We have known for many years that people in the five to ten years before they qualify for Medicare have a significant burden of illness. For example, nearly a quarter of cancer cases diagnosed in the U.S. annually occur in people ages 55-64.[1]  In addition, the prevalence of chronic disease increases with age, and multimorbidity (having more than one disease) becomes more common.

It is no surprise, then, that health care costs also increase as we age. People over 55 account for more than 50% of the total health care spending in this country. Those between 55 and 64 are responsible for 20% of the total health spend even though they only make up 13% of the population. That is a step up compared to ages 45 and 54 who account for 13% of the population and 13% of the spend.[2] Our failure to provide universal health insurance coverage in this country means that a chunk of the pre-Medicare population is either uninsured or underinsured and therefore exposed to significant out-of-pocket expenses.

There has been a push to expand Medicare to everyone (“Medicare for All”) but failing some advocate for at least lowering the age of eligibility.[3]This would make coverage available to individuals in their high healthcare cost years. A study in the May 2021 issue of Health Affairs [4] reveals that uninsured older Americans have worse cancer outcomes than their slightly older counterparts who are covered by Medicare. This supports the idea that expanding Medicare eligibility to age 60 (or maybe lower) could have a significant impact on cancer outcomes, an important measure of health and well-being of people at any age.

What did the study hope to achieve?

The research team, led by Gerard Silvestri at the Medical University of South Caroline, wanted to assess differences in cancer survival between uninsured patients younger than age 65 and older Medicare beneficiaries. They used data from more than 1.2 million people in the National Cancer Database from 2004-2016 to answer the following questions:

  • What was the survival for sixteen different cancer types at one, two, and five years?
  • And, were differences in survival associated with differences in insurance coverage?

Patients were divided into 8 groups based on age and type of insurance or lack thereof as shown in Table 1 below.

Table 1. Uninsured cancer outcomes


They also did a comparison of the younger patients with either Medicare or private insurance with the older patients with Medicare only or Medicare with private insurance.

Other patient characteristics examined included race/ethnicity, a measure of comorbid illness burden and characteristics of their cancer (type, stage, and place of treatment.

What were the results?

The results showed what many of us would have expected knowing how important it is to have insurance to help pay for the high cost of care in the United States. Nevertheless, this study is important because it clearly showed a “dose-response” effect on survival that varied by the robustness of the coverage, ranging from none to excellent.

The study included survival curves by age and insurance status for three different cancers. Although the details differ, what is strikingly similar is that in each of the three cancers illustrated the best outcomes were for the younger patients (60-64) who had private insurance. The next best were Medicare patients (65-69) who had Medicare plus private insurance (also known as Medicare supplemental insurance. Medicare-only patients (65-69) were the lowest on the survival curves. And bringing up the bottom in every case were younger patients (60-64) who were uninsured.

The major findings can be summarized as follows:

  • Uninsured patients (60-64) were almost twice as likely to have late-stage disease when first diagnosed compared to older Medicare beneficiaries
  • They were also “significantly less likely” to get typical cancer treatments, such as surgery, chemotherapy, or radiotherapy
  • These differences occurred despite the younger patients having lower comorbidity (other conditions) than the Medicare-aged patients.
  • The younger patients also had what the authors called “strikingly lower” 5-year survival across all the cancer types in the study

An example of the last bullet point is that younger uninsured patients with late-stage breast or prostate cancer had a five-year survival that was 5-17 percent shorter than the older patients with Medicare.

The authors concluded that “survival after a diagnosis of cancer is considerably lower in younger uninsured patients than in older Medicare patients.”

Some caveats about the research

The study is what we call an observational study. The researchers examined a database of patients in the US that captures about 72 percent of newly diagnosed cancer patients. They used that data to look for associations between age (pre-Medicare and Medicare age) and insurance status. Because it is retrospective (looking at the past) and there is no control (or reference) group, you can’t be sure that lack of insurance actually was the reason why the uninsured group had the poorest outcomes. The outcomes could have partially or completely due to other things in their life that were not measured in this study. A different type of study is needed to determine a causal relationship – that is to determine if the lack of insurance was what led to (or caused) the unfavorable result.

Nevertheless, studies of this type are valuable as they can much more easily and quickly uncover associations that we might not have recognized. They often provide the impetus for more definitive studies to be carried out.

What are the implications of this study?

This study is important because it suggests that lack of insurance is associated with worse cancer outcomes – something that is devastating for patients and their families. There is also a high societal cost related to prematurely losing the lives of patients during their working years. I believe (as did the authors) that this study can be used by policymakers and advocates to make the case for expanding Medicare eligibility to at least age 60.

You may think that this is too expensive and that we just cannot afford it. Leaving aside the fact that the US is one of the only Western countries that fails to provide universal health coverage, think about this: Our failure to diagnose cancer patients at an early stage means that they will likely need more expensive treatments (e.g., more extensive surgery, more rounds of chemo or radiation). And even if they don’t get it while they are pre-Medicare (as this study suggests), a portion of them will age into Medicare bringing these higher costs of care with them.

The authors point out that insurance alone “would not eliminate the health disparities facing underserved Americans with cancer,” prior studies on health insurance status suggest strongly that it would definitely help low-resource people have better and earlier access to care.


1.  Mallin K, Browner A, Palis B, et al. Incident cases captured in the National Cancer Database compared with those in U.S. population-based central cancer registries in 2012-2014. Ann Surg Oncol 2019:26(6):1604-12

2.Sawyer B, Claxton G. How do health expenditures vary across the population? Peterson KFF Health System Tracker, Jan. 16, 2019. https://www.healthsystemtracker.org/chart-collection/health-expenditures-vary-across-population/#item-start

3. Ghilarducci T. The time is now to lower the Medicare age to 50. Forbes 2020 Apr 10. https://www.forbes.com/sites/teresaghilarducci/2020/04/10/now-more-than-ever-is-time-to-lower-medicares-age-to-50/?sh=5b317bd852be

4. Silvestri G, Jamal A, Yabroff K, et al. Cancer Outcomes Among Medicare Beneficiaries and Their Younger Uninsured Counterparts. Health Affairs 202140(5)754-762

Some years ago, a few months after I had made the decision to leave academic medicine for the greener pastures of private practice anesthesia, I was called in one night to evaluate a young man in his early thirties with a presumptive diagnosis of appendicitis.

