Steven Brill, Author of “Bitter Pill: Why Health Care Costs Are Killing Us”

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Mark Masselli : This is Conversations on Health Care , I am Mark Masselli .

Margaret Flinter : And I am Margaret Flinter

Mark Masselli : Well, Margaret there continues to be fallout from the recent budget
announcements out of a White House calling for cuts to some social programs as well
as increases in spending to get the federal insurance exchanges off the ground.

Margaret Flinter : While the Obama administration is taking some heat for requesting
more money than originally was planned to get th ose health insurance exchanges up
and running and money that’s needed primarily because of the large number of states
who chose not to set up their own exchanges. At least 33 states will now have to be
covered entirely under the federal exchange once agai n interest juxtaposition of the
people that would fight for state’s rights handing it over to the federal government to run.

Mark Masselli : And even Democratic Senator Tom Harkin a proponent of the Affordable
Care Act had some harsh words for the White H ouse budget plan, he doesn’t agree with
the provisions that would take money from the prevention in public health fund to fund
the program that will help the uninsured sign up for new insurance markets. He says it’s
a classic case of robbing Peter to pay Paul.

Margaret Flinter : Well, it’s real dilemma, Mark but the law was set up with funding
provision for the state to handle that transition for the newly insured but with so many
states opting out it’s the federal government’s job now and the way the law was written
there weren’t additional financial provisions allocated for assisting customers with their
federal exchange, it would simply assumed that most of the states would do their own.
So just kind of a case of unforeseen consequence.

Mark Masselli : And yet advocacy groups like families, USA says well, it may not be
perfect and there will be start up glitches, the health care law will prove to be a real
benefit for the average American family struggling to require health care coverage and
estimated 30 millions will gain coverage under the Affordable Care Act and that’s the
price we need keep our eyes on.

Margaret Flinter : And I do think there’s another area of the law that is irking some of the
opponents of the Affordable Care Act and that’s the la ck of power the law has to control
cost and health care but our guest today has done exhaustive research into what is
driving America’s health care cost to be so high and we’re very excited to have him
here.

Mark Masselli : Investigative Journalist Steven Brill will be talking about his recent article
on Time Magazine, Bitter Pill: Why Medical Bills Are Killing Us . It’s sending ripples
through Washington and across the country for exposing who’s profiting from the way

we pay for health care and who’s been forced to fit the bill, it’s a sobering tale of follow
of the money.

Margaret Flinter : I think Former CMS Administrator Don Berwick called Bitter Pill, the
single most important piece of health care journalism in a decade, that’s pretty high
praise from somebody who knows.

Mark Masselli : Lori Robertson from FactCheck.org checks in as well with another
corrected misstatement about health care but no matter what the topic you can hear all
of our shows by Googling CHCradio.

Margaret Flinter : And as alwa ys if you have comments e - mail us at chcradio.com or
find us on Facebook or Twitter because we love to hear from you.

Mark Masselli: But first, here’s our producer Marianne OHare with this week’s headline
news.

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Marianne OHare : I’m Marianne OHa re with this health care headlines. The explosions
that rocked the Boston Marathon finish line this week ended up being the start of some
real preparedness training for triage clinicians working in Boston’s emergency rooms.
They were varying degrees of d evastating wounds among the 130 injured in the blast.
Emergency room physicians likening the trauma as similar to injuries they’d encounter
in warzones. They were visible wound such as severed limbs and there were also non
obvious wound and marks around nostrils indicating patients might have inhaled
dangerous levels of heated shed which could cause swelling and suffocation of the
airways, ruptured eardrums were common injuries as well and of course those close to
the blast were at much higher risk for tr aumatic brain injury from the concussive force of
the dual blast.

The Supreme Court heard arguments this week on whether pharmaceutical companies
have the right to patent human genes . Companies seeking that right have committed
research dollars coming up against doctors and patient’s groups who fear the move will
monopolize research protocols while blocking exploration in the emerging world of
genomics. The case involve the Utah company that had isolated two genes indicated in
higher risk for breast and ovarian cancer. They quickly patent to those genes and were
challenged in court. Lawyers for patient groups argued that genes are human elements
and therefore not patentable. The line of questioning from several justice has indicated
they’re leaning tow ards the same point of view even from conservative justices on high
court.

