The Price We Pay - What Broke American Health Care and How To Fix It

A recent book titled “The Price We Pay-What Broke American Health Care and How To Fix It” by Marty Makary, MD, MPH, is a highly critical analysis of the U.S. health care system. Several features of this book make it unique.

First it is written by a practicing gastrointestinal surgeon who performs long tedious operations such as pancreatic cancer surgery and islet cell transplantation. The author is the youngest person ever to hold an endowed professorship at Johns Hopkins Medical Center. He also holds a Masters Degree in Public Health (MPH) and has a team of doctors and other professionals help him conduct his research on health care.

Secondly, the author focuses on the exorbitant charges of hospitals and the financial toll they take on patients. He and his team are not just armchair analysts poring over statistics. They go out into the field interviewing administrators, physicians, and patients, and just about anyone associated with health care including business owners who are forced to pay high insurance premiums for their employees.

Thirdly, Makary does not think “Medicare For All” is the solution to the problem. He believes transparency will solve the health care cost problem by allowing the free market to work. Despite what hospital and insurance company executives say he does not believe we have a competitive free market in health care today.

Welcome to the Game

“Welcome to the Game” is the title of one of the book’s chapters and aptly describes what is transpiring between hospitals and insurance companies in America today. Makary writes hospital prices are notoriously inflated. Different hospitals charge different prices for the same operation which do not relate to quality. Makary notes that researchers from the University of Iowa called 101 U.S. hospitals on prices for the same type of heart bypass operation. Only 53 provided the price which varied from $44,000 to $448,000. Makary asks whether the hospital that charged ten times more was the hospital with the best outcomes. The answer is no. Makary states “heart outcomes are publicly available. Research shows no correlation between surgery prices and outcome.” He states the same is true of joint replacement surgery and other major operative procedures.

At a meeting attended by Makary and the major stakeholders in health care which included representatives of hospitals, insurance companies and payers all acknowledged that they know how the game is played. “Hospital officials confessed they inflate bills each year in order to generate more revenue since the insurance companies pay only part of the sticker prices. Insurers confessed they demand bigger and bigger discounts in their contracts with hospitals in order to keep up. Both admitted that they pass on higher bills to the public in the form of higher insurance premiums.”

So a reasonable question is why are hospitals and insurance companies able to continue these games which are essentially scams that extort health care consumers. A hospital employee whom Makary confronted on behalf of a patient who received an exorbitant hospital bill provides the answer:

“The law allows us to charge whatever we want. If we want to charge a million dollars she has to pay it.”

This is not free market competition. It is monopoly pure and simple. How did this state of affairs come about? The answer is revealed in Elisabeth Rosenthal’s book “An American Sickness: How Health Care Became Big Business and How You Can Take It Back.” I reviewed this book in Missouri Medicine, March/April 2018. The business consulting firm Deloitte and Touche travelled around the country and told members of hospital boards to stop their tradition of billing based upon the cost of an item or service. Instead Deloitte told the hospitals “you can increase the amount you bring in just by manipulating how you bill.” This is called strategic pricing.

Free market competition simply does not exist in health care. Imagine what would happen if a grocery charged four times what another grocery charged for a carton of milk or a loaf of bread. It would shortly be out of business.

Hospitals and insurance companies game the system by colluding. Insurance company administrative costs under Obama Care and other private insurance run close to 18%. It follows that the higher the hospital bill is the more the insurance company profits. There is no incentive to voluntarily lower overall costs to the health care consumer by either the insurance companies or the hospitals.

Throughout the book Makary describes the harmful effects that high prices charged by hospitals have on patients. He cites a study that shows “Half of patients with metastatic (Stage 4) breast cancer in the United States report being pursued by a collection agency for medical bills.” Makary confesses that “as a cancer surgeon, hearing the details made me sick to my stomach. Is this what the noble profession of cancer care has become? Is this how our society now treats breast cancer patients at the end of their life?” Not only are these patients dying from breast cancer they are also facing financial ruin.

Many hospital leaders say that they do not sue patients and garnish their wages. Yet, when Makary checks out the facts he finds that many of these same hospitals do sue patients including his own hospital, Johns Hopkins.

Makary devotes an entire chapter to reporting on the billing practices of the only hospital in Carlsbad New Mexico a town with a population of about 25,000. He and his team found that about one fifth of the town’s population has been sued by Carlsbad Medical Center. Many have had their wages garnished. Carlsbad Medical Center is part of a for profit hospital chain.

Makary then went to the courthouse in Carlsbad where he discovered that about 95% of all civil cases have been filed by Carlsbad Medical Center going after patients. He is “shocked” when the judge handling these cases told him that “My husband and I have both been sued by the hospital…”on separate occasions for different bills.” Makary then spoke with the head surgeon at the hospital who is well regarded and serves on the hospital’s board. Like most doctors he had no knowledge of the hospital’s billing practices.

In addition to reading his book I heard Dr. Makary give two lectures. He opposes “Medicare For All” as the solution to the cost crisis in health care. He strongly believes that transparency and true free market competition not the game playing we have today can bring prices down. He is vague on how this goal can be achieved. As noted he has met with various stakeholders in the business communities as well as the hospital and insurance industries. They are all well aware of the games being played by hospitals and insurance companies. The big question is can they do anything about it.

Makary spends several pages in his book making the plea that medical authors avoid writing in medical jargon and write in plain English, even in scientific journals. He certainly follows his own recommendations as his book is written in simple plain English for the average citizen as well as for the medical professional.

Regardless of what one feels about the solution to the high cost of America’s health care system Makary’s book presents a unique perspective on the games that hospitals and insurance companies play in increasing costs. “The Price We Pay” is one of the best books ever written on America’s dysfunctional health care system.