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by: Jewel Pfannerstill


Jewel Pfannerstill
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S. Rightmire

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S. Rightmire
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This 9 page Class Notes was uploaded by Jewel Pfannerstill on Thursday October 22, 2015. The Class Notes belongs to LING 12 at University of California Santa Barbara taught by S. Rightmire in Fall. Since its upload, it has received 14 views. For similar materials see /class/226918/ling-12-university-of-california-santa-barbara in Linguistics at University of California Santa Barbara.

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Date Created: 10/22/15
Hidden Costs Of Health Care National Public Radio s Fresh Air March 11 2009 TERRY GROSS host We just heard one story about facing off with a healthinsurance company that refused to pay for an illness To explain why our health insurance system often seems irrational we invited Uwe Reinhardt a health care economist who is a professor at Princeton N A He39ll also give us his analysis of President Obama s health care plan Reinhardt is a past president of the Association of Health Services Research and served as a commissioner on the Physician Payment Review Committee established by Congress P Uwe Reinhardt welcome to FRESH AIR You chaired a commission and you were appointed by Governor Corzine of New Jersey So it was a commission to recommend how to make the New Jersey health care system more rational Dr UWE REINHARDT Health Care Economist Princeton University Correct GROSS And in one of the chapters of the report you write about the economics and performance of New Jersey hospitals And in this chapter you write about how many different prices there are for the same procedure at one hospital And New Jersey is typical of other states in this matter Why are there so many different prices for any one given procedure at a hospital 0quot 9 Dr REINHARDT Well every insurer negotiates with every hospital the prices for thousands of different things And so for a simple procedure like a colonoscopy one insurer will have 30 different prices one for each hospital And then the same hospital might get five different prices from the same insurance company depending on whether it39s an HMO contract a PPO contract an indemnity contract and so on 8 And I was astounded at the range of prices across the state just this little state that some hospitals get maybe 400 for a colonoscopy and another one might get 3000 for a colonoscopy 5 You asked what drives this It can39t be cost because they cost pretty much the same It39s just bargaining power That39s all it is 0 GROSS And then you also write that hospitals attempt to shift costs from one payer to another or from one service line to another based on relative profitability So I guess one way of counteracting this kind of wacky array of costs is to shift the cost from one payer to another What do you mean by that Dr REINHARDT Hospitals will tell you that Medicaid typically pays less than the full cost of servicing Medicaid patients Similarly they claim Medicare pays them maybe 90 on the dollar of what it costs to serve Medicare patients And then they say this shortfall from the government payers we re going to simply add it to the tab of the commerciallyinsured patients or the selfpaying patients So we raise their prices That is what they mean by cost shift Hidden Costs Of Health Care Page 1 N GROSS Now you39ve also written about how hospitals have really large staffs of billing clerks just to haggle with insurance companies What kind of haggling goes on between the billing clerks and the insurance companies Dr REINHARDT Well the first thing is there is a haggling over the fee schedules that tie a hospital to an insurer But then you have a procedure and a patient gets something that may cost 100000 You submit the claim as a hospital to the insurer A 3 The insurer will now bargain with you and say was this procedure necessary And they haggle over the bill I39m on the board of the Duke University Health System where our bills often can be in the hundreds of thousands And so haggling over the bill is profitable obviously for the insurer and for the Duke 0quot But at Duke yeah we combined all the billing departments into one And at one point it was 900 We probably streamlined that down maybe to 600 700 billing clerks It39s a huge operation GROSS This is just for their health care system at Duke Dr REINHARDT Yeah It39s just for the health care system and just for the billing These people push paper They do not treat patients 9 9 GROSS I think sometimes individual doctors have to spend a lot of time haggling going to bat for their patients who have been denied reimbursement for a procedure that their doctor thinks is essential Dr REINHARDT I think that s true and doctors complain about it Even in an academic health setting you still have to fight to get something covered or not needing pre authorization because there isn39t time for it and so forth 5 m Q But doctors very often have to be the ombudsmen for their patients arguing with the insurance company There s no question it irritates doctors The interesting thing is America s doctors are probably the best paid doctors in the world and have a lot of freedom but they39re very unhappy And one of the unhappiness is this paperpushing and fighting with insurers and so on It39s not a good system m It39s actually in a way tragic when a nation spends as much on health care as we do that in survey after survey the American people rate their health system quite low by international standards m m I mean we always rank almost near the bottom in terms of patient satisfaction with the system And my argument is that isn39t over our doctors who