T.R. Reid on American Healthcare

T.R. Reid, a Washington Post reporter and author of 10 books, set out to answer a few specific questions in his latest, The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care. The first, he said, was to figure out how other countries manage to provide healthcare for everyone and still spend half as much. The second was to ask not how they did it but why. And while he believes he nailed those two questions, he said, “The third question is, why doesn’t the world’s richest country provide healthcare for everyone. I really struggle with that one.” Below, Reid discusses with Zócalo what set him off exploring foreign healthcare systems, how they compare to America’s, and why Americans need to change the terms of the healthcare debate if they want reform.

The Healing of America, by T.R. ReidQ. What inspired you to write this book?

A. Our family has moved around the world, and when you tell your kids that you’re moving to a new country, they say, “Oh God, you’re wrecking my life.” It’s good when they get there but it’s hard to move. We moved to London in 1988, and of course our kids said, “Oh God, you’re wrecking our lives.” So my wife and I thought we’d make the transition easier by saying yes to everything they wanted to do in London. On the second day in London, my 13-year-old daughter buys these earrings and goes into a grimy shop to get her ears pierced. Two days later, her ear was swollen and red and oozing pus. We had been in the country for four days, and we had no idea where the doctor’s office was. We got a cab to St. Mary’s Hospital next to Paddington Station. There’s a plaque in this hospital that says in this hospital Sir Alexander Fleming invented penicillin in 1928. And like many hospitals in Britain, it hadn’t been painted since 1928. It had leaky roofs and everything. But we went to the casualty ward – that’s what they call the ER in Britain-and a nurse came out and spotted my daughter’s ear. She took her in a room, a doctor came, and they cured her. She walked out of the room smiling.

I went over to the desk and pulled out my checkbook – I think in America this would cost $500 or $600. But the woman said, “Put away your checks, we don’t charge for healthcare.” There was no paperwork, no insurance claim, no deductible, no co-pay. My wife and I looked at each other and thought there are better ways to provide healthcare. You don’t get six bills totaling $500 in Britain. Americans ought to know about this. That’s where this book came from. Our family lived in Japan, where they have fantastic healthcare and it’s cheap. Britain has good healthcare and it’s free. I traveled all around Europe and saw their systems, and saw that other countries were providing very good healthcare for much less money than America. They all have universal coverage, and they spend half as much.

The next interesting realization was that it’s not all socialized medicine. That’s an eye-opener for an American. When I went and did the research, a lot of countries cover everybody but still have private doctors, private hospitals, private insurance companies, and still spend half as much as we do. I don’t think there’s any question that our healthcare system is ridiculously expensive and unfair. We need to fix it. the other countries have figured out how to do it. I went to see how they do it, and I came away pretty optimistic. I know we could cover everyone at reasonable cost. All the other rich countries do it.

Q. How exactly did we end up here, with a for-profit healthcare system, when other rich countries don’t have that?

A. You can divide a healthcare system into two parts. One is the providers – doctors, hospitals, the drug companies, the labs. The other half is the paying system – the insurers, the government, whatever. In many countries, the providers are private, for-profit operations. The notion that once you leave America, it’s all big-government nanny states is just not true. Japan has more private hospitals than the U.S. In Canada, over 80% of the hospitals are private. Doctors, labs, and drug companies can make a profit in those countries. What’s non-profit is the payment system. Sometimes it’s the government. A lot of countries have non-profit insurers.

All those countries have decided there’s a fundamental conflict between providing for people’s health and paying a dividend to investors. We’re the only country that lets insurance companies make a profit on basic medical coverage. That’s one of the major reasons we pay twice as much. Our insurance companies just add a huge amount, about 20%, to every doctor bill they pay. It’s the most expensive way anybody ever devised to pay for healthcare. The other countries don’t let it happen. That was a striking discovery. I’m a free-market American. I really believe that for-profit competitive enterprise is the best way to do most things. It’s not true in healthcare. Our for-profit companies are the least efficient payers in the world. They waste more money than any other payment scheme and that’s a major reason why we all pay too much for healthcare.

Q. When and how did these for-profit insurers come about?

A. It’s a good question. Historically, in America, Blue Cross and Blue Shield started in the 1930s and were non-profit for 40 years in every state. In the late ’70s and ’80s, these big for-profit health insurance companies, like Aetna, WellPoint, started buying up the state Blue Cross programs and turning them into for-profit insurers. That made a fundamental change in the payment system in America. They decided, if you’re going to make a profit, you don’t want to cover anybody who might get sick and use the service. They invented this pre-existing condition business, where they won’t cover you if you’re sick. Then they realized the fewer claims they paid, the more money they make. So they have tens of thousands of adjusters who deny claims – that’s their job. They go through claims and turn them down. They get a bonus if they turn down more of your claims. If you call the insurance company and say, why didn’t you pay the claim, the guy on the phone gets more money if he turns you down. No other countries let that happen. They have to pay every claim. They’re not there to make a profit. Their purpose is to keep people healthy.

