PAUL BUCHHEIT FOR BUZZFLASH AT TRUTHOUT
Steven Brill’s article in Time Magazine about the cost of private health care is likely to make most of his readers very angry. Angry about the prices we pay, about the lives that are devastated, and about the fact that we’re one of the few developed countries without adequate health care for its citizens.
Economists have told us that the profit motive of privatization comes with an “invisible hand” that automatically corrects inequities in the market. It hasn’t worked that way for health care. The personal stories recounted below, and some additional facts to complement them, make it clear that an essential human need has been turned into a product that benefits a few people at the expense of many others.
$15,000 for Blood Tests
Brill’s article begins with the story of a 42-year-old Ohio man named Sean Recchi, who traveled to MD Anderson Cancer Center in Houston for treatment of non-Hodgkin’s lymphoma. He and his wife Stephanie had paid $469 a month, or about 20% of their income, for insurance that covered $2,000 per day of hospital costs. His financial troubles started when MD Anderson told him, “We don’t take that kind of discount insurance.”
But he had to go to the hospital. His wife recalled that he was “sweating and shaking with chills and pains. He had a large mass in his chest that was..growing. He was panicked.”
Stephanie asked her mother to write a check for $48,900.
Sean waited for 90 minutes while the hospital confirmed that the check had cleared. He was also required to advance MD Anderson $7,500 from his credit card. The total cost for the initial treatment and chemotherapy was $83,900, including a $15,000 charge for lab tests for which a Medicare patient would have paid a few hundred dollars, $283 for an x-ray that Medicare categorizes as a $20 charge, and $1.50 for a generic version of a Tylenol pill.
Hospital Boss $1,845,000 — Medicare Boss $170,000
MD Anderson provided this statement in its defense: “The issues related to health care finance are complex…[our] billing and collection practices are similar to those of other major hospitals and academic medical centers.” The company made $531 million in profits in 2010, on total revenues of about $2 billion. That 26% profit margin was, in the author’s words, “an astounding result for such a service-intensive enterprise.”
It’s true. A PayUpNow.org analysis of Medical Services providers showed that from 2008 to 2010, Humana had a profit margin of about 5%, United Health Group just under 7%, and WellPoint about 8%.
Last year’s salary for Ronald DePinho, the president of MD Anderson, was $1,845,000. That’s over twice the compensation paid to the president of the University of Texas medical complex that includes MD Anderson. It’s about ten times the compensation of the federal Medicare Administrator in 2010.
Privatization Has Failed Us: The Deadly Facts
Our private health care system has indeed failed us. We have by far the most expensive system in the developed world. The cost of common surgeries is anywhere from three to ten times higher in the U.S. than in Great Britain, Canada, France, or Germany.
Everyone has their hand in the money pot: insurance companies, pharmaceutical firms, physicians, hospitals, equipment suppliers, the AMA. Steven Brill notes that the medical industry has spent $5.36 billion on lobbying in the past 15 years, compared to $1.53 billion spent by the defense/aerospace industry and $1.3 billion spent by oil and gas interests.
As reported by the Census Department, 50 million Americans can’t afford the price of health insurance. According to a study by the American Journal of Public Health, nearly 45,000 annual deaths are associated with lack of health insurance. A 2001 survey revealed that, because of cost, forty-two percent of sick Americans skipped doctor’s visits and/or medication purchases. Even careseekers with insurance can end up uncovered, as in California, where a survey found that one out of four claims were denied by private insurers, even when treatment was recommended by the patient’s physician. The after-effects can be disastrous. A 2007 study at the Harvard Medical School found that 62 percent of US bankruptcies were a result of medical expenses.
Meanwhile, the evidence for incompetence in the private sector is overwhelming. Data from the Congressional Budget Office (CBO) and the Center for Medicare and Medicaid Services (CMS) shows that since 1997 private insurance costs have risen much faster than Medicare costs. According to the Council for Affordable Health Insurance, medical administrative costs as a percentage of claims are about three times higher for private insurance than for Medicare. A study by researchers at Harvard Medical School and Public Citizen found that health care bureaucracy last year cost the United States $399.4 billion. The U.S. Institute of Medicine reports that the for-profit system wastes $750 billion a year on waste, fraud, and inefficiency. As a percent of GDP, we spend almost twice the OECD average…