He had classic symptoms1, was febrile, and had an elevated white blood cell count. A quick ultrasound followed by a CT scan confirmed the diagnosis. Unfortunately, the scan also demonstrated free air in his abdomen. This signaled that his appendix had ruptured, making his surgery urgent.

We had some time together before the rest of the surgical team arrived at the hospital to get the operating room ready, so I was able to chat with him a little. I learned that he was an accountant with his own small firm. He rented an apartment in the Marina, was married, and was thinking about buying a house in Marin near where I lived. He and his wife were expecting their first child.

Any chance we don’t need to do surgery?

I could tell he was nervous and assumed he was worried about the anesthesia and surgery, so I did my best to calm him.

“Anesthesia is safe”, I told him. “Surgery will go quickly, and you will do just fine! You are young and healthy, and you should recover easily.”

I explained to him that a laparoscopic appendectomy usually takes less than an hour and that he would have very little in the way of post-op pain. He nodded and said,

“I’ve been having bad pain and fever for a few days. It just kept getting worse. I didn’t want to come in at all, but my wife made me. Any chance we don’t need to do surgery?” he asked.

“No,” I told him. “That’s pretty unlikely.” Despite my attempt at a friendly reassuring pep talk he still seemed doubtful and was obviously anxious and hesitant to proceed.

So, I tried again. I explained that a ruptured appendix was a true surgical emergency and that he was lucky he sought help before he became really sick. I told him that he should thank his wife profusely for convincing him to come in.

So, how much is it going to cost?

I laughed and made some dumb comments about how men are pretty bad at figuring out when they need help. I had just gone through some health issues of my own and told him that even doctors are often subject to self-denial.

He became quiet, seemed to think about this a bit. Then in a low voice, as if he was afraid someone else would hear him, he said,

“How much do you think this is going to cost me doc?”

Aha – I thought, this was what he was worried about, not so much the surgery, but his co-pay or deductible. I explained that depending on his insurance, this could run from nothing to a few hundred dollars to at most a few thousand.

“Don’t worry,” I said, “Your insurance will cover almost all of it. This is emergency surgery.”

And then I went to his chart and found his hospital face sheet to see what kind of insurance he had. In the box where the form lists patient insurance were the words “self-pay package” – the space that usually shows a photocopy of the insurance card was blank.

The high price of feeling low

“Did you forget your insurance card?” I stupidly asked.

“No…I don’t have health insurance.” He hesitantly said. “That’s why I’m worried. I can’t afford more than a few thousand dollars?”

I considered the best way to allay these concerns without alarming him too much. I didn’t want to panic him, but I also didn’t want to lie. So, I started doing some rough calculations in my head. The emergency room fee, the ER doctor’s bill, CT scan, radiologist’s pro-fee, stat labs, IV set up and fluids, pain medications, antibiotics…

The mental list grew and grew. I could visualize every line item and its ridiculously inflated price. The bill before he even went into the operating room was easily going to be over ten thousand dollars2.

Now add to this the operating room costs at several thousand dollars per hour, professional fees (mine and the surgeons), pathology, surgical and anesthetic supplies, recovery room fees and medications, and on and on.

All of the itemized lines have prices that are designed for a system in which the cost and what is paid are disconnected by contract pricing from the twilight zone of insurance reimbursement.

In this alternate bizarro world, a single Tylenol tablet can be priced at twenty dollars, a bag of IV saline solution, over a hundred. Nobody actually pays those prices…unless you are paying cash. Then all bets are off.

The real world of price versus cost does not apply

As my accountant patient was undoubtedly good at math himself, I am sure he was capable of adding numbers more quickly than I was. What he probably didn’t know was that the real world of price versus cost does not apply to American healthcare. It is far more similar to government military contract spending3, where a hammer or a single bolt can be billed out at many times the actual cost.

Unfortunately for my young accountant, his ruptured appendix was a truly life-threatening event and surgery could not be delayed. However, this was also only the beginning of his treatment.

He would end up needing several days of inpatient hospitalization, intravenous fluids, and antibiotics to ensure an adequate cure and recovery from his ruptured purulent appendix and subsequent peritonitis. Had he come in just a day or two earlier, he could have saved himself an incredible amount of money. More importantly, he would have reduced his risk of further medical complications.

By the end of his stay with us, his bill easily exceeded a hundred thousand dollars. On my post-op visit the day after surgery, we talked more about his money concerns than his medical ones.

Could have, should have

I explained to him that he did have some financial options. For instance, he could try to negotiate with the hospital4 for a cash discount. Or he could set up a payment plan. I heavily discounted my professional fee, and I discussed his situation with the surgeon as well, who also agreed to a steep discount.

The hospital, I thought, would be a harder sell. I suspected it would be difficult to convince the finance people of a large “not-for-profit” institution that a college-educated accountant with his own business didn’t know better than to go uninsured and not carry any kind of health insurance at all. And I also knew there were many other young people5 in his position.

By the end of his stay, my new accountant friend was deeply in debt. This was before “Obamacare” and the provisions of what would become the Affordable Care Act.6  Had he simply enrolled in a reasonably priced Kaiser plan, or at least bought a catastrophic insurance policy at a few hundred dollars a month, he would have been protected from the threat of bankruptcy over this one episode.

