Monday, October 26, 2009
The News Today, Oh Boy
I read the news today, oh boy. (some of you may remember this Beatles’ line from one of their albums, Sgt. Pepper maybe.)
Actually, most of these itemscome from sources other than newspapers.
Barbara Ehrenreich’s new book, for example, is reported to contain this lovely statistic:
Between 1979 and 2007, the top 1% of American households saw their share of all pretax income nearly double—while the share of the bottom 80% of households fell by 7%! To put this in another perspective, according to the NY Times, it is as if every household in the bottom 80% had written a check for $7,000 every year and sent it to the top 1%.
The question is, why has there been no reaction to this???
Another item, this one heard on “This American Life,” NPR’s radio show hosted by Ira Glass, added to my ire about healthcare, which was the theme of the show. The first segment was titled “One Pill Two Pill, Red Pill Blue Pill”—after Obama’s admonition to consumers to buy the blue pill if it’s cheaper. On the segment, Planet Money’s Chana Joffe-Walt explained the scam behind the drug companies’ generosity in handing out prescription drug coupons. Here’s how it works. First, the ploy was invented to combat the moves by Health Insurers to use co-pays (what the customer pays after his Health plan pays part of the drug’s cost) to discourage customers from choosing very expensive, name-brand drugs and choosing cheaper generics instead. That is, generics, in virtually all cases, are just as effective as name brand drugs like Lipitor, but are many magnitudes cheaper. If you use the generic, the Health plans make your co-pay considerably less, because their payment is also less. Seems to make sense.
But the drug companies couldn’t let their cash cows be dissed this way. And so they came up with the prescription coupon. You get the coupon “free”—either from your doctor, or directly from the drug company. With it, you can get a huge discount on your prescription. Thus, one name-brand drug used by a guy with acne, sold for about $600-800 a month. His co-pay had been $130, but with the prescription card, it was only $10. What a great deal! he thought. And who wouldn’t? The problem comes in the details: though the drug company only got $10 from the consumer, it billed the health care provider over $600. And it worked beautifully: the doctor prescribes the name brand, knowing his patient can get it cheaply, and having no idea that the drug company is making a huge profit from the health provider. But that’s not the end of it. In order to stay profitable with this kind of payout, the health care provider will naturally have to charge its customers more—all of which comes back to the poor consumer in the end, who is hit with rising costs for health care.
This is really the gorilla in the room of the whole health care debate. Doctors say they can’t be expected to know how much drugs cost—so they just assume patients have health care, and prescribe name brands which cost 10 or 20 times what the generics do. Who makes money? Pfizer and their ilk. And who gets screwed? As always, it’s John/Jane Q. Public.
As for the doctors, whom everyone seems inclined to excuse from having any role in rising health care costs, a recent medical experience I had demolished that theory as well. I had a knee problem, and though I was wary of the suggestion, after two months or so of pain agreed to have the knee x-rayed—even though my GP (a damn good one) allowed as how it probably wouldn’t show much, but was a necessary step in the progression. Anyway, since he had no x-ray machine, he sent me to the local hospital (Marin General). I knew it was going to be bad when I had to go through a full registration, the way one does when admitted. Finally got the knee x-rayed after a fairly long wait—with three or four pics taken. Then they told me the report would be sent to my doctor. “But I thought I was getting the results,” I said. “We’ll give you copies of the x-rays,” they said, “but our radiologist will send the diagnosis.” I knew that was trouble, but had no idea how much.
The x-rays came back showing the normal degeneration of a knee in my age range. No help. But for that little diagnosis (which, by the way, any competent doctor can do unaided by specialists), I received two bills. One was from Marin General: my charge was $59.50, but only after Medicare paid $409.50 (i.e. the total charge for a simple knee x-ray was $469.00). My daughter tells me that in a veterinarian’s office, the x-ray charge is usually around $90. Same x-ray, same competent diagnosis. But that’s not the worst of it. I also received another bill, this one from Advanced Imaging Medical Association, for diagnosis—you know the guy who reads the x-ray—and for his services, the total charge was $719.86. Medicare paid most of that, but the point is clear. For one x-ray (actually they took 3 shots), which contributed virtually nothing to the diagnosis or the healing of my knee, the charge was $1189.86. And though one tends to imagine that because Medicare pays for this, it’s free, the truth is, it’s not. Ultimately, we all pay for this stuff. And there can be little question that everyone—the doctors, the hospitals, the insurance companies, and everyone in between—is in on the take.
Finally, today’s news had a piece about foreclosure auctions going on in long-suffering Detroit, once the thriving Motor City, now the most depressed and distressed city in the nation. Homes were starting at $500. There were pages and pages of them. One comparison showed the number of homes in foreclosure (or abandoned completely), if put together, would cover an area the size of Boston. And who was getting to buy most of these places? You guessed it, not Detroit natives who were hoping to be able to get a house cheap and live there, but mostly speculators from California and New York, seeking to make a killing while the killing was still good.
But then again, this is the free market, folks. And the “free” market, after all, is the most efficient and most humane of all systems yet devised by man. Oh boy.