Why Medical Bills In The US Are So Expensive — Transcript

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1. 0:00They billed our insurance company over $3 million for the cost of transplant. Then I have another EOB
2. 0:07right 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.
3. 0:16How could you even begin to pay that?
4. 0:19We hear so much about how expensive medical bills are, we've almost become numb to it.
5. 0:24In 2017, 1/3 of the money raised on GoFundMe went towards medical campaigns. And the site raises
6. 0:31$650,000 a year for more than 250,000 medical campaigns.
7. 0:41Luca was born with Alveolar Capillary Dysplasia and Hirschsprung's Disease. At
8. 0:46three weeks old, he had surgery to remove part of his colon. At two
9. 0:51months, he went into cardiac arrest. And at five months, he had a lung
10. 0:54transplant. His parents had to turn to fundraising almost immediately just to keep up with the medical bills.
11. 1:01They did a clamshell approach and he has several scars from all of the other surgeries.
12. 1:07So when did the U.S. health care system go from a philanthropic program to a
13. 1:12multi-billion dollar industry? And where do the funds go once the bills are paid?
14. 1:22Today, the U.S. health care system is in a sort of tug of war between physicians, hospitals, pharmaceutical companies, shareholders and insurance companies.
15. 1:31The list goes on. But for this video we'll just focus on these entities. Caught in the center of it all are the patients.
16. 1:39We're often not able to provide the type of care that we want because of the cost of care.
17. 1:44Most Those costs are now forcing a growing number of uninsured or underinsured Americans into traveling abroad for medical treatment.
18. 1:50Everyone started thinking of health care as a business where the metrics were profit, return on
19. 1:58investment, efficiency, and those aren't the metrics of health but that's how we judge hospitals today.
20. 2:03You would think that they would be looking out for your chronically ill children and you know all of the
21. 2:08medications and and things like parking at the hospital.
22. 2:14No. No that's not covered.
23. 2:17But before we get to all of this, let's rewind to understand how we got here.
24. 2:22This chart is a pretty good place to start.
25. 2:25The data shows health care spending versus life expectancy. The rest of the world pretty much stays the same course.
26. 2:32But around 1980, the U.S. veers off.
27. 2:35I like to say it's kind of the, the road to hell is paved in good intentions
28. 2:39because everything we've done was in the name of better health.
29. 2:44To be clear, growth in U.S. health care spending has slowed over the past few years but it's still way higher than in
30. 2:51other wealthy countries. Before government programs like Medicare and Medicaid, Blue Cross and Blue Shield
31. 2:58were the main providers of health insurance in the U.S. At the time they were nonprofits and accepted everyone
32. 3:04who wanted to sign up. But at this point, it wasn't to control costs. It was really insurance in a worst case scenario.
33. 3:11And after World War II, employers started offering health insurance. Suddenly demand was booming.
34. 3:19From 1940 to 1955, Americans with health insurance went from 10% to more than 60%. That demand created
35. 3:27a business opportunity, and for profit companies started rolling in.
36. 3:32Insurance was the first sector because it's in some ways the original sin, in
37. 3:38the sense of it separated the consumer from payment right. So it felt like nobody was paying.
38. 3:45By 1951, Aetna in Cigna were major players in the for profit health insurance market. And in 1965, President Johnson established Medicare and Medicaid.
39. 3:55This medical insurance for those over 65 will become effective July 1st.
40. 4:01Even so, the for profit insurance market continued to gain steam through the 70s
41. 4:06and the 80s, capturing more and more of the health insurance market. Meanwhile
42. 4:11the first for profit hospitals started popping up around the country.
43. 4:15When Medicare and Medicaid started, there were none. But by 1983, one in seven U.S. hospitals belonged to an investor-owned
44. 4:23multi-hospital system. By the 90s, Blue Cross and Blue Shield had merged but they were losing money, fast. And in 1994,
45. 4:33they let their local companies turn to Wall Street to stay afloat.
46. 4:37Hospitals 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.
47. 4:44But then you know there are all these doctors in the hospitals. They see all these business consultants coming in.
