The Under-Insured: 'Health-Care Crisis Hits Home'

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The Under-Insured: 'Health-Care Crisis Hits Home'

TERRY GROSS, host:

This is FRESH AIR. I’m Terry Gross. Today, we’re talking about health
insurance, how broken the current system seems to be and President
Obama’s attempts to reform it.

The hard truth about our country’s health care system is just about
anyone could be one bad diagnosis away from financial ruin. Even if you
have a job that comes with insurance, coverage that may seem generous
when you’re healthy can prove insufficient if you find yourself really
sick.

These observations come from our first guest, journalist Karen Tumulty.
She writes about the health care crisis hit home in the cover story of
Time magazine’s current edition.

As a national political correspondent for Time, she’s covered health
care policy, but she was still unprepared when her brother, Pat - who
lives in Texas - was diagnosed with kidney failure and learned that his
health insurance wasn’t going to cover him for it.

It was particularly hard for Pat to adjust to the diagnosis because he
has Asperger’s syndrome, a disorder which is often described as high-
functioning autism.

Karen Tumulty, welcome to FRESH AIR. What was your brother’s problem
when he got caught in the whole health care system mess?

Ms. KAREN TUMULTY (National Political Correspondent, Time Magazine):
Well, my brother’s problem was something that showed up during a
physical that he took in December of 2007. It was showing high
concentrations of blood and protein in his urine. That turned out to be
very serious kidney disease, which was confirmed and pinpointed the
following August in a biopsy.

GROSS: Now, he had lost his employer-based health insurance when he lost
a previous job. What kind of health insurance was he carrying when he
got the diagnosis?

Ms. TUMULTY: Well, it had been six years since Pat had had a job that
had genuine, you know, employer-provided health benefits. So Pat went
out and did what seemed like the responsible thing at the time. He went
out and bought himself, on the individual market, the best insurance
policy that he could afford.

And it was a policy that was supposed to be a guarantee against
catastrophe. It carried a $2,500 deductible, a 50 percent co-pay. So
this was not something that he could use for day-in and day-out health
care, but it was there to guard him against a disastrous health event.

GROSS: Well, he had a disastrous health event. He was diagnosed with
kidney disease, and then he was denied coverage. On what grounds?

Ms. TUMULTY: Well, it turned out that the policy that Pat had bought was
– it was a series of policies, all from the same company. He never
missed a premium, but he had bought a series of six-month health-
insurance policies.

And what he didn’t understand was that each time he renewed that policy
every six months, it was treated as though he were a brand-new customer.
And so the reason that his coverage was denied was that the first test
results that indicated he could have a problem, even though he was not
aware of the implications of those results, had shown up under a
previous policy. So the insurance company came back and declared it a
preexisting condition that they were not going to cover.

GROSS: Even though they were covering him at the time, but it was a
different six-month leg. So…

Ms. TUMULTY: Well, that’s what – yeah, that didn’t make any sense to me,
either. So I figured it just had to be some kind of, you know,
bureaucratic mix-up or something, or, you know, okay, if this policy
doesn’t cover him, well maybe that old one did. But I found out I was
wrong.

GROSS: And so you – I mean, you know what you’re doing. You’ve covered
health insurance. You’re a national correspondent for Time. You know how
to work the phones, how to talk to people, how to find out information.
You did your best to get them to admit that they were wrong and to cover
him, and they weren’t saying that at all.

They were saying no, he’s not covered. And you were making no progress

at all. But you finally did, through a lot of investigation, find out
something that had happened to a couple of subsidiary companies of this
insurance company. Tell us what the insurance regulators in Connecticut
found out about this company.

Ms. TUMULTY: Well, it was after I was well into the research for this
story that I discovered that the very same health insurance company had
been fined $2 million last year by the Connecticut insurance
commissioner for doing practices that - to my ear, at least - seemed a
lot like what my brother had gone through.

It was, by the way, the highest fine the insurance commissioner of
Connecticut had ever imposed on a company. But what they were doing was
in many, many cases, they would go back through people’s medical records
and find pretexts, essentially, to deny coverage.

For instance, there was one woman who development non-Hodgkin’s
lymphoma, and the insurance company went back through her records and
discovered that on a previous visit to the doctor, she had mentioned to
her doctor that she was feeling exhausted.

