Priced Out: The Economic and Ethical Costs of American Health Care by Uwe Reinhardt

In his introduction, former Senator William Frist writes, “Was Uwe conservative or liberal, a Republican or a Democrat? I could never figure it out.” I suspect you won’t be able to either. Because this is neither a liberal nor a conservative book; it is a call to action by the most prominent health economist in America. We have no choice. As Uwe puts it “More and more Americans today are finding that health care has become increasingly expensive and, for many, unaffordable.” Not only that, but it is so complicated that people who work in the industry don’t really know how it works. In 2014, for example, the New York Times ran an article by Austin Frakt, a health economist, who was at a loss when it came to choosing his own plan. That’s how complicated it is.

Why is that? In part, because everyone in healthcare is out to fleece us. And I do mean everyone—from the administrators, to the doctors, to the hospitals, to the pharmaceutical industry, to insurers. It is, as Uwe says in the Epilogue a “cozy cartel.” And cartels don’t like being taken apart or having their books examined—and they have the means to prevent such intrusion. For, to quote Uwe again, “Every dollar in health spending=Someone’s health-care income.” When healthcare is 20 percent of the economy, that’s a lot of someones. And nothing hides corruption better than complexity. Which is why the issues Uwe describes are so relevant. Surprise billing? Uwe talks about that. Employers garnishing our compensation to pay for healthcare? You’ll find it here. Insane drug prices? Check. Our refusal to train enough doctors (and the insane wages doctors therefore command)? Yep.

No other country spends as much on healthcare. No other industrialized country gets such awful results. Our life expectancy has dropped for the third year in a row. We have the highest infant mortality of all developed countries. Uwe points out that we rank best the survival rate for three of the five most common cancers but even there it’s not by a lot. And yet, we not only spend so much more for our healthcare than everyone else, we have no idea where the money is going. Why is everyone ripping us off?

Fundamentally, it’s because Americans have never come to grips with the central moral question at the heart of healthcare: “As a matter of national policy, and to the extent that a nation’s health system can make it possible, should the child of a poor American family have the same chance of avoiding preventable illness or of being cured from a given illness as the child of a rich American family?” We consider that question too impolite, too divisive. We refuse to ask it and so discuss healthcare using data, statistics, actuarial analyses. We are not honest with ourselves. And so Big Health fleeces us to the point where now the moral question is “Should the child of a poor or middle-class American family have the same chance of avoiding preventable illness or of being cured from a given illness as the child of a rich American family?” So long as we don’t ask and answer that question, perhaps Big Health is right to fleece us. You can’t cheat an honest man but why should you give a sucker who doesn’t care if his fellow men die a break?

But maybe, just maybe we are becoming more honest. Uwe certainly seems to think so. He thinks we will get to universal healthcare. Though he does not think a single payer system will work here because our government is too corrupt. He points out that “Medicare is a large insurance company whose board of directors (Ways and Means and Senate Finance) accept payments from vendors to the company. In the private market, that would get you into trouble.” In other words, he thinks that a single payer system is a great way for providers (who are already the dominant force in American healthcare) to get even higher rates. But universal healthcare does not have to be single payer. Or, as Uwe puts it, “I think the Germans, the Swiss, and the Dutch have a perfectly fine approach.” And we will get there too.

He thinks it will begin with price transparency. “You can’t stop it anymore. [Providers] lived in the secure castle with complete price opacity, no one knew what anything cost, which worked really well for [them]. But now [they] have these insurgents at the gate, beating at the door, and they’re even getting help from inside. Pretty soon [they’ll] be fully transparent.” Once we know how much things cost, we will have an all-payer system. This works quite well in other countries.

“In developed nations that rely on multiple, competing health insurers—for example, Switzerland and Germany—the prices for health care services and products are subject to uniform price schedules that are either set by government or negotiated on a regional basis between associations of providers of health care.”

He thinks we will end up with “a three-tiered system. You give everyone a guarantee to something. And so we’ll have public clinics and public hospitals, and we’ll budget them, and if you’re poor, instead of being in Medicaid, you’ll go to that hospital. Then, for the middle class, you would have what is called reference pricing. Insurers negotiate prices with different hospitals and tell the insured, ‘If you go to this hospital, we’ll pay 90 percent. If you go to another hospital that is more expensive, you pay the whole difference between this reference price and what they charge you.’ WellPoint has just introduced that for CalPERS personnel, only for two procedures … but it lowered the prices by something like 20 percent. And then boutique medicine for the elite, which they already have.” That may not be the healthcare system you have been dreaming of but it will be a system where every American will have what Uwe had as a poor child, growing up in a shed in war-torn Germany: medical care everyone that is available to everyone whether you are rich, poor, or middle class. And that is worth fighting for—as Uwe Reinhardt did his entire life.

Price: $15.37-$18.81

Currency: USD

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