Hospitals Fund Politicians While Ripping Off Patients
Business + Economy

Hospitals Fund Politicians While Ripping Off Patients

iStockphoto/The Fiscal Times

The problem with health care is that hospitals rip-off patients, charge too much money, and then donate funds to politicians whose massive reforms—such as Obamacare—exist to preserve the dysfunction.

Journalist Steven Brill pitched this argument on Tuesday to a respectful but stunned Senate Finance Committee.

In a March Time magazine article entitled “Bitter Pill: Why Medical Bills Are Killing Us,” Brill—the founder of CourtTV—detailed the internal “chargemaster” lists that hospitals use as a baseline to set the price of their services.

“By any definition, this is no one’s idea of a functioning market place,” Brill said. “In this market place, nobody can explain a hospital’s charge of $77 for a box of gauze pads.” As Brill spoke, a quick Internet search showed that Wal-Mart charges $6.57 for the same product.

The challenge is that basic economic forces such as supply and demand have no bearing on what patients and insurance companies pay. Nor can an injured person in need of treatment shop around for the best deal. “It’s a casino where the house has all the cards,” Brill said.

The only entity in his opinion with the power to challenge hospital prices is Medicare. As government-based insurance for seniors, the program has the buying power to ignore the price lists.

No senator at the hearing disputed the need for more transparency on medical expenses. “The chargemaster is like the sticker price of a new car—it’s inflated,” said Senate Finance Committee Chairman Max Baucus (D-MT). “But unlike new cars, some people have no choice but to pay the chargemaster price.”

Baucus suggested that taxing “Cadillac” insurance plans that are generous—a key element of the 2010 Affordable Care Act, also known as Obamacare—would help to control health care costs.

As one of Capitol Hill’s point men on that bill, it was an attempt by Baucus to take credit for addressing the cost issues raised by Brill and other members of the witness panel.

Brill blew off that claim, saying that Obamacare never dealt with the use of internal chargemasters and the inflated costs they encourage. The Health and Human Services Department only last month publicly released the chargemaster prices—which vary widely among hospitals—for 100 procedures.

Most states allow hospitals to keep their prices hidden until after patients receive their bills.

“Obamacare does nothing about these prices, nothing to solve this problem. Zero,” he said. “My theory is if you don’t mess with the profits of the key players in the industry, you get to get your bill through Congress.”

Brill then noted that the health care industry had contributed $32 million to members of the committee, suggesting as a matter of transparency that C-SPAN include that figure whenever broadcasting hearings.

“A lot is getting disclosed today,” Baucus responded, “which is all good.”