Of Patients and Prices

By A.W. Gaffney, M.D.
Truthout, March 26, 2014

There are many good reasons to impatiently anticipate the end of one's medical training, which not infrequently lasts upwards of five years following medical school. But counterpoised to the oft-cited benefits -- greater autonomy, reliably increased remuneration, less reliably improved hours, and so forth -- there is also, unfortunately, an almost entirely unrecognized drawback: a largely unavoidable entanglement in the business of health care.

Now for some, such an entanglement might make the transition from training seem all the more attractive. But clearly, one need only hear about patients (or their surviving family members) being chased by collections agencies for medical bills, or about the growing problem of "medical bankruptcies" among the insured, or even about the bizarre unaffordability of asthma inhalers to see that something is seriously askew with the way the price of health care can adversely impact the circumstances of the ill. As my own clinical training now winds down, I frequently reflect on how to navigate today's highly problematic health care terrain - in which patients are increasingly exposed to the cost of care provided.

I think it's only fair to begin, however, by recognizing that unlike ethical issues revolving around artificial hearts or organ transplants, the problem of the cost of health care isn't entirely new. Hippocrates (or whoever it was that wrote the Precepts) generally saw nothing wrong in doctors looking after their pecuniary interests, though he also opined that they mustn't "extort money from those who are at death's door." The problem of US national health spending has likewise been recognized for some time: in 1971, as health care expenditures rapidly outstripped inflation, Richard Nixon proclaimed that the nation faced a "deepening crisis," which has been more or less the conventional wisdom ever since (if not without reason).

However, an awareness that something might be awry with what prices patients were being charged by hospitals, physicians, pharmaceutical companies, ambulance companies and more or less everyone in the health care industry seems to have surged into the spotlight in more recent years. The journalist Steven Brill, for instance, in an important issue-length article "Bitter Pill" in Time last year, investigated the stories of patients who received massive itemized bills for health care, which, in several instances, might very well be termed "money from those who are at death's door."

He discussed one person, for instance, who between diagnosis with metastatic lung cancer and death a mere 11 months later had accumulated some $900,000 in medical bills, debt that was then dumped onto his devastated wife. Additionally jarring, however, was Brill's exploration of the extremely high prices being charged for individual services or items to such patients (e.g. $77 for each tiny square of cotton gauze), which originated from a confidential list of hospital prices dubbed the "chargemaster."

Elizabeth Rosenthal of the New York Times has explored the issue further in an ongoing and highly revealing series. Like Brill, she finds instances of absurd prices (e.g. $3,355.96 for five stitches in the ER), though in most cases, these prices are frequently several times higher than what insurance companies - which directly negotiate reimbursements with hospitals and providers - actually pay. However, for the uninsured, the "underinsured" (i.e. those who have insurance, but with high deductibles, coinsurance or copays), those who are out-of-network, or those who have limits on coverage, the "chargemaster" is real enough. For these individuals and families, massive and arbitrary medical bills - for conditions ranging from the trivial to the deadly - can be tantamount to financial ruin.

Why is this issue coming to the spotlight now? Partially, it's a reflection of ongoing trends in the health care system that predated Obamacare but that are also not ended by it. Insured patients increasingly have more financial liability, or as the saying goes, "skin in the game," when they receive health care. High-deductible employer plans are more and more common, "four-tier" prescription drug plans are the norm, and themost commonly purchased "silver" plans on the Obamacare exchanges have an actuarial value of only 70%. All of this equates to increased "cost sharing," or out-of-pocket money paid for health care, on top of annual premiums (which are also rising). Between uninsurance and underinsurance, it's not all that surprising that unpaid medical bills apparently constitute half of accounts reported to collection agencies, compromising the credit scores and the financial opportunities of those affected. Along similar lines, 62% of US bankruptcies, according to one study, are caused by medical illnesses - even though most of these bankrupt individuals actually had health insurance at the time of their illness.

Everyone agrees there is a problem here, but -- not surprisingly -- the fix is far more contested. For many, transparent and more reasonable prices are the key to the puzzle: as Rosenthal puts it, we could require health care providers to provide "price lists and upfront estimates to allow consumers to make better choices." Brill likewise advocates for the elimination of the "chargemaster," what he calls the "source of the poison coursing through the health care ecosystem." And as it turns out, "price transparency" is already becoming a reality: since January 1 in Massachusetts, at least, doctors and hospitals are now required under law to provide price information on services and procedures to patients who request it.

