable care. I’d argue that it may be worse than if you asked a bunch of economists to design the worst possible system of incentives.

And we’re more or less stuck with it. For all the debate and the fight over reform, the reform package we got really did next to nothing to address any of these kinds of underlying issues. And this has nothing to do with silly claims of whether or not it’s “socialist”. The entire healthcare system, before and after the recent health reform, does not resemble anything even remotely close to a free market system. And, while there are some who argue that healthcare itself shouldn’t be subjected to free market forces, but rather towards what provides the best care, it’s not like the system is designed to match up with that belief either.

The system is completely broken. In researching other aspects of the system, I’d already come to the conclusion that it should be scrapped entirely, with something completely different put in its place, but this article just helps take that belief to another level. And, the scary thing is that the chances of that happening are basically zero. We’re stuck with this system, in part because the economic incentives are screwed up so much that it’s ripe for widespread abuse. And when you have so many billions of dollars flowing, with a small group of folks profiting massively from that, there’s simply no chance they’ll allow for any real changes.

And, the really scary thing is that the bits I’ve talked about here really only scratch the surface of Brill’s overall article. And, his article really only touches on one part of the problem. It is a key part of the problem, but it’s still just one part. And each of the other parts tend to look equally insane when you start digging deeper. We are in the middle of the most horrifying economic experiment ever constructed with our healthcare system, and it’s only impacting almost everyone’s lives. Oh yeah, and there’s no real interest in taking on the actual problems.



There’s a great ARTICLE in Time this month:

Changing Our Choices

We should tighten antitrust laws related to hospitals to keep them from becoming so dominant in a region that insurance companies are helpless in negotiating prices with them. The hospitals continuing consolidation of both lab work and doctors’ practices is one reason that trying to cut the deficit by simply lowering the fees Medicare and Medicaid pay to hospitals will not work. It will only cause the hospitals to shift the costs to non-Medicare patients in order to maintain profits which they will be able to do because of their increasing leverage in their markets over insurers. Insurance premiums will therefore go up - which in turn will drive the deficit back up, because the subsidies on insurance premiums that Obamacare will soon offer to those who cannot afford them will have to go up.

Similarly, we should tax hospital profits at 75% and have a tax surcharge on all nondoctor hospital salaries that exceed, say, $750,000. Why are high profits at hospitals regarded as a given that we have to work around? Why shouldn’t those who are profiting the most from a market whose costs are victimizing everyone else chip in to help? If we recouped 75% of all hospital profits (from nonprofit as well as for-profit institutions), that would save over $80 billion a year before counting what we would save on tests that hospitals might not perform if their profit incentives were shaved.

To be sure, this too seems unlikely to happen. Hospitals may be the most politically powerful institution in any congressional district. They’re usually admired as their community’s most important charitable institution, and their influential stakeholders run the gamut from equipment makers to drug companies to doctors to thousands of rank-and-file employees. Then again, if every community paid more attention to those administrator salaries, to those nonprofits’ profit margins and to charges like $77 for gauze pads, perhaps the political balance would shift.

We should outlaw the chargemaster. Everyone involved, except a patient who gets a bill based on one (or worse, gets sued on the basis of one), shrugs off chargemasters as a fiction. So why not require that they be rewritten to reflect a process that considers actual and thoroughly transparent costs? After all, hospitals are supposed to be government-sanctioned institutions accountable to the public. Hospitals love the chargemaster because it gives them a big number to put in front of rich uninsured patients (typically from outside the U.S.) or, as is more likely, to attach to lawsuits or give to bill collectors, establishing a place from which they can negotiate settlements. Its also a great place from which to start negotiations with insurance companies, which also love the chargemaster because they can then make their customers feel good when they get an Explanation of Benefits that shows the terrific discounts their insurance company won for them.

But for patients, the chargemasters are both the real and the metaphoric essence of the broken market. They are anything but irrelevant. They;re the source of the poison coursing through the health care ecosystem.

We should amend patent laws so that makers of wonder drugs would be limited in how they can exploit the monopoly our patent laws give them. Or we could simply set price limits or profit-margin caps on these drugs. Why are the drug profit margins treated as another given that we have to work around to get out of the $750 billion annual overspend, rather than a problem to be solved?

Just bringing these overall profits down to those of the software industry would save billions of dollars. Reducing drugmakers prices to what they get in other developed countries would save over $90 billion a year. It could save Medicare - meaning the taxpayers more than $25 billion a year, or $250 billion over 10 years. Depending on whether that $250 billion is compared with the Republican or Democratic deficit-cutting proposals, thatגs a third or a half of the Medicare cuts now being talked about.

