Pod Insights Freakonomics Radio 423. The Doctor Will Zoom You Now About this episode Thanks to the pandemic, the telehealth revolution we’ve been promised for decades has finally arrived. Will it stick? Will it cut costs — and improve outcomes? We ring up two doctors and, of course, an economist to find out.
Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:01 Stephen J. Dubner? Freakonomics Radio is sponsored by hotels.com. Hotels.com helps you find and book the right stay for work faster. With business preferences, save your travel must haves like gym access or breakfast just once, then get tailored results whenever you search for work travel. Plus, with a free membership, you can save up to 20% on hotels and earn rewards on every stay for future travel. Book now at hotels.com. Visit hotels.com for details.
0:33 Stephen J. Dubner? Freakonomics Radio is sponsored by Amica. You know what they say, if you want to go fast, go alone. If you want to go far, go together. So go with Amica and get coverage from a mutual insurer that's built for their customers, one that looks after what's important to you together. Auto, home, life, and more, coverage that fits your unique needs. Amica helps you protect what matters most. Visit amica.com and get a quote today.
1:04 Stephen J. Dubner? Freakonomics Radio is sponsored by Mint Mobile. With Mint Mobile's summer sale, all of Mint's plans are $15 per month, even unlimited. Free yourself from big wireless and switch to Mint for high speed data and coverage on the T-Mobile 5G network. To get your new wireless plan for just 15 bucks a month, go to mintmobile.com/freak. That's mintmobile.com/freak. Upfront payment, $45 for three months, $90 for six months, or $180 for 12 months. Plan required, $15 per month equivalent. Taxes and fees extra, initial plan term only. Greater than 50 gigabytes may slow when network is busy. Includes up to 20 gigabytes hotspot. Capable device required. Availability, speed, and coverage varies.
1:48 Stephen J. Dubner? See mintmobile.com.
1:54 Stephen J. Dubner? Freakonomics Radio is sponsored by ChatGPT. ChatGPT work is a new way to work in ChatGPT. ChatGPT work can pull info from across your apps and connect to your tools to help you create finished work. You can even automate work in ChatGPT with the scheduled tasks feature, and the whole time, you stay in control. Put ChatGPT to work on your most ambitious ideas and projects. Get started at chatgpt.com by selecting Work Mode, available on Plus and Pro plans.
2:32 Stephen J. Dubner? Okay, so if you would just say your name and what you do, please.
2:35 Speaker 01 My name is Dr. Rebecca Kurth. I'm an associate professor of clinical medicine at the Vagilis College of Physicians and Surgeons at Columbia University, and I'm a general internist in private practice in Manhattan.
2:48 Stephen J. Dubner? We should also say you are our family doctor, and I think you're great. So, thank you.
2:53 Speaker 01 Thank you for that.
2:54 Stephen J. Dubner? It's been an interesting few months. Can you give us a quick overview, really, what your typical day was like during the COVID peak in New York City and how that compared to a typical day pre-COVID?
3:07 Speaker 01 Yes, so I do predominantly preventive medicine. I do a lot of checkups and things that are done in a fairly routine fashion. What happened at the end of March is I went from having a few conversations with people who were having fever to having eight to 10 patients a day calling in with symptoms that were concerning. And I would say of my practice of about 1,000 patients, 50 had COVID-related illness. So I spent a lot of time basically talking to people on the phone. The last two weeks of March and the first two weeks of April were the peak time here in New York City.
3:47 Stephen J. Dubner? And at what point did you stop going into your office to see people and handling this all electronically?
3:54 Speaker 01 Well, I never stopped going into my office because I live within walking distance of my office. So my office manager and I worked the entire time. It was also easier for me to be in my office in what I felt was my command central when I was handling all the phone calls. I had very quick access to my electronic health records. I was able to use my office as a reassuring background for any video calls that I had with patients, and it just allowed me to... Kind of stay focused. So I would do an initial consult, a telemedicine consult, and then I would create my list of phone calls of people who I would call and follow up on
4:37 Speaker 01 over the next day or two or week or two.
4:41 Stephen J. Dubner? So I should say, we were on your daily call sheet for a while. We had illness in the family during that time, which was pretty concerning, especially because in New York City, you know, the big concern is if you go to the hospital, what's going to happen there? And so we were talking to you every day for it seemed like typically 20 to 30 minutes.
5:02 Speaker 01 So what happened with COVID and the hard thing for physicians is that there was so much uncertainty. And there was a sense that there wasn't much we could do other than maybe manage some of the other medications that the patient was taking, or maybe listen and see if on top of a viral infection, they were developing bacterial infections, or pneumonias, or sinus infections, or ear infections. So every day I felt the follow up phone calls, they were to reassure the patient, but it was also for me to learn more about the illness and what was happening, and then to make micro interventions to maybe prevent things from getting worse.
5:46 Stephen J. Dubner? Things didn't get worse in my family. In fact, none of Dr. Keith's patients were hospitalized or died. We were fortunate, but many others were not at the peak. As many as 800 people a day were dying in New York City from COVID-19. The streets had been abandoned. The most common sound was the ambulance siren. By mid-April, the COVID numbers started to decline, but the city was still shut down.
6:11 Speaker 01 So what I saw in mid-April is that the COVID calls went way down, but the calls for other types of problems began to increase.
6:23 Stephen J. Dubner? Kirth was faced with a dilemma. Should she reopen her office or find a way to keep treating her patients virtually, practicing what's known as telehealth?
6:31 Speaker 01 I think the thing that made me go immediately to telehealth was the news that Angela Merkel was in quarantine because her doctor had tested positive for the virus. And the idea of a physician or a physician's office being a vector of illness is kind of creepy that you go to a place to get help and you get sicker.
6:54 Stephen J. Dubner? So Kirth started seeing non-COVID patients virtually over Zoom. She felt she got to know them better.