From the physicians' perspective, an awareness of patients' rising financial liabilities has also led to a variety of proposals. Last summer, three physicians published an article entitled "First, Do No (Financial) Harm" in the Journal of the American Medical Association (JAMA), which argued that medical professionals nowadays must universally consider the financial ramifications of their decisions for patients before recommending care. A patient whose insurance didn't cover physical therapy for lower back pain, they argue, might instead be directed to a less expensive local yoga class. Similarly, physicians could discuss options for avoiding hospitalizations in patients with high copays for inpatient stays.

Now, there seems nothing controversial about avoiding unnecessary hospitalizations, nor do I have anything against yoga. Saving money by prescribing the least expensive among a number of drugs with equal efficacy likewise is a no-brainer (regardless of the financial means or insurance of the patient). But consider how ethically problematic this whole framework is once we move beyond the low-hanging fruit. Should inferior but less costly procedures or treatments be recommended to poorer patients, or provided upon their request? Should a patient's insurance deductible impact the decision of whether or not a hospitalization is indicated? Are we really ready for a multi-tiered medical system (superimposed on a multiplicity of already existing disparities) in which the therapy most likely to save a life or limb or palliate a symptom is no longer de facto optimal but is instead one of a number of options to be considered depending on the financial means of the patient?

Now, to be fair to the writers of the JAMA article, blithely ignoring the reality that one's decisions have costs for patients -- i.e. pretending that we now have a system of universal health care free at the point of service -- doesn't seem like a morally superior approach to take either. But this merely raises the question of why the spectrum of solutions proposed by most in the mainstream seems so impoverished. The JAMA piece provides a framework for adapting to the status quo, but doesn't pass judgment on whether this is at all desirable. Brill, on the other hand, devotes considerable time in his article to discussing Medicare's superior efficiency and ability to negotiate fair prices for health care services. Yet he doesn't consider one natural conclusion from such logic: extending Medicare to the whole population. Rosenthal at one point expresses concern that the out-of-pocket limits of Obamacare plans (up to $12,700 annually for families on top of premiums) will mean that patients "will still not be very discerning shoppers." Such logic, however, unfortunately takes it as a given that patients should be shoppers, and that substantial "cost sharing" (i.e. copays and deductibles) is inevitable, immutable and universal. A reader might not know, for instance, that Edward Kennedy proposed health care legislation in 1969 that would have established universal health care for the country with "first dollar" coverage. He or she might be similarly surprised to learn that the health care systems of many other countries generally score higher in terms of quality, cost about half of the US system, have no uninsurance, and have greatly limited - and in some cases zero - out-of-pocket expenses for patients at the point of care.

A reader might also be forgiven for walking away from these articles with the sense that transparent lists of reasonable health care prices would go some way toward solving the grave problems of the US health care system. Now transparency is almost always a good thing, and more reasonable prices might help the uninsured and underinsured from getting stuck with outlandish bills for minor treatments. On the other hand, such reforms will not be very useful in cases of major illness, and there isn't any reason to conclude that they would reduce medical bankruptcies or control overall costs. Seriously ill? You could easily bump up against the $12,700 out-of-pocket annual maximum of your family's health care plan by the time you've completed a year - or maybe even a month? - of a new cancer treatment.

As I complete my clinical training, I'll soon -- like most physicians -- be submitting bills to insurance companies for procedures or services that I provide. These bills will, at times, land in the lap of the uninsured or underinsured. How should I proceed? I can certainly aim to pursue the least expensive among clinically equivalent therapies, and to avoid unhelpful tests or interventions altogether, though that seems like basic good practice regardless of the finances or insurance coverage of the patient. But what about the slippery slope that will inevitably appear when patients with competing financial obligations -- rent, food, education, or even other health care needs -- understandably seek to save their limited resources by pursuing inferior medicines, tests, or procedures? Down that road, there must be no doubt, lies class-based, not evidence-based, medicine: It is a road we cannot follow. The Confucian physician Chu Hui-ming, born some four centuries ago, wrote that "there are no two kinds of drugs for the lofty and the common; the poor and the rich receive the same medicine." Do we believe this today?

There is, I believe, no satisfactory solution to this problem on the level of the individual practitioner, patient or even hospital. An awareness of the dangers of our path must therefore lead us away from contentment with the status quo, out of the currently accepted confines of the policy debate, and towards bolder alternatives. It has led in my case to a commitment to the establishment of a single-payer system, with national health insurance for all, free at the point of service. Many others -- which in most polls now include a majority of physicians and the public -- seem to feel similarly.

The alternative? A slow, lamentable drift toward the practice of medicine explicitly tiered by class, overlaid on a system already riven with rising inequality. Under such a system, the price of care might be transparent, but at a cost that would soon be unforgivable.

A.W. Gaffney is a physician and a writer with a focus on health care policy and politics. In addition to Truthout, his writing has appeared in Salon, Dissent, and In These Times. He blogs at and tweets at @awgaffney.