I was in the kitchen cooking some food for my dog, which I don't say with pride. I don't even approve of people cooking for their dogs, but he's got health problems and without boring you with a lot of details, there's no getting around it. And I was listening to Marketplace, which is actually the point of this story I'm telling you. I was listening to the radio on Marketplace and I heard this commentary by one of the regular commentators, this conservative commentator, David Frum, who said that new numbers had just been released by the government. Showing that when you look at family incomes-- and what happened to family incomes during the Bush presidency. George W. Bush has the worst economic performance of any two-term president since the numbers were collected. Jimmy Carter did worse, but he only had one term. I asked Frum to come onto our show to talk about this finding. This is a little painful. I was part of the Bush administration. In fact, I was part of the Bush administration's economic team. So I take this a little personally. But Frum says, and this was his point on Marketplace, that it's important to understand why Bush's performance was so bad. Frum says that over those eight years what employers actually paid for each worker rose. And it rose a lot: 25%. But-- Employees received none of that money. The median American worker was earning less in the year 2007 than that worker was earning adjusting for inflation in the 2000. And yet, his employer was paying 25% more. So where did that money go? And the answer is, it all went to pay the rising cost of health care. The average cost of a health insurance policy for a family of four between 2000 and 2007 more than doubled, from $6,000 to $13,000. A $7,000 climb. Coincidentally, during the boom years of President Clinton, when Americans did so well, family incomes rose about that same amount, $6,500. This is just how quickly health care costs are rising in this country. If you take into account health care, George W. Bush stops being the worst two-term president in the modern America era for family incomes. If you were to compare, say, President Bush's performance to Harry Truman's or the Ford-Carter years, it looks good. If you compare it to the Clinton years, the Reagan years, or the Johnson years, it doesn't look so good. So basically he's somewhere in the middle? He's kind of like-- No, I would say the lower part of the middle. I don't want to oversell the record. Rising health care costs are affecting everything in the economy. Rising health care costs are the thing that's driving our health care system off the rails. It's what's led so many people to being uninsured. It's making it hard for US businesses to compete. It's gobbling up more and more of all spending in the United States. I saw this number recently that said that at the current rate of growth, in just 9 years, the amount that the average American family is going to spend on health care each year is going to be $38,000. $38,000. That's more than half of what family income will be that year. What was striking about that was that this isn't one of those projections that the government does looking at health care costs 75 years from now, showing how grim it's going to be far in the future. This is nine years from now at the current rate of growth. Basically, this is going to happen. Half of our incomes are going to be going to health care very, very soon, unless somebody does something. At this point, we, Americans, spend 50% more on health care than any country in the world, and the money isn't buying us better health. If you look at the numbers, when it comes to infant mortality compared to other countries, we are 45th. Worse than Cuba. When it comes to life expectancy, we're 50th. Behind, by the way, Bosnia and South Korea. And so today we ask the question, why is this happening? What's going on in health care that makes it so impossible to hold costs down? We're tackling these questions now, this week, as health care is being debated in Washington. Because fixing our health care system means fixing two different things: getting more people covered by insurance and slowing the increases in health care costs. And the bills on Capitol Hill right now seem much more about solving the insurance problem than about controlling costs. So we're going to do something we've never done. We're going to two shows about this, this week and next week. This is a co-production we're doing with NPR News. Next week, the most entertaining hour, I guarantee, that you're ever going to hear on the insurance industry. This week, we ask why costs keep rising. From WBEZ Chicago it's This American Life distributed by Public Radio International, I'm Ira Glass. Our show today in four acts. Act one, Dartmouth Atlas Shrugged, in which we examine whether doctors are the ones to blame for rising costs. Act two, Every Cat Scan has Nine Lives, in which we wonder if patients are the problem. Act three, Who Would Win in a Fight Between a Polar Bear and an Insurance Company? Is the problem the insurance companies? And act four, Now What? In which we learn what the new health care bills do to fix all this, if they do anything. Stay with us. Act one: Dartmouth Atlas Shrugged. There are all kinds of reasons that health care costs have risen so quickly over the last few decades. We have higher administrative costs than other countries because our health care system with its insurers and providers is so complicated. We use more expensive high tech gear, our drugs cost more. But there's a whole school of thought that blames a lot of the rising costs on doctors. Prescribing drugs that people don't really need, doing too many procedures. And the reason people think this all goes back to the work of one person, a health researcher named Jack Wennberg. NPR science correspondent, Alix Spiegel, explains what that's all about. To understand the work of Jack Wennberg, let's start with one patient and one medical problem, a young woman with a sharp pain in her lower uterus. I was having a lot of problem, just a constant ache right here that never went away. And my boss kept saying, you should go get that checked. You should go get that checked. Because I was like doubling right over. It was like a really, really deep ache all the time. In 1974, Roxanne Tremblay was 29 years old. A single mom living in a small apartment in Lewiston, Maine. Because Roxanne was the only one supporting her young daughter, she had to be able to work, and the pain was getting in the way. The pain was a problem. So Roxanne went to see her gynecologist, a nice man who did a short exam, and then kindly explained that Roxanne would need an operation. Three weeks later, Tremblay had her uterus and ovaries removed, a total hysterectomy. It was what he called the seed of cancer. It wasn't cancer, but it had the potential of developing into it. Now Roxanne didn't mind losing her uterus. She never planned to get married or have kids again. But she was slightly surprised that her doctor had been so quick, and before surgery hadn't taken any x-rays or anything. No pictures. No. He just felt you were-- And based on what I told him that it should come out. 29 years old is pretty young for a hysterectomy. But in the mid '70s in Lewiston, Maine, lots of women were getting them. Roxanne, herself, knew a bunch. My boss that I had