7:00 Speaker 01 I enjoy seeing their homes and I've met their pets and I've seen the children running in and out of the screens.
7:07 Stephen J. Dubner? Once she began offering a telehealth option, she got very busy.
7:11 Speaker 01 People were wanting telehealth visits for low back pain. They wanted it for shoulder pain. They wanted it for a rash that they had developed. They wanted to simply go over their blood pressure medications because they hadn't seen me in a few months. And it actually became quite enjoyable. Back pain is actually quite easy to do with a video camera. You can do all of the exam. You can phone in the prescriptions. No labs or x-rays are often needed.
7:38 Stephen J. Dubner? Can you give me a quick list of the things that going forward cannot and will not be done via telehealth?
7:45 Speaker 01 So earache, you've got to look at the ear. It could be wax. It could be anything. That's a simple thing. Abdominal pain, I did a couple of telehealth, but I certainly knew when I was going to need to get some blood work or other x-rays. Tough ones are fatigue, malaise. You can start the conversation over the phone, but it's hard to complete it. Chest pain, acute stroke symptoms really need to go to the emergency room. There were two visits during the pandemic that I converted from telehealth to actual office visits because I felt that I was at risk of not getting it right on the phone or by video.
8:28 Speaker 01 And I actually brought the patient into the office with all protective gear. Because I felt it was essential and I was safer than an emergency room at that time.
8:39 Stephen J. Dubner? Chris became convinced that telehealth would outlast the shutdown, at least for certain kinds of care.
8:45 Speaker 01 For me, it's the sick visits that I actually could easily do over the phone because they usually have algorithms. Back pain has an algorithm. A number of things like headache, sleep disturbance, you can actually do those things over the phone because they don't require as much of a physical exam. For annual checkups, we could do certainly the screening questions over the phone. So I would say, looking next year, I would expect that 20 to 30% might be done over the telephone and office hours would be more restricted.
9:21 Stephen J. Dubner? Rebecca Kurth is just one doctor with a pretty standard practice. Multiply her by the more than 200,000 primary care physicians in the US who've had to shift their practices during COVID-19, and you may be starting to look at a telehealth revolution.
9:38 Speaker 02 I really think that the old model of bringing patients in for every medical reason is over.
9:44 Stephen J. Dubner? Today on Freakonomics Radio, what does this revolution look like? Who wins? Who loses? And what kind of unintended consequences might we see?
9:55 Speaker 02 You got the questions that stumped me. I was doing so well.
10:11 Speaker 03 From Stitcher and Dubner Productions, this is Freakonomics Radio, the podcast that explores the hidden side of everything. Here's your host, Stephen Dubner.
10:28 Stephen J. Dubner? There are going to be a lot of long-term consequences of COVID-19, economic and social consequences, how we travel and congregate and educate, on and on. There will also be a lot of long-term medical consequences beyond the destruction done by the virus itself. For instance, screenings for cancer and other illnesses that didn't happen during the pandemic, childhood vaccinations that didn't happen. On the other hand, the telehealth revolution that we have been promised for decades was finally thrust upon us by necessity. Some institutions were already well set up for telehealth.
11:06 Speaker 02 Prior to the pandemic in February, we were doing about 400 visits per month.
11:11 Stephen J. Dubner? That is Chad Elamudel. He's a practicing urologist, an assistant professor at the University of Michigan, and also
11:19 Speaker 02 and also the director of telehealth research incubator at the University of Michigan.
11:24 Stephen J. Dubner? Which is what?
11:25 Speaker 02 Essentially, it's a collaborative that uses resources and expertise at the University of Michigan to catalyze and disseminate telehealth research.
11:34 Stephen J. Dubner? Are there a lot of telehealth incubators?
11:37 Speaker 02 It's fairly unique. The purpose of it was to specifically look at population-level effects of telehealth.
11:44 Stephen J. Dubner? Okay, so before the pandemic, the University of Michigan Healthcare System, which is huge, by the way, was doing about 400 telehealth visits per month.
11:54 Speaker 02 And then in April and May, we did about 100 times that. So in April, we had 30,000 visits. And in May, we ended with about 40,000 visits.
12:04 Stephen J. Dubner? Elamudel also got hold of data from a large insurance company to show their telehealth activity for the entire state of Michigan.
12:11 Speaker 02 Prior to the pandemic, there were about 10,000 telehealth encounters per month. And then in March and April, these numbers were 140,000 and 230,000. So about 20 times as many visits during the pandemic.
12:27 Stephen J. Dubner? So the pandemic forced changes that led to a massive spike in telehealth, including regulatory changes, as we'll hear later. But first, let's define what we're talking about when we talk about telehealth. For starters, is there a difference between telehealth and telemedicine?
12:44 Speaker 02 So telehealth, telemedicine, virtual care, and e-health are essentially the same thing for all intents and purposes. Telehealth is typically a little bit more broad than telemedicine, and some organizations may sort of distinguish between the two terms, but nowadays, those terms are all used interchangeably.
13:04 Stephen J. Dubner? So we'll call it telehealth, too. You may be surprised to learn, I certainly was, that the earliest telehealth goes back to the invention of the telephone. In 1879, for instance, the medical journal, The Lancet, discussed using the phone to reduce unnecessary doctor visits.
13:22 Speaker 02 It has been around for a long time. In fact, the Medicare program has reimbursed telehealth for about 20 years now.
13:30 Stephen J. Dubner? But take-up rates have been low.
13:32 Speaker 02 Up until March 2020, less than 1% of Medicare patients have ever used a telehealth service.
13:39 Stephen J. Dubner? Elamudal's own interest in telehealth came from working as a urologist.
13:44 Speaker 02 We're seeing patients from all over the state who sometimes travel four hours just to have a 15-minute consultation about their kidney stone. And to be honest, I probably knew the answer about how I was going to manage that patient when I looked at their CT scan.
