Breakdown: America's Health Insurance Crisis

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Peter Jennings Reporting -

Breakdown: America's Health Insurance Crisis

Air Date: 12/15/05



Charles Gibson

ABC News


Good evening. I'm Charles Gibson. Over the course of Peter Jennings' long career at ABC News, he reported more than 60 documentaries, reporting on stories he believed were so important that they deserved a full hour of consideration on primetime television. Many of those programs were on health issues. Tonight, we bring you Peter's last documentary, about a problem that touches the lives of every American, the problem of health insurance. It is hard to get. It is hard to keep. And it is increasingly hard to afford. As Peter discovered while reporting this story, health insurance is one thing everyone complains about but very few really understand. Much of the reporting and shooting you will see in the next hour was done just before Peter was diagnosed with lung cancer. It is a bit sobering to realize Peter was reporting on a health-care system that would so consume his life in the months ahead. You will see Peter conducting interviews throughout the hour, but unfortunately, he was not able to narrate the program. That being said, it is still very much Peter Jennings reporting.
ANNOUNCER
Peter Jennings reporting: "Breakdown: America's Health Insurance Crisis."
Narrator

Everybody has an opinion about health insurance.


Consumer

Male


It makes me angry. I'm getting ripped.
Consumer

Male


It's an outrage.
Consumer

Male


It's not right. It needs to change.
Narrator

But how many of us understand it?


Consumer

Female


I don't know what the whole purpose of having a deductible is.
Consumer

Male


Reducing coverage.
Consumer

Male


Paying a zero deductible.

Consumer

Female


HMO and you have all the other ones.
Narrator

Tonight, Peter Jennings examines how health insurance really works.


Consumer

Female


Where's all this money going?
Consumer

Female


Executives and HMOs and their salaries.
Consumer

Male


Making gobs and gobs of money.
Narrator

Where does all of that money actually go? And why are so many people uninsured?


Doctor Guy Clifton

Memorial Hermann Hospital



We do in America have a system in crisis.
Narrator

How a rising health insurance costs threatening American businesses?


Rick Wagoner

CEO


We spend two, three, four, five, 10 times as much on healthcare.

Narrator

You may you think you know who is to blame. We think you'll be surprised. Tonight, "America's Health Insurance Crisis." "Breakdown" will continue in a moment.


COMMERCIAL BREAK
ANNOUNCER
'Peter Jennings Reporting: Breakdown," continues.
Narrator

The proof that there is a health insurance crisis today is the ever growing number of Americans who don't have it.


Consumer

Female


When I lost my job, I lost my health insurance.
Consumer

Male


I've been without health insurance more of my life as an adult than I've had it.
Consumer

Male


If I go to the doctor, I write a check.
Narrator

There are an estimated 46 million Americans who don't have health insurance. But most of them do have jobs.


Consumer

Male


Currently, I am doggy daycare provider.
Consumer

Female

I'm a freelance editor/writer.
Consumer

Female


I'm starting my own nonprofit organization.

Narrator

This is a national health care crisis. The uninsured often don't get necessary medical care and as a result, are in poorer health and are more likely to die prematurely than those with insurance. There are 6 million more uninsured Americans today than in 2000, and that's creating another crisis, a crisis in emergency medicine. Houston, Texas, like many major cities, has a growing number of people who are uninsured.


Nurse

Female


I need to you land on pads number three or four.
Narrator

Nearly one-third of city residents, 1.1 million people have no insurance. Not even counting the recent evacuees from Hurricane Katrina. And that means sometimes patients with insurance or not don't get the emergency care they need when they need it.


Nurse

Female


What's hurting you, ma'am? Everything, what hurts you the most?
Narrator

This man, who was in a motorcycle accident, is getting treatment right away. But not everyone does.


Peter Jennings

If I come through the door of your emergency center and I'm seriously damaged in an accident, say, how long can I expect to wait before I get serious care?
Doctor Guy Clifton

Memorial Hermann Hospital



Depends on the day. If...
Peter Jennings

Saturday night.
Doctor Guy Clifton

Memorial Hermann Hospital



You might wait five, six hours.
Peter Jennings

So to put it bluntly, in the fourth largest city in the United States, people are dying because you don't have the medical capacity.

Doctor Guy Clifton

Memorial Hermann Hospital


From time to time, yes.
Narrator

Like much of the rest of the country, Houston's emergency rooms are increasingly overcrowded. When someone without insurance needs to see a doctor for anything from a cold to serious illness, they often go to the emergency room. By Federal law, emergency rooms cannot turn anyone away if they have space. This is the holding room at Ben Taub Hospital. Dr. Ken Mattocks is the hospital's chief of staff.