The president has proposed budget which includes cuts to social security and Medicare
continues (4:27 Inaudible ) from groups previously supportive of the president’s policies.
The plan which creates new tears for Medicare recipients who earn more money and
capping growth in social security cost of living formulas elicited angry calls from a

number of groups including the national association to preserve social security and
Medicare saying social security is secret and should not be touched, other groups
warning the production and already strain Medicare reimbursement formulas would
yield negative consequences for senior’s health.

Physician and assistant suicide. The Montana legisl ature narrowly defeated to bill this
week that would have set the stage for imprisoning physicians who assisted terminally
(5:04 Inaudible ) patients and choosing to die. The bill would have mandated fines and
prison homes or doctors assisting and patient’ s suicides . T he bill has been tabled
in definitely.

And kids and fish the recent study show ed when children consume more fish more
Omega 3 they were at reduce risk for allergies and asthma that according to report ing
the recent journal pediatrics apparent ly grand mom was right to give those yummy
spoon full of cod liver oil.

I am Marianne O’Hare with these Health Care headlines.

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Mark Masselli: We ’re speaking today with investigative journalist and entrepreneurs
Steve n Brill who se recent Time Ma gazine expose on the American Health Care pricing
assent shock waves through the industry , his article Bitter Pill: Why Medical Bills Are
Killing Us attempts to pull the vale away from the secretive world of Health Care pricing
by following the money . Mr. Brill teaches journalism at Yale University and is founder of
the Yale Journalism Initiative . He ’s also founding CEO of Brill ’s Content, Court TV .
He ’s also author of numerous articles and books including Class Warfare: Inside the
Fight to Fix America's Schools . Mr. Brill welcome to Conversations on Health Care.

Steven Brill: Thank you.

Mark Masselli: You know , you spend seven months following the money for your article
Bitter Pill which has been describe d as morbidly fascinating ultimately discourag ing
story about destroy ed financials access es in the US Health Care system. And former
CMS administrator Don Berwick call the report the single most important piece of Health
Care Journalism in a decade . A nd so with all of the talk s surrounding Health Ca re
reforms in these past two years in which I think there ’s been so much focus ing on can
we bend the cost curve why hasn’t the hard data about Health Care pricing been a key
part of these discussion s?

Steven Brill: Well in March (6:48 Inaudible ) but it a ctually takes a lot of work. Anyone
who’s gotten a bill from a hospital knows that they’re basically indecipherable . They --
you know they ’re just -- they have code words and acronyms and numerical codes and
you can ’t figure out what's work. The second reason is that people just assume that you
know it must be worth it because it made me better and you know you don’t want a
haggle over your health. And the third reason is that when it comes to debate over

health care such as the debate over Obama Care a ll of the interest for the making so
much money off of this had a real interest in having the debate be over who should pay
not how come it cost so much. So that's what the debate was about who should pay
without any focus on what it cost, what is cost.

Margaret Flinter: Steven we’ve had a number of guest on the show including Don
Berwick talk about the cost of the Health Care industry and we spend more than any
th
other industrialize nation , we rank something like 37 overall and global health
outcomes an d then we also heard lots in the last couple years about the waste in health
care may be as much of one in three dollars that spen t --

Steven Brill: Probably, yeah.

Margaret Flinter: -- being wasteful on either duplication or unnecessary testing that
d on’t work . May be you could describe for our listeners the kinds of systems or
formulas or tools that got develop ed overtime that are bringing us those result s .

Steven Brill: Sure . You know again I think the reason it's indecipherable is that no one
ev er looked at the specific . S o what I tr ied to do was take a bill a nd just trace all the
money behind the price so that if someone has a giant bill from the cancer centre and
part of that bill is a $13,000 charge for a drug. Okay , well the $ 13,000 what di d it cost of
the hospital and I’ve send out across the hospital maybe $4,000 for the $13,000 drug
what it cost the drug company to sell it to the hospital for $4,000 maybe $300 so
suddenly you can see whose making what kind of money and where all this get s sort of
large is in something called the charge master which is e very hospitals internal list of all
their prices and that's the thing that sort of became the villain of the piece if you will .
T he charge master all the hospitals have them , none of them w ill consistent with each
other so much so that a very simple blood test that Medicare would pay a hospital in
Connecticut you know maybe $24 for the Bridge Port Hospital charge $239 and the
Stanford Hospital in an emergency room charge a $199 for neither h ospital could
explain anything about the charge or why there is a difference of 20% but the charge
master ’ s distinct that has just grown up over the years and nobody can explain what the
rational e is they just tell you well you know every year we bump all the price s by four ,
five or six percent whatever you know whatever we decide. And then we add new
procedures, new test and new things as they get invented a nd we make up a price for
them the n when insurance company deals with us we just count of off charg e master so
the insurance company things is getting big discount and the only real player in the
game in the market who has any kind of power on his Medicare because it ’ s so big and
it buys you know all these procedures on behave of so many people and Medi care
basically looks at the charge master and tears it up . And since we’re not paying any
attention to that, here is what we know your cost is for something like this and we’ll pay
you X dollars which is based on your actual cost including over head, we’ll pay your cost
but you know we’re not going to contribute to a world in which the typical “ Not For Profit”
hospital is making ridiculous profits and paying ridiculously high salaries.

