7 Eye-Popping Details From The TIME Cover Story On Health Care Costs

Ellis Island Hospital

Photo: National Trust for Historic Preservation

In a new Time Magazine cover story, reporter Steven Brill writes a rather lengthy piece about the huge problem with health care costs in the United States.The piece, titled “Bitter Pill: Why Medical Bills Are Killing Us,” goes in-depth on the big problems facing hospitals, insurance companies, and the pharmaceutical industry — with patients often bearing the burden.

It’s a $2.6 trillion problem, according to 2010 data from The Kaiser Family Foundation — a health expenditure increase 10-times the $256 billion spent in 1980.

There is plenty of blame to go around: Rising prescription drug costs, administrative costs, and changes in the nature of illness. And unlike other industries, new medical technologies have pushed costs up rather than down.

Patient bills can be marked up by as much as 400 per cent.

In the opening page, Brill introduces readers to Sean Recchi, who is diagnosed with non-Hodgkins lymphoma. Although Recchi and his wife Stephanie had insurance, it was not comprehensive, forcing them to pay the hospital almost $50,000 before Recchi was ever even seen by a doctor.

But the real problem came when the Recchis found out what the total cost for treatment would be: $83,900.

Their bill is laden with medical terminology and incomprehensible numerical codes, but some things stick out. A single pill of 325 mg acetaminophen -- a generic version of Tylenol -- costs $1.50. You can buy 100 of those pills on Amazon.com for $1.49.

For a simple X-ray, Recchi was billed $283; Medicare would only pay just over $20 for the same service. A cancer wonder drug called Rituxan cost $13,702, a 400 per cent markup from the average price paid by all hospitals for this dose.

Source: Time

Routine services cost thousands of dollars.

Then there's 'Janice S.,' a 64-year-old woman in Stamford, Conn. who started feeling chest pains. One year shy of coverage under Medicare eligibility, she rode an ambulance four miles to the emergency room.

It turned out to be only indigestion, but the good news was tempered with a very large bill:

  • $995 for the ambulance ride.
  • $3,000 in doctors' fees.
  • $17,000 for the hospital.

That worked out to a total just under $21,000, which included charges for Troponin -- a drug that measures levels of certain proteins in the blood -- at a price of $199.50 each. If she could have held off having indigestion bad enough to cause chest pains for a year and had coverage, Medicare would have paid only $13.94 for the drug.

Source: Time

'Non-profit' hospitals are often a city's most profitable business.

Even hospitals don't know why they are charging such high prices.

Doctors have a big financial incentive to rack up more charges.

Medicare makes the maths of medical bills impossible to grasp.

The health care market is not much of a free market, due in large part to Medicare. Some seriously deep discounting occurs for patients covered by the federal health program:

A $121,414 Stanford Hospital bill for a 90-year-old California woman who fell and broke her wrist became $16,949. A $51,445 bill for the three days an ailing 91-year-old spent getting tests and being sedated in the hospital before dying of old age became $19,242.

But it doesn't come without a price. Those discounts for some knock everything else out of whack, with patients becoming powerless buyers in a seller's market.

Source: Time

And Obamacare doesn't even get to the core of the health care problem.

Brill concludes that President Barack Obama's health care reform legislation was a band-aid that didn't really address the real problems inherent in the health care system: lopsided pricing and outsized profits in a market that doesn't work.

He writes:

There is little in Obamacare that addresses that core issue or jeopardizes the paydays of those thriving in that marketplace. In fact, by bringing so many new customers into that market by mandating that they get health insurance and then providing taxpayer support to pay their insurance premiums, Obamacare enriches them. That, of course, is why the bill was able to get through Congress.

Source: Time

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