More content on Healthcare Coverage:  Why You Need to Prioritize Getting the Right Healthcare Coverage

But like many young, healthy Americans who are either self-employed, or unemployed, or who work at firms that don’t provide insurance, he hadn’t. This incident left me deeply affected and made me wonder like David Byrne in The Talking Heads’ song “Once in a Lifetime”7 – well, how did we get here?

The good old days

In the good old days of medical practice, the relationship between the price of a service provided and the amount paid for it was more or less the same thing and bore some passing resemblance to the reality of cost.

A hundred years ago, health insurance as we now know it simply did not exist. Actuaries declined to provide medical insurance to individuals owing to their inability to assess and quantify this particular type of risk.

In-depth medical knowledge was an oxymoron and many popular therapies were unproven quackery8. Statistics was a nascent science. An excerpt from an article in an insurance industry publication stated,

“The opportunities for fraud [in health insurance] upset all statistical calculations….Health and sickness are vague terms open to endless construction. Death is clearly defined, but to say what shall constitute such loss of health as will justify insurance compensation is no easy task” (The Insurance Monitor: July 1919, vol. 67 (7), p. 38).

Insurers lacked the ability to determine whether doctors or patients were less than honest in their claims. As always, death, taxes, and cheating were seen as the only sure thing.

Health care was relatively inexpensive

Instead, insurers offered “sickness insurance”, an early form of disability insurance. Lost income rather than the cost of treatment was the justification for compensating those who missed work as a result of illness. Poor people, alas, were out of luck and depended entirely on charity or the church.

Fortunately, health care was relatively inexpensive, and hospitalizations were rare. Most people were born, treated, and died at home. Doctors made house calls, and cash or barter were the only methods of payment and compensation.

Although physicians were respected members of society and did quite well financially compared to many others, they weren’t exactly rolling in cash. Perhaps the same was true of insurers. They collected premiums and paid restitution in the case of major catastrophes like fires, ship loss, or crop failure.

But unlike doctors, insurance brokers were businessmen and sought to profit from their ventures. Some insurance executives became wealthy as a result of their enterprise.

However, I suspect few individuals were lighting cigars with hundred-dollar bills. And maybe some Park Avenue doctors did better than others due to the wealth of their clientele, but for the most part, they were not multi-millionaires unless they were very good investors or made it the old-fashioned way, through inheritance.

This was all about to change, however. Prior to the late eighteen-hundreds, the cause of sickness was poorly understood, and remedies were not that far removed from blood-letting and leeches. The Gilded Age ushered in the twin promises of science and technology.

The Golden Age of Medicine

In rapid succession progress in medicine included advancements such as reliable and effective general and local anesthetics, and in turn safer and more effective surgery. Antibiotics were discovered and improved upon, which followed the understanding of the germ theory of diseaseand anti-sepsis. Vaccines became common, and polio and smallpox were largely eradicated. Insulin was discovered.

Later, imaging technology such as computed tomography, nuclear medicine, ultrasound, and magnetic resonance enabled diagnostic “vision” unimaginable only a generation before.

By the late twentieth century with advances in genetic engineering and molecular biology, diseases such as cancer, strokes, and heart failure, while still prevalent, had a chance of control if not outright cure. The major consequence of this rapid change has been a longer and more productive life. In 1900, the mean life expectancy of a man10 in America was forty-seven years, now it is approaching eighty. We also expect to live these longer lives in a healthy and active state.

Of course, the cost of this progress is immense11, consuming an enormous amount of our gross domestic product. By the early 1960’s the explosion in medical technology and cost became increasingly expensive for the average citizen, and inordinate numbers of people, particularly the elderly, simply could not afford medical care.

Related Content:  Did Medieval Medicine Pave the Way for Value-Based Payment?

The Great Society

Fearing a society in which many of its citizens could potentially be driven to the poorhouse, President Johnson initiated sweeping changes to medical reimbursement in his “Great Society” programs12, and Medicare and Medicaid were born.

Private insurers such as Blue Shield and Blue Cross expanded coverage to include “comprehensive” services,  And Health Maintenance Organizations like Kaiser became increasingly popular as a way to contain rising costs while still providing good medical care.

In these early days of health insurance, reimbursement became much better for doctors. Older, mostly retired physicians I know, still pine for the “golden age” of medicine in the nineteen-sixties and seventies.

Middle-aged, still working doctors like myself become greatly annoyed at this talk. The same generation that enjoyed relatively generous reimbursements from Medicare and other insurers, set by the doctors themselves, also enjoyed ridiculously inexpensive real estate, low college and medical school tuition, and other perks completely unavailable to the current crop of medical practitioners. I know… cue the tiny violins.

Doctors do well but insurance executives do obscenely well

We still make quite a good living relative to many others. However, if we do well, insurance executives do obscenely well.13  I remember when I was an anesthesia resident in Seattle, reading an article in the local paper about a public opinion poll on medical reimbursement.

Participants were asked to guess and then opine on the salaries of a primary care doctor, a general surgeon, the CEO of one of the local private hospitals, and the CEO of a regional HMO. The guesses people made weren’t even close.

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Most people assumed that doctors made a bigger salary than they actually did, but not by too much. They were off by a factor of ten in the hospital CEO salary, and a factor of nearly ten times that in the insurance CEO’s compensation. The latter was actually in the tens of millions of dollars with stock options included.

More on Doctor’s Compensation: Physician Compensation 2020: How Much Money Do U.S. Doctors Make Per Year? 