Peter Jennings

Are we seeing in here the impact of a crowded, constantly busy hospital?
Ken Mattocks

Ben Taub Hospital



Yes.
Peter Jennings

Which has to treat large numbers of the uninsured?
Ken Mattocks

Ben Taub Hospital



Yes.
Peter Jennings

Are you full all the time?


Ken Mattocks

Ben Taub Hospital



We're full virtually all the time.
Narrator

Many of these patients wouldn't be here if they had insurance that gave them affordable access to a doctor.


Nurse

Male


You know, the best thing is go to a primary care doctor. The primary care doctor.
Narrator

But without that access, patients have no choice but to turn to already overcrowded ERs. And when the hospital's ER is full, that means ambulances and patients must wait. Sometimes they're even turned away.
Doctor Guy Clifton

Memorial Hermann Hospital



When a hospital is full, the emergency room is full, you divert the ambulance, if you can communicate with them, to say, don't bring us anybody.
Peter Jennings

Is that fairly common?
Doctor Guy Clifton

Memorial Hermann Hospital


We have at times had as high, during a year period of time of being on diversion, 30, 35, 40% of the time.

Robert Musbacher Junior

Houston Chamber Of Commerce



They're full of people with anything from earaches to heart attacks. That's going to impact the quality of care you get.
Narrator

Robert Musbacher, Jr., the former head of the Houston chamber of commerce, led a team trying to improve healthcare. He says the growing number of uninsured overcrowding the city's ERs are a huge financial burden for hospitals.


Robert Musbacher Junior

Houston Chamber Of Commerce



Emergency rooms are money losers. Wherever someone walks into an emergency room and pays little or nothing for that care, that represents a loss for the hospital.
Narrator

It costs more to treat someone in an emergency room than just about anywhere else. The ER is also where more bills go unpaid. In 2003, US hospitals delivered $25 billion worth of healthcare to patients who didn't pay.



Doctor Guy Clifton

Memorial Hermann Hospital



The problem is, when you have 25%, 30% uninsured in your community, the hospitals that perform these functions lose so much money that they can't afford to expand capacity.
Narrator

That's one reason why emergency rooms here and around the country are shutting down. And maybe why some of the new hospitals here have actually been built without ERs.


Peter Jennings

The population grows and the uninsured population grows, but the hospital system doesn't really change.
Doctor Guy Clifton

Memorial Hermann Hospital



We actually have fewer functional beds, fewer functional operating rooms than we had when the original Ben Taub was built and opened in 1963.
Robert Musbacher Junior

Houston Chamber Of Commerce

If those emergency rooms are full, it doesn't make any difference if you're insured or uninsured, own the hospital or don't, you're not going there. So it affects everybody.
Nurse

Female


Does anyone know who the patient is in the isolation room.
Narrator

Terrence Cunningham was the hospital's administrator.


Terrence Cunningham

Hospital Administrator



I have seen up to 20 ambulances in line waiting with patients.
Peter Jennings

You have too much business.
Terrence Cunningham

Hospital Administrator



We have too much business. I worry about access for those critical patients that need care.
Nurse

Female


Just relax. Just relax, sir. We're going to take care of you. Okay?
Terrence Cunningham

Hospital Administrator



Everybody at some time in their life is going to be in that kind of a situation with a family member wanting care. Well, 32% of the 7,000 shock trauma victims we have are in motor vehicle accidents. It's the rich, the poor. We have the Mercedes, we have the Kias that come in here with accidents. They need access that care, and sometimes it's not going to be available.
ANNOUNCER
Peter Jennings reporting: "Breakdown" will return in a moment.
Commercial Break
ANNOUNCER
Peter Jennings reporting: "Breakdown" continues.
Narrator

One of the problems with health insurance today is how hard it can be to get.


Consumer

Female


Insurance companies would not accept me.
Consumer

Female

They would not cover my preexisting conditions.

Consumer

Female


I got turned down.
Consumer

Male


Went through application processes and denials and appeals.
Consumer

Female


My son has eczema and there was one company that wanted to exclude that as if, you know, a little dry skin on a 5-year-old was going to bankrupt an insurance company.
Narrator

In 2004, about 174 million people got insurance through work. Nearly 79 million were covered by the government, including the elderly, the poor, and those in the military. Everyone else who wants insurance must buy an individual policy. Only about 27 million people can get insurance that way. It can be extremely expensive.


Karen Pollitz

Georgetown University



The individual health insurance market is the most expensive way to buy coverage because you're selling a policy one person at a time. It's like, you know, buying toothpaste one squeeze at a time. It just doesn't make sense.
Narrator

Even people who can afford individual insurance can't always get it. In 45 states, insurance companies are allowed to deny people coverage, so those with certain medical conditions can find it impossible to buy health insurance.


