It’s safe to say that heath insurance is not only one of the most hotly debated topics in our country, but also one of the most misunderstood. The health care industry is this behemoth that we can’t escape, no matter how inefficient and exorbitantly expensive it is. We need lifesaving drugs and surgeries and cancer treatments. But at what cost?
The Affordable Care Act was enacted to, well, make care affordable, because the system was swallowing us and our paychecks alive. But while the ACA helped an estimated 16 million more Americans get health insurance, it’s far from perfect. While some people finally got insurance and could receive the treatments they needed, others were left with premiums they could no longer afford.
To better understand the subject and and how our health care system became the big, nauseating mess it is today, we talked with Elisabeth Rosenthal, M.D., author of the upcoming book An American Sickness: How Healthcare Became Big Business and How You Can Take It Back . Dr. Rosenthal is a physician turned health reporter who has spent more than 20 years writing about health.
Her goal with this book: To help us understand how things got so bad and suggest ways to fix it. Here’s what she had to say.
In your book, you talk about how health insurance began. What did that look like, and what made it successful?
Dr. Rosenthal: In our country, the origins of insurance began around the start of the 20th century. In those days, medicine couldn’t solve a lot of problems, so it was more of a way to supplement your income if you fell ill. It started as an idea at a hospital in Texas that saw when they were trying to collect bills for people who were sick, that a lot of them went unpaid. The hospital offered a teacher’s union to pay a set monthly fee in exchange for paying for illnesses that put people out of work. They had what we’d call a deductible, where you paid for the first part of treatment and insurance kicked in for the next few.
So how did we move so far away from a system created to truly help people when they were sick?
Over time, what we’ve seen in health care is an inflationary cycle, where people have insurance but then progressively we get more—drugs, antibiotics, anesthetics, better surgical techniques. The more medicine can do, the more you need insurance because health care costs more. A lot of health care has been what I’d like to call kind of keeping up with the joneses. My neighbor has it at his job, so I want it too. So health care got more expensive, insurance became more widespread, and more people wanted it.
One major stepping-up point in this process was during World War II, when it was against the law to raise salaries but employers could give people health insurance. As it is today, you may make less, but if the job has health benefits that counts for a lot. Progressively, insurance expanded, and health care was tied to work. But people over 65 don’t work, so we needed a way to pay for them, so that’s where Medicare came in.
Thinking about basic supply and demand, it makes sense. Can we pinpoint one party responsible for the big price increases?
One of the reasons I wanted to write this book is to help people understand what this process is like and that we don’t have one single villain. It’s a natural thing for everyone to want a bad guy. It’s big pharma, it’s insurers, it’s hospitals. I think there’s plenty of blame to go around, and that’s what I want people to understand. It’s a system that evolved with the best intentions and has gotten out of control and is now extremely dysfunctional. There are factors that are better or worse, but the ultimate result is that instead of being a caring profession focused on health, this has become a big business focused on what will make money.
This is terrible for patients and for a lot of doctors out there just trying to do the right thing for patients. Some of my best sources for the book were physicians who said this is really painful for them. They think they’re helping a patient by taking out their appendix, and then the patient comes back saying they have a $20,000 bill and can’t afford it. If you’re a caring doctor, which most of them are, you’re in a terrible position.
And when you really look at a $20,000 medical bill, you find you’re paying for so many little things. How did billing get so granular?
It’s called unbundling, taking a single medical event and instead of charging for one thing, you start picking off parts and billing separately for them. That progressively happened. It might make sense to separate the hospital fee from the doctor fee, or the anesthesia fee from the ob/gyn fee. But then it turned into, “Oh, well, let’s charge for the birthing tub separately, and IVs, and that epidural kit. If you decide to keep the baby in your room, we’ll charge a rooming-in fee because we won’t be collecting a nursery fee.” It kind of spiraled out of control and now we see these bills for pregnancy that are $15,000 to $30,000, where in the rest of the world it’s just a tiny fraction of that.
