How U.S. Health Care Broke The Bank

Published Jan 9, 2020, 9:00 AM

In 2020, Americans will spend almost $4 trillion on health care. Yet for all that spending, Americans overall tend to be less healthy and die younger than citizens of other wealthy nations. The cost of health care has become so burdensome that people all across the United States are forced to make difficult choices every day: forgo urgently needed medicines or treatment for serious injuries out of fear the cost, even with insurance, could bankrupt them. How did the U.S. health-care system get this way? And what are some people trying to do to change it? This season’s Prognosis explores these questions. 

A woman getting off a subway in Boston fell and got her leg trapped between the train and the platform. The Boston Globe reported that she was injured so badly the bone was exposed, yet she begged bystanders not to call an ambulance because she worried it would cost too much. Last year, Box told the story of a mother who parked outside a hospital with her toddler after the child swallowed some dramamine pills. She waited in the car for hours to see if her daughter would get sick, without ever going inside. She said she was afraid of what she might be charged for any treatment. American healthcare is the most expensive in the world. We're now at the point where it's squeezing every aspect of American life, from spending by government and employers to individuals. Many people are forced to make terrible choice is in their everyday lives because they think they can't afford care. How we got to this point is the story of a system that was allowed to grow out of control. Welcome to Prognosis, Bloomberg's podcast about the future of healthcare. I'm your host Michelle fay Cortes. Healthcare spending in the United States approached four trillion dollars. That's almost one fifth of our economy. Yet for all that money, Americans are sicker and they die younger than people in other wealthy countries. This season on Prognosis, we're exploring the high cost of American healthcare and why the system here fails so many people. Over the next four episodes, Bloomberg reporter John Tozzi will take us through an exploration of how healthcare got so expensive in the United States. He'll look at how the steep price tag can damage lives and distort our economy, and what some people are trying to do about it. Here's John with the first episode. About two years ago, Megan Nasman caught the flu. Megan is thirty four. She lives in Berea, Kentucky with her husband and young son. It was her husband who got sick first. He got the flu and was was home was really laid up with it. A couple of days later, I got the flu as well, and the illness quickly turned serious. So that was on a Monday when I started feeling bad. On that Wednesday, I was actually admitted to the i c U for septic shock from the flu and pneumonia, sepsis, and septic shock are life threatening conditions caused by your body's response to an infection. In septic shock, your blood pressure drops dangerously and your organs can fail. Megan's doctors initially thought that her septic shock might have been caused by a urinary tract infection or U T I. Later I found out that wasn't the case, but that the blood in my urine was because my kidneys were starting to shut down. Septic shock is fatal. About the time Megan was hospitalized for almost a week. She went home on a Monday, but her health scare wasn't over by Friday night. She thought he might be getting sick again. I got up in the middle of the night one night to pee and my urethra felt irritated. So I was worried, and I thought, oh, geez, do I have a U T I, which I knew could lead to sepsis again. Megan didn't know what to do. She thought about going to the emergency room. Her health insurance had covered her earlier hospital stay, but she also wanted to make sure that it would cover a new visit. Even though Megan has health insurance, the cost of medical care is often on her mind. She has severe asthma and her medication cost about a thousand dollars a month without coverage. When I go and I log into my Anthem account and I see the price of the claims for the year, I think this year, I'm up around twenty seven thou dollars that if I didn't have insurance, would be more. There was another reason Megan wanted to be sure she would be covered if she went back to the hospital. She and her husband were saving up to buy a home. We were looking to buy a house, so we had been saving up for a down payment and we were thinking, like, well, one uncovered e er visit could wipe out a significant chunk of what we have as a down payment for a house. But the pain wasn't going away, so Megan called her insurance company. So it's the middle of the night. I am bone tired from being in the hospital for a week, from having a nine month old I was still breastfeeding at the time. UM I called the Anthem nurse line on my my card and I say, hey, I know that Anthem said it won't cover emergency room visits for what they deemed to be not emergencies. I asked Anthem, Megan's insurance company, to comment on her story with her permission. In their statement, Anthem said that quote consumers who reasonably believe that they are experiencing an emergency medical condition should always go to the emergency room or call. But Megan didn't know if it would be considered an emergency. I said, you know, can you just confirm, can you just tell me that under these circumstances, I should go to the er and it will be covered. And they couldn't. They didn't have that authority within the system, so they couldn't guarantee that. So here's Megan. She's just out of the hospital from an infection that could have killed her. She thinks she might be getting sick again with the same thing, and instead of going straight to the hospital, she calls her health inference company. She wants to know whether the hospital trip might wipe out her savings. Instead, they said, you know, well, it's it's up to you. And I was feeling panicky because you know, I had just gone through a near death situation and trying we were trying to weigh you know, what do we what do we do? What? What can we afford what can we not afford? Megan is far from the only person who has had to make this kind of decision. Federal surveys say that about ten of American adults skip or delay healthcare because of the cost. The situation Megan faced is a symptom of a much bigger problem in American healthcare. It's both really expensive and it often doesn't work very well for a lot of people. It doesn't work very well because it's so expensive. The health care