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The United States spends more than $3 trillion on health care every year. That comes out to about double the spending per person than other wealthy nations—yet with worse health outcomes in comparison.
Many Americans are feeling the squeeze of rising health care costs lately. A recent Kaiser/New York Times survey finds roughly one in five Americans struggle to pay their medical bills.
A new book explores how the skyrocketing costs of health care are bankrupting people—and highlights what patients can do to protect themselves.
Dr. Marty Makary is a surgeon and professor of health policy at Johns Hopkins University and author of “The Price We Pay: What Broke The American Health Care System and How To Fix It.”
Dr. Makary joined Illinois Public Media’s statewide talk show, “The 21st.”
He spoke with Side Effects Public Media's Christine Herman about how the “money games” played by hospitals, drug companies and insurance companies hurt patients, with a look toward solutions.
This interview has been lightly edited for length and clarity.
Why this book, why right now?
I began to see how our patients are getting hammered [by medical bills]. Physicians have an incredible history of a great public trust with the community. And that great public trust is now being threatened by the money games and even predatory billing practices.
I've got partners in my hospital who say, ‘Marty, why are you working on this stuff?’ And and I tell them, ‘Look, we can have the cure for cancer. But if half of the public does not trust us and welcome in for care, those cures are no good.’
We need to stand up for our patients [and stop] letting this broken system suck the money out of every business and household in America.
How is it possible that the U.S. spends more on health care than any other nation, and yet we have some of the worst health outcomes?
We have a system loaded with pricing failures, inappropriate care, and middlemen that takes a tremendous amount of money out of the system. It's estimated that a third of all of our health care spending is going to things that have nothing to do with health. We spend 48% of all federal spending in the United States on healthcare and its many hidden forms. So we need to talk about fiscal responsibility as much as we need to talk about great health care in the United States.
You write about price gouging, how hospitals can charge pretty much whatever they want and people have to pay it, without knowing prices up front. Is it at least true that if I go to a place where things cost more, it's better quality?
No, it's not true. We need to create healthcare literacy. If you look at the pricing failures in the market, they are basically gouging whatever the market will allow among some of the stakeholders. Some hospitals price fairly and bill fairly, but the predatory billing going on is a disgrace.
If airlines did not give you a price on a travel website (and instead billed) after the flight, there would be price gouging and we would conclude that a lot of the corporations getting very rich off of a market. If you go to a restaurant and asked to see the menu, they don't say who's your employer, and then you get a secret list of prices and it's, you know, twice as much as the next table and each table is contractually gagged not to share the prices.
We need open and efficient marketplaces. And right now the exciting thing in healthcare is, they are coming. There are a host of navigation tools like MDSave.com for patients and a bunch of platforms for businesses, who are proxy shoppers of healthcare; and it's cleaning up healthcare, it’s creating efficient markets. It's restoring medicine to its mission of, not just honest care, but honest billing.
Some hospitals argue they have such thin profit margins, and don’t get paid enough from Medicare and Medicaid, so they have to charge such high prices. Is that a fair argument?
Well, the data would show that a different story. American hospitals are on track for their largest profit margin in history. They're making a ton of money. They're building Zen gardens and new granite lobbies, and executive pay and administrators are increasing.
Look, we need good people in health care. But this nonprofit designation that a lot of hospitals have forces them to spend their money. They will buy new land, build new buildings, pay off debt, do whatever it takes to spend the profit. And then this argument that they're getting by on razor thin margins is just not supported by the data. Small hospitals and rural hospitals are closing left and right, as large hospitals are making record profits.
Your book offers a fairly simple explanation about why drugs are so expensive, or why sometimes we can see prices skyrocket. The analogy you offer involves Girl Scout cookies. Is that right?
So there is, behind the pharmacy counter when you pick up a medication, a middleman called a PBM or pharmacy benefit manager. Most countries don't have a PBM industry. The U.S. didn’t until a few decades ago. Because of a loophole and an anti-kickback statute, these middlemen accept kickbacks, which they call ‘rebates,’ from pharma companies. It's a “pay to play” fee to list their drugs on their, sort of, catalog that's available to employers and pharmacies.
PBMs sometimes share a portion of the ‘rebates’ with the patient. And so it looks like a shiny object and people think, ‘Oh, what a generous middleman. They're giving me a rebate.’