Penny Baldwin

Insurance Agent



Lupus, MS, any kind of heart - congenital heart defect, stuff like that. All of those are people that are not going to be able to get insurance.
Narrator

Penny Baldwin sells health insurance to individuals. It's something, however, she however, can't buy herself. She's a cancer survivor.


Penny Baldwin

Insurance Agent


Even though it's been six years since I've had the cancer, I - you know, I still have tests and stuff that I do, you know, to make sure that it's still gone, so they wouldn't want me.

Karen Pollitz

Georgetown University



Sick people, ironically, become quite disadvantaged. You can become discriminated against. It's a problem, it's a big problem in our system.
Narrator

Many insurers are increasingly reluctant to write policies for people with even minor health problems.


Consumer

Female


She had minor problem with asthma as a child?
Narrator

That's why Penny Baldwin is having difficulty finding a policy for this client's 23-year-old daughter.



Penny Baldwin

Insurance Agent



I'm seeing more and more problems with the younger people also. So they're not doing people that have acne, they're not doing - yeah, because of the medication. They're scared to death of even seasonal allergies. Asthma is just like, forget it, we don't want it. I don't think, given the situation that we have right now, that we're going to get any further with another company than we did with this one.
Peter Jennings

We have heard stories where people with acne, with hay fever, have been turned down for health insurance. Why would that be?
Sherry Glied

Columbia University



It's kind of ridiculous because those costs are not terribly high. But hay fever and acne, people who already know they have them probably anticipate using services to deal with them.
Peter Jennings

If the insurance companies really doesn't want really to insure people who are sick, what does this mean for the chronically ill? What does it mean for people who are simply getting older?
Sherry Glied

Columbia University


Once something's wrong with you, it's very hard to get into the non-group insurance market. And that means an employer-based insurance is really almost the only private place for those people to go.

Narrator

But today, even employer-based insurance is in trouble. The percentage of employees covered by insurance at work keeps dropping. Small businesses, especially, are seeing the impact of soaring healthcare costs.


Scott Elmore

Business Owner



In 1994, our average monthly premium was about $2,000. Our average 2004 monthly premium, just ten years later, was $4,700.
Narrator

Scott Elmore is the owner of Stan's Automotive, outside Denver. His health insurance costs are rising at double-digit rates each year.


Scott Elmore

Business Owner



If things continue the way that they're going, then I'm going to have to reduce or eliminate coverage for my employees. I've got a lot of guys who depend on me to make sure that they've got coverage and that they can make things happen for their family. That's something we get pretty emotional about.
Todd McCracken

National Small Business Association



Well, let's see, the first issue is health insurance. The second issue is health insurance. The third issue is health insurance. I mean, it is the top concern of the small business community.
Consumer

Female


As your employees get older, the premiums go up.
Consumer

Male


Every year, we go through this juggling act.
Consumer

Male


There is a point where we can't afford to give coverage at all. I don't know exactly where that point is. But we're getting there fast.
Todd McCracken

National Small Business Association


For many small companies, the price of their health insurance premium per employee is very soon going to reach their average wage. And it's unsustainable.

Narrator

Costs for small businesses have risen so steeply that more and more of them have been forced to drop coverage. That's why only 59% of small businesses offer health insurance, compared to 98% of large businesses.


Sherry Glied

Columbia University



If you're a small business and say you have an employee with a sick child, it could drive up costs for all the employees of that business by a pretty substantial amount.
Peter Jennings

What does the employer do then?
Sherry Glied

Columbia University



That's a really difficult problem. We really don't want the employer to be firing the worker because they have a sick child.
Peter Jennings

The consequence of one sick person in a small group could be cat strophic.
Sherry Glied

Columbia University



Absolutely devastating.
Narrator

This is because of the way insurance works. Ideally, an insurance plan needs a large number of people all paying premiums into one pool. Each year only a few of them will get very sick. The pool is a way to spread the costs of the very sick among everyone else.


Doctor Alan Garber

Stanford University



Insurance allows us to pool risk, to let people who...
Karen Politz

Georgetown University



Who are healthier than average will be helping to pay for the care for people who, in that particular year, are sicker than average.
Sherry Glied

Columbia University



It spreads the cost of things that you could never afford on your own.
Doctor Alan Garber

Stanford University


And when we mix young, healthy people with older people who have chronic diseases, we can make health insurance affordable for everyone, at least in theory.

Peter Jennings

So herein lies the original notion of group insurance, that you've always got healthy people paying for people who aren't.
Sherry Glied

Columbia University



Exactly.
Narrator

But as healthcare costs rise, this system is breaking down. It's becoming hard to get and keep health insurance, especially for those who need it most. Those who are sick.