system in the US is just a never ending sequence of impossible problems. That's Austin fact. I'm a health economist with the Department of Veterans Affairs, Boston University School Public Health, and the Harvard th h chn School of Public Health. Austin started out studying physics and engineering, but he was eventually drawn to health economics. He's interested in health care for the same reason most Americans find it so frustrating. It doesn't make any sense. I love problems and I love puzzles, so I find that motivating and interesting. Austin says, the biggest problem in American healthcare is the price tag. I think the top line problem is just that it is so expensive. I mean, it's so much more expensive than anywhere else in the world. It's to the point where a family that gets health insurance through their employer that costs over tars a year now for a family. That counts what workers pay for their insurance premiums and the money their employers can tribute, and it doesn't even count out of pocket expenses like deductibles or co payments. That's like having a family buy a new car every year, obviously an economy car, not like a Mercedes, although in a few decades maybe they'll be like making them by a Mercedes every year. So I think that drives everything else about what we're concerned about. When you add up all the money that the government, private employers, and families spend on healthcare, it will be about four trillion dollars. That's about eighteen of America's gross domestic product. It's a lot more than in other wealthy democracies, or health spending typically makes up about ten of the economy. That includes countries with publicly run health care systems like the United Kingdom and places with private insurance like the Netherlands. This outsized cost of US healthcare affects americans lives in real consequential ways. Not long after she finished college, Megan had an offer for her dream job, working as a naturalist at an outdoor education center. I was super excited about the naturalist role. You know, that was what I what I thought I wanted to be when I grew up sort of thing. But there was one hitch. The company had a year long waiting period before new employees could join their group health plan. This was before the Affordable Care Act, and insurance companies could have denied making coverage because her asthma was a pre existing condition. My prescriptions were nine a month or so if I didn't get sick. She couldn't afford to pay that out of pocket. She did briefly consider a more radical way to get health coverage. I did have friends somewhat seriously offer, you know, if you can't get this workout worked out, we can have basically a sham marriage for you to have health insurance through my employer. But Megan didn't elope for the health benefits. Instead, she took a different po vision that let her hold on to coverage. The choice influenced the path of her whole career. I didn't have the privilege of good enough health. To be able to make my decisions around my passions, my education, I had to make a choice based on you know what, literally would keep me breathing. Choices like this play out all over the country. Employers choose between giving workers a raise or paying an increase in their health insurance premiums. States choose between funding public colleges and building roads or funding state medicaid programs. We're putting more and more money into the healthcare system. That leaves less money to invest in other things. And for all the trillions of dollars that we spend on healthcare each year, we're not doing better than other countries that spent less. In fact, life expectancy in the United States is lagging behind other wealthy democracies. There are a lot of other things that affect life expectancy beyond medical care, but economist Austin fract says, if we spend money on healthcare in order to feel better and live longer, Americans are spending more than other countries and we're getting less for it. You might ask the question which countries are more efficient, as as every country has put more dollars into their health care system and they all have over over the last forty years, Um, which country is getting more value for those dollars? And uh, you know in every country, you know, life expecting is going is going up. In every country they're spending more. But per dollar, how much is life expectancy going up? Uh? And in the US it's a lot less than in other countries. And here's the thing, it wasn't always this way. As recently as the eighties, are health care spending resembled that of other countries, and our life expectancy was similar as well. For many of us, this problem that we're talking about, the wild expense of American healthcare, has grown up in our own lifetimes. It's not some law of nature that American healthcare has always been more expensive and always will be. Something happened that caused the price of our care to skyrocket. Three big things make the story different in the United States. First, we never set limits on what we'd pay for new treatments. Second, the health care system became a lot more complicated, and third, the health care industry became much more consolidated. First, let's talk about new treatments. Our technology has become so much more sophisticated since the new scanners like m r s let doctors look inside the body. Extraordinary medical procedures like organ transplants became more common, and new drugs hit the market. We've had this explosion of new technology, new treatment's, new diagnostic tests a FIFA as a physician and professor at Harvard, these are good things, right, They've made people healthier and live longer and live better. But all that comes at a price. After all, investors took some risk to develop new treatments. Businesses don't bring new products to market if they don't expect to make a profit, and America has just been willing to pay much higher prices than the rest of the world. Other countries responded by putting in breaks into the system. They put in a whole bunch of things to kind of control that spending. The United Kingdom created a group twenty years ago to evaluate new health technologies and decide whether they're worth the cost. But as other countries put some limits on what they would spend on healthcare, the United States just didn't. That allowed medical costs to rise faster as we paid more and more for each scan, hill or procedure. The second reason that healthcare got so expensive in America is that the system became a lot more complicated. Insurance companies made patients, doctors and hospitals jumped through