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Lost in Obamacare

Buried in Steven Brill’s convoluted tome are important truths about how to reform our health care delivery system.

May 2, 2015  |  by Phil Longman
Read on Washington Monthly

The coming of Obamacare did not lead to the Armageddon of health care inflation that many conservatives predicted, and for that they should show proper humility. But neither did the Affordable Care Act (ACA) relieve the staggering and still-growing burden of America’s prosperity-killing health care costs—a reality that progressives need to acknowledge and tackle head on.

The cost of health care is now so high that even historically low percentage increases in medical inflation do serious damage to the economy and household budgets. The total annual cost of health care for a typical family of four covered by a typical employer-sponsored plan reached $22,030 in 2013, or roughly the equivalent cost of buying a brand-new Honda Accord LX every year. That was bad enough, but last year, with the base cost so high, a “mere” 5.4 percent increase in health care costs sucked an additional $1,000 out of such a family’s standard of living.

The continually growing burden of health care costs is a major reason why employers are so reluctant to hire and wages remain stagnant. At the same time, even patients with employer-provided plans are paying an ever higher share of the cost of their care (42 percent in 2014) directly out of their own pocket. What moderation we’ve seen in the rate of increase in health care spending comes not from increases in health care efficiency or decreases in health care prices but from a tough economy combined with the spread of high-deductible health care plans, including those offered on the exchanges under Obamacare, which cause people to forego care they may well need.

Meanwhile, because of our failure to roll back inflated health care prices, a higher percentage of Americans are uninsured today than in 2001. And despite a massive increase in Medicaid spending and insurance premium subsidies offered under Obamacare, a recent Commonwealth Fund survey finds that a higher share of Americans (35 percent) now report difficulties in paying medical bills or have medical debt than in 2005.

Two years ago, Steven Brill published an extraordinary, 24,000-word cover story in Time magazine that took on these issues, concentrating on the profit-maximizing practices of America’s so-called “nonprofit” hospitals. Wonky yet filled with compelling human interest anecdotes, the special report offered hope, to me and many others, for the future of both serious journalism and health care reform. Brill and Time appropriately received the National Magazine Award for public interest journalism.

Now comes the inevitable book, based on the original story plus four others that Brill subsequently published in Time. Unfortunately, though America’s Bitter Pill contains important information about how the political economy of health care actually works and in the end comes to strong, if not original, policy prescriptions, it’s poorly argued and a pretty dreadful reading experience. You’d be well advised to let someone else distill the key take-aways.

The first 200 pages cover the battles that led to the passage of the ACA. Then come another 200-some pages in which Brill mostly tries to reconstruct what went wrong with the rollout of Obamacare, concentrating on the star-crossed HealthCare.gov website.

Both sections suffer from a defect that should have been a virtue. Brill, to his credit, has done a lot of old-fashioned, face-time reporting. In his acknowledgments, he writes that he interviewed “243 people—many of them multiple times—over twenty-seven months.” This is a refreshing contrast to the increasingly standard journalistic practice—driven by a combination of vanishing media resources and sometimes arrogance—in which reporting mostly amounts to shooting off “smart takes” based on Google searches and Twitter feeds.

But Brill’s old-school style of reporting has always been vulnerable to certain deficiencies, and they show up here as he attempts to build his previous work into a higher, more comprehensive synthesis. One is a tendency to, in effect, just cut and paste quotes and anecdotes from one’s many interviews and call it an analysis. Sometimes, to be sure, this can result in the reader coming across random gems. I enjoyed Brill’s account of how the crisis team that was sent in at the last moment to fix the broken HealthCare.gov website conducted all its meetings standing up and under a sign that read, “The war room and meetings are for solving problems. There are plenty of other venues where people devote their creative energies to shifting blame.”

That’s a keeper. But I had to force myself to not skim during hour upon hour of reading through seemingly pointless other details about each small twist and turn in the troubled project. The only systematic lesson Brill draws from the website debacle is that the Obama administration, fearful of creating a human target for Republicans in Congress, failed to put anyone in charge of the project at a high enough level.

Another feature of Brill’s reporting style is that he always seems to wind up thinking the best of his sources once he’s spent a lot of time with them. Here, for instance, is a sample of his treatment of former Democratic Senator Max Baucus and the senator’s former aide, Elizabeth Fowler. “At first impression,” Brill writes, “Baucus’s genial demeanor, punctuated by a habit of bursting into a grin even after he hears or says something serious, often makes him seem less intelligent or substance-oriented than he is. Yet, Fowler recalled, ‘Max was really serious about healthcare. He wants to do something big and thought this was the time.’ ”

Both Baucus and Fowler were vilified in progressive circles for their role in accommodating the demands of Big Pharma and other corporate interests during the fight over the ACA. But rather than seriously weigh the merits of such criticism, Brill just wants you to know that Baucus and Fowler are good people. For readers in the know, this can lead to head-slapping moments, as when Brill bemoans how foundational provisions that would have led to meaningful federal research into the comparative effectiveness of different medical treatments were ultimately gutted from the act. He has apparently never put it together that Baucus played a key role in stripping those provisions from the bill, acting in concert with Big Pharma and its Republican allies (see my take on the subject in “The Republican Case for Waste in Health Care,” Washington Monthly, March/April 2013).

Brill’s tendency to think highly of his sources is also in evidence when they turn out to be his own doctors. Early on in the book, Brill strikes a strange note when he lets us know that his thinking about health care costs has been changed by his experience as a patient at New York-Presbyterian Hospital in Manhattan. Brill tells us that while he was at work on the book, doctors there diagnosed him with an “aortic aneurysm” and then split open his chest with a high-power sternum saw in an operation that he believes saved his life. As a result of this experience, he writes, “I now understand, first hand, the meaning of what the caregivers who work in the system do every day. They do achieve amazing things and when it’s your life for your child’s life or your mother’s life on the receiving end of those amazing things, there’s no such thing as a runaway cost.”

