There’s an absolutely-must-read column at The Economist that illustrates why health care in the U.S. costs so much. One reason is that the highly touted free enterprise market based yadda yadda part of the system has to pour huge amounts of money into marketing to promote its products.
And the products that sell are not necessarily the best ones, or the most cost-effective ones, or even the ones that are most needed, but the ones that are most smartly marketed. The cost of the marketing is passed on to the consumer. Plus, Americans often are pushed into expensive treatments they don’t need because it will make somebody some money. At the same time, people are doing without health care they really do need because they can’t afford it.
Anyone who doesn’t believe our private health care system is bloated and wasteful needs to carefully look at this Kaiser Family Foundation study comparing health care costs in the U.S. to that of several other industrialized nations. There’s a bar chart that shows health care spending per capita. Wow, we are the biggest bar! USA! USA!
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Not only that, our costs are going up faster than everyone else’s. The line graph at right shows increases in spending as a percentage of GDP since 1970. Yep, that top line is us.
The second-highest line represents Switzerland, which is interesting because Switzerland still relies mostly on private health insurance to pay for health care. It’s not as free-wheeling as it is here, however. About five years ago, the Swiss mandated insurance companies to offer a basic package of coverage at no profit, and Swiss citizens are required to purchase the coverage. Yep, an individual mandate. The insurance companies make money from supplemental insurance policies.
But the point is that after a lot of fighting and arguing, the Swiss realized that health care costs were draining their economy, and increasing numbers of people were losing coverage. And they figured out that the only ways to get their costs under control while insuring most citizens were to either go with a primarily single-payer system, or mandate that everyone purchase private insurance that is regulated to keep costs down. The Swiss are stubbornly conservative, I understand, so they went with the latter.
The Netherlands also mandates that everyone buy a basic, risk-equalized insurance policy offered by private companies at no profit, plus some medical care is directly paid for by taxpayers. I believe some other countries may combine no-profit private insurance (again, the private companies can sell supplemental insurance) with government-paid health care, and the rest are mostly single payer.
On top of that, most other countries have cost controls on pharmaceuticals, and generally some bunch of government bureaucrats make purchasing decisions based on cost and effectiveness. Here, of course, stuff costs whatever some people are willing to pay for it. No limits.
One other Fun Fact that came out of the Kaiser study — in spite of all our chest thumping about keeping government out of health care, the U.S. governments spends more on health care as a percentage of GDP than a lot of countries with single payer systems.
Yep. The U.S. government spends 7.4 percent of GDP on health care (the private sector kicks in 8.5 percent). The government of Canada spends 7.3 percent of GDP on health care. The British government spends 7.2 percent of GDP on health care.
So when people start screaming about how we could pay for a single-payer system — if we can get rid of the marketing overhead, price gouging, unnecessary treatments, and other by-products of the Free Market (blessed be It) out of our system, we ought to be able to provide a basic single payer system for about the same amount of money the bleeping U.S. government is spending now.
Granted, we might have to spend a bit more to bring our system up to the level of France, the Cadillac, so to speak, of health care systems. The French health care system overall costs 11.2 percent of GDP, compared to 16 percent of GDP in the U.S., but a higher proportion of that is government spending. Still, it’s less money out of French citizens’ pockets, because they aren’t shelling out tons of money to pay for marketing and profits and private sector overhead. And it will take a while before we can rebuild some of our neglected medical care infrastructure, such as emergency rooms.
But the fact is that only the United States is trying to get along with for-profit health care paid for by private, for-profit insurance, and it ain’t workin’. Keep in mind that big chunk o’ change the U.S. government spends on health care is mostly to take care of folks the private system has dumped. Anywhere else but here, our mostly private system would be considered a Massive Fail.
Now, let’s go back to the Economist column. The writer brilliantly skewers a recent David brooks column — I love this —
DAVID BROOKS had an op-ed in the New York Times yesterday that proclaimed the near impossibility of restraining costs in health care through centralised government efficiency evaluations, which is being justly ridiculed by people (Jon Chait, Jonathan Cohn, Ezra Klein) who note that every single one of the world’s centralised government-regulated health-care systems is far cheaper than America’s relatively decentralised private-sector one. Mr Brooks has surely had this explained to him a thousand times by now, and his failure to process the fact or incorporate it into his worldview seems to me most likely to reflect an absence of the ideological furniture on which the fact could sit. Mr Brooks doesn’t seem to have an instinctive understanding of how it can be possible for unregulated free-market health-care systems to cost more and deliver inferior care than strongly regulated systems with heavy government involvement, and that’s why, while he occasionally must have to acknowledge the existence of the French health-care system, he can’t seem to retain it.