are good and our hospitals and I think our health care system is actually very customerfriendly I really don t think it39s the delivery system people are complaining about It39s this hassle over how we pay for our health care m w Ithink how we pay for health care makes Americans very unhappy m P GROSS Uwe Reinhardt is a professor of political economy at Princeton University He39ll have more to say about our health care system in the second half of the show m Q I m Terry Gross back with health care economist Uwe Reinhardt He s a professor at Princeton University and has written extensively about the inconsistencies and inequities in our health insurance system We39re going to get his analysis of President Obama s Hidden Costs Of Health Care Page 2 m N m on m lt9 90 o w w m w w w P health care plan But rst let39s pick up where we left offihow patients and their doctors are constantly haggling with insurance companies over coverage for procedures and illnesses Do insurance companies sometimes intentionally withhold a payment and say oh no you re not covered for this procedure when they know that you areithat they have gured if they tell enough people that they39re not covered some of them will just kind of drop it and let it go instead of haggling and then the insurance company will save money Dr REINHARDT Actually I personally doubt that because for that to happen you would have to write this down somehow Because ultimately the people in the front line are fairly poorly paid people who have to implement the policy So you would have to have that written down somewhere and such a paper in the hands of a trail lawyer would be just dynamite So I very much doubt that this is really a form of policy that would happen or that the insurance companies would even intend to do that But there are obviously gray areas When you write an insurance contract with a private insurer it s called a socalled contingent contract meaning we will pay you if a certain contingency happens if you get sick Now describing that contingency is very very dif cult You have to understand these companies have shareholders and as a management you re not supposed to throw away shareholders money On the other hand you also have customers and you obviously do want to serve them and serve them properly But there are these gray areas where there is a question was this really insured To give you an example there was a case in California where a woman had breast cancer and the doctor wanted to do a bone marrow transplant The insurance company said no this is experimental We re not covering that That s not in the contract And they didn t Well the lady died The company was sued They had a 90 million settlement But some years later research did establish that bone marrow transplants don t work in this instance and what the company did was actually defensible So there are these gray areas Yet it might also have come out the other way that the research years later showed this really did work And then you make the company look like there were evil People have to understand that it s extremely dif cult to right an insurance company with a private and commercial insurer It39s different when you deal with the government They39ll either pay it or they won39t like in Canada GROSS Well as President Obama tries to rewrite some of America s health care policy and how we pay for health care you say that Americans are really suffering from cognitive dissonance about health careithat they distrust government They don t want government running the health care system And they supposedly have faith in markets but you say they39re unwilling to accept the harsh verdicts of the market in health care like when you re denied payment to reimburse you for a procedure Talk a little bit more about this cognitive dissonance that you think we suffer from in America Dr REINHARDT Cognitive dissonance of course means that you hold two different theories that are in con ict with one another but they39re both in your brain and in your soul That39s what this means Now for example you will have Americans say the government doesn39t have the right to tell me to buy health insurance But the same Hidden Costs Of Health Care Page 3 w on w m m N w on w lt9 4 o 4 m 4 w 3 4 on Americans would say if I get hit by a truck and I lie bleeding in the streets society owes it to me to send an ambulance and the emergency room doctors owe it to me to save my life How could both be true Even a teenager would blush at something this ridiculous If you believe society has a duty to save your life when you get hurt you have a duty to chip into a fund that pays for that GROSS The things that you describe as irrational in America39s current health care system can you nd these problems in other developed countries Dr REINHARDT No I don t think so The typical Canadian or German or Englishman understands that they have to pay taxes or premiums to be insured because you re all in this together because you also expect society to save your life when you get in trouble And they understand tit for tat I remember my own mother giving me a lecture once when she had to wait in Germany two weeks for the neighboring hospital to have a bed And I said oh I can make a phone call and get you in earlier And she said I was asocial She says then some other lady has to step back How could this be decent So here I felt lectured by my mother who had this sense of a social solidarity that yes we have a good health system but you also have to sometimes wait or step back to keep this affordable Americans complain about the cost of their health care but they have the desire I want everything my doctor prescribes whether it s appropriate or not and I want it today And then they go and look at God and complain about health care costs This is extremely frustrating