Healthcare costs: A moment of clarity

Steve Brill stands his ground on ABC

Bravo for Steve Brill! His appearance on ABC’s This Week was a rare example of a guest on a Sunday news program challenging the prevailing gestalt of the “expert” conversation stream these programs specialize in. It was refreshing to see Brill defend some of the themes in his Bitter Pill magnum opus on healthcare costs, which was recently published in Time (and which I will review shortly). Somehow I never thought of George Will and Steve Rattner as healthcare experts, and viewing this segment did not change that perception. Some highlights from the This Week interview:

On Medicare: Medicare is a big theme in Brill’s 36-pager, so the This Week conversation, which also included Kimberley Strassel, a member of The Wall Street Journal’s editorial board, focused a lot on it. Brill argued on air that Medicare was very efficient. (In fact, as CJR has reported, it controls costs better than the private sector does.)

He argued further that it could control them even better if the handcuffs came off and Medicare was allowed to negotiate the price of drugs, which it is forbidden to do. (That’s the last thing Big Pharma wants.) Medicare “buys healthcare really efficiently, which is a great irony because it’s supposed to be the big government bureaucracy,” Brill told viewers.

Is that true?, the host, George Stephanopoulos, wondered aloud. That was the signal for Rattner to jump in. He conceded that you could “get a fair amount” by negotiating drug prices. But he quickly added that he didn’t want “people to be confused”—negotiating drug prices will not be enough, he argued. His message: What is necessary are “fundamental reforms”—a prettied up phrase meaning large cuts in benefits—would be necessary. He passed along an argument from Medicare “reformers” that is floating around the Beltway—that today’s beneficiaries will get more in benefits than they paid in to the system during their working years. Eugene Steurle, a senior fellow at the Urban Institute, has advanced this value-for-dollar meme, a way of thinking that has often been used as a rationale for the idea of cutting Social Security benefits.

Stephanopoulos didn’t push for more explanation of the value-for-dollar thesis or offer any himself. If he had, viewers might have learned the reason seniors will get so much more in benefits is because of the growth in health spending. (I called Paul Van de Water, a Medicare expert at the Center for Budget and Policy Priorities, who said, “That’s a fact that we have to deal with, but it doesn’t necessarily justify cutting benefits.” And the incredible growth and cost escalation, which results in American healthcare providers being paid many times more than their counterparts in other countries, is the point of Brill’s Time piece.)

Brill pushed back, making the case for lowering—not raising—the age for Medicare eligibility, an idea long since dumped in the dust bin even by its liberal supporters. Brill’s reasoning: “You would put more people in the bucket of much more efficient healthcare,” he said. The president’s plan, Brill went on, will actually raise costs, because people in their early 60s who can’t afford health insurance premiums but must get them now will have to be subsidized by taxpayers—a less efficient mechanism than Medicare.

On making patients healthcare shoppers: Stephanopoulos turned to Will. “George, that becomes an argument for a single-payer system.” Will quickly argued against single-payer. He essentially argued that people are not paying enough for their healthcare, and that somebody else is paying the rest of their bills; that patients, aka consumers, don’t shop around for the lowest priced services the way they shop for cars and toothpaste. (That assumes, of course, that healthcare is a competitive marketplace, a notion that Brill and some health experts have debunked over the years, as CJR has discussed.)

Brill shot back, telling Will: “You’re completely wrong. We have tried that experiment with 30 to 50 million Americans who don’t have health insurance and have to pay 100 percent right now. They have no choice. They are powerless consumers.” When an ER doctor says you need a CT scan, he pointed out, you don’t sit around and wonder if you really need it. Or if this is an efficient emergency room.

Strassel threw in her two cents: A large group of Americans get their healthcare from employers, she said, and they have no “skin-in-the game.” In other words, they need to pay more for their care because if they do, they won’t use as much, and the price will drop. She noted there’s no price transparency, no ability to look around, the way we do when “we spend hours deciding which toaster we’re going to buy,” Strassel said.

Brill countered: “There’s a difference between buying a toaster and buying a CT scan.”

On Medicare again: Rattner returned to Medicare, arguing that when people go on Medicare, they really don’t see price, so “they tend to consume more [healthcare services] than they otherwise would.”

Some questioning from Stephanopoulos might have helped make this part of the conversation more factual. That Medicare beneficiaries overuse healthcare is a common rationale for cutting the program, as well as the amount of coverage they currently get from a Medigap policy. Not everyone agrees. Late last year, the National Association of Insurance Commissioners told Kathleen Sebelius, the Health and Human Services Secretary, that after analyzing studies in peer-reviewed journals the association found no evidence that seniors were using more healthcare services when they were fully reimbursed for them.

Rattner shifted to end-of-life costs —“really tough, moral questions,” he said. Strassel brought up rationing, a recurrent subject in healthcare’s verbal wars. (Never mind that it was somewhat off topic.) “Are you going to let consumers make those choices about end-of-life decisions, or are you going to have Medicare” tell you “about what procedures you can have, and how much they’ll pay, and government make those choices?” she asked.

Brill took the position of the little guy, saying that in the real world most people don’t have the money to make the “wise” healthcare decisions ABC’s other roundtable guests—presumably well paid for their work—can make.

Stephanopoulos allowed Will the last word, and he seemed to argue for high deductible health insurance: “No one expects automobile insurance to cover your windshield wipers. Insurance is for large unpredictable events.” In other words, the less coverage the better. Never mind how much you have to pay out of pocket. As Brill reports in his Time story, those out of pocket payments easily reach a sum that is out of reach for most families. (The Rand corporation, in a 2011 study, came to the conclusion that people with high deductibles use fewer healthcare services, which in turn raises the question of whether such people are using their money efficiently— or merely shortchanging their health.)

Stephanopoulos could have done a better job steering the conversation, and his producers might have done more homework. Still, Brill’s bright performance managed to make some important points that large segments of the public have not heard before on a national news outlet. He managed to pierce the fog of out-of-touch Beltway commentary we hear much too often.

The Second Opinion, CJR’s healthcare desk, is part of our United States Project on the coverage of politics and policy. Follow @USProjectCJR for more posts from this author and the rest of the United States Project team. And follow Trudy Lieberman @Trudy_Lieberman.

Related stories:

Exchange Watch: growing pains in Connecticut

The Big Boys: An affordability puzzle

Medicare Uncovered: The pain from ‘skin in the game’

Has America ever needed a media watchdog more than now? Help us by joining CJR today.

Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR's healthcare desk, which is part of our United States Project on the coverage of politics and policy. She also blogs for Health News Review. Follow her on Twitter @Trudy_Lieberman. Tags: , , , ,