Oh, first rate snark, Economist writer. I salute you. But it points up that we’re debating the relative efficiency of a Free Market (genuflect here) system versus a system with some central control in management and purchasing. And Americans are told over and over again that the Free Market (hallowed be Its name) is better, but it isn’t.
The Affordable Care Act passed last year is a step in the direction of sanity, although what it provides still amounts to the least regulated and most privatized health care system in the industrialized world. However, if the individual mandate is canceled, you might as well flush all of it. The rest of the provisions that limit health insurance profit-taking and mandating insurers take all customers regardless of pre-existing conditions will have to be flushed as well. And then we’re right back where we are now.
Here’s the real choice. If we want to see to it that most Americans have access to decent, 21st century health care, we can go in one of two ways. Either the purchase of private insurance policies is mandated — although we need to move toward mandating that insurance companies offer basic coverage at cost — or we go with single payer. Or, like the Netherlands, we try a little of both. That’s the choice. And we aren’t even talking about the real choice.
The Economist is a peculiar magazine – some good reporting mixed with a lot of contradictory idiocy. I used to subscribe to it back in the 1990s, but finally got disgusted enough by some of the outrageous positions they would take. Of course, when you’ve got a number of different writers, you’re going to get different people taking different positions, unless management cracks the whip which they periodically did. At times, the magazine seemed like listening to Fox News, at other times it was rational. Free trade plus privatization was their big solution to everything – the idea was to drive wages down to the level of Bangladesh, but we’d all be better off because everyone would own stocks and bonds, while enjoying cheap consumer goods and low taxes.
The breaking point (for me) was when they published article after article ridiculing scientists who believed in global warming, then did a massive flip-flop when Wall Street came up with the idea for creating a “carbon market” (otherwise known as cap-and-trade). They thought gold would be worth as much as lead by now. They were, surprisingly, opposed to nuclear power, but kept promoting a drill-baby-drill policy as the solution (they confidently predicted that oil prices would drop to $5/barrel by year 2000 thanks to the WTO). On health care, they thought the Internet would drive health care costs way down because it would create a freer market, including running your own diagnostic tests from home and then consulting with a doctor online (who could be anyplace in the world). Need a CAT Scan? Just rent a scanner from Home Depot, plug it into a USB port, email the results to your doctor in India and get a face-to-face consultation via Skype, all for $99.
They did get a few things right. They thought the dotcom bubble would pop, and it did. I do remember one article where they criticized derivatives (when Long-Term Capital Management collapsed in 1998). They did a good job of reporting Enron. But overall, it was a propaganda sheet – Ayn Rand would have been their chief editor had she lived long enough.
I’m glad the Economist article called out Brooks in the first paragraph. It’s high time that someone with such a prominent position but with such mediocre sensibilities had a comeuppance, such as it is.
I wonder how long it will be before information like the Kaiser study becomes widely known and accepted. And how long it will be before a politician dares to step out and champion single payer. It’s kind of like asking how long can the powers-that-be keep the lid on the truth. Like Canada’s system, single payer will probably emerge from the states.
Earlier this week I read that one of the many challenges to the constitutionality of ObamaCare met a reaction among (Bush-appointed) justices in the Atlanta federal court, along the lines of: “in the 220 year history of the Republic, Congress has never forced everyone to buy a product”. Part of me hopes ObamaCare is struck down, as it’s clearly inferior to single payer, which is what I expected Obama to fight for in the first place, even if it was only an opening position in the negotiation. I may get my half-wish if any of these cases goes before the conservative US Supreme Court.
Finally, if you really want to do something about your own health care, I recommend seeing the new movie Forks Over Knives. In fact, Run, do not walk to see this film. It follows the research by Caldwell Esselstyn, MD and by Colin Campbell PhD, author of The China Study. It’s a strong argument for vegetarianism. This is another startling, against conventional wisdom conclusion that I wonder how long it will take to become widely accepted – that most degenerative diseases can be eliminated and even regressed if people would only change their diet. It’s that powerful of a film. One of these men made the statement – and these are scientists – that the US could reduce its health care costs by 70 to 80% if people would change their diets.
