If there is one problem that symbolizes the ongoing national healthcare emergency, it is the rampant price gouging that continues to push too many Americans out of access to care and into financial ruin. Not only is the problem not solved by the Affordable Care Act, but it is a likely reason many will continue to demand more effective reform, such as expanding and extending Medicare to cover everyone. As Time recently reported, predatory pricing happens almost everywhere in healthcare—particularly by insurance companies, outpatient clinics, drug companies and medical suppliers.
U.S. hospitals are among the biggest abusers, as illuminated in recent data released by Medicare on hospital charges for common procedures, as well as brand new findings by the Institute for Health and Socio-Economic Policy, the research arm of National Nurses United. Here are some sobering numbers: U.S. hospitals charge, on average, $331 dollars for every $100 of their total costs. While hospital charges over costs have been climbing steadily over the past 15 years, charges took their biggest leap ever in 2011—a 22 percent rise. From 2009 to 2011 (the most recent year for which the data is available), hospital charges lunged upward by 16 percent, while hospital costs only increased by 2 percent. U.S. hospital profits, pushed upward by the high charges, hit a record $53.2 billion, while nurses see more and more hospitals cutting patient services and limiting access to care. One case study is California, where hospitals soared past the national average with $451 for every $100 of costs. While predatory pricing is an issue for the medical field as a whole, it is especially prevalent at hospitals. It should be no shock that the lowest charges are by government-run hospitals that operate in public, not in secret, and have far more accountability and transparency. Hospitals ought to act as responsible providers of needed medical care, not loan sharks. Piling up profits by jacking up prices is at sharp odds with the glossy feel-good advertisements from hospitals we see on our TV screens, newspaper pullouts, sponsorship of sports teams, and mass transit placards. Hospital lobbyists have tried for years to convince us that predatory pricing policies don’t matter. These are just “list” prices that few people actually pay, they claim, and it is a random phenomenon that two hospitals in the same city, or even on the same block, might have widely varying prices for similar patient services. But the grotesque reality tells a different story. We’re not the only ones who think so. As Glenn Melnick, a USC health economist, told a reporter, “If [hospital prices are] meaningless, how come hospitals spend all this money on consultants to raise them? Why haven’t they stayed flat for the past 15 years? Why do hospitals keep raising them, if they have no impact?” the truth is that insurance companies inevitably respond by ratcheting up what they charge employers and individuals. In California, for example, since 2002, premiums have risen 170 percent—more than 5 times the inflation rate, as noted in a California Healthcare Foundation survey. An alarming, if predictable, ripple effect follows. As the CHF survey noted, in the past decade, the percentage of California employers providing health coverage dropped from 71 to 60 percent; 21 percent said they’d increased workers’ co-insurance premiums, while 17 percent said they had reduced benefits or increased other out of pocket costs. More than one-fourth of workers in small firms have deductibles of $1,000 or more on their health plan. Then there’s the uninsured who do not have the collective clout to bargain down the list price. Hospitals say they write off a lot of those bills, but clearly not all of them. How many distressing stories have we all heard about patients facing $50,000 or $100,000 medical bills they can’t begin to pay, while being hounded for payment by hospitals or collection agencies? Patients and families, even those paying for insurance, have a stark choice. Use your health coverage and get socked with huge out of pocket costs or forgo needed care. Medical bills account for more than half of all personal bankruptcies in the United States. Many of those now paying for health insurance—either through their employer or as individuals—choose not to use it, because of the high co-insurance, deductibles, co-pays, and all the additional fees that get thrown in by the hospitals (such as professional fees, facility fees, pathology fees and anesthesia fees). A 2011 Commonwealth Fund study found that as many 42 percent of Americans skipping doctors’ visits, recommended care or not filling prescriptions due to cost. Consequently, people end up in emergency rooms for medical problems that should have been resolved earlier at far less cost and pain. It also explains why, according to two recent reports, the United States has the lowest life expectancies and the highest first day infant death rate among major industrial countries. It’s long past time to fix this nightmare, and sadly the ACA won’t do it. At a minimum we need to crack down on price gouging by the health industry, with real penalties for lack of compliance. But a bigger vision is needed. Replace our profit focused health care system with one based on patient need and quality care, as all those other countries with national or single payer systems that surpass us in access, quality and cost, have figured out.