This 36-page article, Time's longest ever, asks the question largely ignored in the debate and unaddressed by the Affordable Health Care Act ("Obamacare"): Why are our medical costs higher than those of the next 10 biggest spenders combined?
The article is chock full of facts. I'll focus on just one theme in Brill's report: when it comes to healthcare delivery and cost control, Medicare beats private coverage every time.
The villain in Brill's article is something I hadn't even heard of before. "Chargemaster" is the price list every hospital uses for its charges. Brill says it doesn't make sense, and can't find anyone willing or able to explain it.
But the hero in Brill's report is Medicare.
Medicare Outperforms the Private Sector on Cost Savings
Republicans and insurance industry lobbyists contend that Medicare should be turned into a kind of voucher program by which seniors would shop for private insurance. Brill shows that Medicare has been most effective in controlling cost and optimizing efficiency.
Brill traces actual hospital charges to demonstrate just how crazy our system has become. Chargemaster's mysteriously high prices are most likely levied only on the poor and uninsured. Those covered by private insurance plans will receive discounted prices. But Medicare pays much, much less, since the law mandates that it pay only the approximate cost of care.
Medicare collects lots of data on hospitals' actual costs for treatments, tests and other services. Under the law, Medicare is supposed to reimburse hospitals not just for direct costs, but also for expenses like overhead, executive salaries, insurance, differences in regional costs of living, capital expenses, and even the education of medical students.
Hospitals may grouse about Medicare's fee schedules, but they accept Medicare patients, often encourage doctors to refer them, and even advertise for them.
Medicare Is More Efficient
Medicare is usually fast, accurate, customer friendly, and impressively high tech. Sure, it makes mistakes. But I've spent a lifetime dealing with private insurance companies and 17 years with Medicare. For efficiency and accuracy, Medicare wins hands down.
Contrary to the image generated by its opponents, Medicare is not run by a bloated federal bureaucracy. Its staff includes more people employed by private contractors (8,500) than government workers (700).
How Medicare Can Reduce Costs Even More
Unfortunately, Congress -- pressured by Big Pharma lobbyists -- has specified that Medicare cannot use its clout to negotiate prescription drug discounts.
We will spend more than $280 billion this year on prescription drugs. All other developed countries set drug prices. If we paid what they do for the same products, we'd save about $94 billion a year.
Although he realizes the issue is a political non-starter, Brill says we'd reap giant healthcare savings if we opened up Medicare to younger people and charged them hefty premiums. Healthcare costs would drop dramatically.
The Bottom Line
What's wrong with our healthcare system is not Medicare. It's the private sector.
Our healthcare is absurdly expensive for one main reason: the federal government doesn't regulate the prices that healthcare providers can charge.