Insurance _Why Medical Bills In The US Are So Expensive

Medical Insurance

They billed our insurance company over $3 million for the cost of transplant. Then I have another EOB right after it was it was another $1 million.So you’re looking at a $4 million transplant. I don’t know what people do without insurance. How could you even begin to pay that? We hear so much about how expensive medical bills are, we’ve almost become numb to it. In 2017, 1/3 of the money raised on GoFundMe went towards medical campaigns. And the site raises $650,000 a year for more than 250,000 medical campaigns. Luca was born with Alveolar Capillary Dysplasia and Hirschsprung’s Disease. At three weeks old, he had surgery to remove part of his colon. At two months, he went into cardiac arrest. And at five months, he had a lung transplant.

His parents had to turn to fundraising almost immediately just to keep up with the medical bills. They did a clamshell approach and he has several scars from all of the other surgeries. So when did the U.S. health care system go from a philanthropic program to a multi-billion dollar industry? And where do the funds go once the bills are paid? Today, the U.S. health care system is in a sort of tug of war between physicians, hospitals, pharmaceutical companies, shareholders and insurance companies. The list goes on. But for this video we’ll just focus on these entities.

Insurance _Why Medical Bills In The US Are So Expensive
Insurance _Why Medical Bills In The US Are So Expensive

Caught in the center of it all are the patients. We’re often not able to provide the type of care that we want because of the cost of care. Most Those costs are now forcing a growing number of uninsured or underinsured Americans into traveling abroad for medical treatment. Everyone started thinking of health care as a business where the metrics were profit, return on investment, efficiency, and those aren’t the metrics of health but that’s how we judge hospitals today. You would think that they would be looking out for your chronically ill children and you know all of the medications and and things like parking at the hospital.

No. No that’s not covered. But before we get to all of this, let’s rewind to understand how we got here. This chart is a pretty good place to start. The data shows health care spending versus life expectancy. The rest of the world pretty much stays the same course. But around 1980, the U.S. veers off. I like to say it’s kind of the, the road to hell is paved in good intentions because everything we’ve done was in the name of better health. To be clear, growth in U.S. health care spending has slowed over the past few years but it’s still way higher than in other wealthy countries.

Before government programs like Medicare and Medicaid, Blue Cross and Blue Shield were the main providers of health insurance in the U.S. At the time they were nonprofits and accepted everyone who wanted to sign up. But at this point, it wasn’t to control costs. It was really insurance in a worst case scenario. And after World War II, employers started offering health insurance. Suddenly demand was booming. From 1940 to 1955, Americans with health insurance went from 10% to more than 60%.

That demand created a business opportunity, and for profit companies started rolling in. Insurance was the first sector because it’s in some ways the original sin, in the sense of it separated the consumer from payment right. So it felt like nobody was paying. By 1951, Aetna in Cigna were major players in the for profit health insurance market. And in 1965, President Johnson established Medicare and Medicaid.

This medical insurance for those over 65 will become effective July 1st. Even so, the for profit insurance market continued to gain steam through the 70s and the 80s, capturing more and more of the health insurance market. Meanwhile the first for profit hospitals started popping up around the country. When Medicare and Medicaid started, there were none. But by 1983, one in seven U.S. hospitals belonged to an investor-owned multi-hospital system. By the 90s, Blue Cross and Blue Shield had merged but they were losing money, fast.

And in 1994, they let their local companies turn to Wall Street to stay afloat. Hospitals I think were the first to realize, well we can charge whatever we want for these things because it feels like no one’s paying. But then you know there are all these doctors in the hospitals. They see all these business consultants coming in. They see the hospital’s CEO making two million dollars a year and they’re feeling like wow we’re suckers. You know we’re working our tails off here, and we want in too. Essentially hospitals went from being run as a philanthropy to being run as a corporation.

But these corporations aren’t selling just another widget. They’re putting a price on human health. The health care industry is now the country’s biggest employer. And those employees need to get paid. Throughout all of this is private capital, and lots of it. You would think that if hospitals are becoming more efficient the cost to consumers should go down too. But that hasn’t necessarily been the case. And a lot of that has to do with the billing system. Of course doctors need to get paid.

There are admin costs and medical supplies and technology. But instead of this three page bill you’d get in Belgium, medical bills in the U.S. look more like this. I am my son’s secretary and I spent a lot of time taking care of just just medical bills ,and phone calls, and that type of thing. We talk a lot about the billers and the coders and the consultants who really are removed from health care. They’re not there because they care about health, they’re there because they see a business opportunity.

Insurance _Why Medical Bills In The US Are So Expensive
Insurance _Why Medical Bills In The US Are So Expensive

And you know you can’t blame them in the sense that that’s what their companies are supposed to do. They’re looking for business, so a collection agency that does health care, you know to them a bill is a bill is a bill. They don’t care if it’s for somebody’s heart transplant or someone who was not very judicious and spent a lot more money on a Rolex watch that they couldn’t afford. It’s a bill. But how come those bills are so long?

It has to do with something doctors call unbundling. Think of it like buying a plane ticket. You pay for the ticket itself, but there are a lot of extra charges squeezed into your final bill. $30 for a checked bag. $50 for a few extra inches of leg room and another $3 for water. You get the gist. People get irate about it in an airline ticket but in healthcare we’ve kind of come to accept it as, oh that’s just normal. And part of the reason I wrote the book is to say that’s not normal in other countries.

Hospitals do this through a complex system of codes. New patient visit: 99201-05. Emergency room visit: 99281-85. Burn due to water skis on fire: V9107. Yeah there really is a code in case your water skis burst into flames, you know, as they do. Different codes mean different prices. Just take the codes for a laceration. You’ll be charged a different amount depending on the size of the cut, where it’s at on your body and how complex the suture is. Coding historically was about tracking diseases., right.

