Alex Witt   |  May 11, 2013

Enormous variation of medical charges among US hospitals

Time Senior Editor Jeffrey Kluger joins MSNBC’s Alex Witt to break down the revelatory report from the Department of Health and Human Services. He explains and reacts to the enormous variation of medical charges among U.S. hospitals.

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This content comes from Closed Captioning that was broadcast along with this program.

>>> an eye-opening first of its kind report from the department of health and human services . it has just been released this week, and it shows a huge variation of medical charges between hospitals. just how bad is it? here is one example. a joint replacement in ada, oklahoma, will cost a patient $5,300 while in monterey park , california, it will cost a whopping $223,000. with me now with more is "time" magazine senior editor jeffrey klugger. if we were talking about it on twitter i would put a big omg with a million exclamation points. can you explain what is behind the price differences?

>> a lot of it has to do with the fact like we reported in our march 4th issue, medicaid operates on the theory that nonprofit is not for profit. they fold in details like overhead whooshtion dt overhead, what it costs to keep the lights on and arrive at a reasonable figure. hospitals, when they decide what to charge outside the medicare structure rely on a double secret pricing menu called the charge master, and basically the prices they charge are just whimsical which is where you get the $2,223,0222300$22,300 joint replacemen ts.

>> it's incredible. you're explaining it one way but let's look at it geographically. even in denver, colorado, let's look at the $25,000 difference between hospitals for heart failure treatment. jackson, mississippi, there's a $42,000 difference. you know, you have been covering health for a long time. does all this surprise you?

>> well, i think the numbers surprise everybody. it's been no secret that we're grossly overcharged for these things. it's very much like the pentagon scandals from 30 years ago when we realized we were paying $700 for a hammer. one of the reasons consumers are a little bit numb to this is because so much of it goes to the insurance companies , and insurance companies do have the power to negotiate some of these prices down. the problem is if your insurance company is being billed 20 times what it should cost for one of the procedures to be undertaken and they're able to negotiate it down by 50%, that's still ten times more than they should be paying.

>> okay. the old adage you get what you pay for, does this report assume that all hospitals provide the same level of care?

>> well, no, and i mean it's not something that's specifically dealt with here. we would like to think quality control and government oversight and the professionalism and the training of the doctors provide essentially equivalent care and i think they do. i think that's a reasonably safe assumption to make. but it does say that if you get no care at all, you're having the worst possible care. which means that people who are uninsured in particular who are hit with these $200,000, $50,000 bills, whatever they are, they get no care at all because it's simply so far out of their ability to pay. these are bankrupting numbers for people without insurance. and as a result they get zero care and the rest of us get state of the art care.

>> okay. the majority of americans have either private or government health insurance but when you talk about these people, the 32 million uninsured, do they ever try to pay these sticker prices or do they just go with the no care option you're describing? and also obama care, does that have an answer to these wild price swings?

>> absolutely. obama care has an answer in that in insurance exchanges, which allow us to shop for better insurance, they bring the price of insurance down ultimately, and this gets more people into the insurance pool. in addition, hhs when they release these numbers also allocated $87 million for pricing transparency centers around the country. this means that we will always be able to comparison shop just as we do with the insurance exchanges to pick the hospitals that are going to provide us the most affordable care.

>> are you saying these hospitals really want these numbers out there?

>> no, they don't want the numbers out there, and they're fighting tooth and nail against this. but the fact is the numbers are on the record. they have been held by the government. the only thing that happened is that hhs released it in part as a result of our coverage of this.

>> it is extraordinary. i'm so glad you came on to talk about it. absolutely shocking. but very revealatory. leaving political