The best write-up I’ve read in some time. The main problem is that the stuff just costs too much. We can’t afford it on our own unless it’s provided by our employer in some manner. We have a terribly inefficient system and a large part of the country that believes fairy tales. Our gov’t has to get control of the cost of health care, not paying for it. If we don’t we will all be bankrupted by it, while a few scurry off with our money. Frontline did a couple, or more, show on this, Sick Around America and Sick Around the World. Both are streaming online and are must watches.
You missed one of my favorite parts of the free-market cost-increase mechanism we have – the offices full of insurance company employees who have the job of denying valid claims, because every one that isn’t successfully appealed becomes profit for the company, and the money is really in collecting premiums and investing them, not in actually paying anything back out to policyholders. That ‘investing them’ part is also why it takes forever to have a claim processed – every day between them receiving a claim and paying it out is a day they can have that money in the stock market.
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Not to defend Brooks (who pretty much typifies the beltway hippie-punching cocktail party elite) but when looked at as a percentage our costs aren’t rising any faster than average for the developed world. So his idea of using market forces to control costs can’t just be dismissed out of hand — medical treatment is getting more expensive in France, the UK, etc, as well as the US. Our problem — which he ignores — is that many more of our healthcare dollars go into the profits of entities that have nothing to do with directly providing medical care. Thus our costs are higher and remain proportionately higher.
Now, it’s silly to assume that patients are equipped to generally make treatment decisions alone, though Republicans seem to think they are chiefly to blame for rising costs (as always with them, the victim must be blamed). But if we eliminated some of the perverse incentives (e.g. profit from unnecessary treatments, referral arrangements that in other contexts would be kickbacks, other conflicts of interest, price-fixing, marketing practices that bypass physicians, etc) via appropriate regulation, perhaps market forces would actually help to keep costs down.
It is utterly against Republican dogma to acknowledge that regulated markets can lead to better outcomes than unregulated ones. But for Brooks’ idea to have even a ghost of a chance of working, centrally-controlled policies are essential. And, anathema though it may be to him and his beltway pals, profits have got to get smaller, and some of the parasites on the system removed altogether.
As a percentage of what? As a percentage of GDP, our health care costs are rising a great deal faster than the rest of the developed world. Dramatically and significantly faster. Didn’t you read the post? Once again, the line chart shows increases in health care cost as a percentage of GDP since 1970. The U.S. is the top line. Yes, everyone’s health care costs have gone up, but our have gone up more and faster.
As David Brooks may say about the Swiss and health care:
‘You know what the fellow said – in Italy, for thirty years under the Borgias, they had warfare, terror, murder and bloodshed, but they produced Michelangelo, Leonardo da Vinci and the Renaissance.
And in America, they wage constant war, and do everything possible to make the rich richer off the backs of the poor and middle class, but they produced Bell, Edison, Ford, jazz, rock and roll, moon landings, and The Age of Technology.
In Switzerland, they had brotherly love, they had five hundred years of democracy and peace – and what did that produce?
The cuckoo clock.
And mandated health care.’ *
Bobo is one of the most respected men who aren’t blind, and yet can’t see. In America, they’re called pundit’s. I call them “Pun-twit’s.”
I don’t respect him, because he’s willfully stupid, and will ignore any and all factual evidence that’s contrary to his BELIEF.
And he’s got well paid perch’s on radio, TV and the NY Times to spout his bullshit. He even wrote a novel about his conservative world view – a book that was about as badly panned as any you could find – even in his own newspaper (lol!). It’s like ‘Ayn Rand in YuppieLand.’ I wouldn’t know, because not only won’t I read it because life’s too short, but I wouldn’t even have it in my house if it was the last book in the world and the kitchen table rocked.
And did anyone notice when our health care costs started to spike up and diverge from where it was kind of lumped together with the other countries?
Yes, is was the great, stupendous, great, cheerful, great, optimistic, great, great, President “St. Ronnie of the Free Markets.”
Did I mention how great he was?
That was obviously snark, because, whenever you look at any charts that shows America and the middle class slipping, and the rich getting richer, it always starts to go up dramatically under Reagan, and then spike like a rocket launch under Little Boots.
I tremble at the thought of a Republican President, House, and Senate, any time soon. And the SCOTUS won’t be of any help because it’s already been privatized. And this nightmare may come iaround n 2013 – if we don’t work hard.
*From one of my favorite movies, the GREAT (and I mean it this time) “The Third Man.”