And so they said bang, preexisting condition. Essentially, she was
supposed to have known that feeling tired meant she had non-Hodgkin’s
lymphoma. And you saw that with - in Connecticut with a number of other
cases, as well, you know, people who develop multiple sclerosis who
should’ve known that that’s what they had.

So what happened was after a very long process in Connecticut, the
company never did acknowledge any wrongdoing, but they did agree to pay
a big fine.

GROSS: How were you able to use that to help your brother’s case in
Texas?

Ms. TUMULTY: Well, what I did was I called the Texas Department of
Insurance, and I identified myself as both a journalist and a sister of
an aggrieved kidney patient. And I just was asking, you know, how does
the law in Texas work?

And I was describing this whole situation, and the people from the Texas
Department of Insurance, there was a long pause on the other end of the
line. And they said, would you do us a favor? Would you file a
complaint?

So it turned out to be really easy. It took us maybe 10 minutes, filling
out a form over the Internet. And that was in January. And less than a
month later, in February, just last month, we got a reply from the
insurance company. And they once again said that they had done
absolutely nothing wrong, that everything that they did was justified
under Texas state law, but that the extraordinary circumstances under
this case merited that they would go ahead and pay on his previous
claims because we had subsequently canceled the insurance policy.

So what they have agreed to do is go back over the claims from last
summer – which, by the way, just to find out what was wrong with my
brother was $14,000 worth of medical bills. So they’ve agreed to pay
their part of that.

So far, I believe my brother has received a check for $13.

GROSS: Okay, so this insurance company said that it was not in the
wrong. However, due to the extraordinary circumstances, they were going
to pay the 50 percent of the medical costs for the time your brother was
insured.

I guess I’m wondering if somebody who didn’t have the sway that you did
would have the same success that you had in getting the insurance
company to pay.

Ms. TUMULTY: Well, I certainly got the attention, I think, of the Texas
Department of Insurance. But I do think that, you know - one of my big
lessons from all of this is that you’ve got to complain.

At the time when we were hit with this, you know, this $14,000 worth of
medical bills and counting that were going to be much, much bigger as he
progressed into treatment, I didn’t even think to complain because we
were so desperate to go out and find him the treatment that he needed.

Now I realize that you really do have to go and push. And I do think
that people need - if they find themselves in this situation, need to
find the regulatory authority that is over it and go right to them.

GROSS: Does it seem to you like it’s part of the way some companies work
that they do their best to deny you coverage, and then the way the game
is played, you fight to get the coverage and sometimes they win and
sometimes you win, but it’s still cheaper for them than paying
everything, all the submissions that come their way?

Ms. TUMULTY: Well, I do think that, you know, insurance companies do not
make their money by paying claims. So yeah, I do think that’s right,
because my first call after the insurance company decided to deny the
benefits - and I wasn’t getting anywhere - was I called my brother’s
kidney doctor’s office. And I got a hold of the woman who runs the
billing office there, who’s been doing this for 33 years, and she, like
me, confidently said, oh, let me - this is ridiculous. Let me take a run
at the insurance company.

And she called me back within an hour and said this company is never
going to pay you a penny. You should cancel that insurance because the
money that your brother is spending on those premiums, he’s going to
need it for his care.

GROSS: Now you learned a lot of things along the way in trying to get
health care reimbursement for your brother. One of the things you
learned was what you describe a paradox in medical costs, which is that
people who can least afford to pay - the uninsured, or the under-insured
- end up being charged the most. How did that play out with your
brother? Was he charged more than somebody else would be?

Ms. TUMULTY: Oh, yes, a lot more. See, insurance companies and big
programs like Medicare, because they have so many customers, can
negotiate with the hospitals and the labs and the doctors and really
negotiate down the charges.

But, for instance, my brother’s kidney biopsy, which took place in a
hospital last summer, he was charged $7,756 just for the hospital part
of it. His insurance company would’ve been charged $900. So it was, you
know, over seven times as much.

In a lot of his lab work, he was charged six times as much as an insured
patient might have been charged, and one of those lab bills alone was
$3,290.

And so I think what happens with a lot of uninsured patients is these
bills are so huge that they have no choice. They just walk away from
them. And that means that the hospitals and the labs and the doctors
have to write them off, which means, essentially, everyone else is
paying for those services.