Similarly, we should tighten what Medicare pays for CT or MRI tests a lot more and even cap what insurance companies can pay for them. This is a huge contributor to our massive overspending on outpatient costs. And we should cap profits on lab tests done in-house by hospitals or doctors.

Finally, we should embarrass Democrats into stopping their fight against medical-malpractice reform and instead provide safe-harbor defenses for doctors so they dont have to order a CT scan whenever, as one hospital administrator put it, someone in the emergency room says the word head. Trial lawyers who make their bread and butter from civil suits have been the Democrats’ biggest financial backer for decades. Republicans are right when they argue that tort reform is overdue. Eliminating the rationale or excuse for all the extra doctor exams, lab tests and use of CT scans and MRIs could cut tens of billions of dollars a year while drastically cutting what hospitals and doctors spend on malpractice insurance and pass along to patients.

Other options are more tongue in cheek, though they illustrate the absurdity of the hole we have fallen into. We could limit administrator salaries at hospitals to five or six times what the lowest-paid licensed physician gets for caring for patients there. That might take care of the self-fulfilling peer dynamic that Gunn of Sloan-Kettering cited when he explained, “We all use the same compensation consultants.” Then again, it might unleash a wave of salary increases for junior doctors.

Or we could require drug companies to include a prominent, plain-English notice of the gross profit margin on the packaging of each drug, as well as the salary of the parent company’s CEO. The same would have to be posted on the company’s website. If nothing else, it would be a good test of embarrassment thresholds.

None of these suggestions will come as a revelation to the policy experts who put together Obamacare or to those before them who pushed health care reform for decades. They know what the core problem is lopsided pricing and outsize profits in a market that doesnגt 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.

Obamacare does some good work around the edges of the core problem. It restricts abusive hospital-bill collecting. It forces insurers to provide explanations of their policies in plain English. It requires a more rigorous appeal process conducted by independent entities when insurance coverage is denied. These are all positive changes, as is putting the insurance umbrella over tens of millions more Americans a historic breakthrough. But none of it is a path to bending the health care cost curve. Indeed, while Obamacareגs promotion of statewide insurance exchanges may help distribute health-insurance policies to individuals now frozen out of the market, those exchanges could raise costs, not lower them. With hospitals consolidating by buying doctors practices and competing hospitals, their leverage over insurance companies is increasing. ThatҒs a trend that will only be accelerated if there are more insurance companies with less market share competing in a new exchange market trying to negotiate with a dominant hospital and its doctors. Similarly, higher insurance premiums much of them paid by taxpayers through Obamacare’s subsidies for those who cant afford insurance but now must buy it - will certainly be the result of three of Obamacares best provisions: the prohibitions on exclusions for pre-existing conditions, the restrictions on co-pays for preventive care and the end of annual or lifetime payout caps.

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.

When you follow the money, you see the choices we’ve made, knowingly or unknowingly.

Over the past few decades, weve enriched the labs, drug companies, medical device makers, hospital administrators and purveyors of CT scans, MRIs, canes and wheelchairs. Meanwhile, weҒve squeezed the doctors who dont own their own clinics, don’t work as drug or device consultants or don’t otherwise game a system that is so gameable. And of course, we’ve squeezed everyone outside the system who gets stuck with the bills.

We’ve created a secure, prosperous island in an economy that is suffering under the weight of the riches those on the island extract.

And we’ve allowed those on the island and their lobbyists and allies to control the debate, diverting us from what Gerard Anderson, a health care economist at the Johns Hopkins Bloomberg School of Public Health, says is the obvious and only issue: “All the prices are too damn high.”

Posted by Elvis on 10/23/12 •
Link to this articleLink to this article and comments
  1. Hospitals Should be Care Providers not Loan Sharks
    Predatory pricing practices can be found nearly everywhere in healthcare.

    By Deborah Burger
    May 17, 2013

    If there is one problem that symbolizes the ongoing national healthcare emergency, it is the rampant price gouging in the healthcare industry that continues to price too many Americans out of access to care and into financial ruin. Not only is the problem not solved by the Affordable Care Act, but it is a likely reason many will continue to demand more effective reform, as in expanding and extending Medicare to cover everyone.

    Predatory pricing practices can be found nearly everywhere in healthcare, by the drug companies, insurance companies, medical suppliers, outpatient clinics, boutique medical services, and many others as chronicled this spring in Time magazine.

    U.S. hospitals are among the biggest abusers, as illuminated in recent datareleased by Medicare on hospital charges for a variety of common procedures as well as brand new findings by the Institute for Health and Socio-Economic Policy, the research arm of the National Nurses United, based on Medicare cost reports.