48. 4:49They see the hospital's CEO making two million dollars a year and they're
49. 4:54feeling like wow we're suckers. You know we're working our tails off here, and we want in too.
50. 4:59Essentially hospitals went from being run as a philanthropy to being run as a corporation. But these corporations aren't selling just another widget.
51. 5:10They're putting a price on human health.
52. 5:12The health care industry is now the country's biggest employer. And those employees need to get paid. Throughout
53. 5:19all of this is private capital, and lots of it. You would think that if hospitals are becoming more efficient the cost to
54. 5:27consumers should go down too. But that hasn't necessarily been the case. And a lot of that has to do with the billing
55. 5:33system. Of course doctors need to get paid. There are admin costs and medical supplies and technology. But instead of
56. 5:40this three page bill you'd get in Belgium, medical bills in the U.S. look more like this.
57. 5:46I 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.
58. 5:55We talk a lot about the billers and the coders and the consultants who really are removed from health care. They're
59. 6:02not there because they care about health, they're there because they see a business opportunity. And you know you
60. 6:09can't blame them in the sense that that's what their companies are supposed to do. They're looking for business, so
61. 6:14a 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
62. 6:21somebody'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.
63. 6:31But how come those bills are so long? It has to do with something doctors call unbundling. Think of it like buying a
64. 6:37plane ticket. You pay for the ticket itself, but there are a lot of extra charges squeezed into your final bill.
65. 6:45$30 for a checked bag. $50 for a few extra inches of leg room and another $3 for water.
66. 6:51You get the gist. People get irate about it in an airline ticket but in
67. 6:55healthcare 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
68. 7:01say that's not normal in other countries.
69. 7:04Hospitals do this through a complex system of codes.
70. 7:08New patient visit: 99201-05. Emergency room visit: 99281-85. Burn due to water skis on fire: V9107.
71. 7:20Yeah there really is a code in case your water skis burst into flames, you know,
72. 7:25as they do. Different codes mean different prices. Just take the codes
73. 7:31for a laceration. You'll be charged a different amount depending on the size of the cut, where it's at on your body
74. 7:37and how complex the suture is. Coding historically was about tracking diseases., right.
75. 7:42But in the U.S., pretty much alone, how you code a patient interaction is a billing construct. Again something
76. 7:51that would had scientific and medical purpose gets translated into a business asset.
77. 7:56Every day we spend hours going through check boxes, typing notes, documenting things that we're supposed to
78. 8:02document for billing purposes, that we really don't think improves patient care. The more that you spend time
79. 8:08with computers, the more that we spend time billing, that means a lot less time for face to
80. 8:13face interaction with our patients. And that's why most of us got into medicine in the first place.
81. 8:19There are benefits to taking down all that data. In theory, it can lead to better results in the long run.
82. 8:25Doctors 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
83. 8:32concerned about malpractice lawsuits, so they order more tests to protect themselves. Bills keep getting longer,
84. 8:38and health outcomes aren't always getting better. The American Hospital Association declined to comment on
85. 8:44criticisms of the current hospital system. But they do have a fact sheet
86. 8:49explaining that hospitals often don't get paid the full amount that the bill.
87. 8:52The AHA claims two-thirds of community hospitals lose money when the government
88. 8:57pays Medicare and Medicaid bills. And that "the hospital payment system itself is broken."
89. 9:04And of course a big part of that health care spending is on drugs and supplies,
90. 9:08both of which can be hard to get insurance to fully cover.
91. 9:12Oh, thank you Luca. Can you show us what's in that box?
92. 9:15Are these your ostomy bags? So we get 10 per box and that lasts me about two and a
93. 9:22half days. What they're currently charging me is one $1,178 this month for those boxes.
94. 9:34Thank you!
95. 9:35Let's talk about one of the biggest issues weighing on the pharma industry right now and that is drug prices.
96. 9:41From $18 a tablet jumping to $750 a tablet a 4000 percentage just 24 hours.
97. 9:48Do you feel badly about what's happening? No in fact we're increasing access to patients, Meg.