Todd McCracken

National Small Business Association



The way insurance companies make money is by paying out less in claims. And the way you pay out less in claims is to have healthier people who don't have as many claims.
Karen Politz

Georgetown University



Their overwhelming financial incentive is to stay away from you if you're sick or if they think you might get sick.
Narrator

Think of it from the insurer's perspective. If you were an insurance company, would you want to sell homeowners fire insurance to people whose homes were already on fire?


Karen Politz

Georgetown University



People who are sicker, they'll step right up and buy the insurance. And the people who feel very healthy, who can't remember the last time they went to a doctor, who never take any drugs, will say, why should I pay so much?
Peter Jennings

Insurance companies often wonder and complain that people only buy insurance when they're sick or when they're on the verge of being sick. That's a legitimate concern, isn't it?
Sherry Glied

Columbia University



It is definitely a legitimate concern that people may only want health insurance when they think they're going to need it.

Narrator

This is the result of a voluntary system where no one is required to have health insurance. People with high medical costs naturally want it more.

Sherry Glied

Columbia University



You could simply require everyone to buy their own health insurance. You can have a mandate and say, everybody has got to have health insurance. The way we do it with cars. If you have a car, you have to have car insurance. If you have a body, you have to have health insurance.
Narrator

But that's not the way it works. So insurers say they must raise rates and deny coverage to make sure there's enough money to pay for those who do get sick. And as a result, more people are unable to get health insurance.


Karen Politz

Georgetown University



This fundamental tension about needing to avoid the sickest people, the most expensive people, is a real root problem in our system. It raises questions about, how long can we live with this system that can only survive when it disadvantages the people who are sick and need it most?
ANNOUNCER
"Breakdown" will continue in a moment.
COMMERCIAL BREAK
ANNOUNCER
'Peter Jennings Reporting: Breakdown: America's Health Insurance Crisis" continues.
Narrator

Most people who come to the New York auto show come to talk about the newest cars.


Sales Person

Female


These bulging thunders are constructed of carbon fire.
Narrator

Or vehicles of the future.


Sales Person

Female


Lengthens the wheelbase here, allows her to travel at a higher speed.
Narrator

But we came here to talk about health insurance because the cost is threatening not only small businesses but also some of America's largest companies. Annette Guarisco directs public policy for General Motors.


Peter Jennings

Leading up to the big car shows, all the press is not about the latest design as it is about the burden of healthcare for American carmakers.

Annette Guarisco

General Motors



If you think about it, healthcare costs are a hidden tax that are built in every product and service that - that we have in this country. It's the reason why your electric bill is higher and your school taxes are higher.
Narrator

Of all the problems the once mighty US auto industry faces today, health insurance costs may be one of the most challenging.


Annette Guarisco

General Motors



It affects us in a big way. It affects all US manufacturers and really the country as a whole.
Narrator

General Motors is the largest private sector provider of health insurance in the nation. 1.1 million people, employees, dependents and retirees, get health coverage from GM. Think of General Motors as a health insurer that just happens to make cars and trucks.


Consumer

Female


The healthcare benefits here, I think, are great.
Consumer

Female


Oh, we're very fortunate with our health benefits.
Narrator

GM still provides the kind of health insurance most people would love to have. The company pays 100% of the premiums for unionized employees. They have low co-pays and can choose their own doctors.


Consumer

Male


My benefits are - are fantastic. To say the least.
Narrator

But today, these comprehensive healthcare benefits paid for by the company are in jeopardy. The CEO of General Motors, Rick Wagoner, says he spends more time wrestling with the rising cost of health insurance than he ever would.


Rick Wagoner

CEO

The cost of that coverage has gone up at astronomical rates. I would say, really, rates that were unimaginable at the time these benefits were extended to our employees.

Narrator

This system, employers like GM providing health insurance, evolved by accident during World War II when government wage and price controls were in effect, and it stuck. Today corporations are expected to offer this benefit. But it's become hugely expensive.


Rick Wagoner

CEO


Based on the current data, it would be About $1,525 per vehicle that we produce. That's the total healthcare cost per vehicle. And interestingly, it's a lot more than we pay for steel per vehicle, for example.

Narrator

That's not an exaggeration. This year, General Motors will spend about $2.7 billion on steel and $5.6 billion on healthcare.


Rick Wagoner

CEO


We at this point at GM cover more people than probably Ford, Daimler-Chrysler, and Toyota added together.
Narrator

But unlike small businesses or individuals who pay monthly premiums to an insurance company, GM, like most large companies, is self-insured. That means GM pays the actual medical bills of their employees. GM simply contracts with an insurance company to administer the plan.