more hoops to prove that treatments are necessary. Here's Austin behind the scenes. Mostly to us is a huge army of people who are managing how the hospital and doctors are going to get paid for those services. And that's extremely complicated because exactly how they get paid, uh, depends on our particular insurance, and my insurance is different from your insurance. And finally, the health care industry also became more consolidated. Insurance companies merged into bigger insurance companies. Hospitals joined together to form big health care systems that dominated local markets. They can command more market power, they can command higher prices. That's going to drive your premiums up. Bigger healthcare entities are also more politically powerful. They can influence government policies that affect how much we pay for healthcare. Then, Medicare is a government plan. It sets prices, there's no negotiation involved, it just sets them. But it is subject to the political process. And healthcare is now so big again almost one fifth of our economy, that it is also a major political player and healthcare organizations, hospitals, physician groups. They have a lot of political clout and uh they're able to influence how prices are set through public programs to keep them higher than they would otherwise be. So in America, we didn't really limit what we would pay for new medical technologies. We watched as our system grow more and more complex, and healthcare organizations got bigger and more powerful, and year by year, the small difference is between what Americans spend on healthcare and what other countries spend became big ones. The result is the most expensive healthcare in the world. Researcher Ashish jah says healthcare in the US is even more costly than pricing countries like Switzerland. Everything there is so much more expensive than most American cities except one thing. You know, if you need an m R I in Geneva, you're gonna end up spending probably half of what you would spend in Topeka, Kansas, or in Boston. It's really about the craziness of the pricing in the US, much more than it is that somehow the Swiss I've figured out how to do m r s cheaper. The fact that we spend so much more than everywhere else has huge consequences for our economy, our government, and for each of us. People and organizations are constantly forced to make the kind of choices that Megan has had to pay for healthcare or pay for something else. Megan was grappling with this choice on that night in February. She feared she might be sliding back into a life threatening illness. The call with a nurse from her insurance company didn't make her feel any better. After I had talked to the nurse, my husband and I were basically deciding, Okay, we've been saving for years, since before we even knew each other, for a down payment for a house. So we have this little nest egg. Should you go to the emergency room and we maybe lose that that that sense of security we've been working for if somebody at Anthem says that wasn't an emergency. The nurse told Megan that her temperature would rise if she was becoming septic again, so she and her husband decided that they check her temperature every half hour. If it started to go up, they'd go to the emergency room. So instead of sleeping, like you might think would be great for somebody who just got out of the hospital, has been through this tremendously traumatic situation. I was staying up, I had a little time around my phone and I would just sit an alarm um and I just kept monitoring my temperature um instead of going into the emergency room to just have a simple ten minute U t I test because I didn't know if it would cost us the ability to buy a house. Megan's temperature didn't rise, and she didn't go to the emergency room. In the morning, as soon as it opened, she went to a retail clinic at a Kroger supermarket nearby. She got a lab test that was much less expensive than it would have been at the hospital. She didn't have a new infection. The pain she was feeling was a side effect of other medicines she had been taking. In a statement of Bloomberg News, Anthem said that when Megan called the nurse line quote, she was provided the recommendation to be seen by a doctor that evening or at the latest in the morning. Further recommendations included the option to have a consult with a physician end quote through Anthems seven telet Health Service. Anthem also said that the nurse line doesn't have access to members plan or coverage details, so Megan was instructed to call customer service. If you just look at this on paper, Megan's story might be considered a success. Emergency rooms are some of the most intensive and costly resources in the health care system, and insurers try to reduce costs by keeping people out of hospitals when they don't need to be there. If Megan had gone to the e R, it could have cost her insurance company or her family thousands of dollars more than waiting until the morning. But that's on paper, and if you talk to Megan, it's clear that she does not feel like this was a good outcome. She says she feels traumatized by the experience. I know that hospital bills can be way out of line with what you think feels reasonable and what does feel reasonable. Um, so we didn't feel like we could afford um to take that risk, which is atrocious. You know, I had just almost died. Megan and her husband are middle class, educated professionals. They're not poor, and they have health insurance. Yet they're among the millions of Americans whose lives are shaped by the high cost of healthcare. Every day this four killion dollar problem is only getting more serious. For years, experts and politicians have called this level of healthcare spending unsustainable, but each year the price tag goes up. It is is faster than inflation and faster than wages, and as the cost of healthcare rises, we have less and less to invest in all the other things we want and need. That's it for this week's prognosis. In coming weeks, we'll visit some novel approaches to solving the healthcare cost puzzle. Do you have a story about healthcare in the US or around the world. We want to hear from you. Find us on Twitter at fay Cortes or at Jaytaws. If you were a fan of this episode, please take a minute to rate and review us. It really helps new listeners find the show and don't forget to subscribe. This episode was produced and edited by Top Foreheads and Rick Shine. Special thanks to help team leader Drew Armstrong. Francesca Leavie is head of Bloomberg Podcasts. Thanks for listening.

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