America’s Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System

By Steven Brill

Random House, 2015

The Clear Winners of Healthcare Reform, and How We Got There

From March 23, 2010 through late January 2015, stock prices of seven of the largest health insurance companies soared from 118 percent to 361 percent, well above the 75 percent jump for overall stock prices.

March 23, 2010 is also the date President Obama signed the Affordable Care Act.

Insurance companies, which gained several million new captive payers required to buy private insurance, were not the only industry insiders to harvest a bonanza. The 25 biggest pharmaceutical companies pocketed more than $100 billion in profits in 2013 alone.

Big Pharma, too, gained a lot of new subsidized business through the ACA, a law that Steven Brill in his new work, America’s Bitter Pill, concludes in part produced only “one clear group of winners – the healthcare industry.”

Brill’s main mission is to provide an insider account of the ACA’s inception, enactment, and implementation, through a tale of lobbyists, executive branch and congressional staff, some academics, federal office holders, and techies.

Late in the story, here’s how Brill summarizes the development of the Affordable Care Act:

"All the years of Ted Kennedy’s crusading, all of [Senate Finance Committee staffer] Liz Fowler’s drafting, all of the days of wrangling votes on Capitol Hill in 2009 and 2010, all of the backroom deals and furious lobbying by all those industry players, all of the frantic efforts to game the CBO [Congressional Budget Office] scoring process, all of the millions of hours and billions of dollars spent writing regulations and building the almost junked website…"

In the nearly 500 pages of the book, a few ordinary people do appear, but only as victims of the healthcare industry, whose struggles as patients, mostly with unpayable bills, emphatically demonstrate the need for systemic reform.     

Missing from this account are the thousands of nurses and other healthcare and community activists who have worked for years for fundamental transformation of what Brill colorfully calls a “dysfunctional healthcare house (that) with the bad plumbing and electricity, leaky roof, broken windows, and rotting floors, would never have been built and become so entrenched in its special interest foundations that it could not be torn down.”

But tearing it down, because of its fundamental corruption and what Brill also calls “a broken down jalopy,” is exactly the cure advocated by nurses and the activists who have long campaigned for real reform, through an expanded and improved Medicare for all.

Even while conceding that single-payer or national healthcare is the “path taken by every other developed country, all of which produce the same or better healthcare results than we do at a far lower cost,” Brill discounts that as an alternative to the ACA. Of course, so did all the key players he profiles, from Congressional and White House staff to the top Democrats at the helm of the process, including former single-payer advocates Ted Kennedy and President Obama.

We do get a clear report on the many deals cut with the corporate healthcare industry, including with the drug companies, hospitals, and insurance companies in particular. Most of this is known from newspaper accounts, but Brill does bring it into a strong story narrative.

His primary critique is on the high charges and profits of corporate hospitals and drug companies. He exposes the high chargemasters of hospitals and other industry price gouging, recounting many examples first told in his highly regarded March 2013 Time magazine article also titled “Bitter Pill.”

Brill deconstructs the false pharmaceutical pretext that high drug prices are necessary for “research,” detailing the drug companies’ higher spending on marketing and administration than on research and development, not to mention huge public subsidies for that research.

Brill is softer on the insurance companies. He over emphasizes the “lower” profit margins of insurance companies compared to hospitals, and sharply criticizes the Obama administration and the president personally for hypocritically attacking the insurers, then utilizing insurance consultants to rescue the Healthcare.gov federal insurance exchange website.

While noting the insurers’ top objective, the mandate to deliver all those new paying customers, Brill leaves out another major objective the insurers also won, protecting their anti-trust exemption so they can effectively collude on prices and market share, as reported by Matt Taibbi and others.

To be fair, Brill does an admirable job pointing out the high out-of-pocket costs for many, even after application of the very expensive subsidies given to the uninsured to purchase private insurance through the health exchanges. He also nicely exposes the facade of the “Medical Loss Ratio” as a cost-saving device which is easily manipulated by the insurers to count bookkeeping and other non-care activities as a medical expense.   

While Brill is unsparing in detailing many of the gaping problems of the ACA and devotes nearly half the book to at times tedious descriptions of the well-chronicled failure of the ACA rollout which Brill blames, with some justification, on President Obama’s “failure to govern,” Brill ultimately strongly defends the ACA.

In his words, “Obamacare gave millions of Americans access to affordable healthcare, or at least protection against not being able to pay for a catastrophic illness or being bankrupted by the bills. Now everyone has access to insurance and subsidies to help pay for it. That is a milestone toward erasing a national disgrace.”

But, he concedes, the law “hasn’t come close to making health insurance premiums and out-of-pocket costs low enough that healthcare is truly affordable to everyone, let alone affordable to a degree that it is in every other developed country.” A reminder of that reality comes from a recent Kaiser Family Foundation survey that nearly 30 million Americans remain uninsured, largely because of the cost (though many also because of the botched rollout Brill describes of an absurdly complicated law.)

Brill concludes not by recommending the single-payer or national healthcare solution adopted by most of those other developed countries, but by a fix that would make many nurses gasp – regional-based integrated care networks of hospitals and insurance companies acting as oligopolies or monopolies regulated as public utilities led by doctor-CEOs who will align the incentives “in the right way.”

One model he cites is the Cleveland Clinic, led by heart surgeon Dr. Toby Cosgrove. Brill may not realize this hospital system also demonstrates that having an Ivory Tower medical center in one’s backyard does little to improve the health of a community.  Within the three miles surrounding the Cleveland Clinic area, infant mortality exceeds some Third World countries. The system is frequently under attack for failing to meet their charity care obligations and shifting the burden of caring for uninsured and underinsured to the lone public safety net hospital. Meanwhile, the system is grossing $11.63 billion and posted over $900 million in profits in 2013 alone.  

The Cleveland Clinic has also been cited by the Centers for Medicare and Medicaid Services for violating Medicare rules more than three dozen times since 2010. In 2013 alone, the system was cited for 23 health and safety issues. 

Nurses may question whether regulation and lower executive salaries, as Brill proposes, would correct all that. He argues that his system would make healthcare a public good out of the free market, but when he talks about aligning incentives, he gives short shrift to hands-on care and resourcing the provision of care by highly skilled clinicians exercising their professional judgment. Phrases such as safe, therapeutic care or a single standard of care not based on ability to pay don’t enter the lexicon of the regulated “integrated healthcare oligopolists” led by rightly aligned beneficent doctors who are allowed reasonable profits.

Compared to saving money through a truly universal system of guaranteed healthcare, cost controls through global budgets for hospitals that cover actual annual expenses for patient care, regulated prices and bulk purchasing of prescription drugs, and negotiated fees for providers, Brills’ approach is inadequate. Rather than dismissing single-payer, he could investigate how to pull the levers of power and overcome the industry he cogently criticizes.

Brill’s own experiences as a patient feature prominently in his conclusions and nurses may wish that the patient’s understanding of the system led to more insight about how to change it.

– Michael Lighty and Charles Idelson

Michelle Mahon contributed to this review