The reality is that it would be like a mom saying, ‘Hey, I'm going to sell Girl Scout cookies to your business. I will manage the process for you and you, the CEO, can pay me directly, I'll charge you. And I'll set the co-pays for individuals.’ And they bring in a bunch of girls to sell cookies and they charge high co-pays. And this mom doesn't really pay the girls fairly for selling the cookies and then gouges the employer because the employer cannot understand the different types of Girl Scout cookies out there.
What tips do you have for business and individuals to save money on health care costs?
I tell individuals to use the app, Good RX, or the website GoodRX.com; and there are other sites as well. And don't offer your insurance information before you pick up your medication. You'd be amazed how the price without insurance can be less sometimes because the PBMs create these artificial co-pays to sometimes steer patients to more expensive medications for the employer paying the cost of it.
You can do the same with medical services, looking at the what we call the ‘market price’ on websites like Healthcare Blue Book, and FairHealth.org, where you can see the going prices for a medical service.
Most businesses, when they want to provide healthcare for their employees, they buy two products, they buy health insurance off the shelf, and then they also buy a pharmacy plan. Well, they don't really understand the pharmacy plans. The health insurance companies say, ‘Hey, this is our preferred pharmacy plan. So just use our preferred company.’ And there's gouging on the pharmacy plans that employers cannot understand. There's a whole new network.
Some consultants and agents are coming in and they're saying, ‘Look, we're not going to take kickbacks on the back end, like most agents and brokers do that advise businesses on health care. We're going to be your independent fiduciary, and we're going to renegotiate that contract for you.’ Some of those individuals I've listed on RestoringMedicine.org and get into their stories in the book. They can help save a business a quarter million dollars or half a million dollars overnight by cutting through these money games on their employer’s contracts with pharmacy plans.
When you get a bill that’s unfair, you deserve and should demand an ability to appeal certain things on there. 80% of bills from hospitals have errors on the itemized bill. And if you're not getting through to the call center person, go to the CFO, have the hospital operator transfer you to the executive suite.
And talk to your doctor. A lot of people patients don't want to bother us doctors with their bills. But engage the doctors; we want to help. We want to be your internal advocate within the hospital. And if you're getting nowhere with anyone, go to the hospital board. The board members are supposed to be liaisons to the community. They are the public accountability of a local hospital’s leadership, and they should be engaged.
What would you say to them or say to someone who hears these things and decides they just can’t trust doctors?
We don't want to create hysteria. Most doctors do the right thing and always try to. But people need to be aware of what's out there. When I show these egregious bills of price gouging to doctors, saying ‘Hey, do you know your patient was sued in court over this bill for your service?’ they are outraged. They're livid. They want to fight for their patient, and they want to do the right thing. So don't be afraid to bother us doctors with your bills and point out some of the issues with bills. Doctors need to get more engaged and every time we do engage them, they are fierce fighters for patients.
Where are examples of clinics doing it differently, doing it better?
Well, there's a great network of clinics that's sprouting up all over the country called ‘relationship-based clinics.’ They're saying, ‘Look, billing is for the birds. Let's get rid of billing, and let's just take care of patients.’ They get paid in a lump sum format, either from an employer, or if you're a Medicare beneficiary, you don't have to pay a penny and Medicare will will agree to use this new relationship-based clinic in lieu of your other clinic.
Doctors in those clinics are doing amazing things. They're talking about food as medicine. They are treating back pain with ice and physical therapy instead of surgery and opioids routinely. And we're seeing this movement now to try to address the root causes of chronic illness.
So we're seeing a group of doctors rise up in these new clinics and say, ‘Let us practice medicine the way it was meant to be practiced.’
What do you feel like is missing from the conversation among lawmakers and politicians? Where should policymakers be focusing their efforts in terms of policy changes that could lead to real solutions for people?
While the politicians are talking about different ways to finance our broken healthcare system, we need to talk about how to fix our broken healthcare system, not just how to pay for it differently.
If we keep throwing good money after bad into this broken system, it's going to erode into every other national priority. I believe there's broad consensus around health care in the United States to restore medicine back to its mission, to remember that most hospitals were built to be a safe haven to care for anybody.
We already spend enough money to give everyone who lives in our borders gold-plated health care, we just have to cut the waste. I wrote this book to create healthcare literacy, so we can come together and really adopt common sense solutions, with or without the government.
This story was produced by Side Effects Public Media, a news collaborative covering public health.
Follow Christine on Twitter: @CTHerman
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