when I worked at Kmart, she had one shortly after I did. One of my friends that I've had since I was six years old, she lives right five minutes from here, she had one. Just about anybody you talked to would say, oh, I had a hysterectomy. Oh, yeah. So I did. So and so did mine. Our I just remember there was a lot of them. I do remember that. Now most Lewiston women, including Roxanne, weren't suspicious about the hysterectomies. And this is where Jack Wennberg's research comes in. Until Jack Wennberg made Lewiston and its hysterectomies famous, no one had even noticed. But in the late '70s, Wennberg published a paper, "A Study of Health Care in Maine." And in it he showed that an unusually large number of women in Lewiston were having their uterus removed. He projected that 70% would have a hysterectomy by age 70. While a couple towns over, the number was much smaller-- 25%. That paper was one of a series of studies of Maine and Vermont published by Wennberg in the '70s and '80s. Studies which ultimately, completely transformed our understanding of what's going on in health care in this country. Which is how come I ended up in Wennberg's dining room. Hello. Hello. This is me trying to set the levels on my recording equipment. To do this I asked Wennberg what I ask most people, "could you say a little something?" This is what I got. 19th century German poetry. Apparently, for fun in college, Wennberg committed foreign verse to memory. Wennberg's that kind of guy. The kind of guy whose side projects tend to be unusually rigorous. This was certainly the case in health care. You see, when Wennberg started out in the late '60s, what he was trying to do was improve medicine in the state of Vermont, get better medical services to rural communities. He'd gotten a grant to overhaul Vermont's health care system. But because Wennberg is such a thorough type of fellow, he made a pretty extreme decision. He decided he'd try to collect information about every medical transaction of every person in every town in the whole state. That way he'd know what was going on. What was going on in home health agencies, what was going on in nursing homes, hospitals, doctors' offices. And we need to know for each patient what their diagnosis is, what their treatment was, how much money was spent, and what the outcomes were insofar as we could actually measure them. Now to collect these records, Wennberg hired a bunch of researchers, people dubbed the Pit Crew, who year after year were sent out to medical records rooms to collect records. It was a massive undertaking. Every medical transaction in the state of Vermont. It took two years of road trips just to collect the records for 1969. But once he had all the information, Wennberg began to slice it and dice it in all kinds of ways. And what immediately jumped out was that medicine from town to town in Vermont was practiced in entirely different ways. As soon as we set out to do the analyses, we began to see these extraordinary differences. In one town, say 50% of the men would have a prostate procedure. But in another town only 30 miles away, only 15% would. Ditto with mastectomies, hemorrhoid removal, back surgery. Basically, town after town was a version of Lewiston, Maine, in the sense that some procedures might be incredibly numerous, or conversely, incredibly rare. It just didn't make sense. We lived right on the boundary between Stowe and Waterbury Center, Vermont. And if my kids had been going to the school system in Stowe, they would have had a 75% chance of getting their tonsils out. If they'd gone to the Waterbury School-- where they actually did-- it was about 20%. So what was going on? Why the differences? Well, there are two possible explanations. The first explanation is that it was the doctors. Doctor behavior was somehow to blame. The second was that it was the patients. That people in some areas were just much sicker than people in other areas. Or maybe they just wanted more services for some reason. Which brings us back to the city of Lewiston, Maine, and yet another woman who had a hysterectomy. My little dogs are freaking here. Oh, hi there, little dogs. Come in. You found me. A couple miles down the way from Roxanne Tremblay, on a quiet Lewiston street, is the home of Carol Bradford. Carol is another Lewiston woman who had her uterus removed in the 1970s. She had fibroids. And like Roxanne, she's happy with the result. But when I asked, Bradford had a theory about the high hysterectomy rate in Lewiston back then. Lewiston, she explained, is mostly Catholic. Some women were having too many children. There are families here with 10, 12 children. It's a possibility that women came to the point where they just really couldn't deal with any more children, and were begging the doctors to do something about it. That's my personal opinion. Not just her opinion. Most people assume that when you go into a doctor's office, the doctor is simply responding. Responding to sickness in your body, responding to the needs and concerns you have. But in the studies he did in Vermont and Maine, Wennberg demonstrated that it's a lot more complicated than this. The women of Lewiston weren't having more hysterectomies because more of them were Catholic or because more of them were sick. Wennberg showed that in terms of sickness and demographics, the populations of the communities in states like Maine and Vermont were actually incredibly homogeneous. Which according to Jack Wennberg could mean just one thing: it wasn't the patients. It wasn't true. It wasn't correct. Because we could easily see that it wasn't that patients were different between regions. So it wasn't illness that was driving this. This must be coming from the provider side. The provider side, the doctors. That was the first insight. That it was doctors not patients that drove medical consumption. And that there are all kinds of things that influenced the decisions a doctor makes when you go into his office. Sickness plays a role, but a much smaller role than we originally thought. So, what are the things that influence doctor decisions? To answer this question, I went back to Maine to talk to doctors themselves. Doctors who explained that the work of Jack Wennberg inspired a small revolution in the state. You see, after Wennberg published a paper on his early discoveries, a small group of Maine doctors gathered to take action. They decided that physicians in Maine should, and could, themselves figure out why these strange geographical variations in care were taking place. And the best way to do that this group figured, was to get all the doctors in Maine to sit down together on a regular basis, look at Maine city by city, and then hash out together why the care they were giving was so different. Bob Keller is a back doctor who worked on this project. And he told me that in the beginning there was only one small problem with the plan: many of the doctors in Maine hated it. Number one, they were insulted. They were angry. Their judgment was being challenged. That was not allowed. There were variable responses. In some cases they just didn't believe it, and they would try to find holes in the data. One of the classics. Oh, we have more workers' compensation here. We have more heavy industry here. And we were able to work through most of those things and demonstrate that wasn't the