13:59 Stephen J. Dubner? MDs aren't the only people who can deliver telehealth. Nurse practitioners, social workers, and clinical psychologists can use it, and the applications are diverse.
14:10 Speaker 02 Everyone knows about video visits and telephone calls, but there are other modalities of telehealth. One example is called an e-visit.
14:18 Stephen J. Dubner? What's an e-visit?
14:20 Speaker 02 So essentially, an e-visit is a secure message between a healthcare provider and a patient. That secure message can come in the form of a patient portal message. It can come in the form of an email. It could come in the form of a picture. A good example would be in dermatology, where you can take a picture of a rash and send it to a dermatologist, and the dermatologist can reply without actually having to talk to you and give you a prescription for it.
14:46 Stephen J. Dubner? There's also an e-consult.
14:48 Speaker 02 So an e-consult, also known as an interprofessional consultation, occurs when
14:54 Speaker 02 A primary care doctor has a question about their patient and then sends a specialist that question. And then rather than having the patient see that specialist directly, the primary care doctor and the specialist hash it out, they come up with the solution, and that's it.
15:12 Stephen J. Dubner? Telehealth can cut across many specialties. During the pandemic, it's even been used to facilitate assisted dying. And also?
15:20 Speaker 02 Psychiatry is a very important area. Dermatology is an important area. Stroke care is a very important area. So when a patient is diagnosed with a stroke, how quickly they're started on medications impacts their function after that stroke. And so if a patient is having a stroke in a small rural hospital and there's no neurologist that's around, you can use video conferencing to get a neurologist in the room to diagnose that patient within seconds, and then start that patient on medications within minutes so that they can have the best functional outcome from their stroke.
15:58 Speaker 04 So it turns out, it's not just telehealth. You can do tele fill in the blank for anything.
16:04 Stephen J. Dubner? That is David Cutler, a healthcare economist at Harvard.
16:07 Speaker 04 So for example, you can have a tele ICU. You've got a rural hospital somewhere with maybe not a full-time ICU physician who really does need backup. And you have a hospital system that then has a central ICU where they look into maybe 10 or 20 different hospitals in their local ICU.
16:28 Stephen J. Dubner? Cutler worked in the White House under President Clinton and advised Barack Obama on healthcare policy during the 2008 campaign. Being a healthcare economist in the US is a bit like being a general in a war zone. Everywhere you look, there are crises and opportunities. You want to cut spending while increasing access for those who need it. To that end, David Cutler is excited about this unplanned surge in telehealth.
16:57 Speaker 04 It is amazing. We went from Essentially, no visits for medical care being telehealth to now between 10% and 15% of visits for medical care are telehealth. And we did it virtually overnight.
17:12 Stephen J. Dubner? But the telehealth spike didn't happen entirely on its own. Yes, there was an increase in demand from patients who couldn't get to their doctors during the pandemic. And yes, there was a supply of unbusy doctors who had the capacity to treat those patients, but that alone wouldn't have been enough to drive the surge. Chad Elamudal again.
17:33 Speaker 02 So there were more regulatory changes related to telehealth in the last three months than there have been in the last 20 years.
17:40 Stephen J. Dubner? The Trump administration has leaned into this one hard. FCC Chairman Ajit Pai has called the telehealth boom "the silver lining of the pandemic."
17:51 Speaker 02 So at the federal level, there were five major changes. Number one was patients were allowed to connect from home. So prior to the pandemic, patients were required to go to a medical facility, and that medical facility needed to be located in a health professional shortage area.
18:07 Stephen J. Dubner? In other words, you didn't have local access to the medical help you needed, but rather than being allowed to get telehealth from your home, you had to visit a local medical facility and connect remotely from there. So pre-pandemic access to telehealth was often not very convenient.
18:24 Speaker 02 Number two was that patient privacy rules were relaxed. And what that means is that prior to the pandemic, there was a requirement that the software that you use, the equipment that you use, has high levels of security required by the law called HIPAA. And so during the pandemic, there was some relaxation of these rules, just so that it can enable patients and providers to ramp up quickly.
18:48 Stephen J. Dubner? So rather than a dedicated interface or device, patients could use their own phone or computer.
18:54 Speaker 02 Number three was that payments for telehealth services were essentially made comparable to in-person visits. This is especially true for phone calls, which typically were either not reimbursed by payers like Medicare or were reimbursed at low levels.
19:10 Stephen J. Dubner? Number three is the big one, if you think about it, the money. We'll come back to this one.
19:15 Speaker 02 Number four was that there was relaxation of medical licensure rules. So what this means is that many state governments and the federal government also said it would be okay to practice across state lines.
19:28 Stephen J. Dubner? This allows flexibility, of course. In the past, some healthcare providers fought this idea, arguing their businesses will shrink if patients are allowed to see out of state doctors.
19:39 Speaker 02 And then finally, the other big change was that practices were essentially given the power to waive co-pays for patients. And that's really important because it incentivizes patients to use these visits versus in-person care.
19:54 Stephen J. Dubner? Okay, so that is a lot of regulatory change in a short time, the kind of change that doesn't typically happen without years of legislative fighting and horse trading. The biggest change, as I mentioned earlier, concerned how doctors could get paid for practicing telehealth. David Cutler again.
20:13 Speaker 04 The key missing ingredient had always been the financial one. It was not the technological one, because as we've learned, it's easy, relatively easy to do. It was not the desire of patients, because as we've learned, patients would like to do it this way. It was the financial issue.
20:30 Speaker 02 Insurance coverage for telehealth was fragmented. There were some private payers that were reimbursing for telehealth visits. The Medicare program was not at that time, or there was at least a significant regulatory burden on how a telehealth visit could be conducted. And so that sort of fragmentation leads to confusion among patients, confusion among providers, which just inherently leads to lower rates of adoption.