    The nurses’ data augments the Medicare findings, and goes the next step, illustrating a trend of rising high hospital charges while providing context to a very ugly picture and the deplorable impact on anyone who needs healthcare.

    Here’s the sobering numbers:

    • U.S. hospitals charge on average $331 dollars for every $100 of their total costs, in statistical terms a 331 percent charge to cost ratio.

    • While hospital charges over costs have been climbing steadily over the past 15 years – the charges took their biggest leap ever in 2011– a 22 point vault.

    • From 2009 to 2011 (the most recent year for which the data is available), hospital charges lunged upward by 16 percent, while hospital costs only increased by 2 percent.

    • U.S. hospital profits, pushed upward by the high charges, hit a record $53.2 billion, while nurses see more and more hospitals cutting patient services and limiting access to care.

    • One case study is California where hospitals soared past the national average with a charge to cost ratio of 451 percent, or $451 for every $100 of costs.

    That similar pricing practices occur elsewhere in the healthcare industry is hardly an excuse for the private hospitals to act more like Wall Street corporations than responsible, community based institutions. It should be no shock that the lowest charges are by government-run hospitals that operate in public, not in secret, and have far more accountability and transparency.

    Hospitals ought to act as responsible providers of needed medical care, not loan sharks. Piling up profits in large part by jacking up prices is at sharp odds with the glossy feel good ads from hospitals we see so often on our TV screens, newspaper pullouts, sponsorship of sports teams, and on mass transit placards.

    Hospital lobbyists have tried for years to convince us all that predatory pricing policies don’t matter. These are just “list” prices that few people actually pay, they claim, and it is a random phenomenon that two hospitals in the same city, or even on the same block, might have widely varying prices for similar patient services.

    But the grotesque reality tells a different story.

    We’re not the only ones who think so. As Glenn Melnick, a USC health economist, told a reporter, “If (hospital prices are) meaningless how come hospitals spend all this money on consultants to raise them? Why haven’t they stayed flat for the past 15 years? Why do hospitals keep raising them if they have no impact?”

    While it is true that major payers seldom pay the list price, hospitals typically bargain with insurance companies over reimbursements. Anyone who has ever bought a car knows that the higher the list price, the more you end up paying. That’s true with hospital charges as well.

    The inevitable result is insurance companies respond by ratcheting up their charges to employers and individuals. In California, for example, since 2002, premiums have risen 170%—more than five times the inflation rate, as noted in a California Healthcare Foundation survey last month.

    An alarming, if predictable ripple effect follows. As the CHF survey noted, in the past decade, the percentage of California employers providing health coverage dropped from 71 to 60 percent; 21 percent said they’d increased workers’ co-insurance premiums while 17 percent said they had reduced benefits or increased other out of pocket costs. More than one-fourth of workers in small firms have deductibles of $1,000 or more on their health plan.

    Then there’s the uninsured who do not have the collective clout to bargain down the list price. Hospitals say they writeoff a lot of those bills, but clearly not all of them. How many distressing stories have we all heard about patients staggered by $50,000 or $100,000 un-payable medical bills while being hounded by the hospitals or bill collection agencies to pay up?

    Patients and families, even those paying for insurance, have a stark choice. Use your health coverage and get socked with huge out of pocket costs that may mean choosing between medical bills, housing costs, food, or other necessities, or facing financial calamity, or forgo needed care.

    As the Washington Post recently noted, the Affordable Care Act has not ended the deplorable story of medical bills accounting for more than half of all personal bankruptcies in the U.S.

    Even many of those now paying for health insurance either through their employer or as individuals, or who will be required to buy insurance under the ACA, choose not to use it because of the high co-insurance, deductibles, co-pays, and all the add ins that get thrown in by the hospitals, such as professional fees, facility fees, pathology fees, anesthesia fees, and so on.

    A 2011 Commonwealth Fund study found that the U.S. stands out among high income countries with as many 42 percent of Americans skipping doctors’ visits, recommended care, or not filling prescriptions due to cost.

    Consequently, people end up in emergency rooms for medical problems that should have been resolved earlier at far less cost and pain. It is also why two recent reports disclosed that the U.S. has the lowest life expectancies and the highest first day infant death rate among major industrial countries.

    It’s long past time to fix this nightmare, and sadly the ACA won’t meet that test. At a minimum we need to crack down on price gouging by all the corporations that control our health, with real penalties for lack of compliance.

    But a longer vision is needed. Replace our profit focused health care system with one based on patient need and quality care as all those other countries with national or single payer systems that surpass us in access, quality, and cost, have long figured out.


    Posted by Elvis  on  05/19/13






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