Is Our Health Care System Broken?

Is the Health Care system in this country broken? This is the basic question we need to ask ourselves as Americans. I think there is a lot of evidence to suggest that it is; that we are paying for a Cadillac and receiving a Yugo with warranty issues. I often hear it said that we have the greatest health care system in the world but I seldom hear that particular sentiment out of anyone who is not a right wing Republican, a doctor, an insurance spokesman, or a drug company executive. This issue really isn’t that different from any other; it is all a matter of perspective.

Let’s look at that argument of those who like the system as it is. First off, if you are a doctor in this country you make almost twice as much as a doctor in the rest of the world on average. This number climbs to four times as much for specialists but on the average it comes out around twice as much. There are probably numerous reasons for this but the ones most often presented as justifications are the costs of doing business as a doctor. Education to become a doctor is extremely expensive and time consuming. There is little doubt about this but I would also point out that it is the AMA who controls the medical education field. The AMA controls how many doctors get into the field and how long it takes to get a medical degree. The AMA, as a union for doctors, well understands that the best protection for high fees is a moderate supply of doctors and almost all studies agree that we have a shortage of doctors in this country so I would suggest that they are doing a very good job of controlling the supply of doctors which can be directly correlated to the pay of doctors by the simplest rules of supply and demand. The AMA also regulates who can practice medicine in this country which is why we don’t have nurse practitioners, holistic doctors, and other types of medical practitioners treating many patients in this country. In alliance with the AMA, private insurance providers refuse to provide payment to non AMA approved practitioners even though they are much more cost effective for most common ailments.

The next argument that the AMA puts forward as a reason for high costs is tort policy in this country. It is without doubt that high malpractice insurance adds cost to the practice of medicine. However, experiments in tort reform policies in Texas and several other states have shown that such reforms actually only lower medical costs some 1-2%. While this is not something to be ignored it hardly goes towards explaining why health care costs in this country are higher than in any other industrialized nation in the world but I will get back to tort reform a little later. As a percentage of GDP we are fast approaching 20% for health care costs in this country while no other industrialized nation in the world has more than 12% of their GDP associated with health care costs. It is also worth remembering that our GDP is larger than any other country in the world.

Let’s look at some numbers to see if we can decide how our health care system fares when compared with the rest of the industrialized world. The US GDP is estimated to be 14.1 Trillion dollars. If you are anything like me you have a hard time visualizing this type of number but I decided to do some comparisons with other countries to try and make sense of this number. If you add up the GDP totals of Germany, France, United Kingdom, Italy, Canada, Spain, Belgium and Australia you get a number just a little less than the 14.1 Trillion dollars of the US GDP. Therefore, the combined total of these countries’s GDP is roughly equal to the US GDP. If you add up the averages of these western countries percentage of GDP spent on health care and average it out it comes out to a roughly 9%. Currently in this country the best estimates put our percentage of GDP spent on health care at 17.3% (and projected to grow at an astonishing 6.78% per year in the near future).

To decide what this means in actual dollars per person I looked at the population totals. The population total in the US is presently some 307,212,123 people. If you take 17.3% of our 14 trillion dollar GDP and divide that by the number of people in the US you get $7883.00 per person as the average cost per person in this country. If you take the total population of the eight countries I listed above (352,179,713) and do the same calculation based upon 9% of their GDP the total comes out to $3552.00 per person. In other words we pay on average 221% higher health care costs per person in this country than do the people in these eight nations which I would argue are probably the closest to this country in culture and standard of living.

This is exactly why so many of the supporters of the present system are so adamant about saying we have the best system in the world. It better be; as it is more than twice as expensive as any other system that is directly comparable. Let’s look at some comparison studies to see if this theory holds water. In terms of general health and measurable statistical information I am afraid that the numbers don’t support this theory at all. According to the CIA World Factbook the US ranks 41st in the world in infant mortality rate which is hardly something to brag about. There is controversy over how these figures are gathered in that many countries vary according to how they specify when an infant is alive but the US also ranks 41st in the world in infant low birth weight which I think anyone can see is directly correlated to infant health. We rank 46th in the world in life expectancy and it is worth noting that there is a rapidly growing disparity in this country between life expectancy for the wealthy upper classes and life expectancy for the financially lower classes. Those who can afford our best health care simply live longer.