GROSS My guest is health care economist Uwe Reinhardt He s a professor at Princeton University GROSS If you re just joining us my guest is health care economist Uwe Reinhardt He39s a professor of economics at Princeton University and he39s written extensively about the economics of health care President Obama is trying to reform health care in the United States He says his principles are coverage should be universal affordable portable and there should be investments in prevention and improved quality of care So those are his principles but he says he39s going to let Congress write the details of what the system will look like And I m wondering if you think there are inherent problems of letting politicians write health care policy when it comes down to the type of policy determining how insurance will look Dr REINHARDT No Ithink that s a smart approach We had the alternative the Clintons tried it where you had a whole bunch of wrongs 1000 policy people tucked away somewhere in Washington developing a finished plan where absolutely everything was determined by the White House presenting it to the Congress and saying please pass this plan And the Congress laughed and tore it up and threw it in the garbage can And that was that And the lesson we learned from that is since the politicians have to vote on this and appropriate the money they must have considerable say on how this looks So the Obama people are extremely smart laying out the principles and then letting the Congress spec Hidden Costs Of Health Care Page 4 this out Now on the Hill you can t 535 people write this obviously You have leaders Max Baucus Senator Baucus took the leadership last summer He has an exquisite staff of people They wrote a white paper and the white paper lays out a passable health reform plan 4 m It39s very similar to Obama s plan by the way But you could take that and start with it and then make amendments as other players Senator Kennedy Senator Orrin Hatch They are people in Congress in the Senate and the House who have specialized in health care In the House it would be Congressman Pete Stark for example These are really experts And they together Ithink could fashion a bill that obeys roughly the principle of President Obama But it s passable and fundable and so on So I think that is the approach that should be taken And fortunately Senator Baucus has already done most of the homework for that GROSS So what do you think about the basic principles of Obama s plan Dr REINHARDT Well the basic principles are sound and Ithink they would be shared Ithink they39d be shared by Senator McCain Everyone wants universal coverage wants health care to be efficient and affordable wants preventive care I don t think Senator McCain would have differed on those broad principles But if you go to the campaign Web site of then Senator Obama he was really quite specific in detail of how that thing should look For example he had proposed a Medicarelike plan for people under 65 Now in Medicare it s government run it s permanent it s portable and so on And Senator Obama said I want younger people to have the same right to have a plan that is portable that s permanent it s government runisomebody they ll trust That will be of course extremely controversial to the private insurance industry because they fear that they cannot compete with a public planithat Americans would gravitate more and more into it and eventually the private insurance industry would die out So the big battleground in the forthcoming health reform debate will be this idea of having a public plan And my gut tells me that maybe President Obama will possibly give up on that idea if in return the insurance industry comes to the bargaining table and gives him what he wants which is that any insurer must serve everyone who comes to them and the premiums cannot re ect the health status of the individual applicant for insurance 4 N 4 co 4 lt9 on c on on m So there is going to be some fierce horsetrading this summer over this And my gut tells me the public plan may very well become a victim of it on w GROSS And that in return we would getiyou could get health care in spite of any pre existing conditionithat would be irrelevant Dr REINHARDT Yeah But that only works if you mandate insurance If I haveiwe have in New Jersey for example what is called preexisting conditionsithis guaranteed issueiif you go to an insurance company they have to take you and they must charge all their customers the same rate whether they39re sick or healthy Well when you have on top of that that health insurance is voluntary then healthy people will not insure and take a chance on P on on And when they get sick they have the right to join the pool without having taken their sickness into account That system will inexorably lead to the death of the insurance plan Hidden Costs Of Health Care Page 5 on m on N on on on lt9 m o m m m m w m P And in New Jersey it is happening The private commercial insurance for individuals is so expensive that most people don t take it So Obama then would have to go and say okay like Massachusetts you must be insured It s mandatory And that s what the private insurance industry is saying If you want what is called community rate everyone the same premium then you have to mandate health insurance or this cannot work And the insurance industry is right on that one So there s much to do at the bargaining table this summer GROSS Do you think that the nature of support for health insurance reform has changed since the Hillary Clinton initiative of the 3990s Dr REINHARDT Yes Ithink in the 90s when Hillary Clinton came things were actually still pretty good and you had the AMA basically opposed to it The National Association of Manufacturers they thought they could handle it on their own The private insurance industry