Karen Politz

Georgetown University



You may actually carry a Blue Cross card in your wallet or an Aetna card in your wallet if you work for a big company. But Aetna's not paying your bills out of their own money. They're actually paying it with GM money.
Doctor Alan Garber

Stanford University



It's not really the insurance company that's bearing the risk. It's the employer. And the employers are not running this health insurance as a profit center. They're doing it as a benefit for their employees.
Peter Jennings

Who actually makes the decisions, for those of us who are employed, about what kind of health insurance we get?

Sherry Glied

Columbia University



Usually the person who makes the decision is, say, a vice president of human resources, an upper level management person.
Peter Jennings

So it isn't the health plan that decides what we get and it isn't the insurance company?

Sherry Glied

Columbia University



No, it's the HR people, the human resource people who are making decisions about their insurance.
Narrator

Since GM is spending so much money on its employees' healthcare, the company is desperate to keep them healthier. Just off the factory floor in Flint, Michigan, GM teaches employees how to cook healthier food.


Cook

Male


That's what this is about, getting flavor because extra virgin olive oil has a lot of flavor.
Narrator

The company has exercise rooms in the factories that workers can use on their breaks.


Consumer

Female


They have healthcare days where we get screenings for cholesterol.
Consumer

Female


They'll check women's bone density. They check your blood pressure.
Consumer

Male


They started a step aerobics class yesterday. I'm enrolled in that. And why not?
Narrator

GM's in-house news program educates employees about how to save money on medical care.


Gm Reporter

Female


We try to incorporate messages on healthcare whenever we can, because it's kind of a win-win for the company. This piece is an example of cost-saving for the company. If GM employees stop buying a brand name heartburn medicine and switch to the generic it would save the company $70 million.

Narrator

GM is also shifting some of the healthcare costs to employees. The company just recently won concessions from the union to require 335,000 retirees and their spouses to pay a little more for health insurance. But it's not clear that these concessions will make much of a difference. The US remains the only industrialized nation that relies on employers to bear so much of the healthcare burden. GM says this makes it difficult to compete in a global market.

Rick Wagoner

CEO


The fact that we have much higher healthcare costs than most of our competitors is a factor that weighs on our ability to be successful going forward. So today we estimate versus our, say, toughest competitor, outside - based outside the US, we have something like a 4 to $5 billion cost disadvantage per year.
Karen Politz

Georgetown University



Whereas GM needs to build the cost of the health insurance into the cost of their cars, Toyota doesn't have to because healthcare is financed a different way in Japan.
Rick Wagoner

CEO


This is not a GM issue. It's an issue for really a lot of sectors of our economy, and I think over time the percentage affected is going to grow and grow.
Narrator

Health insurance costs are one reason so many jobs move overseas and why many companies are slashing benefits and shifting costs to employees. It's one of the reasons why General Motors just announced that they will lay off 30,000 workers and close nine North American factories.


Sherry Glied

Columbia University



When an employer pays people more in health insurance, he or she hasn't got as much money left over to pay them in wages or pensions or other things. So the cost of health insurance eventually is going to fall on the workers.
Rick Wagoner

CEO


I think increasingly even our employees are seeing that the cost of this benefit is such that it's affecting our ability to invest, our ability to grow, our ability to insure their jobs are there tomorrow and the next day.
Narrator

'Peter Jennings Reporting: Breakdown" will return in a moment.


COMMERCIAL BREAK
ANNOUNCER
'Peter Jennings Reporting: Breakdown" continues.

Narrator

It's impossible to understand why the price of health insurance keeps going up without understanding what's happening to healthcare costs.

Sherry Glied

Columbia University



Healthcare costs have gone up year after year after year.
Scott Elmore Business

Owner


Costs continue to go up.
Penny Baldwin

Insurance Agent



The products are costing more and more and more.
Doctor Guy Clifton

Memorial Hermann Hospital



The cost is what's killing us.
Narrator

In 2003, the country spent $1.7 trillion on healthcare. That's up 500% since 1980. Inevitably, insurance costs keep rising, too.


Doctor Jay Crosson

Kaiser Permanente



The premium that we charge for health insurance to our members goes up and up and up and up. And employers look at it and they say, we can't afford this anymore. Individuals, young people look at this and they say - I can't afford health insurance for my family.
Narrator

So who is to blame?


Consumer

Male


I think a lot of it is the insurance companies that are driving up the costs.
Consumer

Male


Their motive is understandably profit.
Consumer

Male


It's all profit. You know, the executives are getting bonuses.
Consumer

Female


I just think it's greed, to tell you the truth.
Peter Jennings

There is a deep distrust of health insurance among consumers. Why do you think that is?
Sherry Glied

Columbia University



Health insurers are the bad guys. They're the ones who deny coverage. They're the ones who say that you can't go to this doctor or that they won't pay this.