What really bugged me, however, was the follow-up opinions of those surveyed that it was the doctors as opposed to the business executives who made too much. Ouch! I remember thinking to myself Gordon Gekko was right. Greed is good.14

Medical school is expensive and out of reach for many

These days much has changed. Unfortunately for the worse. Income disparity is greater than ever. Great wealth is measured in billions, not millions. To be simply “rich” we are told your net worth should exceed 2.3 million dollars!15

All the while, more and more middle-class individuals like my accountant patient of twenty-some years ago cannot afford even basic health insurance. This is occurring in a backdrop where healthcare costs are taking up an ever-increasing percentage of our GDP16, exceeding seventeen percent in 2020.

For those aspiring physicians out there, medical education costs upwards of one-hundred-thousand dollars per year for four years of medical school. And that is after four years of incredibly expensive college.

It is so pricey and out of reach for most people now, that many medical schools are offering++ low or no tuition for individuals who qualify financially, or who promise to spend several years of their early career in primary care in underserved areas. As generous as this is, it doesn’t cover everyone who wants to be a doctor or people like me who want to become an anesthesiologist or some other kind of specialist.

Far more important, however, is what we must do to protect and preserve our health. If the pandemic has taught us anything, it is that we need to figure out how we are going to provide affordable, basic, and even intensive medical care to our aging and vulnerable population.

As our technology improves, so do our costs. We live in a world where we are only one novel virus away from another pandemic, thus we have some reckoning to do. The miracle of rapid PCR tests for coronavirus, and the even more miraculous mRNA vaccines cost serious money. It was money well-spent, but we will need much, much more.

What about the future?

It would be nice to have a crystal ball, but we don’t, and speculation is a poor substitute for action. I often think of one of my favorite Yogi Berra phrases17 – “it’s tough to make predictions, especially about the future.”

I do know that we have made great strides as a society in the past to help address the problem of affordable health care. The Social Security, Medicare, and Medicaid programs were a start and Obamacare was also a giant step in the right direction.

Whether or not we will see single-payer insurance or universal basic health coverage is a mystery. What is clear to me and my medical colleagues, however, is that the system we have is broken and needs repair.

No great society can last long while its citizens suffer, and no humane person can stand back and impassively watch. I know I can’t.


  1. Appendicitis, Mayo Clinic. https://www.mayoclinic.org/diseases-conditions/appendicitis/symptoms-causes/syc-20369543
  2. Lindsey Tanner, AP Medical Writer.  Appendix removal: Huge sticker shock in study.  Yahoo News, Apr 2012
  3. Jack Smith.  $37 screws, a $7,622 coffee maker, $640 toilet seats: suppliers to our military just won’t be oversold. Los Angeles Times, Jul 1986. https://www.latimes.com/archives/la-xpm-1986-07-30-vw-18804-story.html
  4. Hal Levy. 6 Things to Remember As You Negotiate Medical Bills, HealthCare Insider, Updated Jan 2021. https://healthcareinsider.com/negotiate-medical-bills-68526
  5. Kevin Quinn, Cathy Schoem, Lousia Buatti.  On Their Own:  Young Adults Living Wintour Health Insurance.  The Commonwealth Fund, May 2020.
  6. The Affordable Care Act, Healthcare.gov. https://www.healthcare.gov/
  7. Talking Heads, Once in a Lifetime.  YouTube by Rhino/Warner Records.  https://www.youtube.com/watch?v=CHatn3_UxEU
  8. Quackery, Wikipedia. https://en.wikipedia.org/wiki/Quackery

  9. Germ Theory,  Encyclopaedia Britannica. https://www.britannica.com/science/germ-theory
  10. Life Expectancy, Mortality in The United States, 2018. NCHS, Centers for Disease Control and Prevention. https://www.cdc.gov/nchs/fastats/life-expectancy.htm
  11. National Health Expenditure Data, Trends.  Centers for Medicare and Medicaid Services. https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata?redirect=/nationalhealthexpenddata/
  12. Great Society, Wikipedia.  https://en.wikipedia.org/wiki/Great_Society
  13. Morgan Haefner.  Pay for each of these 6 health insurance CEOs surpasses $15M.  Becker’s Payer Issues, Aug 2020
  14. Gordon Gekko, Wall Street character.  Wikipedia https://en.wikipedia.org/wiki/Gordon_Gekko#.22Greed_is_Good.22_quotation

  15. Maryalene LaPonsie.  Are You Rich? How the Wealthy Are Defined, U.S. News, Jul 2020. https://money.usnews.com/money/personal-finance/family-finance/articles/are-you-rich-how-the-wealthy-are-defined
  16. National Health Expenditure Data, Historial.  Centers for Medicare and Medicaid Services.  https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical
  17. Yogi Berra, American baseball player. Wikiquote.  https://en.wikiquote.org/wiki/Yogi_Berra

With Medicare eligibility looming and my good genes and healthy lifestyle, I made a good argument (to myself) to avoid buying health insurance. My relationship with the medical establishment was mostly hands-off.  In addition, I thought I had all that anyone really needs – a satellite geo tracker with its red rescue button and life flight insurance. However, the fateful words of my retired veterinary friend kept talking about the importance of having a screening colonoscopy.

It gnawed at my serenity when he said:

“No one has to die from colon cancer; if they do, it’s their own fault.” 

That was two years ago.  

I finally decided to get the freaking colonoscopy

On top of my growing anxiety over my friend’s wise words, my internist in San Francisco was relentless in sending me requests to have my labs done. Finally, I decided to answer the knock at the door.

Simultaneously, another good friend, a physician, and CEO was working feverishly at his digital health company that uses AI to better measure and deliver quality care. Between my nagging guilt and the high-tech inspiration, I set out to get the freaking colonoscopy.   

That was two months ago.

I reached out to my San Francisco doctor whom I pay cash to on yearly basis. I do that so he’ll take my calls and keep an eye on me. And also get me some (slightly) discounted lab services.  

He referred me to a GI doctor whom he trusts and would give me a preferred rate. I called his office and made an appointment. Out of curiosity, I asked the receptionist, “How much do you charge for a screening colonoscopy?”