case. But they would-- our population's older. More of them need prostatectomies. Well, we adjust for age, so that's not an argument anymore. And some doctors never could deal with that. And they would leave the study groups. They just said, this is baloney; we're not going along with this. But in time, says Keller, many doctors did warm to these ideas. They began to accept the data and they began to accept that indeed, different physicians were using different thought processes or decision-making processes in dealing with patients. And so in the state of Maine, for years there was this incredible experiment. Four or five times a year each medical specialty got together for a kind of Talmudic dissection of doctor choice conducted by the doctors themselves. They wanted to look at all of the geographical differences, figure out why they existed, and then try to bring their medical decisions in line with one another. They figured that by doing this they could eliminate unnecessary care. Now, when talking in these groups, the Maine doctors usually seemed to agree on what criteria they would use for making treatment decisions. So for instance, everyone agreed that you only operate on a back after there'd been three months of pain. But when they went back to the data, it showed that in the privacy of their own offices, many doctors were doing something completely different. Why? One possible reason was fear of lawsuits. Some doctors felt that, criteria be damned, if they didn't do every possible thing they might get sued. Another was temperament. Some doctors were just much more eager to take action. Then there was the role of medical culture. In some communities it had evolved over time that, let's say, when a kid got a temperature of 102, he was sent to the hospital. Well, in the next town over, kids with that temperature were advised to just stay home. And then there was the number of doctors in a community. One of the many doctors I talked to while I was in Maine was this eye specialist named Frank Read. He's another doc who participated in these groups. And he told me this story. My old partner that I joined here in 1971 was asked by a friend of his, you know, at what level of vision do you do a cataract operation? And he said, well, if there's one ophthalmologist in town, it's 2200. 2200 is pretty bad vision. If there are two ophthalmologists in town, it's 2080. Not so bad vision. If there are three ophthalmologists in town, it's 2040. Pretty good vision. In other words, the criteria easily shifts. According to later work done by Jack Wennberg, the number of doctors in an area can influence the amount of medical services consumed. The more doctors, the more appointments, the more procedures, the more money spent. You could actually see this dynamic especially clearly during the '70s. Because to drive down costs in medicine, the federal government created a program to send more people to medical school. The theory was that when there were more doctors, doctors would be forced to drop their prices to compete for patients. Basic economics. But that's not what happened. The doctors just adjusted their criteria for doing stuff and had the patients they had come in more often. Because in health care, supply drives demand. So when the supply of doctors and clinics increases, the demand for medical services goes up. Often, Frank Read says, for a completely innocent reason. I don't want to be sitting on my thumbs all the time. I want to be busy. And that may unconsciously loosen my criteria for doing a particular procedure. Which brings us, finally, to the subject, which incredibly, was never ever discussed during the nearly 20 years the doctors met: money. Specifically, the idea that doctors might be prescribing more visits and more procedures so that they could make more money. Frank Read and Bob Keller told me that this subject was completely verboten. We didn't want to talk about money. That's something that we wouldn't want to acknowledge because it would have been a show stopper. I mean it would have then gone right to the question of greed. And you're not going to keep a doc at the table if you say you're greedy. Doctors are uncomfortable acknowledging the role of money, but every doctor I talked to admitted, it affects medical decision-making. Including Gordon Smith, head of the Maine Medical Association. Of course it does. That's just common sense. That's human nature. The payment system is an important influence. You see, the majority of doctors in this country are not on salary, but are paid for each thing they do: a la carte. That's what they mean when they say, fee for service. A phrase you've probably heard a lot. And the way fee for service affects doctor behavior is clear. Gordon Smith. If you pay people more the more things they do, they're going to do more things. Bob Keller points to his own specialty-- he's a back doctor-- and says one of the most popular operations among back doctors these days is this complicated procedure called an instrumented fusion. When a patient has a back problem, the doctor can go in and insert metal rods. Keller says in the old days the doctor used a much simpler and safer operation, but the new, more complicated one costs more. Surgeons could charge more because they were doing these complicated procedures, and so they were putting the screws in. They billed for putting the screws. They were putting the plates in, they billed for putting the plates in. Doing all these things. In the old days a fusion was very much a simpler operation with no external devices. It was all done with the patient's own tissues and bone. So you had a whole new high-tech procedure that was enormously attractive to spine surgeons. And it literally took off in this country. At the same time, as most good spine surgeons will admit, they had no research to support what they were doing. In fact, says Keller, the one high quality study that did exist wasn't so positive. It showed that it isn't so great actually, as people thought it was. And they also showed that interestingly enough, that the old fashioned non-instrumented fusion was as successful as the instrumented fusion. Which was a real blow. And here in miniature is one of the big problems with the way our current system is set up. It's a problem some call, more is not better. Doctors exist in a system that encourages-- and really because of their fear of malpractice suits-- actually forces them to do more. More surgery, more tests, more stuff of every kind. And while most Americans just assume that more care is good, it turns out that more isn't always better for patients. Because every time you get a medical procedure, you risk the possibility of complications and doctor error. In 2003, there was this enormous landmark study published by a Jack Wennberg protege named Elliott Fisher. He compared areas throughout the United States. Areas where elderly people got relatively small amounts of health care services to areas where elderly people got a lot of health care services. A lot. Here's Fisher. The patients in the high spending regions were getting about 60% more care. So 60% more days in the hospital, twice as many specialist visits. And yet, when we followed patients for up to five years, the mortality rate whether you were poor or rich, urban or rural, if you lived in one of these higher