20:57 Stephen J. Dubner? Now, keep in mind, the US healthcare system is incredibly segmented. Some doctors take private insurance, some take Medicare, some take no insurance. So the money didn't flow evenly. Consider my family doctor, Rebecca Kirth. She doesn't take insurance, which meant no insurance company was reimbursing her for all those COVID calls.
21:19 Speaker 01 April was a brutal month. It was a 75% reduction in revenue. Even though I was doing eight telemedicine visits a day and, you know, probably 10 sort of non-charged phone calls, which were my own neurotic follow-up phone calls. I bill by, you know, 10-minute intervals. But you don't bill the same way when you're not fully present in a room with somebody.
21:44 Stephen J. Dubner? Money, probably more than anything else, will likely determine the degree to which telehealth continues after the pandemic. These federal regulations have been changed only temporarily on account of the crisis.
21:57 Speaker 04 At the end of this, CMS will have to figure out whether it wants to go back to the way it had it or keep things the way that it changed them to.
22:06 Stephen J. Dubner? CMS is the Centers for Medicare and Medicaid Services. It's a federal agency within the Department of Health and Human Services, and it accounts for 37% of US healthcare spending and accordingly plays a huge role in setting costs.
22:21 Speaker 04 That's a political, economic decision. Congress might get involved as well. My hope is that they will continue to reimburse telehealth. Certainly, there haven't been stories about widespread abuse of telehealth that might indicate we've got to be careful here.
22:41 Stephen J. Dubner? What kind of abuse would one fear?
22:46 Speaker 04 Anytime that you have someone taking care of a patient or claiming to take care of a patient, you always need to be sure that that actually occurred. So there was a good deal of home health fraud that was about bills that were submitted for home health where people suspected no actual home health care was provided, that it was entirely a scam to submit bills.
23:11 Speaker 04 There is a seamy underside of a lot of medical care like that.
23:16 Stephen J. Dubner? This sort of caution may be justified, Cutler says, but it doesn't fully explain why CMS has been historically disinclined toward reimbursing for telehealth.
23:26 Speaker 04 I think what happened was there were no doctors yelling and screaming, you have to create this telemedicine thing because I'm desperate to do it. And so CMS listens to where the yelling and screaming is, and the yelling and screaming is coming from the specialists who say, oh, we've got a new way of treating X, you've got to find a way to reimburse X. And so there's this sort of tendency to focus on where the pocky pucky is and not where it's going.
23:57 Stephen J. Dubner? Talk about the other economic decisions being made, including, I'm really curious to know about private insurers.
24:04 Speaker 04 So, private insurers are in a very interesting position. So, on the one hand, the use of medical services has plummeted, absolutely plummeted. People are not going to the doctor, people are not going to the hospital, there are fewer people showing up with strokes and heart attacks. So, on the one hand, that was like a bonanza for private insurers, because their business models take in premiums and pay out claims. And if nobody's making claims, then you're taking in premiums and not paying out. On the other hand, they had businesses and individuals who were writing them checks, who were saying, I can't pay you now. My business is shuttered, I can't pay you. As
24:48 Speaker 04 an individual, I can't pay you. So, on the revenue side, they were losing a lot as well. So, most insurers are in this tricky spot where in the short term, they've been making a lot of money, because they haven't been paying out. They're now, if you will, extending loans to businesses, and they're wondering, is that care that was deferred going to come back and bite us? So, all those people who didn't go to the doctor for X, are they going to show up in the fall next year? They don't really know about this. If they get very nervous that people are going to have all these elective surgeries, that
25:30 Speaker 04 doctors are going to make up for a couple of months out with a lot of billing. Then they're going to return to clampdown mode. So they'll say, we have to get a handle on expenses. We have to impose more drug co-pays. We have to stop this telemedicine thing. We have to do all these things to try and bring our costs under control. If they don't need to do that, if utilization stays low, if people come back and can pay their insurance premiums and so on, then the insurers will be in a much better position to say, you know, this actually turned out okay and we're willing to go with this and let's figure out how we work this into routine care.
26:15 Stephen J. Dubner? It may end up being harder to take away telehealth reimbursement than it appears, just because it can be hard to take away anything that people have gotten used to. For now, patients are using it, doctors are being reimbursed, and everybody's already invested time and energy in figuring out how to do it.
26:34 Speaker 02 And, you know, that reluctance and that resistance to change is a big problem in healthcare. You know, as someone who is working to expand the use of telehealth, I mean, just getting providers to do a video conference with a patient that is eight hours away is hard enough to build that into workflow. Providers and patients across the country were able to see what the value and the benefit of telehealth was during this time where they really didn't have any other options.
27:03 Stephen J. Dubner? It strikes me that telehealth has been, you know, the future for a long time. And then suddenly, in the course of a month or two, because of COVID-19, it became the present. So really, what I want to know is, is it also the future? In other words, is it going to stick?
27:22 Speaker 02 I think it's going to be sticky to some degree. I think that this spike is probably the highest level that we're going to get to for a while. After the pandemic is over, as health systems start to ramp up in-person care, we're going to see telehealth drop, and it'll drop to some baseline level that was much higher than it was prior to COVID, but it won't be at the levels that it was during the pandemic.
27:46 Stephen J. Dubner? If this goes as you would like it to go, what share of in-person medical visits as of 2019, let's say, right before pandemic? What share of those will convert to telehealth visits by, let's say, 2025?
28:02 Speaker 02 So I think that the right number is probably about 25%. I really think that the old model of bringing patients in for every medical reason is over. And now that there's been that exposure to telehealth, a lot of specialties will be redesigning care.
28:21 Stephen J. Dubner? Coming up after the break, what would all this conversion to telehealth mean for costs and, more important, for health outcomes?
28:30 Speaker 04 If you want to reduce spending in medical care, get people out of institutions.
28:35 Stephen J. Dubner? And the telehealth we've seen so far is only the beginning.
