The leading nurses union says the study highlights the need for a Medicare for All system to limit high markups
By IGOR DERYSH, NOVEMBER 22, 2020, For Salon.
The 100 most expensive hospitals in the United States charge between $1,129 and $1,808 for every $100 of their costs, according to a study by National Nurses United, the largest nurses union in the country.
Overall, hospitals across the US charge an average of $417 for every $100 of their costs. The average markup has more than doubled over the past two decades, according to the report.
The markups have resulted in hospital profits skyrocketing by 411% from 1999 to 2017, hitting a record $88 billion.
“The rise in charges coincides with growing hospital mergers and acquisitions by large systems,” the union said in a news release. “The result is increased market consolidation, which leads to higher profits and increased charges, not savings for patients as hospital systems often claim.”
Medical workers worry that high costs will increase the number of people avoiding medical care.
“There is no excuse for these scandalous prices. These are not markups for luxury condo views, they are for the most basic necessity of your life: your health,” nurse Jean Ross, the president of the union, said in a statement. “Unpayable charges are a calamity for our patients, too many of whom avoid— at great risk to their health — the medical care they need due to the high cost, or they become burdened by devastating debt, hounded by bill collectors or driven into bankruptcy.”
The union warned that “high hospital charges also drive up Covid-19 treatment costs.”
A study by the health care data nonprofit FAIR Health in the spring found that uninsured coronavirus patients or those that receive care considered out-of-network by their insurer face costs ranging from $42,486 to $74,310 if they require inpatient hospital treatment.
A survey by the health care research group the Commonwealth Fund also found that more than two-thirds of Americans say that “potential out-of-pocket costs would be very or somewhat important in their decision to seek care if they had symptoms of the coronavirus.”
While insurers often negotiate prices with hospitals, uninsured patients have little recourse. And as with other health care and coronavirus-related disparities, people of color are disproportionately impacted. Latinos are nearly three times as likely and Black people are nearly twice as likely to be uninsured than white Americans, according to a study from the Kaiser Family Foundation.
The National Nurses United report argued that the findings further make the case for a Medicare for All system because Medicare is the “most effective” system to limit price gouging.
“The most viable solution to slowing the growth in hospital charges and the continued inflation of hospital prices, is to bring all health care purchasers together, under a public, nationwide single-payer plan,” the report said.
The RAND Corporation, a nonprofit think tank, found that hospitals charged private insurers an average of 2.4 times more than Medicare rates.
“Nurses know that the best way to rein in these outrageous charges that create such grievous harm for our patients is with Medicare for All, as other countries have proven,” said Ross, the union president. “Medicare for All will not only guarantee health care coverage for every person in the United States, it will end medical bankruptcies, medical debt lawsuits, and the health insecurity faced by millions who make painful choices every day about whether to seek the care they desperately need.”
Republicans like President Donald Trump and centrist Democrats like President-elect Joe Biden have forcefully pushed back on the idea of a single-payer health system, arguing that it would kick tens of millions of people off their employer-provided insurance and vastly increase the federal budget.
Hospitals have also argued that they lose money under Medicare.
“Medicare payment rates, which reimburse below the cost of care, should not be held as a standard benchmark for hospital prices,” Melinda Hatton of the American Hospital Association, an industry trade group, told The New York Times. “Simply shifting to prices based on artificially low Medicare payment rates would strip vital resources from already strapped communities, seriously impeding access to care.”
But the disparity between insurer and Medicare rates shows “market forces are clearly not working,” Richard Scheffler, a health economist at the University of California, Berkeley, told the outlet. “Prices vary widely and are two and a half times higher than Medicare payment rates without any apparent reason.”
Studies have repeatedly shown that single-payer systems vastly drive down the cost of health care, as they have in countries that have long had such systems.
A study published in the Annals of Internal Medicine earlier this year found that 34% of health care expenditures go toward administrative costs alone. The US spent about $2,497 per person on administrative costs in 2017, compared to $551 per person in Canada, which has a single-payer system. Switching to a single-payer system would drive down health care costs by $600 billion on administrative costs alone, according to the analysis.
“Americans spend twice as much per person as Canadians on health care. But instead of buying better care, that extra spending buys us sky-high profits and useless paperwork,” lead author Dr. David Himmelstein, a professor at the CUNY School of Public Health at Hunter College, said in a statement.
Another study published in The Lancet earlier this year found that Medicare for All would save the country about $450 billion per year while preventing more than 68,000 unnecessary deaths annually.
Lead researcher Dr. Alison Galvani, an epidemiologist and director of the Center for Infectious Disease Modeling and Analysis at Yale University, argued that Biden’s proposal to essentially expand Obamacare could actually increase costs compared to the Medicare for All plan that the president-elect decried during the primaries as too costly.
“Without the savings to overhead, pharmaceutical costs, hospital/clinical fees, and fraud detection, ‘Medicare for all who want it’ could annually cost $175 billion dollars more than status quo,” she told Newsweek. “That’s over $600 billion more than Medicare for all.”
An analysis published in PLOS Medicine of 22 single-payer studies showed that 19 of them “predicted net savings … in the first year of program operation and 20 … predicted savings over several years; anticipated growth rates would result in long-term net savings for all plans.”
Critics have argued that reducing costs by switching to a single-payer system would result in doctor shortages and the rationing of health care. But data shows that fewer than 1% of doctors have opted out of the existing Medicare and Medicaid programs, with nearly half of those being psychiatrists. Single-payer proponents also dismiss rationing claims, arguing that Americans are already effectively self-rationing due to sky-high costs, even for those with private insurance.
A Federal Reserve survey published last year found that about 25% of American “adults skipped necessary medical care in 2018 because they were unable to afford the cost.” Another survey found that 26% of Americans with diabetes have rationed their insulin, primarily due to the cost.
“It would be a missed opportunity for America to ignore lessons about universal coverage from other countries out of a fear that they ration health care more than we do,” researchers at the Commonwealth Fund warned in a report last year. “In reality, more people in the U.S. forgo needed health care because access to care is rationed through lack of access to adequate insurance or unaffordable services and treatments.”
Igor Derysh is a staff writer at Salon. His work has also appeared in the Los Angeles Times, Chicago Tribune, Boston Herald and Baltimore Sun.