intensity communities, your survival was certainly no better. And in many cases, worse. After Wennberg's original work in Vermont and Maine, a group of health care researchers set up a shop at Dartmouth College and created something called the Dartmouth Atlas of Health Care. Basically, a countrywide version of what Wennberg did in New England. The huge warehouse of data compiled by these researchers has led to a lot of insights about our system. Including this very disturbing statistic that you sometimes hear in the health care debate. They've estimated that about one-third of the medical care delivered in this country is unnecessary. One-third. Doctors and hospitals doing things to you and me that we don't need. Stuff that doesn't make us any more healthy. Care delivered by a system that pushes doctors to do more when less is probably better. Alix Spiegel. Coming Up, patients are told that they should do with less. That the test or procedure that they want for themselves is unnecessary. And surprise, they are not too happy about it. That's in a minute from Chicago Public Radio and Public Radio International when our program continues. It's This American Life, I'm Ira Glass. Each week on our show of course, we choose a theme, bring you different kinds of stories on that theme. Today's show, "More is Less." This is the first of two shows that we're going to be doing, this week and next, explaining the health care system, or parts of it anyway. Today we're asking the question, why are health care costs rising so much that they threaten our entire economy? We've arrived at act two of our show. Act Two: Every Cat Scan Has Nine Lives. This summer at a press conference, President Obama described how he wants to slow the increase in health care costs. He's going to do it by having patients everywhere adjust a bit. They're going to have to give up paying for things that don't make them healthier. Why would we want to pay for things that don't work? Of course when he says it that way it sounds like it could not be easier. According to the Dartmouth Atlas of Health, as you've just heard before the break, one-third of medical spending is on treatments and tests that are not actually necessary. And in some cases, may actually harm us. And President Obama's stimulus package devotes a billion dollars to studying and determining which procedures those are. So, let's just eliminate the stuff that doesn't work, right? Well, one of our producers, Lisa Pollak, explains why, in practice, that is not so easy to do. In the spirit of the president's advice, here's a story about what happened at one hospital when one doctor tried to resist ordering a test for a patient. The patient was a teenage girl who'd been in a minor car wreck. As a precaution she was brought into the ER on a backboard with one of those collars around her neck. The doctor was Jerome Hoffman. He's a professor of emergency medicine at UCLA. And the first thing he needed to do was rule out the risk of an injury to the girl's cervical spine. He was able to do this without taking an x-ray. Because when he examined the girl, her condition matched this list of five criteria. For instance, she had no tenderness in the middle of the back of her neck that indicate to doctors when a fracture is extremely unlikely. Hoffman told the girl's mother that her daughter was fine, no need for an x-ray, and the mother seemed OK with this. But a couple minutes later, the dad showed up. Dr. Hoffman. And the dad was a very tall, very powerful figure, who was very upset and spoke very loudly. And he also happened to mention that he was a lawyer and that there would be consequences for any error that we made. And he said that he wanted to get not just an x-ray, but a CAT scan of her neck. A CAT scan. Which is not only more expensive than an x-ray, but uses much more radiation. So I tried to explain to him that a, she didn't really need the x-ray, or the cat scan. And b, that there was some harm with it. In fact, if you do a thousand CAT scans to a young woman like this, there's a pretty good chance that some small number-- one, two, something like that-- may have harm from it. And the harm is not trivial harm, it's important harm. She could get a cancer of her thyroid that in 15, 20 years might actually be fatal. So while I can't say with 100% certainty that her neck was fine, I was pretty sure-- 99.9% at least, in my judgment, it would be more harmful than beneficial to her to do the test for her. So I tried to explain this to the dad and I tried to be really nice and patient, but he was having none of it. He said things like, you will do a CAT scan. And then I said to him something that, actually I had long known, but it never crystallized for me exactly in this way until that moment. I said to him, you know, for me it really is the right thing to do the CAT scan. I said, you know, if I don't do the CAT scan, you're probably going to lodge a complaint about me. If I do the CAT scan, you're going to be really happy with me. I said, in addition, I'm almost certain that your daughter is fine. But there's maybe a one in a million chance that she isn't. That there really is a hidden fracture and I'm missing it. And if that's the case, the CAT scan will save my butt. And on the other hand, if I do the CAT scan and your daughter gets a cancer 20 years from now, no one will blame me. I said, in addition, I'm spending a lot of time talking to you here that I need to be going doing other things. If I get the CAT scan, I could do it in a second. It would be done with. It would be easy. And I said, finally, the really strange thing is that I'll get paid more if I do the CAT scan. Because the way that bills are made, you get paid more for more complex patients. And the insurance companies of the world think that it proves that the patient was more complex and more difficult if you had to do a CAT scan. So everything about this was pushing me to do the CAT scan. I said that to him. And I said, there's only one problem, which is that when I decided to become a doctor, I made a pledge. And the pledge was that I would put my patient's interest in front of my own interest. And in this case, my judgment was that it was not in my patient's interest to do the CAT scan. And therefore, I can't do it. And it was really strange. It was interesting because this big guy, very powerful guy who had been really yelling and angry and screaming, his jaw dropped and he was silent. He didn't know what to say. And you didn't do the CAT scan? Oh no. That was the end of the story. I hope it's the end of the story. It's been over a year now and I haven't gotten that famous embossed letter with the lawsuit, so I'm assuming that everything turned out fine. Hoffman told me this story is not an isolated example. Things like this happen all the time in his department. Whether it's people wanting antibiotics for illnesses that antibiotics have been proven not to help, or tests such as x-rays and CAT scans. Where a patient thinks, well, don't I need to be sure that I don't have appendicitis? Or this, that, or the other thing. And really, the right thing for the doctor to do is to think. And in many cases, not to do any tests. At least not right now. There's a place for tests and there's a place for interventions. But not in every case. And yet, the incentive to the doctor is often, just