What happens next is insurers say that’s too expensive, so they negotiate a lower rate with the hospital. But that hospital wants its income, so the next solution is to get patients to pay the first $2,000, or a copay on the hospital fee but not on the lab. And then instead of getting one bill, you get five different bills and each lists a bunch of things and often in code. So you owe $732, and you’re like what, why? It’s really a shockingly complicated system.
When you just had surgery or a baby, you don’t want to spend the next three months arguing with your insurer and figuring out how much you owe. It’s a terrible thing to ask of a patient at a time of their life when the focus should be on other things.
It almost feels malicious, like insurance companies want us to be confused so we don’t question it and just write the check.
One of the examples I’d like to use is a basic blood test patients get a lot that measures sodium, glucose, and other things. You draw one tube of blood, and it goes into a machine and all those numbers spit out. At some point consultants came into the mix, and they were like, “Gee, why are we billing it as one test, we could bill it as seven tests. $50 for sodium, $50 for glucose, etc.” But it’s all automated, you can’t really get one test without the other, and before you know it, you have a bill that’s 10 times what it used to be for the exact same test.
When they unbundle that test and make it into seven, in the past, insurance would just pay, so it didn’t feel like it was hurting the patient and the labs got more money. But what happened over time is that we started to get high-deductible plans and more copays, so we’re feeling those costs more. What we don’t see, and partly why I wanted to write the book, is why do you think copays are going up? Because some of us pay those bills.
So when we just let insurance pay because it’s not coming out of our pockets, we’re basically condoning the high prices?
The ultimate pocketbook is you and me, but it’s not always that direct. If someone came to you and said they were going to charge $30,000 for sinus surgery, you’d say no way. But as it is, maybe insurance will cover it all, maybe they’ll negotiate a discount and cover most of it and you’ll get a bunch of bills at the end, and each of them will be $100 here or $50 there. And they really add up. A lot of people are now finding that it’s unsupportable. Maybe you can afford them but then you can’t go on vacation, or you won’t go to grad school. If we’re paying more than we should for basic health care, that involves so many trade-offs.
When we ask people why they don’t have health insurance, and I’ve spoken to hundreds of people who didn’t want health insurance, they say it’s because it’s unaffordable. It’s a choice between health insurance or putting their kid in preschool.
How is it that the price of one procedure can change dramatically from hospital to hospital, even in the same city?
[Laughs] Well, the simple answer is we as patients and our insurers allow it. We like to say it’s market-based health care, but there’s no market, really. When you’re ordered to get an MRI scan no one says to you, “This is going to be X price and if you go down the block it’s going to be one tenth.” And if you try and get that information, you’re frequently at an impasse.
In health care, there’s so little rhyme or reason to the pricing and it’s partly because there isn’t a real market. You don’t know prices, you can’t find prices, you don’t get them before the procedure. Which kind of gets into why we need a more systemic solution. People always want one answer but there’s a whole menu of things that can make this function better, not one of which will be the entire answer.
What are some of those solutions?
It’s a very difficult problem to solve, but it’s not unsolvable and there are a lot of things that will make it better. Many of which have been tried elsewhere and even here on a small scale. For example, let’s talk about drug pricing. One of the ideas on the table in Congress is if we should let Medicare negotiate drug prices. Medicare insures people over 65 for the most part, but once we have that yardstick for pricing, then other insurers can say they want that pricing, too. Another option is called reference pricing, as many European countries do, where we negotiate with pharma and say, “You can charge what you want but we won’t pay more than Canada, Germany, etc.” We can also import drugs from other countries. Imagine what TVs would cost if you couldn’t buy an imported brand.
There are many things that can be done, all of which require a far greater degree of transparency than we have now. When a drug is prescribed, you and your doctor likely have no idea what that will cost. My husband got in a bike accident and had a blood clot, so he needed to take heparin every day. I went to fill his prescription and the pharmacist said, “That will be $2,500.” I was like, “I’m a physician and I know that’s not worth $2,500.” I felt like it was robbery, and I almost didn’t take it. But then I said, “Wait, I need this, it could be life-threatening.” So what happens to the person who can’t put it on their credit card? I got most back after arguing with the insurance company, but that’s not a system. That’s not right.
