Unaffordable Care

Americans are really good at creating slogans that make us feel good but are often wildly inaccurate. One of those oft-repeated mantras is that we have the best healthcare system in the world. Unless you are a one-percenter and can afford whatever you want, the U.S. actually provider a horrifically expensive system that lags behind lots of countries in the developed world when it comes to quality and system usage.

In a May 3^rd article by the Commonwealth Fund (a private organization dedicated to better healthcare): “There were 2.4 physicians per 1,000 population in the U.S. in 2009, fewer than in … the other 12… countries in the study except Japan. The U.S. also had the fewest doctor consultations (3.9 per capita) of any country except Sweden. Relative to the other countries in the study, the U.S also had few[est] hospital beds, short[er] lengths of stay for acute care, and few[est] hospital discharges per 1,000 population. On the other hand, U.S. hospital stays were far more expensive than those in other countries—more than $18,000 per discharge. By comparison, the cost per discharge in Canada was about $13,000, while in Sweden, Australia, New Zealand, France, and Germany it was less than $10,000.” Simply put, the average American has less access to routine medical care than residents of the other countries surveyed… and still pays more than anywhere else on earth for the privilege.

The system is heavily stacked against the consumer. When the Affordable Care Act (“Obamacare”) was passed in 2010, the pharmaceutical industry managed to keep competitive prescription drugs from high-medical-standards countries (like Canada or the UK) out of the United States to fund research and under a misguided and inaccurate explanation of “quality control.” “Prescription drug prices in the United States are the highest in the world. ‘The prices Americans pay for prescription drugs, which are far higher than those paid by citizens of any other developed country, help explain why the pharmaceutical industry is — and has been for years — the most profitable of all businesses in the U.S. In the annual Fortune 500 survey, the pharmaceutical industry topped the list of the most profitable industries, with a return of 17% on revenue.’ [citing Time magazine]” Wikipedia.

When the potential of government-provided “generic” healthcare coverage was on the table, the insurance industry pushed hard to make sure there was no low-cost alternative to their profit-driven alternatives; the insurance lobby kicked in and killed that effort almost from the get-go. While the 2010 statute mandated significant decreases in administrative costs inherent in privately-covered healthcare, it effectively handed the entire system over to that private sector. Virtually every component in American healthcare is more expensive that its counterpart in any other country in the world.

Look at the picture above comparing the costs of a common hospital procedure for evidence. Based on data from the World Health Organization, “The US has the highest health spending in the world - equivalent to 17.9% of its gross domestic product (GDP), or $8,362 per person.” The Guardian (UK), June 30^th. To give you you a sense of perspective, the next three highest percentages of healthcare cost as a fraction of GDP in the developed world are the Netherlands (11.9%), Switzerland (11.5%) and Germany (11.5%). We are literally 50% higher than the second most expensive developed-world system! Inexcusable, right? So costs must now really be falling in the United States under such massive global realities, right? NO!

With no lower-cost government coverage to compete against, the cost of healthcare coverage in the United States is soaring. Small businesses and individually insured folks are getting slammed the hardest, because they have the least amount of bargaining power against the monolithic healthcare insurance giants. “Health insurance companies across the country are seeking and winning double-digit increases in premiums for some customers, even though one of the biggest objectives of the Obama administration’s health care law was to stem the rapid rise in insurance costs for consumers…

“In California, Aetna is proposing rate increases of as much as 22 percent, Anthem Blue Cross 26 percent and Blue Shield of California 20 percent for some of those policy holders, according to the insurers’ filings with the state for 2013. These rate requests are all the more striking after a 39 percent rise sought by Anthem Blue Cross in 2010 helped give impetus to the law, known as the Affordable Care Act, which was passed the same year and will not be fully in effect until 2014… In other states, like Florida and Ohio, insurers have been able to raise rates by at least 20 percent for some policy holders. The rate increases can amount to several hundred dollars a month… The proposed increases compare with about 4 percent for families with employer-based policies.” New York Times, January 5^th. What would be the increases have been without the mandated in the reduction of administrative costs in the 2010 act?

And while medical costs are rising, looking at the actual numbers, there seems to be little justification for these rate hike requests. According to statistics in a report just released by the Department of Health and Human Services: “The rate of increase in health spending, 3.9 percent in 2011, was the same as in 2009 and 2010 — the lowest annual rates recorded in the 52 years the government has been collecting such data…

“The recession increased unemployment, reduced the number of people with private health insurance, lowered household income and assets and therefore tended to slow health spending, said Micah B. Hartman, a statistician at the Centers for Medicare and Medicaid Services… In the report, federal officials said that total national spending on prescription drugs and doctors’ services grew faster in 2011 than in the year before, but that spending on hospital care grew more slowly.” New York Times, January 7^th.

Although no corrective legislation is likely to make it through the do-nothing, obstructionist Congress, average Americans – be they Republicans or Democrats – are going to pay the price of our failure to contain medical insurance costs and the way we pay for them. Why are Americans saddled with the most expensive and hence the least efficient healthcare system in the developed world? Who are we kidding? The fact that most of the developed world can supply a more accessible system at much lower cost shows it can be done. We just have a government that caters heavily to special interests with deep pockets and loose campaign contribution policies. The average American just gets screwed! Until we face this reality, Americans will be the world’s “healthcare suckers” paying a lot more for the same or lesser medical care than anywhere else.

I’m Peter Dekom, and we really cannot keep “solving problems” by redesigning our slogans in lieu of facing hard facts and offering genuine solutions.