do everything. And the truth is, a lot of us like it that way. It's hard to understand how doing everything could be bad for us. We think, better safe than sorry. Do everything possible. In a study published earlier this year, half the public believes someone's getting unnecessary health care. But only 16% thought it was them. We're so wired to think that more health care is better that when someone suggests we might be better off with less, it's upsetting. Even daring to raise the question, is this device or test or pill really making us healthier, can send people into a panic. Consider the PSA test, the blood test used to screen men for prostate cancer. The question of whether the benefits of this test outweigh the risks is one of the most controversial issues in medicine. Some doctors worry that the test is leading to unnecessary treatment. Because it catches many prostate cancers that are so slow growing they would never be harmful if left alone. In 2002, two medical journal editors, both doctors, made this point in an op-ed for the San Francisco Chronicle. Gavin Yamey and Michael Wilkes wrote that since early detection hadn't been proven through randomized control trials to reduce a man's risk of dying from prostate cancer, getting the test might not be right for every man. Their op-ed, published under the headline, "Prostate Cancer Screening: Is It Worth the Pain," did not go over so well. Lots of people wished that we would die. That's Gavin Yamey. Since many of the readers believed the PSA test had saved their lives, they didn't appreciate being told that the test wasn't effective. Lots of people wished we would have a very slow death from a nasty cancer. People accused us of having the deaths of thousands of men on our hands for writing this piece. Of geriatricide. Michael Wilkes, Yamey's co-author. People wrote both to us and to our bosses accusing us of being sort of like the Nazis. And specifically, accusing us of being like Mengele. Others accusing us of truly being men-haters and wanting to wipe out the male population. When the president says we can cut health care costs by eliminating things that don't work, things for which there's no evidence, it sidesteps the fact that in medicine the evidence isn't always so clear cut. And that's true with the PSA test. There's a lot more evidence about PSA now than there was when Yamey and Wilkes wrote their op-ed. In fact, two long-awaited studies came out this Spring. One showed that the PSA test did not reduce a man's risk of dying from prostate cancer. The other showed it reduced prostate cancer deaths by 20%. But it also showed that for every life saved because of PSA screening, 48 other men were diagnosed and treated. In other words, for each prostate cancer death prevented, dozens of men endured surgery or radiation, risking serious side effects, like impotence and incontinence. Doctors interpret this evidence differently. Some I talked to said it's proof that the test saves lives. Others said it shows we might be hurting more men than we're helping. Because the evidence is ambiguous and the balance of risks and benefits is really a judgment call, most national guidelines say that doctors should let men know the pros and cons of PSA testing, and let them decide whether to have it. But most of the time this is not what happens. Studies show that the majority of men get the test without any discussion at all. It's automatic, a no-brainer. And honestly, it's not hard to see why. To question whether the test is necessary, a doctor is flying in the face of all sorts of cultural forces. Like the idea that if you can find cancer early, you always should. Not to mention all the billboards and free PSA screening events and celebrities in TV ads telling men to get tested. Want to do something really special for your man this Christmas? Call his doctor and schedule his prostate exam. Prostate exams save lives and prostates. Here's another from the NFL. So get screened and don't let prostate cancer take you out of the game. And of course, Larry King. Men over 40, take your PSA test. It's a simple, little blood test. You get the result in a couple days. A few doctors I talked to mentioned another reason that physicians might be wary of bucking the PSA trend. They told me what happened to a doctor named Dan Merenstein. Merenstein was trained in evidence-based medicine, and about 10 years ago, when he was a family practice resident, a 53-year-old man came to him for a routine physical. Merenstein says he followed the guidelines. Talked to the patient about the benefits and risks of getting the PSA test. And the man chose not to have it. Then, a year and a half later, the man went to another doctor. That doctor tested the man's blood without discussing it with him. His PSA level was extremely high and a biopsy found an aggressive, incurable cancer. Now there is was proof that having an earlier PSA test would have changed the man's fate. But Merenstein and his residency program were sued for malpractice. At the trial, the patient's attorney argued that Merenstein shouldn't have given the man a choice to have the PSA test, no matter what the national guideline said. The attorney put other family doctors on the stand. And they said, you know, we don't talk to patients. This is Dr. Merenstein. That's what they do in ivory towers. You know, I order tests. Patients come to me for me to order the test. I'm the one that went to medical school. And these are the tests we order. And if Dr. Merenstein had ordered this-- they said this straight under oath. And if Dr. Merenstein had ordered a PSA, this patient would live a long, productive life. But because Dr. Merenstein failed to, this patient is going to die surely. Merenstein was exonerated, but his residency program was found liable for a million dollars. The jury, just like the doctors on the stand, rejected the idea of following the guidelines based on evidence. To them, the best care meant doing everything you can. I should have just ordered it. There should have been no discussion. It shouldn't have been up to the patient. So that was the approach they took. And they took this approach that this thing called evidence-based medicine is just a way to save money, just a way to ration care. After the trial, like a lot of doctors who had been sued, Merenstein found it hard not to see patients as potential plaintiffs. I think you view people differently after that and you look at patients and you say, this mole, which a thousand times before I would say I'm pretty confident on how to evaluate moles and which ones I need to take off myself, and which ones I think are fine to stay, and which ones need to go. You know, I think I started sending more moles to dermatologists to remove and sending more people with what I was pretty confident was irritable bowel or something like that to GI doctors to get scoped and things like that more than I should have. It sort of just didn't feel right. It didn't feel right, he said, because it didn't feel like he was doing what was best for the patients. These days, when it comes to the PSA test, Merenstein starts by following the evidence. He still tells his patients the pros and cons, but then he gives them a little nudge and adds something he never used to. "Most people," he tells his patients, "get the test." Lisa Pollak. If you're a man