Narrator

There are plenty of reasons to be unhappy with insurance companies, beginning with the ever rising premiums. So what do insurance companies do with all that money? How much goes to actual medical care? Surprisingly, according to the Federal government's data, on average about 87 cents of every dollar pays for medical care. Only about 13 cents goes to insurance industry administration, marketing, salaries, and profits. And that hasn't changed in more than 30 years.

Sherry Glied

Columbia University



The problem in healthcare is that the costs of the medical care themselves are so high that the insurance company costs are almost a drop in the bucket by comparison.
Narrator

Health care costs and insurance premiums are skyrocketing because today Americans use more medical care than ever before. More tests, PET scans, CAT scans, MRIs, more doctors visits, more procedures. Americans use 70% more prescription medicine than they did in the early '90s. All of this is expensive.


George Halvorson

CEO


It's simple arithmetic. You take the total cost of care and divide by the total number of people covered.
Narrator

George Halvorson is the CEO of the nonprofit Kaiser health plan, the largest healthcare provider in California.


George Halvorson

CEO


If you start doing ceramic hips instead of plastic hips and you double the cost, premium goes up just a little bit. You have a new drug that covers hemophilia and costs $1 million a year per patient, average premium goes up just a little bit. Keeps moving up.
Doctor Jay Crosson

Kaiser Permanente



I think patients, for the most part, do not really understand the connection between the cost of healthcare and how much they have to pay.
Narrator

Even though premiums are rising, people covered by health insurance usually only pay a small co-pay when they go to a doctor or fill a prescription.


Doctor Alan Garber

Stanford University



The healthcare system in the United States has been structured in such a way that it's insulated people from the costs of the care they receive for many, many years.

Narrator

For example, look at a prescription drug like Nexium for acid reflux. With insurance, it will cost a patient about $20 for a month's supply. The real cost is about $120. Someone spending their own money might consider a drug like Prilosec, which works just as well for most people and costs just $20 sold over the counter.

John Mackey

Whole Foods Market



If you're not spending your own money, if you're spending somebody else's money, you have no reason to economize. You have no reason to ask how much a procedure costs.
Narrator

John Mackey is the president of Whole Foods Market, the growing natural foods supermarket chain based in Austin, Texas. Mackey believes part of the reason everyone's insurance costs are rising is because individual consumers don't have an incentive to control costs.


John Mackey

Whole Foods Market



How many people go to a doctor and ever say, you know, Doc, how much – how much is that going to cost? If you ever do that, chances are the doctor will say, "I don't know. I don't know. You got insurance, don't you? Don't worry about it. We'll just bill your insurance company." I wish I could operate my food company that way and we didn't have any prices on anything and people got to the registers and we'd say, you know, "don't worry about how much your food costs. We'll just bill your - we'll just bill your credit card." But that in a sense is how our health insurance program works in America.
Narrator

So today, Whole Foods employees have a new health insurance plan that the company hopes will make employees better healthcare consumers. It's called consumer driven healthcare.


Paula Labian

Whole Foods Market



Consumer driven healthcare really puts the choices and the thought process back into the employee's hands. Our employees are going to the doctors, and they're asking about what kind of medication they're being put on. Is that the most expensive one? Do I really need to be on that one?
Employee

Male

The first thing that we want to get out of this class is to recognize the amount of self-responsibility that's required in order to take full advantage of your benefits.

Narrator

Whole Foods encourages employees to control costs by making them responsible for more of the cost of their healthcare. Employees here have a high deductible, $1,000 for medical care and $500 for drugs. But the company contributes to a health reimbursement account, which the employee can use to pay for the deductible. Whatever the employee doesn't spend stays in the account from year to year.


Employee

Male


That's the beauty of this system because it really lets you have a lot of say in how you're going to direct your dollars.
John Mackey

Whole Foods Market



It becomes their money. If they don't spend it, it doesn't get taken way from them at the end of the year. So psychologically they begin to have ownership of that money. They begin to ask questions.
Employee

Male


You're allocated enough to cover your medical deductible for the year.
Narrator

Since employees pay high deductibles, the plan is less expensive for the company. And as a result, more employees here are now covered by health insurance. That's why many other companies are considering high deductible insurance plans. But there are some concerns.


Sherry Glied

Columbia University



Raising the cost of healthcare to the consumer is sort of a tried and true way of keeping the costs of healthcare down. It's a way that we know works. People will go to the doctor less if they have to pay for it. The question is, is it – is it just reducing costs, or is it actually making the system work better in the sense that it's reducing the useless costs but not the useful costs.

Narrator

Plans like the one Whole Foods offers are being studied to see if employees do stop getting necessary medical care. It's too early to know. But there is another problem that these plans aren't even designed to address.