Knowing I paid cash without insurance coverage, she was quick to respond, “The whole procedure not including the anesthesiologist is $8500.” I thanked her and hung up the phone. 

Hmmm, what else could I use that money for?

And then I began to think through the importance of the procedure for my own health and well-being compared with alternative uses of the cash. Say, a “scuba trip to the Sea of Cortez”, or “my grandson’s college fund.”

It’s hard to trade-off a potential future benefit against a good use of that cash now. So, I started calling around.

When I’m not working in California, I’m living in Utah. I called some Salt Lake City doctors, which seemed logical. Dinners in Utah are at least 30% cheaper than dinners in San Francisco. Perhaps colonoscopy rates might follow that trend.  

After a couple of calls, I got two quotes — one at $6,500 and the other at $5,000. Still a chunk of change, as they say, but a little bit easier to digest.

Colonoscopy shopping in Missoula

During my hunt, I was renting a vacation place in Hamilton, MT, so thought I’d do some colonoscopy shopping just north in Missoula too. What have I got to lose? 

I called the Community Hospital there and asked for the Colonoscopy Department. I told the receptionist right away that I was a self-pay patient (code for no insurance). And, that I was calling around to get the best pricing.

She put me through to the billing department. The helpful staff member informed me that the cost for a screening colonoscopy was $3,500, but that there is a 40% discount for self-pay patients.

Related content: A Tale of Cost and Care: Blood on the Sidewalk  

After some discussion and clarification, we settled on $2,000 for the procedure. I booked the appointment immediately. That was two weeks ago. 

My screening colonoscopy experience

Wendy, the clinic nurse, and I became friendly. She made my appointment and got my address to send the prep kit. She called me the night before the appointment to make sure things were going well. And she reminded me to show up a little early for registration.

She also told me where to park and which entrance to the hospital to walk through. Wow! Great customer service in healthcare. This is new. 

When I arrived on the day of the procedure, I was politely greeted and directed to a seating area to wait. I waited only about ten minutes before I was called up to the front desk.


Surprisingly, the woman at the desk already knew that I was a “self-pay,” and confirmed the 40% discount. So far, so good.

Smiling, she informed me that she could give me an additional 20% off if I paid the procedure in full that day. The total became $1,680. What a massive break from the whopping $8,500 the hospital in San Francisco wanted to charge me.

I smiled back and said, “Well, in that case, I’ll take two!”


Why is there such a huge variation in pricing for a screening colonoscopy?

I got curious about the calculus of why the same procedure could have such a swing in cost from city to city. So, I called another friend who is a data science expert and told him my story.  

He did his best to throw some light on some of the reasons, although we’re going to need another call. He explained, among other things:

  • the complex eco-system of payers and providers
  • small hospitals vs. large 
  • the risk adjustment equations for colonoscopies specifically.

But that was well after his, “How’d it go?”

“Bottom line, pun intended, the doctor gave me the 10-year‘ hall pass’,” I said.

Admittedly, after I left the cashier, I had some second and third thoughts about the recent transaction. I wondered if indeed they had gotten the fee right and if they did, hoped they would get the procedure right. Hell, I paid more for a dental crown the week before.

The procedure

I went on to share more about the quality of care I felt I had received from the Community Hospital. In other words, both the doctors and the prep nurse were awesome. They were efficient, confident, and personable in the genuine ways that made me feel like I was seen as an individual and not just as a patient.

The prep nurse heard that I got my free COVID-19 test at the High School in Hamilton. She shared that her daughter was one of the National Guard Soldiers assigned there that day.

The doctor came in and informed me that those results were not in yet. But not to worry because he and the team (of two) were just going to double up on the protective gear.

The O.R. was smaller than most. I only know this because the anesthesiologist said, “It’s a little cozy in here Stephen, but I’ll have you out of here before you know it.”

As I was coming to after the procedure, the doctor — on his way out to throw hoppers on the bitterroot — told me he appreciated the good job I did on the cleanse the night before. He also told me that everything looked great.

“Maybe I’ll see you on the river one of these days, but not here again for another 10 years.”

The bottom line

No one has to die from colon cancer. If they do, it’s their own fault — unless, of course, they live in San Francisco.

Come get your free money! Buyers love rebates, right? It means a discount on the purchase price to the benefit of the customer, right? Well, not always. And it certainly doesn’t occur in the arena of prescription drug rebates.

Most people agree that prescription drugs have made life better. It is also evident that the cost of these medications is simply unreasonable for many Americans. This makes healthcare both unaffordable and inaccessible.

The role of pharmacy benefit managers (PBMs)

It has long been difficult to discern what is driving high prescription drug costs. This is, in part, because we don’t know what happens behind closed-door negotiations between the middlemen pharmacy benefit managers (PBMs) and drug manufacturers.

It is understood that these parties negotiate rebates related to new therapies. They also bundle older therapies together to protect market share from emerging generic competition. All of this impacts what patients pay, whether in the form of co-pays, deductibles, or out-of-pocket expenses.  

This endless circle of negotiations also drives up therapeutic list prices. These are the prices a manufacturer puts on particular products. That’s because when PBMs demand rebates, manufacturers in turn raise list prices to maintain their profit margins.

In fact, research from the Schaeffer Institute at the University of Southern California (USC) shows there is a positive correlation between drug rebates and list prices. They found that on average, every $1 increase in rebates is associated with a $1.17 increase in list prices. Notably, this increase isn’t because of time trends as that was controlled for in the study along with the exclusion of drugs with high Medicaid share.

It also affects patient out-of-pocket costs

Patient out-of-pocket spending goes up when there are high list prices. This is because the portion the patient pays is based on the list price. Hence, if there is a high list price then a disproportionate burden is placed on the buyer (patients) in the form of high-cost sharing. This is particularly true when the patient’s out-of-pocket share is coinsurance (a percent of the list price) as opposed to copay (a fixed amount).