and you heard this story and you want to know more about the pros and cons of getting the PSA test, there's a good summary at the Mayo Clinic web site. Those people really know what they're doing. Act 3, Who Would Win in a Fight Between a Polar Bear and an Insurance Company? So if doctors aren't going to keep costs down and patients aren't going to keep costs down, how about insurance companies? Out of everybody in the health care system, you would think that this would be the one group most interested in keeping costs down because they are the ones who actually make the payments to doctors and hospitals, and every dollar they save is basically a dollar they get to keep. A dollar that goes into their profits. Or, if you want to get very technical about this, it's a dollar less that they could charge you and me in premiums. Well, we looked into this and it turns out that there are a lot of reasons that insurance companies have a hard time holding down health care costs. But they all boil down to one thing. Insurance companies are not always as powerful as you would think. The way that insurance works is that each insurance company makes its own contract, its own deal, with each local hospital group or health provider system. And that deal spells out how much the insurance company is going to reimburse for every different kind of procedure and test. And even in cities where a company is the biggest insurer in the market, even then, it does not necessarily have the power to boss hospitals around and push down costs and bargain down prices. Take, as an example, the pricing showdown between Blue Cross of California-- huge insurance company-- and this big network of hospitals and clinics called Sutter Health. Sarah Koenig, another one of our producers, tells what happened. Back in 2000, Sutter was demanding huge rate increases from Blue Cross, averaging something like 30% or 35%. That was a shocker. Blue Cross was the biggest insurer in the state, which meant it was used to getting cheaper rates from hospitals than the smaller guys. But Sutter was enormous too. It had more than a hundred health care facilities all over Northern California, including more than two dozen hospitals. Sutter had what's called a geographic lock on the Bay Area. So of the several hundred thousand Blue Cross customers there-- Almost everybody received, or knew, or went to Sutter for their medical care. That's Michael Chee. At the time, he was spokesman for Blue Cross of California. And Blue Cross's position was that Sutter's demands were out of line. They weren't justified by the medical costs and inflation data Blue Cross had researched. So Blue Cross offered a lower figure. Sutter rejected it, saying Blue Cross had been underpaying them for years. It got contentious. Blue Cross still refused to pay. So Sutter said, if you don't, you can tell your members to go elsewhere, find other doctors, go to other hospitals. The brinksmanship that kind of occurred was, well, if we close our doors, all these people-- hundreds of thousands of them-- are going to be forced to travel an extra 30 minutes, an extra 10 miles, and that was not acceptable to the membership. So the membership began to express its opinion in the negotiations. Blue Cross got dozens, sometimes hundreds of phone calls a day, all thanks to a new pressure tactic used by Sutter. Sutter urged its patients to call Blue Cross's customer service line and complain. Michael Chee and his bosses started seeing news stories about the dispute, stories that favored Sutter. In response, Blue Cross launched a major marketing push of its own to try to convince customers everything would be OK if they would just find different doctors. Michael Chee did interviews with reporters. He sent tens of thousands of letters to Blue Cross members saying things like, "We are saddened and disappointed that Sutter has put its energy into instigating members like you to contact us." Blue Cross bought ads in local newspapers, publishing lists of non-Sutter care centers, explaining who all the doctors were and what they specialized in. And pointing out that those facilities weren't much farther than Sutter's. So you guys sort of mounted this campaign to try to convince your membership, we can do this, we can live without Sutter? They came back to you and said-- And said, I can't live without Sutter. You know, we want what we want. I've been with my doctor here at this location for many years, and I don't want to have to look for somebody new. I don't want to have to make any extra effort. I mean did you explain, as a company also, like this is potentially going to cost you guys more because your premiums are going to go up? Absolutely. Absolutely. One of the things we tried to tell members and employers was, this is our job. Our job is to control health care costs, so that your premiums don't constantly go up. So that you're not constantly paying more. And one of the ways we do that is by these negotiations. None of this worked. Customers didn't budge. Neither did anybody else. State lawmakers got dragged into the fight to mediate. Finally, because they couldn't live without each other, Sutter and Blue Cross worked out a compromise. Sutter didn't get all the money it asked for. It wasn't a 30% increase. The actual number wasn't made public. But they got enough that it resulted in hiked up premiums. That's one reason medical costs in San Francisco, where Sutter is totally dominant, are still more expensive than cities nearby, like Oakland and San Jose, where Sutter isn't quite as strong. So that now a family of four in San Francisco pays $45 more per month to Blue Cross than it would pay in San Jose for exactly the same coverage. Michael Chee is still sort of baffled that it worked out this way. That people don't respond to bottom line reasoning when it comes to where and how they get care. He says costs will keep rising until we consumers start sacrificing a little, making different health care choices. Based on knowledge, based on facts, not based on our feelings, not based on what we want. Without those kinds of sacrifices, we're always going to be stuck in this argument of, I want what I want, and what I want can be very expensive and not the most cost effective thing. As it happened, I interviewed Michael Chee from the hospital. He'd had an accident involving one of those jet ski things and suffered a head trauma. Natasha Richardson had a very similar injury to mine. Mine was probably actually more severe. Quite honestly, I shouldn't be talking to you right now. I should be dead. Michael Chee lives in Burbank, California, near Los Angeles. But he had the accident on the Colorado River in Nevada and was airlifted to Las Vegas for treatment. For his two week rehab, he wanted to go home to LA, and had been arguing about that with his insurance company. Which happens to be Blue Cross. There are providers that I have a preference for closer to home, closer to where I live, that I wanted to go to for my care because I know them, I trust them. But my insurance would not accommodate my medical transport from here to there because those rehab services were available right here without having to move me. But Wait, weren't you just making the exact opposite argument before, that patients should be willing to sacrifice for lower costs and quality care? So here I am, away