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System of Dilemmas
Heart surgeon Mehmet Oz was set to go. On the operating table lay a 50-year-old man, dying from heart failure. He was anesthetized, out cold, and his chest was painted with sterile Betadine. In minutes, Dr. Oz and his team would implant a mechanical pump to keep him alive until a donor heart could be found.All that remained was for Dr. Oz to scrub his hands. As he soaped up just outside the OR, he thought about the brief chat he'd had with the patient earlier that morning. The man, a mid-level executive with an agricultural company, was clearly terrified, knowing that he could die.
Just then someone called out. There was an urgent phone call for the surgeon. With suds dripping from his hands, Dr. Oz walked back into the OR and a nurse held the phone to his ear.
It was someone from the patient's health insurance company. His policy covered heart transplants, but not the cost of the mechanical pump. At the end of the operation, someone was going to owe a small fortune -- and the insurers were insisting that it would not be them.
Dr. Oz's mind raced. What was he supposed to do, sacrifice this man's life because no one knew who'd pay for the surgery? A quick follow-up call to his department chairman confirmed his own instinct: Ethical decisions trump financial ones. He would proceed with the operation. They'd figure out who'd pay later.
In the end, the surgery was a success, but the hospital got stuck with most of the costs, which ultimately ran into the hundreds of thousands. If it hadn't picked up the tab, the patient would be drowning in debt.
Millions of other insured middle-class Americans aren't nearly so lucky. Between 2000 and 2003, seven in ten adults who were driven into debt by medical expenses had insurance at the time. In 2001, 42.5 million people in insured households paid 10% or more of the family's net income in medical expenses. They are America's underinsured, caught in a Catch-22: too well-off to qualify for government programs that support the poor, while not nearly affluent enough to pay their health bills without wrecking the family finances. And there's no rescue in sight, for the system is broken at every link along the chain -- from insurers who protect profits by raising premiums and restricting coverage; to doctors who can't keep up with the skyrocketing costs of malpractice insurance as well as the burdensome paperwork that some carriers require; to companies whose soaring medical costs force them to push more and more of the expense onto their employees.
At the end of this chain is the hard-hit consumer. Premiums for family coverage in employer-sponsored health insurance plans have increased by 73 percent since 2000. Currently, they're rising three times faster than the average paycheck and more than twice the rate of inflation. The bills keep adding up.
They certainly did for Lynette Swartz. After marrying her 46-year-old husband, Rob, and settling into their home in Freeman, Missouri, Lynette became concerned that he hadn't had a routine checkup in seven years. Because he played softball with guys half his age, Lynette talked Rob into scheduling a physical.
His doctor ordered a chest X-ray, which showed a growth on his lung. The diagnosis came days later: lung cancer.
Rob resolved to fight the illness aggressively and began chemotherapy that spring of 2003. Even with health insurance, the family quickly fell into debt. Each time Rob ordered medication, or had chemo, an X-ray, or even a biopsy, Lynette was hit with another co-pay. She kept their financial troubles from him by hiding the bills.
Things grew far worse when tests revealed that Rob's cancer had spread into his brain. Soon he shut down his printing business, leaving Lynette as the family's sole source of income. "At the time I was so thankful that we still had health insurance," says Lynette, who covered both of them through her $30,000-a-year administrative job at a J.C. Penney department store. "I guess I was naive."
As costs mounted, Rob's doctor suggested a procedure called gamma knife surgery, which no neurosurgeon in their network performed. It would cost well over $15,000. Was she supposed to choose between her family's solvency and her husband's life? Of course, she okayed the procedure, and eventually talked the insurer into covering it.
Rob held on longer than expected, first one year, then two. But his medical expenses grew steadily. If Rob's parents had not helped out, they would have lost their home.
He finally succumbed to the cancer a year ago. Now Lynette makes monthly payments to providers and to a collection agency that amount to one-third of her paycheck. "If Rob had had appendicitis or a broken leg, we would have been adequately insured," Lynette says. "But for something catastrophic like cancer, we weren't. I don't think anybody is."
It's not just catastrophic illness that can send consumers deep into debt. In a newly released Reader's Digest poll, two-thirds of adults 21 and older said they feel they "can't afford to be sick." Among those identified as middle class and "underinsured," one in three said that health care is "completely" or "mostly" unaffordable. About half say they've put off or refused medical treatment for a serious condition, or delayed taking or renewing prescription drugs; 46% have postponed routine annual physicals; and 27% have avoided surgery of some sort. In our poll, nearly a quarter of the underinsured say they currently have overdue medical bills, and close to half have used credit cards to meet their health costs. Nearly the same number have withdrawn money from their savings to settle their accounts.
That's not so surprising when you consider this: The Bureau of Labor Statistics calculates that America's health care costs have risen at twice the rate of inflation since 1970. Total costs amount to about $2 trillion annually, with almost half of that government spending. What's behind this enormous price tag? Here are the biggest components:
- Hospital care: $571 billion
- Doctors' services: $400 billion
- Prescription drugs: $189 billion
- Nursing-home care: $115 billion
- Private insurance: $96 billion
- Dental services: $82 billion
- Home health care: $43 billion
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