was pretty rambunctious with the Harry and Louise ad So they all thought if the Clintons just went away everything would be ne and they could handle it No one thinks that now The private insurance industry knows that it is actually a declining industry unless they get this new book of business from government So they are not opposed The hospitals and the physicians are desperate with patients that they serve who cannot pay them because either their deductibles are very high or they don t have insurance So it s really beginning to hurt the hospital and the physicians So they are on board The average American citizen even if you have a job today and you have health insurance you are thinking you might not have it tomorrow or next year and that wasn39t true in the 3990s People sort of felt secure So the whole landscape has changed GROSS If the new health care system mandated that everybody had to carry health insurance what kind of prices are we talking about here I mean I know the health care that you get through your job is usually pretty expensive A lot of people whoi particularly people who weren39t employed couldn t afford to pay that So how if it s mandated would people afford to cover themselves Dr REINHARDT Oh yes And Senator Obama and now President Obama had been very explicit to say there will have to be substantial subsidies to help lower income people buy this product And as you know in his speech the other day he said he39ll earmark particular sources of funds 634 billion for the next 10 years to provide these subsidies to low income people Now if you divide it by 10 that s about 65 billion a year andior 63 billion a yeariand he had in the campaign said he would roughly think of 65 billion a year So one could say he39s owning up to the campaign promise with those funds Whether he39ll get them is another issue that depends of course on the Congress But in any event I do believe he s making a very sincere effort to own up to a promise that he made My hunch is to get full insurance coverage for everyone in America The total amount of money the federal government would have to think about is probably more like 120 billion a year today or maybe for next yeariso double what he would spend But he never did promise that he ll go to 100 percent insurance coverage as Senator Clinton had promised He never did promise that Hidden Costs Of Health Care Page 6 m on m m m N m on N o N N m N m N P He said we ll make a substantial down payment and sort of covering half would in my view be an honorable gesture on this promise So Ithink one can be hopeful that something substantial will happen My own feeling on this would be the easy way to make sure if you re reasonableiwould be to have a debate on the following simple question What percent of a family39s discretionary income that is income after housing and food and clothingidiscretionary incomeiwhat percent of that should a family be expected to pay for its own health care If you look at upper income people like professors at Ivy League colleges you could say well that should be 15 percent Your income is such that we could expect you to eat at least 15 percent of your discretionary income If you look at a waitress you might say you know for her or him that couldn39t be more than five percent because their income is so low But can you see If we had a debate on what is it that one can reasonably ask fellow Americans to pay for their own health care you could get somewhere And I would hope President Obama would steer the debate into something that people can understand like this particular question GROSS My guest is health care economist Uwe Reinhardt He s a professor at Princeton University GROSS If you re just joining us my guest is health care economist Uwe Reinhardt He39s a professor of economics at Princeton University and he39s written extensively about the economics of health care Do you think if we pass health care reform and the insurance is all in the hand of private insurance or even if it s a combination of private insurers and government insurance that there will still be a class system in terms of the quality of health care that you get depending on the money that you re willing to pay for the insurance plan that you buy Dr REINHARDT I think it39ll happen although this is not really what Americans in general would like But it could happen in the following sense that you will get subsidies from the government that helps you buy a lowcost insurance product but that insurance product will cover only generic drugs and it39ll cover only certain hospitals that are low cost And if you want to go to another hospital they might tell you well we ll pay you what we would have paid for the cheap hospital but if you want to go to Columbia Presbyterian for example you pay the whole difference outofpocket yourself This is called reference pricing where the insurer pays for a standard model but if you want something more superior you pay the difference outofpocket I could see that come as the American solution to creating a classbased health system because you could say well we ll give you something but if you want sort of the superior model you have to pay it outof pocket That would be rationing by income class My hunch is at some point that s what we39ll do in this country But if any politician proposed that now it would still be politically incorrect GROSS Do you think that the direction we re headed in will keep our country as an employerbased insurance system for the most part Hidden Costs Of Health Care Page 7 N on N m N N N on N lt9 on o co on N on A on P on 0quot Dr REINHARDT I think some of the larger companies will always prefer to offer health insurance on the job because it s a good come on in the labor market And let39s not forget we now have great unemployment but the labor force