• Does Brill really make a case against single payer?

    David Frum thinks so:

    Unfortunately Brill’s piece is also inspiring more comment that the only solution is to extend Medicare to all: single-payer.

    Yet Brill himself along the way shows why this would be a bad idea. More than 3 million bills arrive at Medicare every day. How are reimbursement rates determined?

    A panel of doctors set up by the American Medical Association reviews the codes annually and recommends updates to Medicare. The process can get messy as the doctors fight over which procedures in which specialties take more time and expertise or are worth relatively more. Medicare typically accepts most of the panel’s recommendation.

    This method can work within the context of a private market. A price level exists “out there.” Medicare and its panel can argue over how much to discount. But if there were no private market “out there,” Medicare would stumble into the plight of the Soviet planning authorities. Any price would just be a guess, producing either windfalls or shortages. US Medicare works better than Britain’s NHS or Canadian Medicare precisely because it is informed by private price-setting.

    I’m not sure Frum is correct here. If he were, then single-payer systems would be failing all over the place, and France seems to be doing just fine. Canada is, too, but I wanted to throw you off there.

    What I believe Frum is alluding to is that if we had a single-payer system, the pressure from government would be to push reimbursement so low that the system would starve, and begin to suck. First of all, I’d argue that quality ain’t so hot already. But I think the more important point is that we – as a nation – seem unwilling to squeeze the health care system at all. Medicare hasn’t said “no” enough. We just don’t do that.

    Frum then goes on to cite his and Brill’s ideas about reform:

    1) Tighten antitrust laws for hospital companies so none can become regionally dominant;

    2) Tax hospital profits and non-doctor hospital salaries at confiscatory rates;

    3) Outlaw the charge master – the hospitals’ outrageous list prices;

    4) Control prescription drug prices;

    5) Medical malpractice reform.

    Point 3 however seems weird and counter-productive. Wouldn’t the first steps to reform be to a) require every hospital to publish its charge master price list and b) make conveniently available Medicare’s discounted price?

    A patient presented with a big bill could then, at a minimum, readily compute the Medicare price and have a better basis for complaint and negotiation. Some patients would shop beforehand. Ideally, brighter publicity would exert downward pressure on prices in general.

    I already touched on 5. Frum doesn’t like 3. He wants to go more consumer directed. I also already touched on that, too.

    This argument baffles me. Brill’s kajillion word opus focused almost entirely on how the prices are the problem. It’s the prices. That’s not pro- or anti- Medicare for all. If you believe that single payer would force more fair pricing, you’ll love it. If you believe Medicare is incapable of forcing that you won’t.

    But the evidence from Brill’s piece is that individuals are HORRIBLE at forcing more fair pricing. So why would we want to go more that way?

    And why can no one even mention the words “all-payer”?

    @aaronecarroll

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    • I’m sorry but isn’t Frum getting it backwards? I thought that when hospitals and insurers met to renew contracts and negotiate rates, they use Medicare reimbursements as the benchmark, off of which they build up the outrageous chargemasters, and then “discount” from those partway back down toward Medicare prices. If Medicare just looked at the commercial rates and marked down, they’d be vulnerable to the exact same infinite price raises that hospitals impose on insurers.

      Also, I know you’ve mentioned it before but it’s worth giving some credit to the FTC which is finally winning some hospital merger battles. ProMedica’s acquisition of St. Luke’s was kind of small fry when they blocked it, (http://www.toledoblade.com/Courts/2012/07/26/ProMedica-FTC-gear-up-for-next-legal-battle.html) but I think it drew a line in the sand, and the logic of it seemed to suggest no more 4-to-3 mergers would be getting through. Basically after getting licked for years, the FTC set up an initiative to study all the mergers the courts wouldn’t let them stop, and see how prices evolved post-merger. Surprise: they went up faster than elsewhere. Now those studies have been published, and are top-notch evidence in the FTC’s fight to block further hospital consolidation. Check out their review here [PDF]: http://www.ftc.gov/be/otherdocuments/econatftc/Farrelletal_RIO2009.pdf.

      Still, until we see some real countervailing market power on the other side of the table (e.g. single payer or public option), the hospitals will be holding most of the cards, regardless of whether there’s 3 or 4 systems in a city.

    • To me, the first step is to requite hospitals to charge one price for everyone. One.

      Not one for Medicare and one for everyone else and hope that everyone else can bargain their price down to something reasonable.

      The same price for everyone. Really, it’s not a crazy concept.

    • Garrison Keillor once described a liberal as a conservative who has been through treatment.

      Well, in health care a liberal is a conservative who has been underinsured for a hospital stay.

      Frum is a smart man, but he has this blithe idea about patients being better armed to negotiate with hospitals.

      Yes, it is true even now that a recovering patient can get a bill for $100,000 and then negotiate down to $20,000.

      Is this how we want recovering sick people to spend their time?

      Should sick people have to hire an attorney or a billing adovcate just to contest hospital bills?

      Americans in general do not like haggling over prices. How we have gotten trapped in a rug merchant bazaar environment over hospitals bills is a long and ugly story.

      We do not have time to wait until every David Frum is forced to confront a hospital bill collector.

      Obama has certainly showed zero inclination to confront hospitals.

      In my own writing, I advocate that Medicare Part A become the payor of last resort for hospital charges, at all ages.

      Bob Hertz, The Health Care Crusade

    • I got routine blood work the same month as my wife got the same. The hospital my wife went to charged $1243. the lab I went to $240. for the same work. I am now myself trying to get the hospital to lower the bill, that was highway robbery. They are giving me a hard time and don’t want to do it, I am spending a lot of time on the phone.

      The problem is that I called before hand and no one, not even the lab I want to, could tell me what the price was before I went in. You have to wait to get the bill to find out what they are going to charge you.

      Pretty nifty scam, eh? In California where I live if I go to get some work on my car the law requires the mechanic to give me an estimate in advance.

      I think the whole medical industry has turned into a giant scam operation.

    • Thanks Michael.

      I assume you did not have health insurance with a major carrier like Aetna or Blue Cross.

      American hospitals and insurers are running a protection racket.

      If you do not buy an expensive insurance policy, a hospital billing department can have its way with you.

      Not that much different from two guys named Guido telling a store owner that if he does pay up every week, his building might catch fire.

      America needs national fee schedules. Ideally these would be set in negotiation with providers, but the behavior of some providers is so repulsive that I would be ready to just impose the fee schedules unilaterally.

      • Bob, we have Assurant which we got through State Farm, and they just put us on Aetna network. There are two or three different networks they put us on, we can look on line to see if a particular provider is carried but sometimes even if it says on line they carry them, they don’t. It is all too much for me, I spend hours on the phone trying to sort this all out–I am actually getting to know some of the billing people at the hospital. It’s ridiculous.

        We are spending almost $2000 a month for insurance with a $10,000 deductible, $35 thousand right out of the chute a year with no particular major health problems. Both the lab bills were for annual physicals.

        My wife and I have our own business with no employees and can’t get group rates. Good thing we are doing well, I don’t know how people making less than $100,000 a year with businesses even make it.

        Anyway, thanks for writing, I am so angry I am ready to go on a crusade. I guess it is pick a number and get in line to crusade against our medical establisment.

        It’s funny, I tend toward a free market philosophy and my health care problems are turning me into a socialist.

    • Frum doesn’t make any sense here really. There is NOT a private market, but a oligopsony that is messy and ineffective (multiple sellers to a few buyers). What we need is a MONOPSONY aka Single Payer.