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But in the U.S., pretty much alone, how you code a patient interaction is a billing construct. Again something that would had scientific and medical purpose gets translated into a business asset. Every day we spend hours going through check boxes, typing notes, documenting things that we’re supposed to document for billing purposes, that we really don’t think improves patient care. The more that you spend time with computers, the more that we spend time billing, that means a lot less time for face to face interaction with our patients.

And that’s why most of us got into medicine in the first place. There are benefits to taking down all that data. In theory, it can lead to better results in the long run. Doctors may find things later that they didn’t catch in the moment. But at the end of the day, it’s just not working in the U.S. Some doctors say they’re concerned about malpractice lawsuits, so they order more tests to protect themselves. Bills keep getting longer, and health outcomes aren’t always getting better. The American Hospital Association declined to comment on criticisms of the current hospital system. But they do have a fact sheet explaining that hospitals often don’t get paid the full amount that the bill.

The AHA claims two-thirds of community hospitals lose money when the government pays Medicare and Medicaid bills. And that “the hospital payment system itself is broken.” And of course a big part of that health care spending is on drugs and supplies, both of which can be hard to get insurance to fully cover. Oh, thank you Luca. Can you show us what’s in that box? Are these your ostomy bags? So we get 10 per box and that lasts me about two and a half days. What they’re currently charging me is one $1,178 this month for those boxes. Thank you! Let’s talk about one of the biggest issues weighing on the pharma industry right now and that is drug prices.

From $18 a tablet jumping to $750 a tablet a 4000 percentage just 24 hours. Do you feel badly about what’s happening? No in fact we’re increasing access to patients, Meg. We’ve all heard about Martin Shkreli raising the price of Daraprim. But what about Colchicine or Epinephrine? The prices of those drugs have both skyrocketed because one company has control over it. The response is usually the same, the companies need to raise prices to fund the research and development for the next drug. For the most part high priced drugs have patent protection from the government.

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They pretty much have a monopoly in a market so very often you have someone who needs a specific cancer drug. One company makes it, they’re the only company that makes it, no one else can make it. And since it might be absolutely necessary for your life, they’re in a position where they could charge anything they want. How is that possible? Well there’s not really anyone stopping it. Once people realized you can get away with this stuff it became a race to the top. It’s also important to remember that many of these costs are adding up during a very stressful time. Sometimes the people paying the bills aren’t even conscious. The analogy I often make is firefighters when they come to a burning house. So when your house is on fire, your family’s inside, you don’t want to be sitting there negotiating with firefighters.

Oh you know I’m going to pay you $300,000 they want $400,000. That’s not how you want to do this. And often health care does have that character. Medical emergencies are chaotic. And health insurance is confusing. There are HMOs, PPOs, deductibles, copays and premiums to try and make sense of. You’d think that if people are insured, they shouldn’t have to pay that much out of pocket. But that’s not always the case. Not every doctor accepts every insurance plan. And some hospitals have staff employed by multiple third party companies. So one trip to the E.R. could get you five different bills and your insurance might only cover one. I actually stopped taking ambulances. Really.

We had one really really close call where Luca was pretty unstable. We knew things were going south and we drove him to the hospital instead. I sat in the back and slowly increased the oxygen the entire ride and my husband was driving 120 mpg down 95 because it was faster and cheaper for us to do it that way. When you’re being slammed with those type of bills like you just can’t incur any extra costs. And I’m a nurse so I figured I was in the backseat and if I had to do chest compressions I was going to do chest compressions. Today nearly 30 million Americans are uninsured. That’s down from roughly 55 million in 2010 before the Affordable Care Act.

Insurance _Why Medical Bills In The US Are So Expensive
Insurance _Why Medical Bills In The US Are So Expensive

But it’s still a higher percentage than countries like France, Japan and Israel. The insurance companies are supposed to be negotiating their prices lower because in a lot of cases they’re ultimately the ones footing the bill. But as we’ve seen over the last few decades, those costs can still get passed onto consumers. Health costs and contribute to all sorts of inequalities in society. So people who are poor or middle class even, they’re just one serious illness away from bankruptcy. So where do we go from here? Once there’s all this money sloshing around in the system there’s this kind of pile on effect where everyone wants to grab their bit of this huge pot of money.

And now what we have as we’re trying to take it back and reduce costs is everyone is desperately clinging to their piece of the pie. Of course, health care costs have the potential to impact your personal budget if you’re paying for insurance or when you get sick. But it also impacts the country’s bottom line. The government currently spends more than $1 trillion on health care. And the CBO expects spending on Medicare and Medicaid to double in the next 10 years. That’s not just because the population is getting older. A large part of that spending will come from health care getting more expensive.

There’s no magic solution as to what to do next. But people are at least starting to think about the steps it will take to turn things around. One is having a lot more transparency. Both doctors and patients and their families should have an understanding of roughly what it’s going to cost. Alternative route, having some sort of government manufacturing facility so that you could say to Shkreli’s: “OK you want to do that, guess what? Next week, we’re going to be on the market and we’re going be selling this stuff for a dollar two dollars a pill.” Peekaboo. (laugh) Ready. Peekaboo.

There is a very very strong possibility that Luca will need a second lung transplant before he’s ten years old. He’s already had one and they will list him for a second. And right now the policies in our health care system is they do not list him for a third. So I do not know if I will see my child ever hit his teens or early 20s. It’s pretty scary. Like I don’t know if I’ll ever see him get married. It’s just so unknown.

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