There’s a big argument about how many claims [insurers] deny, but the estimate is about 30%, and that’s been my experience – at least a third of my claims are denied. With the American insurance companies, as long as you’re healthy and paying your premium, they’re happy. If you get hit by a truck, they look for excuses, they look for a reason to cancel your coverage. These practices are a function of the need to make a profit.

With health insurers in Germany, Japan, France, the Netherlands, and Switzerland, executives get paid on the basis of how many claims they’ve paid. In America, our executives get paid on the basis of how much profit they make, and that’s a matter of paying fewer claims.

Q. I know it’s hard to compare because of there are other reasons for cost increases, but how was costly was healthcare when we had nonprofit insurers compared to today?

A. Until around 1980, healthcare was much cheaper. There are a number of reasons for that and I won’t go into that. In 1980 the U.S. spent about 7% of GDP on healthcare. In 1980 Canada, which has a government-run health insurance system that covers everybody, spent 7% of GDP on healthcare. Today Canada spends 8%, it’s gone up a little. We’re spending 17%. That’s a huge increase in spending, and a lot of that has come about since insurance companies went for-profit. That’s not the only reason, but it’s one of the reasons. We have an inefficient and unfair insurance system. I’ll tell you, when you travel the world and talk to health ministers, they all know how crazy our system is. They had this smug superiority, you know, “We don’t leave tens of millions of our people uninsured. We don’t let insurance companies add 20% to every bill.” They get off on trashing American, and in terms of healthcare, they’ve got a point.

Q. Are you optimistic about healthcare reform moving forward this fall?

A. I’m pessimistic. I don’t think we’ll get a serious change out of Washington this year. The reason is that, compared to all the other countries, we’re going about it backward. In all the other rich countries I went to, they first made a basic moral decision and that is: We think everybody in our country should have access to a doctor when she’s sick. Once you decide that everybody should have access to healthcare, then you can design a mechanism to do it. In our country we have never committed to cover everybody. Our debate is really distorted and mainly focused on details of the payment scheme-how much doctors make, how much insurance companies profit, let’s protect employees in the hospital industry. The basic goal of universal coverage at reasonable cost gets lost in the American debate, and it’s happened again this time. Washington is so concerned about the state of the insurance companies and the hospital industry that they’ve lost track of covering everybody.

Q. Healthcare reform was a major priority for voters in the last election, and still seems to rank high – has it simply not been enough? What would it take from voters to push this through?

A. I’d say today the number one domestic issue is healthcare reform. Some are for it, some are against it, but it is the number one issue, and the president has made it the number one issue. And he means it. What happened? In America, [healthcare] is a $2.4 trillion industry. That’s one dollar of every six dollars we spend. There are literally thousands of companies making more than a billion dollars a year on healthcare. They have a huge interest in blocking change. We started talking about the basic moral goal, universal coverage, and very quickly got distracted by the interest groups afraid of losing their piece of this pie. It’s interesting, in my book, I talk about two other countries that did do healthcare reform, Taiwan and Switzerland. Switzerland is a lot like us – a thriving capitalist democracy with big drug companies and giant insurance companies. The Swiss decided, “We want to have universal coverage,” and the drug and insurance companies fought this like crazy because they thought they would lose out. The Swiss passed it anyway. In Switzerland, the whole argument was, “We want everybody to be covered.” That’s all the proponents of reform talked about: “Don’t you want your Swiss neighbors to have healthcare when they need it?” In our country we’ve lost that argument. When Obama talks about the plan, he talks about money – don’t worry, it won’t cost you anything, as opposed to, we want to make sure all our neighbors have healthcare when they need it. We’re going about reform differently from anybody else.

Q. What would be your idea of an ideal system for this country?

A. For my book, I went to all the other rich countries and I found several models – some use government and others use the private sector, as I told you, and they all work. A government-run, single-payer plan like they have in Britain or Canada or Australia would work fine. But it’s probably hard to pass in America, since it violates our ideological views. But it doesn’t have to be government-run single-payer. In many countries the private sector provides healthcare. Japan has less government involvement than we do, and it has 3,000 different payers. But guess what? They cover everybody, they have much better health results, and they spend less than half as much per capita as we do. I thought the Japanese model was a good one – private doctors, private hospitals, and they have enough doctors and hospitals so you almost never have to wait. The waiting time is almost always lower than for the same procedure in America. They have more MRI scans than we do, more X-rays, they take twice as much medication and yet they spend half as much. They’ve figured out how to do it in an effective way and still get great results. It’s a good model and quite American. It’s all private and it’s not big government.

*Photo of St. Mary’s Hospital in London courtesy maistora.


×

Send A Letter To the Editors

    Please tell us your thoughts. Include your name and daytime phone number, and a link to the article you’re responding to. We may edit your letter for length and clarity and publish it on our site.

    (Optional) Attach an image to your letter. Jpeg, PNG or GIF accepted, 1MB maximum.