The Affordable Care Act (ACA) does little to answer questions like: “Why are we paying so much? Why do we spend nearly 20% of our gross domestic product on health care? Why do we spend more than the next 10 countries combined and not get better results than them.
The February 20th, 2013 issue of Time magazine was entirely devoted to one story - Bitter Pill: Why Medical Bills are Killing Us by Steve Brill. The 24,000 word article “follows the money” to reveal how hospitals, the drug companies and some doctors game the system for huge profits. Download article -> Biter Pill
One answer is that health care is a seller’s market and we’re all buyers - buyers with little knowledge and no ability to negotiate. It’s not a free market. Hospitals and providers charge prices that bear little relationship to costs. They charge what they want to and we have to pay.
We like our villains, our scape goats, someone or something to blame it all on. Usually we pick on the insurance companies, easy targets, but they are buyers like we are, albeit with some negotiating position. If Brill’s piece has a villain, it’s something I never heard of - the Chargemaster, a mysterious internal price list for all products and services that every hospital in the US keeps. Charge master is responsible for indecipherable hospital bills with highly inflated prices, like an Alcohol Prep Pad for $7 each. This is the little square of cotton used to apply alcohol before an injection. A box of 200 can be purchased online for $1.91.
If there is a hero, it’s Medicare. It turns out that Medicare does more than Obamcare to bend the medical cost curve. That’s because the government program, by law, can only pay hospitals and providers the approximate cost of care. Hospitals say they lose money on Medicare, but they don’t.
The ACA does contribute to lower healthcare costs over the longer term by providing more transparency and competition on the payor side. On the provider side, the ACA supports Affordable Care Organizations (ACOs), new models that integrate hospital and physician services to achieve greater accountability and coordination of health care. California’s health care policy wonks are working to track the development of integrated approaches to the delivery of care and financing to determine how ACOs would work in the public sector (community clinics and public hospitals) as well as the private health care marketplace.