There are other basis for doing relative comparison studies on health care efficiency that are based upon years of life lost under the age of seventy in cases amenable to being saved by health care. The Organization for Economic Cooperation and Development publishes studies based upon these cases under the heading of “years of potential life lost”. This is where we should shine as a nation if our health care system, which is heavily slanted towards cure instead of prevention, is actually efficient. Unfortunately, the US ranks third from the last for women in the study just behind Mexico and Hungary. For men, we rank fifth from last for men just ahead of Slovakia and Poland. Being in a class with Mexico, Hungary, Slovakia, and Poland is not necessarily something I think we need to be bragging about; especially when we pay more per person than anyone in the world to get there.

The fact of the matter is that the US leads the world in specialized care for many types of technologically complex treatment systems. This is one area of health care where our system shines and this is exactly the area that is so often highlighted by proponents of the system. If you have plenty of money and inexhaustible insurance coverage this is the place to come for such treatments and people from all over the world come here for that reason. However, if you don’t have insurance and a lot of money besides this is not something you will likely be afforded access to in this country. After all, the medical industry has to make a profit in this country too; that is how capitalism works.

As I have covered in several posts already the private insurance industry in this country well understood the pitfalls of providing health care insurance from the beginning and they have avoided them admirably. By tying insurance to employment from the beginnings of the rise of private health insurance in this country they effectively assured themselves that they could control profit margins by providing insurance for the healthiest people (those that are gainfully employed) while removing those from their rolls who are the worst risks (the elderly and those who get too sick to work). While this is good business for private health insurance companies it is a problem for those who actually need medical care and one that continues to add exponentially to actual health care costs. As is often the case, the goals of meeting profit margins and providing needed services are frequently in direct opposition.

For example, a very high percentage of personal bankruptcies in this country are directly attributable to health care costs. Estimates range from 50-80% as far as percentage of people filing bankruptcy because of medical bills depending on which agency you get your information from. The story that is repeated over and over again is the same. Person A, who has health care insurance through their work, is unlucky enough to get cancer or some other debilitating medical condition. This person soon loses their ability to work and with it their health care insurance (some 80% of medical related bankruptcies come from people who originally HAD health care insurance through their work but later lost it). Being unexpectedly unemployed bring many financial hardships to working class people and very few of them can afford the higher rates they are forced to pay to keep insurance after being removed from a group plan where they work. Therefore, they are soon without insurance and the bills instantaneously get higher without insurance. If any of you have been to a hospital recently you know that the bill you get is usually two to three times higher than what the hospital eventually accepts from the insurance company as payment. However, if you don’t have insurance you also don’t have the power to barter with the hospital to get this same reduction. The truth is that the hospital recognizes that people cannot afford to pay the high costs associated with a long treatment and they fully expect to take a loss on the costs so they are not willing to barter. They would much rather take a loss and write it off on their taxes while collecting what they can through government sponsored Medicaid. It is just good business sense for them and they too are part of the capitalist system wherein profit is the final motive. The end result is bankruptcy for the individual who is unlucky enough to need the care. Even worse, if this person is lucky enough to survive the disease, the treatment, and the bankruptcy they are now faced with the certainty of not being able to attain private health insurance for this condition for the rest of their lives. This leads to the surprising conclusion (and one that most working class people aren’t aware of until it is too late) that having private health care insurance through your work is a lot like playing Russian roulette; everything is fine until you hit on the chamber with the bullet in it.

Let’s talk about the uninsured for just a moment. Some 15% of the population in this country is currently uninsured. While a good percentage of these people are younger workers who are not working in industries that offer employer health care programs the fact remains that all of these people are at risk of accident or catastrophic disease that would quite literally bankrupt them if it were to occur. Russian roulette is equally deadly whether you are aware you are playing it or not. If an uninsured person does need routine medical care, no matter how innocuous, the large majority of them show up at emergency rooms where health care costs are the most expensive because most emergency rooms are required to provide the care they need. Because there is often no other choice these people get the most expensive care possible; often for problems that could easily be taken care of much more efficiently at a clinic by a nurse practitioner were lobbyist from the AMA not actively making sure this is not legal. Between the government’s reluctance to help set up such alternative programs and the AMA’s insistence on protecting their memberships ability to make exorbitant amounts of money we have another situation wherein the worst solution is the only possible one for people without insurance.

Tort reform is another solution that is often tossed about as something that will cure the problems we currently have with health care costs. The theory is that by protecting doctors from high lawsuit settlements we can thereby bring down the costs of malpractice insurance which will be reflected in lower overall costs for the consumer. Even though there have been several instances in the last few years where such plans have been tried out, the results are not encouraging as costs have simply not come down appreciably from such efforts. If we had a nationalized health care system where everyone was guaranteed health care coverage this whole argument would disappear because the whole system of high settlements is based upon the recognition that health care costs are so high. This isn’t a chicken or egg argument, it is more like a cow and calf argument in that it is quite evident which one came first in this situation; the high health care costs. If you pursue a lawsuit against a doctor for malpractice the vast majority of the settlement set aside it is to cover the costs of future medical expenses. If you had nationalized health care insurance that will cover these costs already; there is little reason to collect a high settlement outside of pain and suffering incurred due to the doctor’s negligence. Without the high settlement possibilities the very volume of such lawsuits will steadily diminish as lawyers are capitalists too.