Mark Masselli: You know , I want to pull this right on something and Ma rgaret started off
within our question which is really talking about outcomes. So I guess the question to
you is with this matter if in fact we were number one, two and three and the reality i s
we ’re not world 37 th . So are you really say look at -- I sur e thought missing here is let's
focus on outcomes we are just we are over paying for something that we are not having
delivered.

Steven Brill: Well it's actually even a little worse than that because a lot of doctors you
talk to who look at this objectiv ely will say that the high cost actually contribute to the
bad outcomes, you know every test, every procedure, e very extra day in the hospital
actually has risk the test .

Margaret Flinter: Right.

Steven Brill: So you know the outcomes can become worst the higher the cost get . T ell
me the there is any better outcome of the standard blood test in Bridge Port you know
versus Stanford I mean you know that’s just ridiculous.

Margaret Flinter: So Steven one of the great paradoxes of our systems does the ve ry
group that's least likely to be able to afford to pay their bills the uninsured often end up
paying at the very highest end or the pricing skill. But what about when the government
pays you, you talked about what Medicare is willing to pay as more clos ely
approximating through price and yet we have all this call for privatizing Medicare giving
vouchers to help Medicare folks purchase insurance , why is that a good or a bad idea?

Steven Brill: Well it becomes a really bad idea when you do what I did and if you follow
the money what you realize i s that insurance companies are hopelessly inefficient
compare d to Medicare. They pay much more because they can just charge on a higher
premium and there is no way the farming a i d , Medicare to a private insurance company
was going to re sult in anything other than much higher cost all through the system
including much higher cost to the government because the government is going to have
to subsidize that care. Yes, it’s a great thing that insurance companies have to cover
people with pre existing condition s but that means insurance companies are going to
have much more risk and are going to have to charge higher premiums, it's a real good
thing that we’ve gotten rid of those caps s o that if someone buys an insuranc e policy
that say s you know you have a $75,000 a year (12:57 Inaudible ) the insurance
company can be on the hook for that's no longer legal, that's good ex cept it raise s the
risk for the insurance company if God forbid you get cancer it could be a million dollars.
So that's going to cause all premiums to go up.

Mark Masselli: Well, you noted that one of the good things is that there will be millions
of American estimate about 30 million Americans are going to be added to the
insurance polls, but what is the way out of the sort of thing call that you write about in
the Bitter Pill ?

Steven Brills: Well the first thing you could do is you know if you allowed Medicare to
negotiat e the prices it pays for drugs and the prices it pays for defibrillators and fo r cans
and for implantable medical devices you would sa ve probably 20 to 30 billion dollars
that you are just doing that and you could take those saving s and use that you know to
subsidize people for insurance . So, there are all kinds of things you can do but
ultimately what we have to get our heads around is that we are a country devote d to a
private free market but in medicine , we can ’t have a private free market in medicine
because the buyer just doesn’t have the kind of power that a buyer needs to have in a
free market . Y ou don’t wake up in the morning and say gee I think I ’ll go , you know
shop around a bunch of emergency rooms today because I ’m feeling sick and I want to
see who would give me the best price and offer me you know the best care . You do n’t
get to do that, you end up in the emergency room. You know hospitals are
consolidating so rapidly that you know if you ’re in the new heaven area you don’t have a
choice of a hospital. You don’t have a choice of a the price you ’re going to pay.

