Next week, Time magazine features a cover story that it says is “the longest single piece ever published by a single writer” in the magazine. Entitled "Bitter Pill: Why Medical Bills are Killing Us," it is an exhaustive, morbidly fascinating, and ultimately deeply discouraging story about the almost unimaginable financial excesses and distortions in the U.S. health care industry.
It was written by Steven Brill, a journalist, lawyer, and entrepreneur and the founder of Court TV, American Lawyer , and Brill's Content. Brill's most recent book was Class Warfare: Inside the Fight to Fix America's Schools (2011).
Brill has a unique way of digging into stories of labyrinthine complexity, establishing the key dysfunctional elements, and exposing and explaining them in clear and straightforward prose that makes the reader feel smarter for having read him. He doesn't always persuade everyone. When Class Warfare was published, Michael Winerip of The New York Times wrote a withering review, noting that Brill "knows that every story needs a villain or an evil force." In Class Warfare, the villains were "bad teachers coddled by unions," Yet, Winerip wrote, he didn't give teachers their say. "Of the three million who work in traditional public schools, three are interviewed by Mr. Brill on the record; their insights take up six of the book’s 437 pages," he wrote.
Applying that measure to Bitter Pill, I think Brill comes out better. The villains here are not those you might expect–the insurance companies. Here it is the hospitals and their highly paid executives. In this telling, insurance companies are victims too, often as powerless in their dealings with hospitals as are the individual patients whose stories Brill tells. If that sounds incredible, it will sound less so once you've begun to power your way through Brill's story.
Brill's mighty edifice is built on line-by-line examination of seven bills, showing the charges assessed against patients and insurers that are many, many multiples of what the services or products actually cost. He begins with an example that we've heard about, although usually in reference to aspirin. The first bill he examines includes this line: 1 ACETAMINOPHE TABS 325 MG. The charge, for a generic version of Tylenol, was $1.50. "You can buy 100 of them on Amazon for $1.49 even without a hospital's purchasing power," Brill writes.
But, of course, it gets far worse than that. A 64-year-old Connecticut woman who felt chest pains one night last summer was taken four miles by ambulance to the emergency room at Stamford Hospital in Connecticut, "officially a nonprofit institution." She spent three hours there and was told she had indigestion and was sent home. She was billed $995 for the ambulance ride, $3,000 for the doctors, and $17,000 for he hospital: "In sum, $21,000 for a false alarm," Brill writes. She had no insurance.
Because she was uninsured, the prices for her services were derived from something every hospital keeps on file–the "chargemaster," a list of outrageously inflated prices drawn up, apparently, to provide an opening position in negotiations with insurers and patients. Brill contrasts the chargemaster prices–which the Connecticut woman was charged, having no opportunity or leverage to negotiate–with Medicare prices, which, he says, are based on examination of actual costs. She was charged $157.61 for a blood count; Medicare pays $11.02 in Connecticut. But the big ticket item was a nuclear stress test for which she was billed $7,997.54.
Medicare pays $554 for the test in Connecticut, Brill reports. And an expert tells him the test was probably unnecessary. But none of that helps the woman who got the bill.
Brill has many more examples like this, many–but not too many. Each illustrates a particular point about the healthcare system. And Brill is meticulous about noting the salaries of hospital executives. Stamford's CEO–it's a nonprofit hospital, remember–is paid $1,860,000, according to Brill. Its chief financial officer receives $744,000.
Surprisingly, Medicare, the government program that is so often criticized in Washington but praised outside by those who benefit from it, comes off as the shining example of how to run a healthcare system. It processes hospital bills quickly and efficiently, sets prices fairly, and costs what it does only because its "hands are tied when it comes to negotiating the prices for drugs or durable medical equipment."
Brill writes that its bill-processing system…
…is fast, accurate, customer-friendly and impressively high-tech. And it’s all done quietly by a team of nonpolitical civil servants in close partnership with the private sector. In fact, despite calls to privatize Medicare by creating a voucher system under which the Medicare population would get money from the government to buy insurance from private companies, the current Medicare system is staffed with more people employed by private contractors (8,500) than government workers (700).
The weakest part of Brill's story is the short, obligatory section at the end in which he draws on his reporting to say what should be done about all of this. Tighten antitrust laws to keep hospitals from becoming so dominant that insurance companies have no power to negotiate. Tax hospital profits at 75%. Put a tax surcharge on nondoctor hospital salaries that exceed $750,000. Outlaw the chargemaster.
Many of these are impractical or politically impossible. Even so, Brill's story provides one of the clearest and best analyses of the U.S. healthcare industry that I've read anywhere. If this has appeared in a newspaper, it would be a heavy favorite for a Pulitzer Prize. And it should win a National Magazine Award.