GROSS: Another paradox that you found along the way was that if your
brother got sick enough to need dialysis, the federal government would
pick up the costs under the Medicare program for end-stage renal
disease.

So, in other words, if your brother got so sick that he was on the verge
of dying, he’d get coverage through the federal government, but nobody
was going to pay to prevent him from getting to the point where he would
die and require that coverage.

Ms. TUMULTY: Oh, and this I think is a, you know, the paradox of health
care writ large in this country, which is that, you know, you can find
help. You can find programs that will pay for really expensive things
like dialysis, which is $60,000 a year. But what the system doesn’t pay
for as much, even for insured patients, is the kinds of stuff that will
get you there - you know, preventive care.

And, you know, even in talking to my brother’s primary care doctor in
the program that we ultimately got him into, she said the problem with
that is that by the time she sees patients, their conditions are so
advanced, you know, they are diabetics whose legs are already numb. They
are cancer patients whose disease is already in the advanced stages, and
their treatment is much more expensive as a result.

GROSS: How is your brother now?

Ms. TUMULTY: My brother is still struggling with the kidney disease, and
it does appear to be progressing. When he first saw the doctor last
summer, he had something like 48 percent of kidney function. It’s now
between 35 percent and 40. So he is going to have to move to more
aggressive and, I might add, more expensive kinds of treatment and
hopefully to put off dialysis as long as we can.

GROSS: Does he have insurance now? I don’t know who would insure him
with such an expensive preexisting condition.

Ms. TUMULTY: Oh, boy. We went through so many paths that we went down
before we got to treatment. You’re right. There is absolutely no way he
could now go out and buy a health-insurance policy on the open market,
given how sick he is. But we were lucky.

Pat lives in Bear County, San Antonio, Texas, which since the 1990s has
actually developed, through the county hospital system, a program that
operates much like an HMO for people who make up to 200 percent of the
poverty line, which Pat with his job does qualify for.

So we have been able to get him coverage under that. But I’m telling
you, if he lived just across the county line in Atascosa County or
Medina County, that program would not be available to him.

GROSS: From what you’ve told us, it seems that in order for your brother
to be able to get decent health insurance coverage and to get what he
was owed from the company that he did, for a while, have insurance with,
he’d have to really read the fine print in the insurance policy, argue
with them effectively, know what the state had to say about health
insurance, what his county had to say about health insurance - it’s an
enormous amount of research to do when you’re sick.

Ms. TUMULTY: You know, it really is. And, you know, and even people who
get good health insurance through their employers, I don’t think many
people have read their health insurance policies.

I went back and re-read my brother’s policy, and you know, a lot of it
is jargon and technical language. And, you know, when a policy says it’s
non-renewable, I don’t think that people understand what the
implications of that are if they get sick.

GROSS: Well, Karen Tumulty, I want to thank you a lot for talking with
us, and I wish your brother all the best with his health. Thank you very
much.

Ms. TUMULTY: Thank you, Terry.

GROSS: Karen Tumulty is a national political correspondent for Time
magazine. She writes about her brother’s health insurance problems in
the current edition.

Coming up: Health care economist Uwe Reinhardt diagnoses why our health
care system is so frustrating. This is FRESH AIR.
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Uwe Reinhardt: Hidden Costs Of Health Care

TERRY GROSS, host:

We just heard one story about facing off with a health-insurance 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.

He’ll 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.

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?

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 it’s an HMO
contract, a PPO contract, an indemnity contract and so on.

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 $3,000 for a colonoscopy.

You asked what drives this. It can’t be cost because they cost pretty
much the same. It’s just bargaining power. That’s all it is.

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 commercially-
insured patients, or the self-paying patients. So we raise their prices.
That is what they mean by cost shift.

GROSS: Now you’ve 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 $100,000. You
submit the claim, as a hospital, to the insurer.

The insurer will now bargain with you and say was this procedure
necessary? And they haggle over the bill. I’m 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.

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. It’s a huge operation.

GROSS: This is just for their health care system at Duke.

Dr. REINHARDT: Yeah. It’s just for the health care system and just for
the billing. These people push paper. They do not treat patients.

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 isn’t time for it
and so forth.

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 they’re
very unhappy. And one of the unhappiness is this paper-pushing and
fighting with insurers and so on. It’s not a good system.

It’s 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.