28:39 Speaker 02 That's also where these new concepts like artificial intelligence can come into play.
28:51 Stephen J. Dubner? Freakonomics Radio is sponsored by Southern New Hampshire University. There's no hiding how convenient Southern New Hampshire University makes college. They offer over 80 career-focused graduate programs online. Classes have no set meeting times, so you can balance life and learning, and online tuition rates are some of the lowest in the country, making it all a little more manageable. A school this willing to work with you is worth the investment. Visit SNHU.edu/freakonomics to learn more.
29:22 Stephen J. Dubner? Freakonomics Radio is sponsored by PNC Bank. Boring, great word, bad rep. Yet, time and time again, here at Freakonomics, we find that when something culture-changing happens, boring things like calculations and careful planning are usually behind it, which begs the question, why not apply it to other aspects of life, like banking, for example? Well, PNC Bank did since its inception, proving time and again that the best banking strategy isn't the exciting type, but the steady, reliable, definitely not YOLO type. PNC Bank, brilliantly boring since 1865. Brilliantly boring since 1865 is a registered mark of the PNC Financial Services Group, Inc. PNC Bank, National Association, Member FDIC.
30:10 Stephen J. Dubner? Freakonomics Radio is sponsored by hotels.com. Hotels.com helps you find and book the right stay for work faster. With business preferences, save your travel must haves like gym access or breakfast just once, then get tailored results whenever you search for work travel. Plus, with a free membership, you can save up to 20% on hotels and earn rewards on every stay for future travel. Book now at hotels.com. Visit hotels.com for details.
30:48 Stephen J. Dubner? A few months ago, before the COVID-19 pandemic, we were working on an episode about the US healthcare system. We had two central questions. Is the system as messed up as people think it is?
31:01 Speaker 05 Oh, I think absolutely the US health system is as messed up as people think it is, probably more so.
31:07 Stephen J. Dubner? And what are the primary drivers of this mess?
31:11 Speaker 06 If there are two fundamental drivers of our broken, costly healthcare system, I would say it's pricing failures and inappropriate care.
31:21 Stephen J. Dubner? We will finish up that episode eventually, but we, like everyone else, put our pre-pandemic plans on hold. And today, we're focused on one piece of that larger healthcare story, the massive boom in telehealth precipitated by the COVID shutdown. In a typical year, the US spends about 18% of its GDP, or $3.5 trillion, on healthcare. That's nearly double the average OECD country in terms of GDP percentage. And our outcomes aren't always so good. How might telehealth change this? The healthcare economist David Cutler sees three main drivers of those high costs.
32:00 Speaker 04 The first one is the administrative cost of running the healthcare system. In most countries, they just say to the physicians, here's the resources that we have, you make do with them. And that's not a very expensive way to do things. In the US, we don't say that. We say you can have whatever equipment you want. But we're going to question every single time you want to use it. So the net effect is we spend an enormous amount of resources adjudicating when is it appropriate to use care or not. That's very, very costly.
32:35 Stephen J. Dubner? Okay, so a huge layer of administrative costs. Healthcare is hardly the only US industry to pay these costs. Higher education comes to mind. What else drives up US healthcare costs?
32:47 Speaker 04 The same provider of care, think about pharmaceutical companies, gets paid more for selling in the US than in other countries. So drugs are more expensive in the US than in other countries. So by the way, our physician visits for the same thing, more expensive in the US than other countries.
33:04 Stephen J. Dubner? That's connected to our Byzantine system of insurance reimbursements and the fact that many people get their health insurance through their employers, which doesn't happen in other countries. And the third driver of high US healthcare costs?
33:18 Speaker 04 The typical visit to a medical care institution is more intensive in the US than it is elsewhere. It's likely to involve additional testing, maybe hospitalization. And a lot of that care is not really so essential. It's done because the physician just wants to be sure, sometimes because he or she is afraid of being sued, sometimes because there's an empty hospital bed, so you might as well use it.
33:46 Stephen J. Dubner? When you break it down into those three areas, does telehealth, if it were to, let's say, double, triple, quadruple over the next five or 10 years, does that do anything to significantly lower those costs?
33:58 Speaker 04 So one thing that it does, which is independent of cost, is it just makes the medical system more convenient for people. So one of the big frustrations about medical care in the US is that people have a very, very difficult time using it. And accessing it and getting to where you need to and the physician visits and all of that. So we shouldn't underestimate the poor outcomes that result from having a system that's difficult to use.
34:24 Stephen J. Dubner? But Cutler also sees promise in the direct lowering of costs. While CMS is currently reimbursing telehealth visits at the same rate as in-person visits, that doesn't necessarily reflect the future reality.
34:37 Speaker 04 So the telemedicine visit doesn't need to be as high. My sense is that something like 85% of an in-person visit is roughly the cost that's needed because you don't need the staff and you don't need the office space.
34:55 Speaker 02 So I would kind of play a little devil's advocate here and say that it's not necessarily cost savings.
35:02 Stephen J. Dubner? That again is Chad Elamudel, the urologist who runs the telehealth research incubator at the University of Michigan.
35:09 Speaker 02 There are kind of two ways to look at it. One is that it is cost savings because it reduces the in-person clinical footprint. It reduces overhead costs. But on the other hand, it actually can be, you can lose revenue through these visits. And so there's this concept of payment equity, which means that it's not just is the visit reimbursed at the same level, but it's also about all the additional services that come with in-person care.
35:36 Stephen J. Dubner? Do you mean up-selling essentially? Like I go for my physical and I get asked, do you want, you know, not only the flu vaccine, but the pneumonia vaccine too? That kind of thing?