Unlike other industries where rebates benefit the buyer at the point-of-sale, patients seem to see no direct benefit from these negotiated drug rebates. All of this begs the questions – if rebates are flowing through the health system, where are they going and how are they being used?

Redirecting Rebate Returns

On July 24, the Trump administration signed a new Executive Order specifying that Medicare Part B will not be subject to “retrospective reductions in price that are not applied at the point-of-sale.” They are specifically referring to reductions in price that benefit health plan sponsors, pharmacies, or PBMs instead of patients.

The order also authorizes Health and Human Services (HHS) to create new avenues that would permit “health plan sponsors, pharmacies, and PBMs to apply [negotiated] discounts at the patient’s point-of-sale in order to lower the patient’s out-of-pocket costs…”

This is a positive step forward to changing market dynamics to give patients direct benefit from these discounts and help reduce patient spending. But we must remember that it only impacts a portion of patients who need to access prescription medications.

It does not impact those with private insurance or no insurance. Until this is addressed, secretly negotiated rebates will continue to cost patients rather than save them money.

How patients are harmed by drug rebates

To better understand how patients are harmed by rebates, let me take you through a hypothetical case.

Patient Jane Smith is on Medicare. She gets her biologic medication from her local pharmacy. She has a chronic disease and must have reliable and affordable access to this therapy.

The medication prescribed by her doctor is designated by her health plan as a Tier 5* drug. It carries a 30% coinsurance. The list price of a 30 day supply of her drug is $333.33, therefore her share of cost is $100/month. 

If the correlation described by the Shaeffer Institute holds true and the rebate is now increased by $15, then $17.55 ($15 x 1.17) is added for a new list price of $350.88. Her 30% coinsurance out-of-pocket would then increase to $105.26  


      *Understanding formulary tiers

There is variation in the way health plans create their formulary tiers. Some have 3 tiers, others 4, 5 or even 6 tiers.

In order to explain what tiers are and how they work, let’s look at BlueCross/Blue Shield’s Medicare Formulary Tiers:

        • Tier 1: This prescription drug tier consists of the lowest-cost tier of prescription drugs, most are generic.
        • Tier 2: This tier consists of medium-cost prescription drugs. Most are generic but some are brand name prescription drugs
        • Tier 3: This prescription drug tier consists of high-cost prescription drugs Most are brand-name prescription drugs that are preferred by your insurance plan.
        • Tier 4: The prescription drug tier that contains higher-cost prescription drugs. Most are brand-name prescription drugs that are not preferred by your insurance plan and some specialty drugs.
        • Tier 5: This prescription drug tier consists of the highest-cost prescription drugs, most are specialty drugs.


Shedding light on the secrecy of the system

I hope this discussion sheds light on some of the secrecy of the system and the middlemen that are a part of it. And, I hope you now understand how patients are harmed financially by this system.

This is because there is more than a dollar-for-dollar increase in list price when rebates increase. Therefore, the PBMs’ demand for rebates is partially responsible for the increasing list prices that make medications unaffordable for patients across the country.

The Schaffer Institute data further suggests that rebates are part of the problem but also part of the solution. Rebates have a role in increasing drug prices. I believe, if fairly distributed, that they could also have a role in lowering drug prices, potentially lowering patient cost and thereby increasing access to medication.

This begs the question: If PBM’s main claim to business is that they are bringing patient costs down and yet their need for higher rebates is causing the opposite effect, why are they so opposed to reforms that actually may accomplish that goal better than the current system?

The Burden Remains on Patients

Over the past decade, what patients pay for prescription drugs (the sticker price after manufacturer discounts) increased more than three times faster than the rate of inflation. This is according to a study published in the Journal of American Medicine.

  • Impact of chronic illness

This is a huge burden particularly for people living with chronic illnesses. These individuals often require long-term (or lifetime) access to medications.

The drugs they take are often high-priced, complex medications. As a result, these patients have a much higher average drug spend than people without such illnesses. Whenever they fill or refill their prescriptions, they are faced with the burden of high out-of-pocket costs.

As rebates flow through the system and secret negotiations continue, drug prices go up. Some patients may find that they can no longer afford the therapies prescribed by their health care team. This means that these patients are forced to take a chance with their health in the face of financial struggle.

  • Non-adherence to treatment can lead to expensive complications

When a patient is forced to abandon their medication because they can’t afford it, they take a chance that their health could deteriorate leading to complications that require expensive interventions.

Surely, what we’ve learned during the COVID-19 pandemic is that we do not want to overwhelm our health systems with easily avoidable scenarios. Making medications affordable and accessible to patients is the ultimate goal. This will lead to an increase in medication adherence. And, it would potentially improve health outcomes and reduce negative outcomes.

If rebates and PBMs are in fact, partially responsible for the increase in list prices and therefore the increase in patient out-of-pocket spending, we need to work towards eliminating or reducing rebates negotiated by PBMs.

The bottom line about drug rebates

We need more transparency and regulation in our healthcare system to make medications more affordable. We must shine a spotlight on how rebates and drug prices are related and negotiated. It will help improve our ability to advocate for policies that benefit patients rather than middlemen.

As a first step, HHS needs to implement the President’s Trump new Executive Order swiftly and make sure patients get their needed and long overdue, drug discounts.

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Going to the gym in the morning is one of those things I do because it’s good for me and I feel better afterward. That doesn’t change my lack of enthusiasm. I get up early, put on my work-out clothes, and then start writing, delaying my gym visit as long as possible.

One morning, my trip to the gym was over icy sidewalks, so I walked carefully on the strip of grass between the sidewalk and the street, which was a little less slippery. I calculated that I had just enough time to get to the gym, get my heart rate up for 30 minutes, and get back to my next call.