Marga ret Flinter: We ’re speaking today with investigative journalist and entrepreneur
the Steven Brill who se recent Time Magazine expose on the American health care
pricing has created quite a stir across the co untry. His article Bitter Pill: Why Medical
Bill s Are Killing Us attempts to pull the vale away for the world of Health Care pricing by
following the money. So Steve we ’re looking ahead to the full implementation and roll
out of the Affordable Care Act but we ’re looking back in some ways at Massachuset ts ’
experience to try and get a sense of what might happen because they ’ve actually had a
few years to play out some of these things. And as we’ve you know talked with the folks
who designed and have lift through the Massachusetts ’ experiment they ha ve be en very
clear you know we didn’t focus on cost controls, we really focused on covering the
uninsured but now they ’ve made a shift and I know their legislature has been working
on many policies to try and control cost going forward. Have you looked at that at all ,
would you have a c omment on whether it's possible at a state level?

Steven Brill: I really you know I really should know much more about how the
Massachusetts ’ program is working than I do . But again my impression is they were
you know quite fo cus ed on making sure people had you know coverage without
focusing on the ultimate issue which is why does it cost so much, why do we spend in
the United States including in Massachusetts you know twice per capita on Health Care
th a n any other develop coun try ? W hy are our drug prices 50% higher than in any other
country ? A nd if we can deal with that then all the other reforms don’t really matter.

Mark Masselli: Who are you keep an eye out it in terms of reforms you know somewhat
ar gue the President ’s pl an, the Affordable Care Act also known as Obama Care is sort
of an (16:11 Inaudible ) process. But now you’re going to see a lot of states engage
some of the Republican governors who have been reluctant or signing up in part to shift
some of their cost of f to the federal government . I wonder if you don’t think that this is
not similar to Medicare in some ways thought Medicare -- a l ittle more support but
anything that you ’re watching or people have been talking to you about?

Steven Brill: Well I guess I am concern that the cost is going to be so high that it’s
going to discredit ed the whole program and discredit ed the good aspect for the program
also the Obama Administration hasn’t been to terrific about implementing the parts of
the program that are rea lly to my mind sort of unabashedly good and eas ily
implement ed . Best example is there ’s a provision in Obama Care that I don’t think
anybody ’s notices ex cept the people in the industry that requires the internal revenues
service to promulgate rules that t ell non - profit hospitals that as a condition of your non -
profit, non taxable status, you have to do certain things when it comes to bill collecting ,
you have to be really aggressive about making people aware of the financial aid policies
that you have whic h most hospitals such (17:23 Inaudible ) or not and if you hire bill
collectors or sue people you can only sue people below a certain income level for your
usual and custom a r y rates not your charge master rates and that's a huge deal. So that
this woman I mean Bridge Port who I write about who gets sued for $21,000 worth of
you know charge master rates one of the -- the hospitals typically gets from insurance
company might have been you know three or four thousand dollars . If she get sued for
$21,000, the hospital wins and they collect the $ 21,000 from her at a rate of $60 a
week for like the next five or six years or something, that would not allowed. Now the
day Obama Care past i s the treasury department which is you know with the IRS is had
written and promulgated those regulations they would be in effect three years later they
have still not promulgated those regulations. I mean I could write those regulations in
an hour.

Margaret Flinter: But we ’d like you to write those regulations and send them i n but on a
serious note you know it sounds a little simplistic but I have often found myself saying
the only way we’re going to really control the Health Care cost is to keep people out of
the hospital because --

Steven Brill: Well that ’s true.

Margaret Flinter: -- we want to make people better , we want to keep them out of the
hospital and we wanted to try and do as much as we can to make sure they only those
people who truly need to get to the hospital and get their --

Steven Brill: You’re absolutely right.

Margaret Flinter: I’m wondering -- as you did your investigative research, did you come
across anything that look ed promising, hopeful, innovative in that arena ---

Steven Brill: Well we ’re becoming much more aware that is a problem and I think to
generally as a culture and as a political organization the country has made progress
whether it's in you know rules prohibiting smoking in various places whether in my
mayor, my Bloomberg so called nanny state rules ---

Mark Masselli: Yes.

Steven Br ill: You know relating to listing calories on menus and things like that I think
we have 95% of the way still to go but we started to make a little bit of progress. So
yeah we do have those issues that you know Americans sort of you know present
themselv es as much more likely candidates for very expensive medical care but then
you have to get back to what happens when they do present themselves which is you
know they get a MRI or a C A T - Scan in the United States and it's you know 50 or 100 %
higher price th an it is in Germany or France or the UK . So it's a combination of you
know factors sort of a perfect storm that yield s this you know this 20% of the country’s
output is going just to keep us healthy which would be great if we were much healthier
than -- t han all the guys but we ’re not.