from home for two weeks getting my rehabilitation done. Yes. I mean when you're injured and you have the kind of injury that I have, you want to be close friends and family because it's just more comforting. That doesn't mean that's a smart medical decision. That just means that's what I want emotionally. I know, I know. But hearing this, you completely-- your sympathies are completely with the patient. You just think, of course you want to go home and be around your friends and family. And you've had this traumatic thing happen and it's totally upsetting, and probably very frightening. And of course, you want to go home. You know what I mean? I think it's a real dilemma. It is a dilemma. And I felt that. And I went through that entire emotional process. Do you think Blue Cross has made the right decision in your case? I think so. From a cost standpoint, yes. We probably can all agree that Blue Cross made the right choice in trying to save money on Michael Chee. But we agree only in the cold light of day. And that's what I mean by the dilemma. As patients, we don't usually consider things in the cold light of day. It's no wonder we don't respond to pocketbook arguments about how to save money on our own care. And that's partly what makes us, the patients, a secret weapon in these negotiations. At least for the doctors and hospitals. Because we side with them every time. Because we like our doctors. We trust them. We basically hate our insurers, even though the insurers are paid to represent us in negotiating the price of our own care. And we unwittingly side with the doctors in another battle we don't even know is going on between doctors and insurers. The one about eliminating unnecessary medical services and procedures. As you heard earlier in the show, the Dartmouth Health Atlas estimates about a third of every health care dollar we spend is wasted on tests and treatment we don't need. So if health insurance companies know they're shelling out all that money on stuff that isn't necessary, why can't they do something about it? I put this to Jack Rowe, the former CEO of Aetna, one of the biggest health insurers in the country. When he was in charge, he watched Aetna's expenses and its profits very, very carefully. Why doesn't an insurance company go, I want that 30% to 40%? You know what I mean? It seems like this is a lot of money sitting there that you guys could profit from. Is there any way to get at that percentage? Insurance companies are trying very hard to develop approaches, which will not only improve quality but reduce overuse. So they're trying, and it's true, Aetna has all kinds of programs. Good, money-saving programs to promote cheaper drugs, to make sure diabetics and cardiac patients do all the preventative things to keep them out of the emergency room. Plus Aetna, like all insurance companies, has guidelines for new technologies they will and won't cover. And all the scientific studies that back up that policy. But the fact is, if companies like Aetna say no too often, they risk losing customers. So there's great sensitivity over that because physicians say that the insurance companies are practicing medicine. And who are they to tell me whether or not this patient needs this operation? As you recall, that's one of the things that led to the great pushback. The great pushback, also known in the insurance industry as the backlash. He's talking about HMOs. Back in the 1980s, employers went to insurance companies and pleaded with them to keep down costs. And that's when the HMO came into vogue. By the mid '90s, most employers used HMOs to cover their employees. And it pretty much worked. Health care costs stopped rising for the first time in a long time. One year they even fell. But a big part of keeping costs down was tightly controlling which doctors patients could see, and denying coverage for procedures that doctors argued were necessary. Insurance companies were inundated with complaints. From physicians, and hospitals, also from patients who were getting complaints from physicians about their insurers. Politicians. Also we're getting complaints from doctors, and hospitals, and patients. There were dramatic stories in the press about people who'd been denied lifesaving operations. There were class action lawsuits, legislation to limit their powers. Then there was that Helen Hunt movie. Remember, As Good As It Gets, where she plays the mother of this poor asthmatic boy who needed some tests he didn't get. They said my plan didn't cover it and that it wasn't necessary anyways. Why, should they have? Well. [BLEEP] HMO, bastard pieces of [BLEEP] OK, I'm sorry. It's OK. Actually, I think that's their technical name. Jack Rowe was one of two insurance executives I talked to who mentioned that movie. It left a big impression on the insurance industry. Because when people saw it in the theaters, they reportedly broke into applause. As a result of those years of opposition, insurance companies will only fight doctors and patients to a point. They don't want to go back to the days of the HMOs, of being the hard-asses telling everyone no. Even though they did successfully hold down costs back then. And they did it without making people sicker. There were anecdotal horror stories for sure. But overall, as a country, our medical care didn't suffer. We were just as healthy. But that's not how we remember it. And now you always hear, no one should stand between you and your doctor. This is Uwe Reinhardt, a health care economist at Princeton university. You know what that means? That means no one should ever control utilization, even if it's unnecessary. If your doctor thinks it's necessary, no one should ever say no. And almost anyone who's looked at the data says, oh yes, somebody should. According to Reinhardt, the fact that insurers can't completely crack down on unnecessary procedures is just one of a whole host of reasons why the insurance industry really can't control costs in the American health care system right now. Do insurance companies actually have an incentive to keep costs down? I've often asked myself that question. Obviously, when you compete against another insurers, it's good to have lower premiums. But the insurance industry as a whole, basically, their profits tend to be 3% to 5% of whatever money flows through their books. So the more money flows through the books, the more profit they make. Suppose a guard waved a magic wand and said, OK, now health care costs in America are half of what they are now. Then the insurance industry's book of business would be half of what it is now, and therefore, their profits would be half of what it is now. It's not totally clear to me the insurance industry would love that. As it stands, insurance companies are doing pretty well. They don't make anything close to the 30% profits of, say, Microsoft, or Merck Pharmaceuticals. Or even the 10% profits of Exxon Mobil, but Fortune magazine lists the health insurance industry as the 35th most profitable industry in the country based on 2008 revenue. What's the 34th most profitable industry you ask, just above the insurers? That would be medical facilities. Sarah Koenig. Act Now What? OK, so far this hour we've illustrated just some of the main things that are driving up health care costs. And truthfully, putting this show together over the last few months, it's