in America is shrinking relative to the number of elderly and children So we will have a labor shortage in the next few yearsinot in the next three four years but in the next decades And havingioffering health insurance is a good come on in the labor market The problem with the American approach is you re losing that coverage just when you need it most which is when you become unemployed and you don39t have any income and you also lose your health insurance That is a very devilish system That doesn t happen in Canada If GM in Canada were to close the workers would not lose their health insurance They would lose their income but not their health insurance And in America you lose your job and your income On top of it you lose your health insurance There is no health policy analyst who would ever put in place such a system if we could do it all over again It39s an accident of World War II that we have it GROSS Now you know your way around health care policy that s for sure And you know a lot about health care economics What39s a typical problem you faced with getting your health care coverage Do you have to fight for things that you think should be insured and then you re told they39re not Dr REINHARDT No fortunately that really hasn t happened You know this complexity of claiming for health insurance is so awesome that my wife does it This goes beyond the capacity of a PhD in Economics So she does it and she tells me that claiming for health insurance is far more time intensive and complex than the income tax which she also does So she deals with it because my attitude always is oh geez I m so busy Why don t we just pay it and not argue Dr REINHARDT But she will argue because she said it s wrong GROSS See that s where they get you though right Like because they know some people are just not going to take the time Dr REINHARDT Yeah they won t take the time Now if it were a really big bill I m sure sheibut she fights even for smaller things if she thinks it s just wrong where you know a guy like me would say I know it s wrong but my time is too busy I ll just eat it And Ithink the insurance industry very often just relies on people like me and say we ll just eat it But fortunately we39ve not been so sick that it s ever been an issue And then if you work as a class employer like Princeton professors really have it good I mean we don t share the American experience frankly given we have tenure and given we particularly Ivy League we have good health insurance In some way I personally don t share the agony of the American people On the other hand I grew up in a tool shed and I know how good it was that when we were paupers my family we had health insurance like everyone else in Germany I ve never forgotten that and I would like the American people to have what I had and my mother had as a kid So that is why I care For me personally I m fine GROSS Any final thoughts you want to leave us with about the state of the current health care system or what changes you39d like to see made Hidden Costs Of Health Care Page 8 co m on N co co co lt9 lt9 9 lt9 lt9 N lt9 90 lt9 P lt9 Ln lt9 as Dr REINHARDT Well I would tell listeners stay away from people who try to solve the health care debate with cliches like oh this is socialized medicine and then you don t have to think anymore Try to actually think through the issues and say what is your predicament What kind of country would you want to live in Do you want to live in a country where someone who loses their job loses their health insurance Is that what you want Do you want a system where kids come out of college and for the next 10 years they can t get insurance You want people who have family members struck with cancer to lose their house or their car I mean ask yourself what kind of country do you want to live in And all of these things I mentioned we have now You lose your insurance with your job You can lose your house and go bankrupt over a health care bill No Canadians or Germans ever go bankrupt over medical bills Why should we in America do that And get away from the clich s And really this is my fellow Americans this really is your last chance If you don t get health insurance solved this year or the next year you are in for some really deep trouble GROSS Why now or never Dr REINHARDT Because you have a president who really is committed to this and it requires presidential leadership You also have a Congress whose leaders in health care are really committed to this idea And we are in a calamity we re in possibly a Depression we don t know but it could happen It39s sort of everything comes together and it s a unique opportunity to get this done We do know that in better times every time we tried it the demagogues won Harry and Louise won and this time Harry and Louise should not win You shouldn39t even listen to them GROSS You39re referring to the two characters on a commercial back in the 90s opposing the Clinton reform plan Dr REINHARDT Yeah Yeah And Ithink there is a group now gearing up and I hope that when they oppose whatever President Obama wants to do they will actually reason with it One can disagree honorably over many things in health policy but don t use cliches like socialized insurance The fact is that for the bottom half of the income distribution in America social health insurance is the only solution GROSS Uwe Reinhardt thank you so much for talking with us Dr REINHARDT It s been my pleasure and very good questions Thank you Terry GROSS Uwe Reinhardt is a professor of political economy at Princeton University You can download podcasts of our show on our Web site freshairnpr org FreshM1200 PM EST NPR Copyright 2009 National Public Radio AII Rights Reserved Transcript by LexisNexis News Hidden Costs Of Health Care Page 9


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