TEXT OF INTERVIEW
Tess Vigeland: This week the California senate rejected a bill that would have required health insurance for almost everybody in this state. Health care advocates watched closely to see what happened because California would have been the largest state to enact such a mandate.
Health insurance has become an intensely personal issue for columnist David Lazarus, even though he is covered through his employer, the Los Angeles Times. We spoke with him last fall shortly after he was diagnosed with diabetes and we've invited him back for an update:
Vigeland: David, what have you discovered since then?
David Lazarus: Well, you know, when I replayed our interview from a few months back, you could hear the fear and the anger in my voice as I just embarked on that road. Well, now it's a few months later and I'm happy to say that I've got my hands around this thing now. I've got my numbers -- my blood sugar levels -- under control. My learning curve is a lot less. I've worked with an endocrinologist about how I dose myself and how I regulate my insulin. I've worked with a dietician to learn how to eat again, which is very hard. And so, you get the hang of something like this; you learn that you're not going to let it manage your life, and when I go to the drugstore now, I know what I'm doing.
Vigeland: So, what have you learned about the costs of managing a chronic disease -- insulin, needles, other supplies?
Lazarus: They're extensive. In some cases, some diabetics tell me the spend about $10,000 a year on this thing. You're talking about your blood glucose meter, you're talking about the test strips that are required for that (and I do as many as seven to 10 tests a day), but there are other things as well: you've got you're insulin, you've got your needles, you've got the lancets you need to poke your finger -- again 7 to 10 times a day -- and so you have a lot of fixed costs attached to a chronic disease.
Vigeland: Can you give us an idea of those fixed costs? When you talk about, say, the strips -- what does that set you back?
Lazarus: This is where it gets really, really interesting Tess, because you have roughly 21 million diabetics in the United States right now. According to some estimates, the number of diabetics is going to double to more than 40 million over the next few years, primarily because of the obesity epidemic. So, you'd think that these economies of scale would bring the costs of much of the diagnostics of diabetes down, but they don't. And in the case of test strips, which is a very good example, each one of these little tiny strips, they retail for $1 each and a handful of major drug companies that have cornered the market, they're all selling at the same exact price of $1 a piece. Now, if that's a monopoly, that's clearly an oligopoly and you're looking at, I would say, cartel-like behavior, if none of these companies are able to compete on price. And when I started investigating the cost of test strips, I discovered that, in fact, the cost of manufacturing the test strips is closer to 9 cents a strip. That's 900 percent markup on a captive market with a chronic disease.
Vigeland: How is it that insurance companies haven't made demands to bring those costs down or that even patients themselves have said "you know what, this is ridiculous; can't we do something about this?"
Lazarus: Patients don't seem to have a powerful voice in this equation and this isn't just diabetes now, we could be talking about any chronic disease, whether it's heart disease, AIDS, cancer, thyroid, there do not seem to be patient empowerment avenues. Now clearly, there are large organizations, in my case, the American Diabetes Association, the Juvenile Diabetes Research Foundation, which are the Type 1 guys, these are all big players here, but they are beholden in many ways to the drug industry because they get much of their funding from the drug industry, hence they do not splash in the pool when it comes to going into the face of the drug companies.
Vigeland: Any other surprises to your wallet in terms of dealing with this disease?
Lazarus: My relationship with my insurance company has become rather troublesome as they have their different ways they want to manage my disease for me, which isn't always in sync with my game plan...
Vigeland: Or with your doctor's game plan.
Lazarus: Thank you, and that's the other thing to is I do have to see my doctor at very regular intervals now and I never really paid that much attention to the copays and whatnot because I always saw it as "OK, I'm going in for my physical and there it is." Now, I go in regularly and I see a doctor, I see a diabetes educator, I see a dietician. These things start piling up very, very quickly and I'll tell you Tess, the more I have encounters with the U.S. medical system, the more I feel validated in my believe that a single-payer system is the way to go for the United States where we spend $2 trillion annually on health care and by some estimates, we squander a third of that amount on bureaucratic overhead. Boy, we can be doing a better job.
Vigeland: Well David Lazarus, thank's for coming in again and we'll look forward to checking in in a couple of months.
Lazarus: Always a pleasure.
Vigeland: David Lazarus is a personal finance columnist with the Los Angeles Times.