Can U.S. health care be healed?

Editor’s note: Former New York Times reporter Elisabeth Rosenthal, MD, is the author of An American Sickness: How Healthcare Became Big Business and How You Can Take It Back. She is editor-in-chief of Kaiser Health News, an editorially independent program of the nonprofit Kaiser Family Foundation. She spoke with SN&R publisher Jeff vonKaenel at her office in Washington, D.C.

Why don’t you tell me a little bit about your background?

I come from a medical family—my dad was a doctor, took care of kids with hemophilia. I loved both writing and medicine, so I wasn’t quite sure what I would do in life. And eventually, life kind of sorted that out for me. I went to medical school and started working in an emergency room, and I was also freelancing a lot for the New York Times. And when the Clinton health reform effort came along, the Times asked if I wanted to come to work full time. And I thought, OK, I’ll do this for a year and then I’ll go back to being a doctor. Now here I am, more than 20 years later talking about a lot of the same issues.

What made you want to focus on the economics and the sociology of medicine?

Ironically, after the Clinton health reform efforts failed, I did a long detour as a foreign correspondent, so I was overseas for about from ’97 to 2007. Those were the years in which health care costs in the U.S. really spiraled, really got out of control. I was covering international environmental issues, mostly based in Europe, and I had experiences there with different health systems. I broke a wrist in Stockholm. And this really great orthopedist examines it, X-rays it, casts it and charges like 400 bucks. And then I needed some stitches on my forehead when I was in Rome and went to the hospital where the pope goes and for 112 euros had my head stitched up.

And so when I came back to the U.S. in 2007, I encountered things that were so crazy and expensive that I didn’t know what to make of it. My kids were young, and they would need an antibiotic and it was $200—when I was in med school, it was $10. A little inhaler that I use when I run had always been this cheap little thing—I would go to the pharmacy and they said, “That’s $100.” And I would be like, “You gotta be kidding me.”

It was right at the beginning of the Affordable Care Act debates. And my editor said, “Will you write about health care again?” And I said, “the only thing I want to do is write about why it costs so much because I am completely confused and distressed.”

What did you find out?

I got to spend two years writing a series of stories called Paying Till it Hurts, which was a fabulous, scary experience. We decided to try something relatively new then, which was to put little call-outs on the stories that said, “Do you have an experience with high drug prices you’d like to share? Or have you had a medical bill that you couldn’t afford to pay?” And we got, for the series, about 20,000 submissions. They were like a catalog of all the ways that the health system was failing ordinary people.

How did the idea for the book come along?

We did probably 20 stories in that series, each one feeding on the other. All of the people in the series, after the first two, were people who submitted their stories. And then at the end, my editors said, “OK, the series is done,” and so I thought, Well, I’d better write a book. And what I hoped to do in the book was to go down another layer. Because, though I love newspaper journalism, for a 2,000-word story, there was a kind of certain depth that I had to understand. But then I didn’t really understand how we got here.

I discovered that the reason colonoscopies can get so expensive is because they’re adding on this thing called a “facility fee;” how we got to charge recovery room time by the minute, like a taxi meter. How do we get to a place where we think a little inhaler that cost $10 in 1995 would cost $200 in 2012? That’s exactly the opposite of how a market should work. So this was kind of like a big mystery to me that I needed to solve.

I thought one of the strengths of the book was that you were able to combine the stories with explaining how the situation occurred, and your conclusions about the culpability of the whole system. Will you talk a little about that?

Well, I’m a storyteller, right? Here at my new job, and at the Times, each of those stories started with a person. I worked from that as a starting point—which story should I tell and what points do they illustrate? There’s a desire, when we talk about American health care, to say the problem is the insurers, the problem is the hospitals or the problem is the doctors and their salaries. And my feeling was the problem is all of them and none of them, you know? It’s the way they interact.

Will you talk about your 10 “Rules of the dysfunctional health care market?”

When I finished writing the book, I thought, OK, so everyone likes to say that in the U.S., we do market-based health care. Well, if this were a market, what would the rules be? And I started writing them down. Things like, “A lifetime of treatment is preferable to a cure.” Obviously, if you’re thinking from a health-care point of view, every one of these rules is ridiculous.

The over-arching rule is: Prices will rise to whatever the market will bear. There’s no reason for anyone to charge anything less than the moon in this system because we, the patients and our employers and our regulators, don’t put any brakes on spending. So, is it a surprise that one hospital charges $150,000 for a knee replacement while another charges $20,000? And what we find in a lot of markets, instead of a bunch of providers pulling prices down, what happens is the opposite; the low-price providers go, “Whoa, why am I such a schmuck? He’s getting away with charging a $100,000.” And the prices all go up to what we call a sticky ceiling.

Big providers can simply demand more. And you see this in Northern California with Sutter. You could say, “Isn’t that unethical for them to charge higher prices than everyone else?” From a Harvard Business School point of view, you look at that and go, “Wow, that’s brilliant. Look, they’ve cornered the market and they’re raising the price to whatever the market will bear.” And if you corner a market that’s really high.

You use Sutter Health as your “poster child” for out-of-control pricing.

I do, but not because they’re the only ones doing it. I mean, sometimes hospitals that are in the book or that are in the New York Times articles will say, “Why did you pick me? I’m not doing anything that Hospital X isn’t doing?” I say, “Well, bad luck.” There are hospitals that have Sutter-like pricing power in different parts of the country. Sutter’s really good at what it does, and that’s partly why they become a target. They’re a prominent medical system; people want to go to their hospitals. So if you have that reputation, and you have a monopoly or near monopoly, you can get away with a lot.