In some countries like Australia, patients have the right to an estimate of what the bill will be like when they go into the hospital. A lot of countries have price lists in doctor’s offices. In most states I can’t see a price list, it’s considered privileged information. I can guarantee if hospitals posted prices, they’d be so embarrassed to say what they’re charging. I think that kind of transparency would help at least as a first step to bring down prices to a more reasonable level.
As patients, what can we do until there’s some sort of systemic change that actually makes health care affordable?
To me the, first step is understanding what’s behind those bills. Why are the prices this high? In understanding how that evolved and how that works, I had a much better sense of what we can do about it as individuals and what we can do as a country. For me, I realized, “I don’t have to write these checks, there’s stuff I can do, everyone can do, to make this really dysfunctional system function better for ourselves.”
For example, we’ve seen issues with out-of-network lab billing. We’re told under the Affordable Care Act that a preventive physical is covered, and then we’re suddenly getting bills from the lab for $1,000. So start asking your doctor to send lab tests to a lab that’s in your insurance network. This will not always be easy because if your doctor works for a hospital network, they may have to use a specific lab. If they can do it, they will have to fill out a form and that protects you from a bill you’d have to fight and don’t have a good leg to stand on to fight it. In some states, there are surprise billing laws, so you can download a form and get protection. But no one’s going to offer that to you; you have to know it exists. [Editor’s note: To find out if your state offers this protection, check with your insurance company, or a do quick online search of your state and “surprise billing laws” to learn what options you have.]
Some other tricks I have for women specifically: If you can’t find a new ob/gyn in your insurance network, try a male doctor. Sometimes you can find a really great male ob/gyn in-network. In most states, you need a prescription for oral contraceptives, but in some states it can be pharmacist-prescribed. Check. Pap smears are only recommended once every three years, but you have to go back every year to pay the doctor just to renew your birth control prescription. Maybe it’s time to ask your ob/gyn to do those renewals by phone. There are a lot of things we can ask for that we don’t feel entitled to ask for, because that’s not the way the doctor-patient relationship has worked in this country. But these costs come out of your pocket and impact other things you do in life, so it’s important to begin acting the part of health care consumer, not patient.
My dad told me to always ask the doctor before they do any test or procedure, to make sure it’s included.
Doctors are just checking off boxes and usually don’t really know how much something is going to cost. They may not know the lab isn’t in your insurance network. When someone says they’re going to just draw a little blood, I ask what it’s for. And I ask them to make sure it’s sent to an in-network lab. I suggest people ask about the structure of the practice, if the doctor is part of a hospital, if you’re going to be charged a facility fee, if the doctor has the ability to refer you to doctors outside of that health care system. For a referral for a test like an MRI, ask to be referred to the cheapest one in the neighborhood that your doctor thinks is high quality.
The Affordable Care Act had great intentions, but prices still seem to be out of control for many people.
What came out of the very prolonged congressional progress was a very watered-down version of what President Obama initially proposed. In the process of getting it approved, some features proposed initially had to be removed. The ACA couldn’t do what it set out to do, which was provide affordable health care for every American. It did establish insurance as a fundamental right and got millions of new people insured. But how individuals fared really varies a lot depending on where you live and where you stand on the income spectrum.
There was a slice of the population that benefited enormously from the ACA and got health care for the first time, affordable care that covered preexisting conditions that had made them uninsurable under the old system. But there was a slice of Americans buying health insurance on their own who may have had policies they liked before, and premiums and copayments went up really significantly. When you buy insurance as an individual, you don’t have a big company negotiating on your behalf, so you’re stuck with the options available in your immediate vicinity.
The ACA did important things, but it did not make health care affordable for every American. But to say it’s completely the ACA’s fault premiums are going up everywhere isn’t really fair or accurate. We have unsupportable prices and costs of health care in this country, and no plan has really tackled that head-on. This remains a holy grail for us all, figuring out how to reduce the financial strains we have from the health care industry. I think neither the ACA nor whatever comes next will be able to really solve this health care Rubik’s Cube until we address this pricing problem directly and head-on.