been hard not to get sort of depressed. Not only do the problems seem like they're built into the very foundation of our health care system, but the health reform debate that's going on right now in Washington doesn't seem to be about cutting costs at all. Democrats and republicans are arguing over who's going to get insurance, and public option, and how it's paid for. Not to mention death panels and abortion. There's really not much discussion about how to fix the health care system as a whole to slow the runaway costs that threaten our entire economy. The stuff we've been talking about all this hour. And so to end our hour, we invited somebody who's been following this very closely in Washington, DC, Susan Dentzer. She's been reporting on the politics and economics of health care since the 1980s for Newsweek, and then later for US News & World Report. She's seen HMOs come and go, she's seen Hillary Clinton's health care plan come and go, and now she's monitoring the latest attempt to remake the health care system as the editor of a policy journal called Health Affairs. And I'll be frank, when I sat down with her to talk about what is actually in the bills, she totally blew my mind. We'll get that part in a minute, but first, the actual detail of the bills when it comes to cutting costs. There is some stuff in these bills that addresses rising costs. If you are a glass half full kind of person, you look at it this way. There are some measures in the bills that would give the secretary of health and human services, among others, enormous authority to experiment with new ways to deliver health care. This doesn't mean that little, experimental projects Dentzer says. The head of HHS will have czar like powers to change very basic things in how the system works by changing how Medicare pays doctors and hospitals. And so for example, Medicare could stop paying fee for service. That system where doctors get money for every procedure that they do. They could bundle doctors and patients into groups to cut inefficiency and waste. The bills also set up a Medicare commission, which could do the kind of restructuring and cutting that would be too hot politically for Congress to do itself. Now the weaknesses of these bills, Dentzer says, is that they don't force the head of HHS or anybody in the government to make any changes at all. There are no deadlines. And the amount that's going to get saved if everything goes perfectly, according to the Congressional Budget Office, is much smaller than health care costs are going to rise. But the idea is that Medicare is such a huge part of the health care system, it pays for a fourth of all the health care in the country. It's the biggest insurer in America. Changes made in Medicare would be adopted by others. So the notion is to really create a platform for gradual change. And is part of the impulse behind this basically to say, we are not going to agree in the Senate and the House on the exact ways to cut costs and exactly which things to do? And so let's just agree, somebody's going to do that. It's going to be the head of the Department of Health and Human Services and some of these other things that you're saying. But let's not discuss that here. Yes, that's part of it. And the other realistic piece of this is if you tried to build all of this into the bill right now. If you said, we're going to make sweeping changes in the system. We're going to completely pay you in a totally different way. We're going to take you doctors who've been out in the hinterlands collecting your fee for service monies and basically restructure the system in such a way that you might have to live your life really differently. Just try putting that into a bill that gets everybody to accept it. You can't. Susan Dentzer told me that there are people in the administration who are deeply involved in the details of how to cut health care costs, and she talks to them. But she says they don't talk about this stuff much publicly for similar reasons. It's a political loser. It's a tough sell to say to people, not only will you get less health care, you'll be better off. OK, now I'm going to tell you the thing that Susan Dentzer says that totally shocked me. She told me that for the first time since she's been covering health care decades ago, all the major players in health care-- the hospitals, the insurance companies, the doctors-- she says they are all for the first time agreeing that something has to change. And she says this is the biggest political achievement made in health reform so far. Almost all the stakeholders in health care have been at the table and are talking about all of this. They know that the system cannot persist the way it is. That we've got to do things differently. We have got to get more value out of the dollars spent on health care. How recent is that agreement? Is that because of Obama and his people like saying, OK, here's what we're going to do? Not really. We would probably be at this juncture no matter who had been elected president. Because of what was happening to the cost over the course of this decade. Right, there's this growing consensus, like it's going up so fast. Well, health insurance premiums went up 130% from the year 2000 to now. Two years ago I was talking to an insurance executive from one of the leading insurance companies and I said, OK, so what's the situation like, and draw me the analogy with the threat alert system. You know, red alert, orange, green, whatever. He said, we're on red alert. We're on red alert. The system is falling apart. The insurance companies? Yes. I'm just surprised to hear the insurance companies are on red alert because they are still making nice profits. But they can see the handwriting on the wall. They see the system crumbling. They understand the pressures that will ensue if things get really out of hand. Just imagine if we had had 100 million people uninsured, what kind of pressures there would have been for, say, a single payer system. They know that. They think the only solution now for preserving any part of the system as a private system is to stop the bleeding now. And so in addition to the health care reform happening in Washington, Susan Dentzer says there's a second reform that's happening right now all over the country. Hospitals and health care providers and state legislatures coming up with their own ways to restructure and contain costs. That's what gives her hope. That things are so hopeless for every player across the board that a consensus is actually taking hold that things can't continue as they have. And she sees people and organizations taking action. Alix Spiegel is going to be doing more stories on this subject on NPR News. You can find those in the coming days at npr.org/health. This American Life is distributed by Public Radio International. WBEZ management oversight for our program by our boss, Mr. Torey Malatia, who says, you know, you think people get upset when you mess with their health care. Try changing the broadcast time of Car Talk. Lots of people wish that we would die. And lots of people wished that we would have a very slow death from a nasty cancer. I'm Ira Glass, back next week with the second hour we're doing on health care. The Planet Money team takes on the insurance business right here on This American Life. PRI, Public Radio International.