Handcuffing Medicare: Perhaps the biggest public service Brill has done is give credit where credit is due—to Medicare, an efficient social insurance program that is the only thing that keeps the hospitals and doctors in check and deserves far better press than it has gotten. Brill’s comprehensive reporting on Medicare could be a game changer, switching the conversation from cutting Medicare and cost-shifting (to beneficiaries), to helping Medicare do its job even better.
By carefully parsing so many hospital bills from non-Medicare patients and comparing them to how much less Medicare would have paid, Brill shows what happens when the government gets involved in the price of care. The price goes down. One hospital charged a patient $333 for a particular X-Ray. Medicare pays $23.83.
The government’s involvement is what healthcare sellers fear, and that opposition has prevented a more rational discussion of alternatives to a bloated system.
Doctors and hospitals may grumble about Medicare’s lower reimbursement, but as Brill notes, most still treat Medicare patients. “Hospitals don’t lose money when they treat Medicare patients,” says Jonathan Blum, Medicare’s deputy administrator, whom Brill interviewed for his piece. (Take a look at all the billboard and TV advertising—often focused on the elderly—that hospitals spend a fortune on, partly to attract Medicare patients.)
Another major theme of Brill’s piece is that Medicare could do way more to control medical costs if only Congress would let them is a point he made on ABC’s This Week in late February, where he talked about the legal prohibition on negotiating prices with pharmaceutical companies. In many other countries drug prices are regulated; America could save some $94 billion a year if we paid what other countries pay for the same products, he reported. (It’s worth noting too that drugs in England are free to people age 60 and older. In the US, thousands of seniors pay hundreds of dollars each month, even with Medicare’s drug benefit, because the prices are so high, and because insurers, which provide the drug coverage, make them pay huge amounts of coinsurance and copays—cost-shifting arrangements that Congress allows.)
Yet drug makers have won over public opinion by arguing that their high profit margins in the US are justified because they subsidize R & D needed for trailblazing drugs. Brill writes:
Apart from the question of whether a country with a health-care spending crisis should subsidize the rest of the developed world—not to mention the question of who signed Americans up for that mission—there’s the fact that the companies’ math doesn’t add up.
Using the case of Flebogamma, a sterile solution to boost the immune system, and its maker, Grifols, he lays bare some of that fuzzy math.
Congress has placed other kinds of handcuffs on Medicare, too. Brill’s discussion of how the program is prohibited from considering whether drugs and medical devices are both cost effective and clinically effective in making payment decisions is illuminating, and one the press almost completely missed during the debate on Obamacare and afterward. The law did set up a Patient-Centered Outcomes Research Institute to do comparative effectiveness research.
But so what? “Medicare could see the research and say, Ah, this drug works better and costs the same, or is even cheaper,” says John Gunn, the chief operating officer at Sloan-Kettering. “But they are not allowed to do anything about it.” (In England and in other countries, government or quasi-government agencies use both cost and clinical effectiveness in recommending which drugs should be used. Maybe that helps explain why seniors in the UK get free medications. The National Health Service usually doesn’t pay for stuff that doesn’t work, and if there’s a cheaper and just-as-effective alternative, that’s what docs prescribe.)
The influence of drug and device makers: Brill makes clear that these two very profitable business sectors have a stranglehold on Congress. From the prohibition on Medicare to use competitive bidding for what’s called durable medical equipment—like wheelchairs, syringes for diabetics, hospital beds, and canes—to the high price of cancer drugs, Brill demonstrates how they manage to keep Congress on their side, to the detriment of the public purse.
Medicare spends about $15 billion a year on medical equipment, and it has been conducting a pilot program to see if those costs can come down. This pilot, which embraces competitive bidding, has resulted in a 40 percent savings. However, it covers only about three percent of the medical equipment that beneficiaries use. If the program went nationwide, Brill estimates Medicare could save some $6 billion annually.