I mean, we always rank almost near the bottom in terms of patient
satisfaction with the system. And my argument is that isn’t over our
doctors, who are good, and our hospitals, and I think our health care
system is actually very customer-friendly. I really don’t think it’s the
delivery system people are complaining about. It’s this hassle over how
we pay for our health care.

I think how we pay for health care makes Americans very unhappy.

GROSS: Uwe Reinhardt is a professor of political economy at Princeton
University. He’ll have more to say about our health care system in the
second half of the show.

I’m Terry Gross, and this is FRESH AIR.

(Soundbite of music)

GROSS: This is FRESH AIR. 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. We’re going to get his analysis of President
Obama’s health care plan. But first, let’s pick up where we left off -
how 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 are - that they have figured if they tell enough people that they’re
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 so-called contingent contract,
meaning, we will pay you if a certain contingency happens if you get
sick. Now, describing that contingency is very, very difficult. 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 difficult to right an
insurance company with a private and commercial insurer. It’s different
when you deal with the government. They’ll either pay it or their won’t,
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
care - that they distrust government. They don’t want government running
the health care system. And they supposedly have faith in markets, but
you say they’re 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 conflict with one another, but they’re
both in your brain and in your soul. That’s what this means. Now, for
example, you will have Americans say the government doesn’t have the
right to tell me to buy health insurance. But the same 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 America’s current
health care system, can you find 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. We’ll talk more after a break. This is FRESH
AIR.

(Soundbite of music)

GROSS: If you’re just joining us, my guest is health care economist Uwe
Reinhardt. He’s a professor of economics at Princeton University, and
he’s 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 he’s 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, I think that’s a smart approach. We had the
alternative, the Clintons tried it, where you had a whole bunch of
wrongs, 1,000 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 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.

It’s 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, I think, 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 I think they
would be shared. I think they’d 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 Medicare-like 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 run - somebody 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 plan - that 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 reflect the health status of the individual
applicant for insurance.

So there is going to be some fierce horse-trading this summer over this.
And my gut tells me the public plan may very well become a victim of it.

GROSS: And that in return we would get – you could get health care in
spite of any pre-existing condition - that would be irrelevent.

Dr. REINHARDT: Yeah. But that only works if you mandate insurance. If I
have – we have in New Jersey, for example, what is called pre-existing
conditions – this guaranteed issue – if you go to an insurance company,
they have to take you, and they must charge all their customers the same
rate whether they’re sick or healthy. Well, when you have, on top that,
that health insurance is voluntary, then healthy people will not insure
and take a chance.

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. 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 ‘90s?

Dr. REINHARDT: Yes, I think 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 fine, 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 wasn’t true in the ‘90s. 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 who - particularly people who weren’t
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 he’ll 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 and - or 63
billion a year - and he had, in the campaign, said he would roughly
think of 65 billion a year. So one could say he’s owning up to the
campaign promise with those funds. Whether he’ll 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 year -
so, 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.

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 I think
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 reasonable
- would be to have a debate on the following simple question. What
percent of a family’s discretionary income, that is, income after
housing and food and clothing - discretionary income - what 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 couldn’t 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. We’ll talk more after a break. This is FRESH
AIR.

(Soundbite of music)

GROSS: If you’re just joining us, my guest is health care economist Uwe
Reinhardt. He’s a professor of economics at Princeton University, and
he’s 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 it’ll 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 low-cost insurance product, but that insurance product will cover
only generic drugs and it’ll 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 out-of-pocket 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 out-of-pocket.

I could see that come as the American solution to creating a class-based
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 out-of-
pocket. That would be rationing by income class. My hunch is, at some
point, that’s what we’ll 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 employer-based insurance system, for the most part?

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 let’s 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
years - not in the next three, four years, but in the next decades.

And having - offering 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 don’t 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. It’s
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. What’s 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
they’re 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 Ph.D. 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?

(Soundbite of laughter)

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 she - but 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 I think the
insurance industry very often just relies on people like me and say,
we’ll just eat it.

But fortunately we’ve 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 you’d like to see made?

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 cliches. 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. It’s 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 shouldn’t even listen to them.

GROSS: You’re referring to the two characters on a commercial back in
the ‘90s opposing the Clinton reform plan?

Dr. REINHARDT: Yeah. Yeah. And I think 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, fresh
air.npr.org.
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