[H]is failure to process the fact or incorporate it into his worldview seems to me most likely to reflect an absence of the ideological furniture on which the fact could sit.
Now, that is a fine sentence with which to start my day.
And what do we get for the most expensive health care system? By most published accounts I have seen it is middle of the pack results.
As a currently unemployed R.N., soon to be desperate for work, I will bookmark this page. But I have to say that there are a lot of services needed which are currently being neglected, and we tend to forget that fact when jumping into discussions about costs for unnecessary tests, etc. I won’t work in a nursing home. The risks are too great–too easy to kill people by accident and to provide substandard care because of understaffing. Also, it would be my license on the line, not an M.D.’s, because legally I am required to recognize when working conditions are unsafe for patients. Honestly? Working conditions related to understaffing have been unsafe for a long time in most places I’ve temp-worked. Infection rates in clinics and hospitals are high, for example, which happens when you’re expected to do 30 things at once and some of those include exposure to body fluids. Nurses cannot be expected to cut any more corners, and yet that’s what continues to be demanded by managers who are tied to a bottom line.
Got to resort to the pejorative – it’s absolutely idiotic to believe that the private sector operates (anything) with no regard to profit. Health care is not a fungible commodity in the sense that there exists nothing to replace it. (Think of it like water, a necessity of life for which there is no viable substitute.) Which has led me to conclude that those who would deny access to health care are simply cruel, a word that is not used in ‘polite’ circles but should be – across the board – in describing the social and economic policies being put forward by today’s Republicans.
hopefulandfree,
Good luck in your search.
Moonbat, once again we have that synchroncity thing going.(thanks, bro!!)
I came home last night and suggested to my wife that we look into a vegan diet.
We’ll probabily start eliminating beef and pork, working towards fish and veggies only.
Both of my knees are shot, one needs replacement, the other has torn maniscus.
My wife is afraid that if I take time off to get them fixed I might loose my job, if I don’t, I’ll need one of those scooter chair thingies in a coupla years.I don’t think management wants to see me running around in one of those on the job.
I’m not real heavy (190 @ 5′ 10″), but I wore them out with always being the work horse on the crew.
@erinyes – I’ve been thinking about going vegetarian for a number of months – heard a couple people from Hippocrates Health Inst (from out your way, in West Palm, FL) speak – I’ve known about HHI for a long time, they come highly recommended. They’re strong advocates for a mostly vegan diet, and they run the country’s premier spa for treating people with this diet. I’ve heard of the main figures in “Forks Over Knives” before and am somewhat familiar with their writings; the movie pushed me over the edge, and I haven’t had meat since seeing it.
I’ve been a vegetarian before, but it was when I was younger and had no glaring health reasons to do so. Today it’s different – I’m pretty sure I’d be headed for heart attack or stroke if I kept eating the conventional diet (like a huge proportion of my countrymen). You sound pretty height/weight proportioned, and so you may still need knee operations, even if you cut out meat. However, this should stop leaching calcium out of your bones – the body uses it to counteract the acidity from excess protein. I’m not a doctor, so take my comments FWIW.
@candide – I echo your sentiments regarding The Economist. It has some good writing, some disappointing ideology. There are other economists who aren’t so bound to Free Market Religion that I wish could get a voice.
@hopefulandfree – your comments explain a lot of what I saw and unfortunately experienced in nursing homes. I’ve long regarded hospitals as places to stay out of if possible, and your comment clarifies the feeling I’ve had about nursing homes. On the one hand it is a lot of risk to work there, but on the other, it’s also a glaring need. I’ve been hearing from others that nursing is finally glutted – too many applicants chasing too few jobs. The person I spoke with had lived overseas and was fluent in Spanish + Portuguese – I encouraged them to finish their studies in the US and move abroad for employment.
Fish is not a good choice any more. Most come from polluted waters and/or are genetically modified. They don’t have labels on them so you can tell the GMOs from the real.
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If I recall correctly, last year Switzerland’s economy was named “the most competitive in the world” by the World Economic Forum. I know their healthcare is not as good as it it in France, but universal healthcare evidently hasn’t hurt their economy.
From Robert Bellah’s “Habits of Mind” a quote that describes the Free marketeers:
“And since we have believed in that dream for a long time and worked very hard to make it come true, it is hard for us to give it up, even though it contradicts another dream we have– that of living in a society that would really be worth living in.”
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