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March 21, 2013

Healthcare exposé shocking, sick

Cooperstown Crier

---- — We always find it interesting to ponder all the different ways in which various issues are brought to our attention.

 Many, such as the village’s tinkering with a seeming plethora of laws or the county’s dilemma concerning the finances of Otsego Manor, come to us as a result of reading our local papers. Others, such as the Redskins issue, often arrive via the telephone. Some issues, such as the 2013-14 school budget, come to our attention because of meeting we choose to attend.

Then there are always those issues that pop up when we least expect them. A case in point would be the suggestion that we read an article on the cost of health care which appeared in Time magazine in February.

We recently held a meeting of the Literary Discussion Group at our house to discuss the book, “Mountains Beyond Mountains,” by Tracy Kidder. It is, we think, a fascinating story of one man’s battle against disease worldwide. But interestingly enough, it seemed that the conversation about the book continually slipped into a conversation about local health care as experienced by those in attendance. This in turn lead to comments about the cost of health care, which finally ended with the suggestion that we should all read the article.

So we did. We found it stunning.

Written by Steven Brill, the article, “Bitter Pill: Why Medical Bills Are Killing Us,” explains, in what we found to be rather grim detail, why the cost of medicine seems so very, very high.

According to the article “When you look behind the bills that ... patients receive, you see nothing rational — no rhyme or reason — about the costs they faced in a marketplace they enter through no choice of their own. The only constant is the sticker shock for the patients who are asked to pay.”

And what we learned from the article is that hospitals have what is called “the charge master,” which is the hospital’s price list for all its services. And according to Brill, “charge master assigns prices to everything ... It would seem to be an important document.” Yet, when Mr. Brill asked about it, hospital officials seemed to not want to discuss it, even arguing that it was irrelevant.

He concluded: “I soon found that they have good reason to hope that outsiders pay no attention to the charge master or the process that produces it. For there seems to be no process, no rationale, behind the core document that is the basis for hundreds of billions of dollars in health care bills.”

And from what we read, this does seem to be true. Evidently most of the charges on such a list far exceed the actual costs incurred by the hospitals. We understand Medicare, of course, pays but a fraction of what is billed. And other insurance companies also see a reduction, although not as steep as Medicare’s, in what they pay versus what is billed. In fact, the only people who are expected to pay the seemingly outrageous charges as determined by the charge master, are those people without insurance who are not eligible for any sort of assistance with their medical bills. As Brill says: “If you are confused by the notion that those least able to pay are the ones singled out to pay the highest rates, welcome to the American medical marketplace.”

We, of course, having just journeyed through the health care system, were fascinated by the article. It also helped us understand, when we got an accounting of benefits from our Medicare supplemental insurance, why it appeared to us that we were billed for our room and board on Dec. 27 the seemingly amazing amount of $3,020.

Of course, while it appears the charge is for Dec. 27, we do suppose it is actually the room and board charge for our entire stay. But either way, we must admit that we have absolutely no idea at this point what was actually paid versus what was billed as we have received no accounting of benefits paid by Medicare. However, after reading this article on health care costs, we are almost willing to bet the entire $3,020 was not paid. In fact, according to the article, hospitals seem to be claiming that they lose about 10 percent on every Medicare patient they treat.

And the difference between what is billed and what is paid by Medicare was noted many times in the article. One of the examples pointed out that for a stress test using radioactive dye a self-pay patient was charged $7,997.54. Had this patient been eligible for Medicare, the hospital would have been paid $554 for the test. To us, it seems almost unbelievable that a self-pay patient would be asked to pay almost 15 times the amount a Medicare patient would pay.

And yet in spite of the reduced payments made to hospitals by both Medicare and private insurance companies, the article notes that when it comes to operating profit, non-profit hospitals across the nation to average about an 11.7 percent profit, which as the article points out is legal in that, “under Internal Revenue Service rules, nonprofits are not prohibited from taking in more money than they spend.”

After reading the entire article it is easy to see why Mr. Brill writes: “That so few consumers seem to be aware of the charge master demonstrates how well the health care industry has steered the debate from why bills are so high to who should pay them.” He then concludes the article with:

“We’ve created a secure, prosperous island in an economy that is suffering under the weight of the riches those on the island extract.

“And we’ve allowed those on the island and their lobbyists and allies to control the debate, diverting us from what Gerard Anderson, a health care economist at the Johns Hopkins Bloomberg School of Public Health, says is the obvious and only issue: ‘All the prices are too damn high.’”

The entire article may be read at:

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