35:46 Speaker 02 So I don't know if it's so much up-selling as it is kind of the services that you receive out of convenience. Let me give you an example in my practice. When we see patients in-person for urologic care, we typically start the visit by collecting a urine sample and running a urine analysis test. And so that urine analysis test, I'll take a look at, I'll make sure that there's nothing that I need to address in that. However, You know, does every patient need that particular screening modality? I mean, we do it because they're there and it's quick and it's easy and it helps us with our management, but it may be considered a low value care or a low value test. And so those are the kind of things that practices make money off of so that the total
36:30 Speaker 02 reimbursement for a patient may actually be lower with telehealth visits than it is with in-person care.
36:36 Stephen J. Dubner? But it sounds like the concern from the healthcare provider may be that it really strips it down to the essentials that even if reimbursement is commensurate with in-person reimbursement for certain activities, there are other activities that just won't be happening at all that you won't be able to charge for. Is that right?
36:52 Speaker 02 That's 100% correct.
36:56 Stephen J. Dubner? What we've been talking about here is the microeconomics of one doctor. Healthcare is of course much, much broader than that. Consider all the treatment, all the elective surgery and consultations and other procedures that was deferred during the pandemic. That loss of revenue has already put a lot of providers under an existential threat. It is not a very popular position to express concern for the existential well-being of healthcare providers. They're generally seen as already charging too much, but no one wants to see providers disappear either. So what's the best way to think about balancing healthcare supply, demand and price?
37:37 Speaker 04 The biggest sources of spending in healthcare is when people get very sick. So they wind up in the hospital, they're in intensive care, they're in rehab and acute care facilities, post-acute care facilities. If you want to reduce spending in medical care, get people out of institutions. That is super expensive. Most, anything you can do that prevents that will save money.
38:04 Stephen J. Dubner? And here's where telehealth may prove most valuable. Using various technologies for preventive care, for healthcare monitoring and other cheap and easy interventions that keep people out of institutions.
38:17 Speaker 04 One of the shames about prevention is we know how to do it and it's still woefully underdone. Only about half of people with high cholesterol or hypertension are successfully treated.
38:29 Speaker 04 If you can use telehealth to do that, you can both improve people's lives and save money on things like heart attacks and strokes and related conditions.
38:40 Stephen J. Dubner? So the complaint from providers is always, well, the complaint from everyone really, is always that prevention is not monetized or not incentivized and that procedures and treatment are. So can you see a way in which telehealth, and all that that includes, you know, apps that have Pulseox, smartphones that are really, really smart when it comes to healthcare, can you imagine a way in which telehealth is sort of an avenue for a huge increase in preventive care?
39:15 Speaker 04 Yes, I can. A lot of preventive care involves regular activities on the part of people, but that it's easy to slip up. So for example, I need to be taking medication regularly for someone who has a particular condition. But if you forget to go to the Walgreens that month or that week, then you don't have it. Maybe actually the right way to care for yourself at home is with telemedicine and CVS or Walgreens, you know, coming in and delivering your diabetes test strips and making sure that your high blood pressure monitor is, you know, accurate and so on.
39:51 Stephen J. Dubner? It is a strange feature of our digital revolution. If you consider how much computers and the internet have changed the way we work and socialize and entertain ourselves, it can often seem that healthcare is back in the 20th century.
40:07 Speaker 04 The thing about healthcare that's always struck me is that healthcare is the most information-intensive industry in the economy, and it uses information technology among the least of any industry.
40:23 Speaker 04 The fax machine seems to exist at the moment only for healthcare. So I think of telehealth as one part of a system that we know should work differently than it does. And this is an easy entree into doing that.
40:42 Speaker 02 The idea of remote monitoring is being able to collect vitals or collect important data from patients without them actually being there in front of you. That is going to be a big way that certain types of conditions like congestive heart failure, diabetes, those conditions can be managed where physicians are essentially managing an entire panel of patients just by looking at their data. And that's also where these new concepts like artificial intelligence can come into play, where the big part of remote monitoring is being able to sort through lots and lots of data to be able to come up with clinically appropriate solutions and red flags for patients.
41:21 Stephen J. Dubner? So here's the big question, Chad. We've talked about uptake and technology and costs and regulations and so on. The big question for me is outcomes, generally health outcomes.
41:34 Speaker 02 Yeah, so there's kind of four areas where we can think about outcomes. So one area is access, second area would be costs, the third area would be quality, and then the fourth area would be patient experience. And so on the patient experience side, there's numerous studies that have essentially showed that patient satisfaction rates with these telehealth visits are equal to or better than in-person care.
42:00 Stephen J. Dubner? Okay, but you're talking about satisfaction outcomes essentially, even when you talk about quality. I want to know about medical outcomes. So in other words, if I feel that there's huge value in seeing my doctor in person because there are things that can be done diagnostically, whether it's physical examination, whether it's a sort of conversation, whatever, or maybe how the data are gathered, collected, and analyzed, I want to know what we can tell about if we were, let's say, the thought experiment is if we were to switch to 100 100% telehealth overnight. What do we see in terms of early cancer diagnosis? What do we see in terms of diabetes and COPD diagnosis and monitoring and treatment? And so on, what can you tell us about that?
42:45 Speaker 02 Yes, that's a good question. There's certain things that we know from smaller sized studies, pilot studies, single institution studies. And what we don't know is really the population level effect. And so let's just go to the chronic disease management of congestive heart failure. That's one area that has been studied very well with a lot of randomized control studies that have found that using remote monitoring, checking patients' weights at home and adjusting their medications can keep them out of the hospital, can shorten their stay inside hospitals and can actually decrease mortality as well. And so that's kind of one area where remote monitoring works well. In diabetes management, remote monitoring has been shown to in randomized control trials
43:30 Speaker 02 to be associated with lower rates of hemoglobin A1Cs. There is some strong data in selected areas, but in terms of will a patient's outcomes from a cancer diagnosis be improved because of early detection? We don't know the answer to that yet because it just hasn't been used in oncology at a population level where we can actually assess that particular outcome.