When I read this, I identified with Brill’s emotion, but a big red flag immediately started waving in my head. Did Brill know where he was? Some aortic aneurysms are indeed life threatening, and it may well be that he truly needed this operation. He may also have received excellent medical care that was worth every penny. But as Brill could have confirmed with a few keystrokes, Medicare data maintained by the Dartmouth Atlas of Health Care shows that New York-Presbyterian scores vary high on various measures of over treatment.

For example, the hospital ranks 66 percent above the national average on Dartmouth’s “intensity of care” index, which compares hospitals by looking at how many different doctors become involved in a patient’s care during his or her last two years of life, and by counting how many days equally sick patients remain hospitalized. When a hospital scores high on this index, it is a strong indication that its patients receive far more intensive and expensive treatment than do equally sick patients at other hospitals, but with no better results. New York-Presbyterian also ranks worse than average in the number of complications resulting from surgery, as Consumer Reports and Time magazine itself have reported.

The prevalence of hospitals like New York-Presbyterian that engage in anomalously high intensities of care is a big deal in the world of health care quality research. Their existence suggests that as much as a third of all health care spending in the U.S. goes for treatment that is unnecessary and often harmful. Indeed, this finding was often repeated by the architects of Obamacare, who used it to explain how they could, at least theoretically, expand coverage while simultaneously “bending the cost curve.”

Yet Brill, in his dual role of patient and health care analyst, seems bizarrely obtuse to the reality and importance of overtreatment. He complains that New York-Presbyterian presented him and his insurance company with bills that were inscrutable, and that they totaled $197,000 for eight days in the hospital. He shrewdly reports that New York-Presbyterian has achieved such market concentration in Manhattan that no insurance company has the power to bargain down its high prices.

But it does not seem to have occurred to him that he may not have needed an operation in the first place, or that even if he did, many of his fellow patients may have been victims of overly intensive care. All serious students of the American health care delivery system agree that high volumes of unnecessary surgeries, overprescribing, and redundant testing are major features of the hydra-headed beast that confronts us. Yet Brill, while he sometimes makes passing references to doctors ordering unneeded tests, and criticizes the ACA for not putting an end to fee-for-service medicine, repeatedly goes out of his way to excuse his and most other doctors from culpability in the health care crisis.

“Most do not ride the healthcare gravy train the way hospital administrators, drug company bosses, and imaging equipment salesman do,” he writes. That may be true, but it’s not saying much. A fifth of all health care spending goes directly to doctors, which is double the share that goes to drug companies and many times more than the share that goes to the medical device industry, let alone hospital administrators. And while most primary care docs are overworked and underpaid, most specialists enjoy fast-rising incomes that are far above those of their counterparts in other advanced nations. The incomes of U.S. dermatologists, gastroenterologists, and oncologists, for example, rose 50 percent or more between 1995 and 2012 even after adjusting for inflation. The average dermatologist made $471,555 in 2012, according to the Medical Group Management Association.

What Brill gets most importantly right about the political economy of health care is the role that provider cartels and monopolies increasingly play in driving up prices. He provides excellent on-the-ground reporting, for example, on how the University of Pittsburgh Medical Center has emerged as a “super monopoly” dominating the health care market of all of western Pennsylvania—first by buying up rival hospitals or luring away their most profitable doctors, and now by vertically integrating to become a dominating health insurance company as well.

Brill similarly reports how the Yale-New Haven Hospital gobbled up its last remaining local competitor in 2012 to become a multibillion-dollar colossus. Importantly, Brill shows readers how, after the merger, an insurer could not “negotiate discounts with Yale-New Haven,” because “it could not possibly sell insurance to area residents without including the only available hospital in its network and the increasing share of the area’s doctors whose practices were also being bought up by the hospital.”

This dynamic is playing out in virtually every medical market across the country, as hospitals buy up one another and the local health care infrastructure, such as labs, clinics, and individual doctor practices, to secure monopoly rents. According to Brill, at least some White House insiders (he names Zeke Emanuel) saw the trend coming and tried to insert language into the ACA that would have done something to contain it. But their efforts were rebuffed, says Brill, when regulators at the Department of Justice and the Federal Trade Commission stated that “this was a complicated problem that needed lots of further study before anything might be done.” Brill reports his sources as telling him that there was another problem as well: “meddling with antitrust laws would require the involvement and approval of the Senate Judiciary Committee and its turf-conscious chairman, Patrick Leahy of Vermont.”

The final 100 pages or so are largely taken up with a Q&A section in which Brill, somewhat bizarrely, interviews himself about what it all means, and then lapses into a rambling discussion of various policy options. The most prominent of these is one that, I have to say, I strongly agree with. Brill describes a breakthrough moment when it came to him that large, integrated health care providers such as the University of Pittsburgh Medical Center may actually have the potential to hold down prices by taking advantage of their size to deliver less fragmented, more evidence-based, integrated care. But this will only happen, he realizes, if rigorous antitrust enforcement ensures that they are subject to at least some meaningful market competition, and if government regulation forbids them from engaging in abusive price discrimination and profiteering—policy prescriptions we laid out over a year ago in these pages (“After Obamacare,” January/February 2014).

In short, Brill accepts that twenty-first-century health care systems need to become big and integrated to improve their efficiency, but wants them to be treated just “the way a public utility is—with still tighter controls on profits.” It’s a brilliant suggestion, and proof that great minds think alike.

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