98. 9:52We've all heard about Martin Shkreli raising the price of Daraprim. But what about Colchicine or Epinephrine? The
99. 9:58prices of those drugs have both skyrocketed because one company has control over it. The response is usually
100. 10:04the same, the companies need to raise prices to fund the research and development for the next drug.
101. 10:09For the most part high priced drugs have patent protection from the government.
102. 10:13They 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
103. 10:22company that makes it, no one else can make it. And since it might be absolutely necessary for your life,
104. 10:28they're in a position where they could charge anything they want.
105. 10:30How is that possible? Well there's not really anyone stopping it.
106. 10:35Once people realized you can get away with this stuff it became a race to the top.
107. 10:41It's also important to remember that many of these costs are adding up during a very stressful time.
108. 10:46Sometimes the people paying the bills aren't even conscious.
109. 10:50The analogy I often make is firefighters when they come to a burning house. So
110. 10:55when your house is on fire, your family's inside, you don't want to be sitting there negotiating with
111. 10:59firefighters. Oh you know I'm going to pay you $300,000 they want $400,000.
112. 11:04That's not how you want to do this. And often health care does have that character.
113. 11:08Medical emergencies are chaotic. And health insurance is confusing.
114. 11:13There are HMOs, PPOs, deductibles, copays and premiums to try and make sense of.
115. 11:18You'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.
116. 11:24Not every doctor accepts every insurance plan. And some hospitals have staff employed by multiple third party
117. 11:30companies. So one trip to the E.R. could get you five different bills and your insurance might only cover one.
118. 11:36I actually stopped taking ambulances.
119. 11:38Really. We had one really really close
120. 11:40call where Luca was pretty unstable. We knew things were going south and we
121. 11:47drove him to the hospital instead. I sat in the back and slowly increased the
122. 11:52oxygen the entire ride and my husband was driving 120 mpg down 95 because it was faster and cheaper for us to do it
123. 12:02that way. When you're being slammed with those type of bills like you just can't incur any extra costs.
124. 12:09And 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.
125. 12:14Today nearly 30 million Americans are uninsured. That's down from roughly 55
126. 12:20million in 2010 before the Affordable Care Act. But it's still a higher percentage than countries like France, Japan and Israel.
127. 12:28The insurance companies are supposed to be negotiating their prices lower
128. 12:31because in a lot of cases they're ultimately the ones footing the bill.
129. 12:35But as we've seen over the last few decades, those costs can still get
130. 12:39passed onto consumers. Health costs and contribute to all sorts of inequalities in society.
131. 12:44So people who are poor or middle class even, they're just one serious illness away from bankruptcy.
132. 12:51So where do we go from here?
133. 12:53Once there's all this money sloshing around in the system there's this kind
134. 12:57of pile on effect where everyone wants to grab their bit of this huge pot of
135. 13:04money. And now what we have as we're trying to take it back and reduce costs
136. 13:10is everyone is desperately clinging to their piece of the pie.
137. 13:20Of course, health care costs have the potential to impact your personal budget if you're paying for insurance or
138. 13:26when you get sick. But it also impacts the country's bottom line. The government currently spends more than
139. 13:32$1 trillion on health care. And the CBO expects spending on Medicare and Medicaid to double in the next 10 years.
140. 13:40That's not just because the population is getting older. A large part of that spending will come from health care
141. 13:45getting more expensive. There's no magic solution as to what to do next.
142. 13:50But people are at least starting to think about the steps it will take to turn things around.
143. 13:54One is having a lot more transparency.
144. 13:57Both doctors and patients and their families should have an understanding of roughly what it's going to cost.
145. 14:03Alternative route, having some sort of government manufacturing facility so that you could say to Shkreli's:
146. 14:09"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."
147. 14:15Peekaboo. (laugh) Ready. Peekaboo.
148. 14:19There is a very very strong possibility that Luca will need a second lung transplant before he's ten years old.
149. 14:25He's already had one and they will list him for a second. And right now the
150. 14:30policies 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.
151. 14:41Like I don't know if I'll ever see him get married. It's just so unknown.