43:58 Stephen J. Dubner? Better medical outcomes are of course reliant on access to healthcare in the first place. Let's go back to something David Cutler said earlier.
44:06 Speaker 04 We shouldn't underestimate the poor outcomes that result from having a system that's difficult to use.
44:13 Stephen J. Dubner? Think about that for a second. Even if you're the kind of person who does have health insurance and 27 million Americans don't, even if you're the kind of person who does have the time and ability to make a doctor's appointment on a weekday and wait there as long as the doctor needs you to wait before seeing you, and you also have the time and the ability to come for the follow up visits or tests, imagine how convenient a telehealth visit might be for you.
44:42 Stephen J. Dubner? Now imagine you don't have the ability or the time to access medical care in that standard, old fashioned way. How much more convenient would a telehealth visit be for you now?
44:53 Speaker 04 So if telemedicine becomes part of this whole thing, which is now we want to care for as many patients as possible at home, not by making them go to the doctor's office and not by making them go to inpatient settings, then that could set off a really interesting battle for who controls the patient's house in terms of medical care.
45:13 Stephen J. Dubner? So if I forced you to predict when the data start being revealed in the fall and beyond, what do you think we will learn about, especially about the insurers' thinking on the economic value of telehealth?
45:30 Speaker 04 My guess is the more fortunate, economically, demographically fortunate, have probably found ways to keep in contact with the medical sector to make sure they're getting their medications, to make sure if anything's going wrong, they're up with it, and that the lower income one has, the less able one has been to do that. So we'll likely see more in the way of missed medications, of missed screenings, and that will then translate into poorer outcomes.
46:07 Stephen J. Dubner? So an exacerbation of the inequality, aren't we, basically?
46:10 Speaker 04 Correct. There's a fact about medical innovation which is relevant here. Almost every medical innovation first diffuses to people who are better off, and then diffuses to people who are worse off. So you see that with new drugs, you know, new drugs for HIV first get taken by higher income people, and then they spread to lower income people and people in lower income countries. Same is true with the antihypertensives, cholesterol drugs, and so on. So it may very well be that telehealth and its related innovations happen first for people in cities and rich providers and so on. I'm hopeful that it won't be. But even if it does, that doesn't mean that that's where it has to end up.
46:53 Stephen J. Dubner? So assuming the change sticks, at least to some degree, and that telehealth grows, who stands to lose the most?
47:00 Speaker 04 That's an interesting question. It'll depend on a couple of things. One thing that will happen is that the physical space and the office personnel may shrink some. So, you know, if you're, for example, a landlord renting to medical offices, they may not need as much space. And if you're in the medical record business or in the office support business and there's no office to support, then you may be out of a job. So those would probably be the biggest losers. The winners, you know, some physicians will turn out to be winners because really what they want is actually a more flexible schedule, too.
47:45 Speaker 04 And so being able to do the telemedicine version may actually work out well. Patients could very well be winners, too. Depending on how much more we spend in primary care relative to what we save, the spending balance could go up or down. My own personal thought, as we were talking about, is that over time, technology from telemedicine and other things ought to be able to lower spending. But there's a possibility, certainly in the short run, that it would increase spending. The bad way to say it is, you know, never waste a crisis. The good way to say it is people, doctors, patients, healthcare systems are now open to more change than they've been in some time.
48:29 Stephen J. Dubner? So let's just pretend for a minute that Joe Biden wins the presidency in November. Let's pretend that you come back into that administration, head of CEA, maybe healthcare specifically. What's the first move you make, or the biggest, best move you make to address, quote, "the healthcare system"?
48:51 Speaker 04 I'm going to give you two priorities. The first one is you're going to come in, in the middle of a continuing recession, hopefully it's not a depression, where people are going to be without coverage, or they're going to have lost the coverage they like, and they'll be searching around for coverage. And so you're going to have to do something to help people. So that's item one.
49:16 Speaker 04 Item two is that medical care is too expensive. And the expense hinders people from seeking medical care. It hinders businesses from investing in workers. It hinders governments from doing things that governments would like to do. So I make a full frontal assault on the cost of medical care. I go after the administrative costs in medical care. I go after wasted resource use. I go after fraud and abuse. I go after higher prescription drug prices than are necessary. I do everything I can, not to ration care to people, because I don't want to ration care to people, but to get rid of all the waste in medical care.
49:59 Speaker 04 We have a three and a half trillion dollar medical system, and our best guess is that a trillion dollars a year is unnecessary. So if I can get any part of that trillion, then I can do whatever the heck I want.
50:12 Stephen J. Dubner? And would you consider whether you pursue some kind of Medicare for All option or not? Would you consider unbundling healthcare insurance from employers? Because that strikes me as, in some ways, the original sin of the US healthcare dilemma.
50:29 Speaker 04 There's an issue as to whether the next president, if it's President Biden, should take a big swing at medical care or should take a medium swing at medical care. So a big swing would be something like Medicare for All or get rid of private insurance and some combination like that. And a medium swing is patch up the ACA and focus on costs. There are other issues that we need to address, too. At a time where the capital of the president is at its highest, I don't know that I would recommend going all in on the big swing for healthcare, spending the first year and a half on that and not addressing wage inequality
51:10 Speaker 04 and cities coming apart and racial issues and pandemic and all of that. I don't know that I would say now is the time to do that.
51:23 Stephen J. Dubner? One part of Cutler's medium swing would be moving away from the fee-for-service system in most primary care.
51:30 Speaker 04 What we currently do with primary care docs is we say every time you see the patient, send in a bill and we'll pay you. Every time you... Have a phone call, send in a bill and we'll pay you. Every time you do this, send in a bill and we'll pay you. A different payment model would be something like, I'll tell you what, we're going to pay you $40 for each person per month, adjusted for how severely ill they are. Then you figure out the best way to care for them. Oh, by the way, we're going to monitor, like, make sure you actually do interact with them, they are getting their medications, their self-reports are good and so on. So you can't not see them. But you decide the best way to see them. If you, as a provider, say, hey, you know what? By using email and telemedicine, I can see many more patients, then go ahead and do it.
