The United States faces a healthcare crisis because we have one huge disadvantage that the rest of the developed world simply escaped: we start from a platform of the highest prices for medical services, procedures and prescription drug prices in the world. Some will argue that we have massively better specialized equipment and better-trained physicians than any other country in the world. That may have been true a couple of decades ago, but that is neither the explanation nor the current state of medical technology and training in most of the developed world. Our “penalty” is historical.
As Europe and Asia were recovering from the decimation of World War II, U.S. territory was virtually untouched by the ravages of war. As the most of the developed world dealt with rebuilding (and remember that Canada was still a much more a part of the UK after WWII), the United States set about growing our economy. We did not have to rebuild cities; we built an American competitive advantage as we also funneled cash and expertise to rebuild our enemies and allies alike.
But that effort made the dollar strong, demand for skilled labor in the US exceptional and our pay levels tracked the demand accordingly. The GI bill was sending hundreds of thousands to college. People were building and buying homes like never before. Prosperity exploded. And relative to the rest of the world, our workers – unions were very strong – were paid multiples of what workers in the rest of the developed world were paid. We relied on our own internal growth, not globalized trade, to build the most powerful economy on the planet.
Meanwhile, doctors in Europe and Asia, living in a world of rebuilding from rubble, were not living in economies where high salaries were remotely possible. No one could afford that luxury. Those soon-to-return-to-developed status began to address social issues. The “communist” bugaboo, evidenced by the McCarthy witch hunt here in the US in the mid-1953s, did not impact Europe, where communist and socialist candidates routinely ran for office. Just mentioning “socialism” in the US would get a government official lambasted by the press and the public. Yet even though Republican conservative, Richard Nixon, first proposed universal healthcare for all Americans, it was an idea that could not find traction in a nation elevating “pure capitalism” over social safety nets.
That anti-socialism bias combined with exceptionally higher prices helped to make American healthcare far and away more expensive than any other country in the world. The world has long-since globalized. Medical research, equipment design and pharmaceutical development were no longer relegated to the United States. So as every single other developed country on earth established universal healthcare, the United States did not. Over the past decade, the percentage of our gross domestic product dedicated to healthcare has ranged from 17% to 20%, a figure that is often double the comparable figures in other developed nations.
So any American healthcare system is built on a very expensive base. We have to overcome prices that no other country has to face. And even if we could find a way to reduce healthcare costs even by a mere 10%, that reduction would effectively reduce our GDP by 1.7% to 2% as well. A 20% cost reduction would be more than our average GDP annual growth. Cutting medical costs is also cutting GDP, at least in the short run.
To get the Affordable Care Act through Congress, the Obama Administration had to deal with powerful lobbies from the pharmaceutical and insurance sectors. By simply having the ACA accept the drug prices as presented by the big purveyors of drugs (without negotiation), the US continued to have drug prices far above those of other developed countries. By eliminating the Medicare-equivalent possibility, a government insurance alternative, private healthcare providers allowed the bill to pass with their support.
Those two concession were flaws that critics pointed to, but clearly those disadvantages were intended to be phased out over time. It might take a decade or more to level off a system that could work the way universal healthcare programs function elsewhere. But a GOP Congress immediately wanted to repeal the entire bill. No fixes, just repeal. The new President and the GOP Congress have slowly chipped away at the ACA, rendering it pretty ineffective and threatening to throw millions of Americans off the rolls of the insured.
Under the guise of “tax reform,” Congress gutted the ACA’s “individual mandate” – an aspect of the 2010 legislation that provided the basic funding for a significant portion of the ACA. Unless alternative funding is authorized, millions of people who currently have healthcare under the ACA will be forced to lose that coverage. But it gets worse from there. Republicans in Congress are now mounting an effort to repeal legislation that makes mid-sized and larger companies offer healthcare at all: “Representatives Devin Nunes of California and Mike Kelly of Pennsylvania, both Republicans, recently introduced a bill, supported by party leaders, to suspend the mandate, canceling any penalties that would be imposed for any year from 2015 to 2018… ‘The employer mandate is a job-killer, a wage-killer and a business-killer,’ Mr. Kelly said.” New York Times, January 14th. But conservatives keep telling us how wonderful American medical care is.
If you think the United States provides the best healthcare on earth, then you really need to look at hard numbers that tell us otherwise. The medical canary in the coal mine – infant mortality – paints a pretty dismal record. The January 14th Los Angeles Times explains: “It’s no surprise that the United States ranks absolutely last in child mortality among the world’s wealthiest countries — that’s been true for years. A new study examines how this sad situation came to be.
“According to data from the World Health Organization and the global Human Mortality Database, the problems go all the way back to the 1960s. It was during that decade that the U.S. infant mortality rate (for babies younger than a year) and the U.S. childhood mortality rate (for those 1 to 19) began to exceed the combined rates for the other 19 richest nations.
“If the United States had performed as well as its peer countries from 1961 to 2010, more than 600,000 childhood deaths could have been avoided over those 50 years, the study authors concluded… The results were published Monday in the journal Health Affairs.
“‘The care of children is a basic moral responsibility of our society,’ wrote the study authors, led by Dr. Ashish Thakrar, a first-year resident in internal medicine at Johns Hopkins Hospital in Baltimore. ‘The U.S. outspends every other nation on health care per capita for children, yet outcomes remain poor.’
“And things could soon get even worse, the authors added: The Trump administration’s budget includes ‘substantial cuts to the Children’s Health Insurance Program, which covers seven million children, and to the Supplemental Nutrition Assistance Program , which directs three-quarters of its benefits to households with children.’
“But there’s plenty of evidence that things were bad already. Babies born in the United States have a lower life expectancy than their counterparts in other countries. In part, that’s because they face higher rates of obesity, injury, HIV infection and teen pregnancy, according to a 2013 report from the U.S. Institute of Medicine.” We are quite willing to incur a trillion plus dollar deficit to reduce taxes for the richest people in a white hot economy, but we are cutting the healthcare system that could reverse the above negative numbers.
There is no quick fix. There is no program that Congress could pass that would be an instant super-success. We cannot afford it… yet. It is going to take time. But we are going in the wrong direction. We need to build a system, over time, that makes the American healthcare system one that begins to deliver what the rest of the developed world has had for years… one that does not provide Cadillac healthcare only for the richest segments of our notion. And since we are starting with the most expensive system on earth, getting within manageable parameters is just going to take time… assume we actually get started.
I’m Peter Dekom, and it is time for Congress to pass legislation that benefits most of us and not a much rarified few of us.
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