Concentrated economic power, combined with fee-for-service incentives, has made healthcare “the least consumer-friendly” U.S. industry and enabled arbitrary and capricious price gouging, according to the man behind Time magazine's notorious "Bitter Pill" investigation.
Steven Brill, a lawyer, media entrepreneur and journalist, told health insurance professionals at AHIP’s Operations and Technology Conference this week that while the country's longstanding problem of inadequate healthcare access may be solved by the Affordable Care Act, he thinks the law will at best make only modest gains towards its namesake principle of affordability.
Brill said health insurers must contribute more to the goals of transparency and accountability — in part because they helped create the reimbursement system that’s led to such a dysfunctional healthcare market, and in part because the ACA may do little to resolve the discontents of consolidated provider markets.
“How will having eight insurance companies help if there’s only one hospital?” Brill asked, critiquing one of the ACA’s main policy goals, competition among insurers.
“To me it was amazing that in hundreds of small and midsize towns and cities, the American healthcare market has transformed tax-exempt nonprofit hospitals into the largest profit centers and largest employers,” Brill said.
Connecticut’s Stamford Hospital “is actually a larger business than the city of Stamford itself,” and it saw a 12-percent profit margin last year, according to Brill. “Not bad for a nonprofit.”
Unchecked market power has potentially terrible impacts on the most vulnerable among us, Brill said, like the underinsured small business owner he profiled in "Bitter Pill," who was charged $13,000 for a first round of chemotherapy that costs hospitals a few thousand dollars to buy and pharmaceutical companies a few hundred dollars to manufacturer.
But it’s not so much the people as the system and its incentives that are the problem. “If you give good people unaccountable power,” Brill said, “they just get used to it and take advantage of it, and that’s what’s happened in the healthcare economy.”
That’s starting to change with accountable care and value-based reimbursement, and with patients having to spend more and more of their paychecks on premiums and out-of-pocket costs.
But Brill thinks the architects of the ACA and the Obama Administration largely punted on the problem of costs by avoiding a few key issues. “It’s clear to me that they looked to two paths, controlling costs or expanding coverage,” and they went with expanding coverage.
There’s still significant reform needed on drug pricing and medical malpractice, he noted. “We’re still going to be giving CT scans to anyone who walks into an ER and says the word ‘head,’” Brill said.
And if the individual mandate was controversial, “You could imagine big corporations and trial lawyers getting together to block tort reform.”
Transparency, though, could be an antidote to the inertia in policy making, Brill said, and not just in healthcare.
He made that point while testifying at the Senate Finance Committee earlier this year, recommending that during congressional hearings and debates C-SPAN show the campaign contributions to each lawmaker from the industries being affected by (or benefiting from) the legislation.
Richard Burr, a Republican senator from North Carolina, asked Brill: “Are you implying that any member of this body would make any decision on policy based on campaign contribution.”
“No,” Brill replied, “I’m just trying to be transparent.”