A block from my house, I saw a young woman kneeling on the sidewalk. Two policemen hovered nearby as if to protect her. She wore a red coat, her red hat upside down about two feet away from her. As I got closer, I noticed blood on the sidewalk.

A teaspoon of blood looks like a quart, and this was more than a teaspoon. The young woman covered her face with bloodied hands.

Is there anything I can do?

Once I finally head to the gym, I am reluctant to stop for anything—that’s my way to get it over with. I grappled for a moment with the temptation to just keep going and get the miserable half-hour out of the way, but I finally did what my medical training compels me to do. I stopped.

Is there anything I can do?” I asked, identifying myself as a doctor.

I’ve called an ambulance,” the officer told me.

The woman started talking through her blood-covered hand, eyes red and damp. I sat next to her, eye-to-eye, and put my hand on her shoulder. My one-cotton-layer-covered butt settled on the sidewalk ice.

What happened?

I fell and broke my tooth.”

May I take a look? I used to work in an emergency department in a ski resort.”

Thinking like a doctor, coach and policy wonk

I asked her to open her mouth and she dropped her hand. She looked like a horror movie escapee. Blood was everywhere—head and lip wounds bled profusely—and her right front incisor was about half gone. She might need sutures, depending upon what happened behind her lower lip. Later, she’ll need a dentist to determine what to do about the injured tooth.

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My linear-thinking, differential-diagnosis, medical-school-trained, quick-assessment self-knew she was mostly just scared. She didn’t really need an ambulance. My coach trained self-listened to her story. My health-policy-trained self-wondered about her insurance.

I was torn between annoyance and ecstasy at having my workout cut short. What a great excuse to avoid the gym.

Is there anyone you can call?

I’ll call my boss,” she said. “She’ll come to the hospital for me.”

An ambulance was called

Fortunately, she was covered by her parents’ insurance policy, which was with a reputable company. Her insurance would most likely cover the emergency department visit, but it might not cover an ambulance ride. If the insurance company decides later, when they get the bill, that the ambulance wasn’t necessary, it could deny the claim—it doesn’t matter that the police called the ambulance and put her in it. That’s most likely a hit of a $1,000 or more.

She didn’t have to take the service just because the police suggested it. She could take a cab or call a friend. For that matter, she could say, “No, thanks,” and walk away, if she felt up to it.

Two taxis passed us on the street.

Do you have Uber?” I asked.

She didn’t.

Had the policemen not been there, I would have encouraged her to just call her boss to take her to the ER. She would have been fine. But she seemed pretty shaky and the EMT unit had already been called. I decided not to push the issue.

The nearest fire station, with the EMT units, was only about five minutes away. When it comes to hospitals, you never know which one they’ll take you to. A few years back, a DC ambulance driver was at the end of her shift when she picked up an unconscious man. She assumed he was just drunk and dropped him at a hospital close to her house, instead of the nearest one. It turned out that he had been whacked over the head in a mugging during an after-dinner walk. He died from the head injury.

The case only made the news because the man happened to be a prominent journalist – a sad commentary on our system.

Cost and care 

This woman wasn’t going to die, but what hospital she would end up at was a crapshoot. It had nothing to do with what her insurance would cover. Even if the hospital was on her health plan, the emergency room physician might not be.

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The plastic surgeon, the ER would likely call, might or might not be a preferred provider with the insurance company’s negotiated rate. I doubted that she had the provider list in her pocket. Also, the ER would probably just contact whoever was on call. Was she supposed to ask them to look up her company’s provider list? Decline the care? I could only hope that she would have the presence of mind to ask the right questions before she ran up a bill that would bankrupt her.


Too many people end up like that woman, getting random treatment because they either can’t speak for themselves or don’t ask the right questions.

There’s so much to think about when you’re injured, in pain, and distressed. What if you’re comatose? In another city? Don’t have anyone to run interference, as I tried to do? Any passer-by can step in, can be present, for an injured person. However, once the authorities arrive, that opportunity is gone. The police only let me help because my MD degree gave me credibility and confidence.

By the time an ambulance showed up about 20 minutes later, I knew I could feel entirely justified in skipping the gym. I shared what I knew with the paramedics, who guided the injured woman into the back of the ambulance. They would clean up the blood and assess the injury. I suggested the closest hospital, which I was pretty sure her policy covered.

Replaying the story

I pushed the lazy demon off my shoulder and hauled myself to the gym, anyway. As I shuffled the day’s schedule to accommodate an abbreviated workout, I told the desk attendant the whole story.

On the elliptical, my brain had replayed that woman’s morning. There were so many moving pieces. Everyone followed the rules. The police called professional help, and the in-the-moment handoff to the kind EMT went smoothly. I tried to provide comfort by sitting down to talk to her and touching her to help her feel less alone. I hope that helped. Still, the whole experience bothered me.

Everyone did their job that morning. But that woman may just be starting a long battle with her insurance company. The desk attendant who heard me out just shook his head, baffled, as I unloaded my frustration on him.

I’m from Germany,” he said. “We don’t have these problems.”



Published on 2/18/15. Updated 8/17/19.

No, this is not a story about a holdup. Or maybe it is. It is, after all, about the high cost of life-saving drugs.

A group of about 120 leading hematology-oncology specialists from 15 countries in 5 continents published an article in the journal Blood on April 15, 2013. It is titled “Price of drugs for chronic myeloid leukemia (CML), reflections of the unsustainable cancer drug prices: the perspective of CML experts.

As Andrew Pollack reported in the NYT on April 25, 2013:

“The doctors and researchers, who specialize in the potentially deadly blood cancer known as chronic myeloid leukemia, contend in a commentary published online by a medical journal Thursday that the prices of drugs used to treat that disease are astronomical, unsustainable and perhaps even immoral. 