52:13 Speaker 04 So those kinds of alternative payment models would also help to incentivize telehealth services.
52:25 Speaker 01 One of the things I should say about myself is I am a fee-for-service doctor and I've opted out of all insurances.
52:32 Stephen J. Dubner? That, again, is Rebecca Kurth, professor of medicine at Columbia and my family doctor.
52:38 Speaker 01 One of the brutal things I realized 15-plus years ago was that I work for the patient and I can't have myself, and this is maybe more than one needs to know, I'm not working for Kaiser, which I think is a wonderful nonprofit health company. I don't work for Cigna, or I don't work for Oxford or United, or I don't work for a commercial insurance company, yet they have put rules on me that may not actually be in the best interest of my patient. And that's a harsh thing to say. And when I work for the patient, it means you have my undivided attention. I will work with your insurance plan to get things covered that need to be covered,
53:21 Speaker 01 but I need to unfetter my brain from thinking about their rules.
53:27 Speaker 01 And when I do that, I become a better doctor because I'm thinking about what does this person need? How can I help this person? What do I think the diagnosis is? How do I best get at the diagnosis without somebody telling me I can't or it's going to take two hours on the phone to get prior authorization? So I look at myself as somebody who is trying to the best of my ability to use my knowledge base and skills to navigate the health of the individual patient. And that makes it easier for me to say, first of all, accept all change that's coming forward if it's in the patient's interest. And if I can do a good job with telehealth, I'm going to do it.
54:15 Stephen J. Dubner? That's our show for this week. We will keep our eyes on the telehealth revolution and you should keep your ears out for that larger episode on healthcare costs we're working on. Meanwhile, next time on Freakonomics Radio, what is the luckiest thing that ever happened to you?
54:31 Speaker 07 That is the question for all questions.
54:34 Stephen J. Dubner? Have you ever wondered how much of your life is determined by luck versus your own actions? The writer Maria Konikova set out to answer this question through the perfect medium, poker. There was just one problem. She didn't know anything about poker. She didn't know how many cards are in the deck.
54:52 Speaker 07 Yes, I thought there were 54. This is a true story.
54:55 Stephen J. Dubner? But she did have a PhD in psychology and she had a brilliant coach and apparently she had a will to win.
55:04 Speaker 07 It's the king of hearts. I can't believe it. Alexandra is getting up and walking over to shake my hand and I still haven't quite registered it. I've just won. $84,600 is mine. I'm the 2018 PCA national champion.
55:25 Stephen J. Dubner? The biggest bluff. That's next week. Until then, take care of yourself and if you can, someone else too.
55:36 Stephen J. Dubner? Freakonomics Radio is part of the Freakonomics Radio Network, which includes no stupid questions and soon even more podcasts. Freakonomics Radio is produced by Stitcher and Dubner Productions. This episode was produced by Zach Lepinski. Our staff also includes Alison Kreglo, Greg Rippon, Matt Hickey, Daphne Chen, Mary Deduke, and Corinne Wallace. Our intern is Emma Terrell, and we had help this week from James Foster. Our theme song is "Mr. Fortune" by The Hitchhikers. All the other music was composed and performed by Louis Guerra. You can get Freakonomics Radio on any podcast app. If you want the entire back catalog, use the Stitcher app or go to Freakonomics.com, where we also publish transcripts and show notes.
56:19 Stephen J. Dubner? We are on social media, and you can write to us at [email protected] . As always, thanks for listening.
56:34 Stephen J. Dubner? How worried are you about overconsumption by the worried well?
56:38 Speaker 04 I'm not worried so much as a monetary issue because I don't think those people are that common, and the office visits are not that expensive.
56:45 Stephen J. Dubner? They're not that common? I must know all of them, then.
56:51 Speaker 03 Stitcher.
56:57 Stephen J. Dubner? Freakonomics Radio is sponsored by EverPure. Is the value of AI not living up to the promise? The problem is probably your data, not your AI models. When it's scattered across different systems, getting your data AI-ready is a challenge. You keep your AI waiting, and everything slows down. EverPure unifies your data so you can see it, understand it, and control it all from one simple place and get it AI-ready fast. Unlock the true value of your AI at everpuredata.com.
57:30 Stephen J. Dubner? Freakonomics Radio is sponsored by Ozempic. Innovation happens through rethinking what's possible, and when it comes to GLP-1s, Ozempic pill does just that. Learn more about Ozempic semaglutide tablets, 4 and 9mg, by calling 1-833-OZEMPIC or visit Ozempic.com to view the medication guide and ask your doctor what's possible with FDA-approved Ozempic pill.
58:01 Stephen J. Dubner? Freakonomics Radio is sponsored by Southern Company. The world and its energy needs are always changing. Southern Company's commitment to meeting this demand stays the same. That's because Southern Company believes energy is more than a utility. It's what powers possibilities. So they are looking ahead and investing $80 billion in infrastructure upgrades and are committed to fueling growth in ways that benefit all customers so that reliable and affordable energy is accessible for generations to come. Go to southerncompany.com to learn more. Southern Company, building the future of energy.
58:38 Speaker 05 This episode is brought to you by Charles Schwab. Is there a right time to sell a stock? Are you taking the right risks with your portfolio? Financial decisions can be tricky, and often, your own cognitive and emotional biases can lead you astray. Financial Decoder, an original podcast from Charles Schwab, can help. Join host Mark Reapy as he offers practical solutions to help overcome the cognitive and emotional biases that may affect your investing decisions. Listen at schwab.com/financialdecoder.
Previous 422. Introducing "No Stupid Questions" Next 425. Remembrance of Economic Crises Past Page updated September 30, 2026 · transcript and summary are machine-generated
