Finsights Blog

America’s Bitter Pill: Long on Detail, Short on Solutions?

Sometimes reviews can deliver insights you might have missed in reading the original work. You can be lulled into thinking you’ve got the main points covered without reading the actual book.  Malcolm Gladwell’s review in the January 12, 2015 issue of the New Yorker of Steven Brill’s opus on The Affordable Care Act, “America’s Bitter Pill“,  is one of those reviews. Brill’s book builds on Brill’s April 4, 2013, 26,000 word report in Time magazine called “Bitter Pill: Why Medical Bills are Killing Us”.

Gladwell compares the Michael Lewis (“Liar’s Poker”, “The Big Short”, “Money Ball”) approach to recounting recent history by using characters and trying to understand the “psychological and moral” perspectives, with the Bob Woodward (“All the President’s Men”) approach of exhaustive  interviews and reviews of correspondence to expose the “interaction of institutions and vested interests”. In Gladwell’s view, Lewis’s approach  adds drama, but when the story is already dramatic and takes place behind locked doors, it needs that “dogged reporting” approach of Woodward.  In this case, Brill is attempting a “Woodward” on The Affordable Care Act. There is no shortage of prose on how events unfolded in Brill’s book.

The 2 major criticisms Gladwell suggests are in the area of solutions. When Brill suggests that integrated health systems add a payer as that would align interests he somehow overlooks the well-known-to-anyone-in-the-industry Kaiser example. This is a major omission that implies Brill has not researched health systems to any real degree of depth, and hence casting doubt on that proposed solution. When Brill points to the rising cost of pharmaceuticals he chooses poorly, leaping on the attention being paid to Sovaldi. As Gladwell points out, Sovaldi is exactly the kind of pill we want pharmaceutical manufacturers to make – one that can cure, one that reduces costs overall, and one that improves quality of life by reducing side effects. While there are some examples of drug prices where the value may not be clear-cut, taking aim at pharmaceuticals misses the point. Despite their growth as a percentage of US healthcare costs (refer to chart below) they remain of the order of 12% of the total.

When you want to reduce costs, it’s usually the case that one is better off seeking a 20% reduction in the biggest category item, rather than a smaller one (in other words you get a lot more saving from 20% of the 32% associated with hospital care, than trying to save 20% of the 12% associated with pharmaceuticals). It would also be interesting to know how much of the other healthcare costs are being replaced by drugs like Sovaldi (in other words, if pharmaceuticals reduce the overall cost of treatment, then we would actually want to encourage more use of those pharmaceuticals, leading to those pharmaceuticals being a higher percentage of overall spending)

Richard Review Chart

Chart developed from table in http://www.ncbi.nlm.nih.gov/pmc/articles/PMC4117976/

Gladwell also references David Goldhill’s “Catastrophic Care“, a book that tackles the key question, raised, but unanswered in Brill’s book: is healthcare really that different, or can the rules of economics be applied as in other industries? Who has read either of Brill’s or Goldhill’s books and agrees with Gladwell’s assessment?

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