Doctor Jay Crosson

Kaiser Permanente



The high deductible health plans, the way they're designed now, are not going to solve the long-term cost problem. Because most of the costs are in hospitalization care, they're in the high-intensity, high-technology, hip replacements, heart transplants. And most people don't have those in any given year. But the people who do spend a lot of money.
Narrator

That money can bring extraordinary benefits. Patients will clogged arteries may get a coronary angioplasty. A doctor using this high-tech equipment can go inside a clogged artery and put in a stent to keep it open. This procedure is used 300% more than it was just 20 years ago, and thousands of lives are saved. It costs at least $28,000. In the early 1980s, nearly 40% of the lowest birth weight babies would die. Today because of treatments like surfactant therapy and high frequency ventilators, mortality rates have dropped 30%. This can cost as much as $100,000. It's the expensive medical procedures like these that are the primary reason healthcare and insurance costs are increasing so rapidly.


Sherry Glied

Columbia University



I think it's important for people to realize that there's no quick fix to the system. Especially as the Baby Boom gets older, all of us want better eyes and knees and so on. We're going to be paying more and more. It's inevitable.
Doctor Jay Crosson

Kaiser Permanente



The problem that the country faces, which is that health insurance is going up and up and up because of technology driven care is going to continue. And as a consequence of not grappling with some of these issues, what we have done is to freeze out a certain portion of the population and to create growing unfairness in the society. And that is not sustainable long term.

Narrator

"Breakdown" will continue in a moment.

COMMERCIAL BREAK
Announcer
'Peter Jennings Reporting: Breakdown" continues.

Consumer

Female


I think health insurance should pay for anything.
Consumer

Female


Any kind of medication, any kind of treatment.
Consumer

Male


All essential services that protect a person's well being.
Doctor Jay Crosson

Kaiser Permanente



It's a human phenomenon if you're sick to want everything that's available applied to you or applied to a member of your family. There's nothing wrong with that. The question is, as a matter of policy for the whole country, is that emotion the right thing to drive the way we structure the healthcare for the country?
Narrator

To rein in insurance costs, a difficult question is starting to be asked. Does all this expensive medical care, the latest technologies and the newest medicines, provide a real benefit for the money?


Doctor Alan Garber

Stanford University



As physicians, we ask, should I prescribe this? Should I recommend this therapy? Payers wonder, should they cover it? And rarely do we go through the exercise of really asking seriously, is it worth it?
Narrator

Every sector of the healthcare system has scores of examples of medical care of questionable value. This electron beam tomography machine can test for heart problems. Cost, $500. Is it worth it?


Bert Barrette

Clinic Owner



We can see coronary artery disease as much as 15 years before you have symptoms.

Narrator

Bert Barrette thinks everyone at any risk of heart disease should have this scan. He isn't a doctor. He's one of the owners of the clinic that bought this $2.2 million machine.

Peter Jennings

Why do I want to come in and have this done?
Bert Barrette

Clinic Owner



The biggest fear for Baby Boomers today is having a heart attack and you die.
Narrator

If everyone who feared they might have a heart attack had this test, it would cost tens of billions of dollars. Some insurance companies pay for this test, others don't. But there is evidence that using this expensive cutting-edge technology actually results in fewer heart attacks.


Doctor Elliot Fisher Dartmouth

Medical School



I think the evidence is not yet in from randomized trials that it is beneficial in addition to the other screening tests that we have.
Peter Jennings

You're saying that America's great tradition of invention and expertise begets not necessarily better healthcare.
Doctor Elliot Fisher

Dartmouth Medical School



Many of the new devices and new medications that we have are tremendously helpful. The problem is once we invent them, we overuse them.
Doctor Jay Crosson

Kaiser Permanente



I think physicians believe that their patients believe that anything that's new is great. And of course, that's aided and abetted by the industries that produce the technology. And of course, some of them are effective and some of them are not. And some of the ones that are effective are really not worth the added cost.
Doctor Elliot Fisher

Dartmouth Medical School



We have an American society that believes fundamentally that more care means better medical care. So they're likely to go to the doctor whenever they can.

Narrator

Dr. Fisher and his fellow researchers at Dartmouth medical school studied the relationship between how much is spent on healthcare and how beneficial that healthcare is. The results were surprising.

Doctor Elliot Fisher

Dartmouth Medical School



We studied about a million Medicare beneficiaries. You know, patients with heart attacks, hip fracture, colon cancer and a representative sample of the Medicare population.
Peter Jennings

Did you find out that more care was better care?
Doctor Elliot Fisher

Dartmouth Medical School



The findings were pretty consistent. You know, more medical care did not result in better medical care. In fact, it goes the other way, if anything.
Narrator

The researchers found that patients with the exact same problems in places like Florida got much more medical care than patients in places like Minnesota, even after adjusting for age and illness. And they found out that in those states that spent more money on medical care, patients were actually worse off. Fisher believes the evidence is clear that spending more money on medical care can be harmful and raise the cost of health insurance for everyone.


