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Insurance is the 'original sin' behind rising healthcare costs, says former emergency medicine professional

Rosenthal recalled the days when insurers covered everything, and employers paid the premiums, which desensitized Americans to how much things cost.

Jeff Lagasse, Associate Editor

Elisabeth RosenthalElisabeth Rosenthal

Elisabeth Rosenthal takes a skeptic's view of the health insurance industry. A Harvard Medical School graduate who practiced emergency medicine before transitioning to journalism, Rosenthal acknowledged the need for people to be insured while also pegging insurance as the "original sin" that led to rising costs in the broader healthcare system

In an interview with the Wharton School of the University of Pennsylvania, the now editor-in-chief of Kaiser Health News recalled the days when insurers covered pretty much everything, and employers paid the premiums -- which, in Rosenthal's view, desensitized Americans to how much things cost.

"Americans become very price-insensitive," she said. "And what do you do if you're a for-profit business as most of the providers and device makers and pharmaceutical companies are? You say, 'We've always charged $10 for that when someone was paying out of pocket. But now they've got insurance, so it kind of feels like nobody's paying.'

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"Maybe that $10 becomes $50 or $100," said Rosenthal. "It's all this kind of inflationary cycle where everyone has the sense that nobody is paying."

Perhaps sensing the unsustainability of rising costs, hospitals and health systems -- not to mention the federal government -- have taken steps to try to curb those costs, with mixed results. Third-party vendors, data analytics companies and even mobile app developers have given rise to entire sub-industries devoted to improving the patient experience and making healthcare more consumer-friendly and affordable.

Many of these approaches focus on the increasingly consumer-centric nature of the healthcare system, banking on things like patient choice and billing transparency as viable means of keeping the power in consumers' hands.

The problem, said Rosenthal, is that the market is too flawed to truly derive benefit from these measures.

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"When I asked one expert, a former health commissioner, 'Why is healthcare such a booming sector?' He said, 'It's like asking Willie Sutton why he robs banks. That's where the money is,'" said Rosenthal. "It's true. We like to say we have a market-based system, but it's such a flawed market that even the most conservative economists look at it and go, 'This isn't a market.' As buyers, we don't know the prices of the choices that are put before us. Even the doctor doesn't know the price. And the price can vary from block to block by a factor of 100. How can you possibly expect wise consumer decisions to totally solve this problem?"

Digital health has the potential to be a positive force, she said, but so far has yet to live up to its potential. As an example she cited digitized medical records and electronic medical records, which in theory allow doctors and hospitals to easily exchange patient information with each other. But what's happening, said Rosenthal, is that some hospitals don't want to share their data for commercial reasons; a patient can easily make a switch to a different health system. Essentially, electronic medical records are designed for billing purposes, not for the patient's best interest, she said.

There are things patients can do, such as question their bill, look for errors, and flat-out refuse to pay if they suspect something is amiss. It's a power most people don't know they have.

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But if lasting change is going to occur on the cost front, Rosenthal said it will have to come via some kind of health reform.

"Whether it's the Affordable Care Act or a Republican replacement, until we get these prices and costs under control, nothing is going to work very well for patients," she said. "Patients are and should be the focus of this endeavor we call medicine. … It's fine for me if people make a profit, but they should make profit out of doing things that are good for patients and the best for patients. Instead, what we see is often profit without regard to whether there's actual medical benefit, and that's a sad state to be in. That's a big part of why our costs are so high."

Twitter: @JELagasse