There is yet another aspect to this marriage of employment and private health insurance that we as consumers are now being forced to deal with. In an economic downturn such as we just experienced in this country unemployment is one of the first symptoms. With unemployment comes loss of employment based insurance for the workers who lose their job; involuntary Russian roulette for both the worker and his immediate family. Therefore, the Medicaid costs in the states where they live grow as well as these people are still going to inevitably have the normal every day health care needs even if they are lucky enough to avoid catastrophic disease or accident. The states are forced to come up with money to make up this difference at the same time they are suffering loss of revenue associated with the recession; both from payroll taxes and from dwindling sales tax revenues. The net result is higher deficits for the state at the same time they need more revenue; in effect a double blow to the economy. We are currently seeing this played out all across the country as states struggle to balance their budgets with rising costs and dropping revenue. The Kaiser Family Foundation released a study in 2008 that suggested a 1% increase in unemployment equates to roughly 1 million extra people without health care insurance in this country which winds up costing some 3.4 billion dollars in extra health care costs. This is a direct result of the fact that our current system of private health care insurance is largely weighted towards employment benefit packages and simply would not occur with a nationalized health care system.

Aside from same tired old mass hysteria argument that the right always trots out about the country being overrun by socialists who want to turn us into a communist state, the main fear surrounding a nationalized health care system is that it would be too expensive for us to afford. Unfortunately, as we have seen and continue to see on a yearly basis, health care costs are the real issue and we have to be able to control these costs to deal with health care issues. The average administrative cost of private health care servicea in this country is about 12% of total costs. Add to that a 3-6% profit margin for the company and we now have an additional 15% levied on top of our health care costs with the present system that is quite unavoidable. I would start out by saying that adding 15% to the costs right off the bat by having private health insurance belongs in the tally of problems rather in the tally of solutions. In any case, as a worker who has employment provided insurance my costs have steadily risen over the last ten years as costs have increased. The national average for such coverage has risen 78% since 2001 while employee compensation has risen just 19% during the same time period. Plainly, rising health care costs are the source of the problem and we have to make strides toward solving this problem. However, I now pay some $350 a month in payroll deductions for my health care insurance with the promise that it will only grow more in the future while the problem itself continues to spin out of control due to all the reasons I have listed above. A lot of these issues would be solved by integrating a national health care system and if we took what we are all paying into private health insurance plans that add to the problem and put that money into taxes that would help alleviate the problem I think it would be a step in the right direction.

The unvarnished truth about our system’s private health insurance is that the only way it is profitable to sell and administer is if there are enough healthy people paying premiums to offset the costs of those who need care. Insurance executives recognized this fact from the very beginning which is why they were so anxious to tie insurance to employment in the beginning. In our system the private health care insurance companies get to reap the benefits of insuring the healthiest Americans while skipping out completely on paying for health care for the unhealthiest. When people in this country retire or are unemployed the government picks up the tab for their health care which is exactly why Medicare and Medicaid programs are so expensive; they are forced to deal with the unprofitable refuse that private health insurers have tossed overboard after they have milked them for all the money they can get. If we had a comprehensive health care system like the rest of the civilized world we would be able to offset the high health care costs for the elderly with the premiums in the form of taxes paid in by the healthiest citizens; the young working class people. Is this a socialist idea? Of course it is but so are Social Security, Medicare, and Medicaid. These programs were put in effect originally because we were faced with the choice in this country of providing steadily rising health care costs for retiring citizens with little or no savings or letting them die. Capitalism had no solution for the problem so we adapted a socialist idea to solve the problem.

Over the course of the last 30 years we have proven that the combination of rising health care costs and an aging population have contributed to another situation that Capitalism has no solution for so maybe it is time we started to admit that what we need is another socialist solution. I shouldn’t say Capitalism doesn’t have a solution as the unseen hand of the free market always has a solution. The only problem is that this solution is the same as all others in the free market. If you can’t afford health care do without. To paraphrase our esteemed Speaker in the House of Representatives when told that the Republican spending cuts proposed recently would cost 800,000 jobs in an economy already in recession, “So be it.”