Doctor Elliot Fisher

Dartmouth Medical School



Mortality rates in the high spending regions were 2 to 5% higher than in lower spending region.
Narrator

Higher spending, higher mortality. Since all medical interventions have some risk, more tests, more treatments, longer hospital stays can all result in worse medical care. An example. In the 1980s, a new experimental treatment was developed using bone marrow transplants and high-dose chemotherapy that promised a cure for women with difficult-to-treat breast cancer. Lawsuits and congressional pressure compelled insurance companies to pay for the treatment. More than 40,000 women got it. The problem is there was little evidence it worked.


Doctor Elliot Fisher

Dartmouth Medical School


When the randomized trials eventually came out many years later, turned out that it wasn't a beneficial treatment after all. So we subjected thousands of women to a treatment that's quite harmful.

Doctor Jay Crosson

Kaiser Permanente



Anytime a new technology is made available, the question is, again, does this work? Is it safe? And is it valuable?
Narrator

Asking these questions can save money and lives. In the late 1990s, two new arthritis drugs were heavily advertised and widely prescribed. You know them as Celebrex and Vioxx. These drugs caused fewer stomach problems than drugs like Advil or Aleve. But they were no better at treating pain and cost much more.


Mirta Millares

Kaiser Permanente



There was a lot of hype regarding these drugs. They were being called super aspirins. The clinical data on these drugs did not though they were any better as pain relievers.
Narrator

Five years ago, the researchers at Kaiser Permanente, the California health plan, also had a serious concern about the safety of Vioxx.


Mirta Millares

Kaiser Permanente



There was a clinical trial that pointed to Vioxx increasing the risk of someone having a heart attack or sudden cardiac death. At that time, the FDA took no action. But we were concerned about the cardiovascular risk.
Narrator

So Kaiser doctors prescribed Vioxx much less frequently than many other doctors in the country. As a result, thousands of patients here were never exposed to the dangers of the drug. Last year, it was pulled from the market for causing heart problems.


Mirta Millares

Kaiser Permanente



I think the general population believes, all new drugs should be provided to me. And I think that we have to educate everyone about what is it we're getting for the money that we're paying.

Narrator

There was another benefit to the more conservative approach to prescribing Celebrex and Vioxx. Using cheaper alternatives saved the health plan $32 million.

Mirta Millares

Kaiser Permanente



Those $32 million can be used for many other things. Childhood vaccinations, the treatment of high blood pressure, the treatment of cholesterol.
Narrator

Still, many Americans are skeptical when the value of new tests, treatments, or drugs is questioned.


Peter Jennings

Some percentage of the public is suspicious of refining the system because they think it amounts to rationing healthcare.
Doctor Elliot Fisher

Dartmouth Medical School



Doesn't rationing imply the denial of beneficial treatments? What our study shows and what a lot of other studies show is a lot of what's going on in medicine is unnecessary, probably harmful treatments. Getting rid of that stuff's not rationing. That's improving care.
Doctor Alan Garber

Stanford University



The most important thing that people need to keep in mind is that when costs go up, they don't come out of somebody else's deep pockets. They come out of our pockets. They come out of your wages. They come out of your tax dollars. When we say we should spend more on this or that, don't think it's the other guy who's going to pay.
Doctor Jay Crosson

Kaiser Permanente



We only have so much money as a society that we can afford to devote to healthcare. I don't know what that is. Maybe we need to spend more. Maybe people want to spend more. But ultimately, there's gonna be a point when we can't spend more.
Doctor Alan Garber

Stanford University



One of the questions that he we face more and more about health insurance is what's in, that is what's covered, and what's out? I would contend that we don't have a consensus as a society about what the boundaries are.

Narrator

Americans don't like boundaries when it comes to health insurance. So, few people in healthcare or the government want to make the hard decisions about what insurance should or shouldn't cover. By default, the country has a patchwork system of health insurance that often pays for medical care with little regard for cost, benefit, and effectiveness. The result is that for more and more Americans, health insurance is no longer affordable or accessible.

Doctor Elliot Fisher

Dartmouth Medical School



I turn around and look at the abundance of the American healthcare system compared to other healthcare systems. I have no doubt that we can cover the entire population of the United States with high-quality comprehensive healthcare. The question is whether we have the will and the energy to try to figure out how to do it.
Charles Gibson

ABC News


On Peter's behalf, I'd like to thank you for watching this broadcast. ABC News is committed to continue these kinds of primetime programs. They are an important part of Peter's legacy and a crucial part of our promise to you to provide provocative, in-depth reporting on issues that matter. For all of us at ABC News, I'm Charles Gibson. Good night.



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