Dr. Jerome Adams, the surgeon general from 2017 to 2021 under former President Donald Trump, recently published his story of a surprise medical bill incurred after a visit to an Arizona emergency room. He was mountain hiking in January and became dehydrated; he was treated in a local ER with 3 bags of IV fluids and had blood work and an X-ray. He improved and was discharged.
Six weeks later, he received medical bills totaling $10,000 for this encounter, which his insurance negotiated down to $4,800. He contested the exorbitant charges but the health care system refused to negotiate, stating the fees were legal and consistent for all patients. Adams had a high-deductible health insurance policy with a Health Savings Account (HSA), but had not contributed to his HSA that early in the year, and thus was stuck with the entire bill. He could afford it, but most people cannot.
Inflation is one of the major concerns facing voters during this fall’s election. Health care accounts for nearly 20% of our GDP and these costs are rising rapidly, contributing much to this inflation. We should be asking political candidates for federal and state offices of both parties to propose strategies to rein in these costs.
Why are medical costs climbing so rapidly? According to a recent series published in the Wall Street Journal, health care consolidation and mergers are major factors. Despite the promise of lowering costs and preserving quality, many academic studies have shown that as health care consolidation occurs, prices increase as competition is eliminated. Private equity firms and hospital systems have been aggressively buying doctors’ practices over the last two decades; more than 75% of doctors are now employed by large corporations or health systems. An example of why costs increase when hospitals acquire physician practices is the additional billing of “facility fees,” which can double the charge for a doctor’s office visit and adds nothing to its value.
The Federal Trade Commission (FTC) has attempted to halt some of the mergers and consolidations, but is badly underfunded and understaffed. Over the past two decades, there have been more than 1,000 mergers among the nation’s 5,000 hospitals. More than 200 of these deals should have been halted because of monopoly concerns, but the FTC only acted in 13 cases.
Medical debt is a major contributing cause of 66% of bankruptcies in the United States. Consumers are shouldering more of the costs of their care because 60% of people with employer-provided health insurance have opted for a high-deductible health plan with an HSA. This strategy allows consumers to afford health insurance, either through their employer or the Affordable Care Act exchange. The problem is that they can receive large medical bills until their high deductible is met.
Advocating for price transparency of health care costs would promote competition and help tame the inflation in this sector of the economy. The Hospital Price Transparency Rule, enacted by executive order in 2021, requires hospitals to post their charges in a readable format on their website. Unfortunately, only one-third of hospitals are fully compliant, preferring to pay the small penalties to avoid posting their high prices. Additionally, the posted prices are usually disguised in an Excel spreadsheet of undecipherable billing codes.
We can each do our part to lower health care costs by consistently asking about the cost of care ahead of its delivery, so that an informed decision can be made whether to purchase the care from that facility. Persistence will be required in such requests; the true costs are hidden by design. We should shop for medical care similarly to how we shop for everything else, when we know the price of what we are buying.
Dr. Bob Newman is a clinical professor of family medicine at Eastern Virginia Medical School. He is the author of “Patient’s Compass,” a guide to navigating the U.S. health care system. Email him at fammedrocks13@gmail.com to request a paper copy of the book.