They suggested that charging high prices for a medicine needed to keep someone alive is profiteering, akin to jacking up the prices of essential goods after a natural disaster”

Strong words indeed, coming from physicians and researchers not known for inflammatory statements. These are people who are in the trenches, daily bearing witness to the tragedy of patients pushed to bankruptcy in order to buy the medicine that will keep them alive.

The high cost of drugs: The Gleevec story

Gleevec is a drug used to treat Chronic Myelogenous Leukemia (CML), a blood cancer. The history of its discovery is instructive.

White cells in CML have an extra long chromosome, called the Philadelphia chromosome, which is a result of translocation of a piece of DNA from one chromosome to another.

This mutation causes the enzyme (a tyrosine kinase called BCR-ABL) to become permanently switched to the ‘on’ position. BCR-ABL is part of the cascade of signals that instruct a cell to divide. The result is uncontrolled cell division. This, of course, is the definition of cancer.

Dr. Brian Druker of Oregon Health & Science University toiled in his lab for many years studying the role of this key enzyme in the pathogenesis of CML.

His work was funded by grants from NIH, NCI, and the Leukemia Society. It resulted in the synthesis of a molecule that inhibited the “switched on” enzyme and cured mice that served as a model for CML.

The miracle drug

Armed with this data, Druker approached Nicholas Lydon, a biochemist at Novartis and persuaded him to test molecules from his company’s library of compounds. After several iterations imatinib was born. The compound was eventually given the brand name of Gleevec. 

The results of small Phase 1 and Phase 2 trials were astounding. The Philadelphia chromosome completely disappeared in over 80% of patients’ cells.

Time magazine promptly put Gleevac on its cover with the moniker ‘miracle drug’.


Indeed, Gleevec is the first example of a rational drug design, where the target’s structure is known and a drug is then designed to inhibit its activity by binding to it.

The abject immorality of profiteering

So what is the good doctors’ problem? They couched their paper in economic terms: the drug is outrageously expensive.

Gleevac, and drugs like it, are going to bankrupt us all – not just the patients – because in the last analysis, we are all paying.

But there is another aspect to the oncologists’ rage. They call it profiteering. This term connotes economic wrongdoing, which it is, but really doesn’t capture the abject immorality of pricing these types of drugs out of the reach of the people who desperately need them.

Novartis argues that few patients actually pay the full cost of the drug. They also say that prices reflect the high cost of research and the value of a drug to patients. But, as we noted above, the main funding sources for Druker’s research was the government and non-profit organizations.

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Drug development costs vs the high cost of drugs

The initial clinical trials were minuscule (about 100 patients) because of the excellent results the drug showed. The FDA approved the drug in a few months. This was a record time.

Further, if we allow the high estimate of $30,000 per patient in the trial, we arrive at the relatively measly sum of $3 million. This is a far cry from the $1 billion and 20 years that the industry claims that it costs to develop a typical drug.

And, what is the company making on this drug? In 2012 the company had sales of $4.8 billion out of a total market of $7 billion for CML. How did Novartis manage to make so much money despite increasing competition from new drugs?

They did it by jacking up the annual cost of the drug. Prices went from $30,000 when it was introduced in 2001 to over $100,000 in 2013 when this article was first published.

Without ascribing unethical or immoral motives let me just point out that the patent for Gleevec was due to run out in 2016. Novartis simply acted the way economists would advise it to do: squeeze out as much profit as possible while the going was good.

What happened when the patent ran out?

On Feb. 1, 2016, Sun Pharmaceutical Industries Ltd. — based in Mumbai, India — launched generic imatinib. This heralded a new chapter in the story of targeted therapy for CML and related conditions.

At the time, a one-year supply of 400 mg imatinib pills (the standard dose for chronic phase CML) cost roughly $120,000 per year. The expectation was that the introduction of the generic drug would precipitate a sharp drop in the cost of imatinib.

A study published in May 2018 in Health Affairs tells us that this did not happen as expected: the price of the generic version only declined by 10% in the 20 months after its introduction on the market.

As the authors note:

“The case of generic imatinib demonstrates several potential barriers to effective generic price competition for specialty prescription drugs, including

  • fewer market entrants,
  • smaller-than-expected price reductions,
  • shifts in prescribing toward more expensive brand-name treatments, and
  • limited uptake of the generic product”.

Isn’t competition supposed to lower prices?

How could that be? Competition is supposed to lower prices, right? I leave this to the health economists but here is an interesting tidbit to chew on.  The prices of new branded tyrosine kinase inhibitor drugs are even higher than Gleevac!

Is there a tacit, if not overt, “understanding” to keep prices up? Again, I am straying into fields beyond my pay grade.

But you don’t have to get a degree in ethics or moral philosophy to realize that there is something profoundly wrong with charging whatever the traffic will bear when the alternative is certain death.

Such a stark choice happens in armed holdups or with Mafia-like offers that you can’t refuse.

Do people really die because they can’t afford the drug?

In reality, do people really die because they can’t afford the drug?

It turns out that the mortality from CML in the U.S is higher than expected if Gleevec were taken in the recommended doses. The suspicion is that patients are skipping doses to save money.

In developing countries, patients can’t even dream of buying this drug. There, physicians perform bone marrow transplants instead. The mortality rates from the procedure approach 50%.

Final thoughts on the high cost of drugs

Free-market ideologues never tire of quoting Adam Smith and the invisible hand.

What they are missing is that Adam Smith was not an economist. He was a moral philosopher. And, he was grappling with the dilemma of harnessing economics in the service of humanity, not vice versa.

This moral person would probably turn in his grave had he seen the extreme perversion of his writings.

Originally published on April 25, 2013, this post has been revised and updated by the author. It is, unfortunately just as relevant today as when it was first written almost six years ago.