Mark Masselli : We’ve been speaking today with journalist , entrepreneur and author
Steven Brill , author that critically acclaimed Time Magazine article Bitter Pill: Why
Medical Bills Are Killing Us exposing the flagrant abu ses and inflated prices of the
American Health Care Sy stem. Steven thank you so much for joining us.

Steven Brill: Happy to be with you.

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Mark Masselli: At Conversations on Health Care we want our audience to be truly in the
know when it comes to the facts about healthcare reform and policy. Lori Robertson is
an award winning journalist and managing editor of Factcheck.org , a nonpartisan,
nonprofit consumer advocate for voters that aim to reduce the level of deception in U.S.
politics. Lori, what have you got for us this week?

Lori Robertson: Well Mark and Margaret President Obama’s new budget included
changing the way cost of liv ing adjustments or calculated for social security. Instead of
using the tradition consumer price index Obama pro poses using the chain ed Consumer
Price Index or chained CPI. Many opponents argue that senior spend more on rapidly
rising Health Care th a n younger people meaning their cost of living increase s faster
th a n either measure. Economist however generally agre e that the chained CPI is a
more accurate measure of the actual cost of living. What's the difference ? T raditional
CPI measures the prices of good s and services in a market basket that doesn’t change
the way consumer behav ior right. For instance when th ese prices go up consumers
might switch to buy in chicken but the traditional CPI doesn’t make that adjustment .
T he chain ed CPI does. It's true that it also rises somewhat more slowly than traditional
CPI leading government spending to also rise more slo wly. For example the $21
average increase for social security retirees this year would have been $2 .40 less under
cha ined CPI. As for the complain t that seniors rising Health Care cost put them in a
special category . E conomist generally haven't found so lid evidence that that’s true.
Senior spend les s of their budgets on other things like education and gasoline and then
experimental measure of elderly spending by the bureau of labor statistics has
produced inconclusive results.

And that’s my FactCheck f or this week . I am Lori Robertson , Managing Editor of
Fact C heck.org.

Margaret Flinter: Fact C heck.org is committed to factual accuracy from the country’s
major political players and is a project of the Annenberg Public Policy Center at the
University of Pennsylvania. If you have a fact that you’d liked checked e - mail us at
chcradio.com, we’ll have Fact C heck.org ’s Lori Robertso n check it out for you here on
C onversations on Health Care.

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Mark Masselli: Each week conversations high light s a bright idea about how to make
wellness a part of our communities and to everyday lives. When Jennifer Staple - Clark
was a sophomore at Yale and internship at the ophthalmology office turned out to be
the life transforming experience. She realize that many of pa tients who had limited
access to medical care we re coming into the office with serious eye conditions that had
gone pass the point of reversing leading to unnecessary blindness . W hat she launch ed
from her dorm room 11 years ago was a local initiative to i mprove access to
preventative eye care , within two years she took her organization Unite for Sight
worldwide and has since turned it into one of the leading providers of global eye care
and hundreds of communities around the world. Unite for Sight bring s ocial
entrepreneur s local eye surgeons and volunteers together to bring eye care into some
of the most underserved areas of the world. The motto at Unite for Sight is that local
problems need local solution s. S o they use each country ’s existing pool of
o phthalmologist and eye surgeons to treat their local patients, they also train community
health workers in each area they serve and also ensur ing a continuum of care for all of
the patients they serve . The community health workers provide education and
tr ansportation to get doctors to the patient ’ s communities and patients to the hospital a s
surger y is indicated since its inception Unite for Sight has served 1.4 million patients
worldwide and restored eye sight to roughly 55,000 people. Restoring not only their
sight but their dignity and ability to be productive members of their communities as well,
suing global health delivery models and improving the quality of life by offering basic
preventative eye care to those who had previously gone without , now th at's bright idea.

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Margaret Flinter : This is conversations on Health Care I am Margaret Flinter .

Mark Masselli : And I am Mark Masselli , peace and health.

Announcer: Conversations on Health Care broadcast from the campus of WESU at
Wesleyan Un iversity streaming live at wesufm.org and brought to you by the community
health center.