A recent report shows that we spend $2.5 trillion dollars per year on health care, by far the most per capita and in aggregate of any nation. So what fantastic effects are we getting for this investment? Our average life expectancy is 78.2 years, ranking us 38th in the world, comfortably between Cuba and Portugal. But, hey! At least we’re ahead of Albania!
This aggregate spending figure is a rough estimate only, in my opinion. Many health care costs do not include “auxiliary” costs, and this can include pharmaceutical spending. I would think it would be hard to miss a $300 billion spend, but maybe that’s just me. In addition, other real and accrued costs are not included, such as lost work time, lost productivity, activity withdrawal, etc. These are common effects or illness and injuries, but somehow do not figure into the equation.
All of this is before the Affordable Health Care Act, otherwise known as Obamacare takes effect, bringing millions of previously uninsured people onto the insurance rolls. Many of these people have been avoiding using the health care system because of the threat of intolerable costs. Even though this is being touted as a cost neutral legislation due to decreased ER visits, I find this very hard to believe.
The same number of practitioners presently licensed would supposedly serve this addition of an estimated 20 million patients. Remember that these patients have been outside the health care system for quite some time, and would be expected to demand services at a much higher rate than established patients. I have seen no indication of expansion of the labor force that would be needed to treat a higher volume of patients.
Pop goes the bubble?
By most accounts, we are already paying too much for health care in our country, without even making simple basics available to all citizens. So, why has this system not imploded or been rendered obsolete by a better system? There is no simple answer to this question, but there are several glaring factors that do not exist in other industries.
- No globalization
- Entrenched, powerful players
- Social conflicts and confusion about health care
Globalization
Health care is by far the largest segment of our economy that has not been subjected to the forces of globalization. Global economics tend to depress prices and increase availability of goods and services through mass manufacturing, mass marketing and ease of instant, complex communication. As a country, we’re fine with having nearly every household good manufactured in China, but we’re not fine with having pharmaceuticals manufactured there and sold at a commensurately low price.
Travel for elective surgery?
We’re also not fine with offshoring non-emergent surgical procedures, even though our cost savings would be substantial. Medicare will not pay for services performed outside the US, regardless of price or necessity. There is apparently a booming elective surgery industry in Vietnam and India, with costs being about one tenth what they are in the US.
Powerful players
The AMA, the AHA (American Hospital Association), Big Pharma, the insurance industry and others are extremely powerful and well-heeled presences in Washington. They largely control access to and pricing of healthcare services in the US, even at absurdly heavy burdens on the taxpayer, the employer and the individual consumer of care. This is seen at many levels, including excluding foreign competition for goods and services, taxpayer subsidy of price-protected drugs, exclusive and monopolistic use of taxpayer supported educational institutions and patient care facilities, etc. It’s a long and daunting list.
This level of influence is so powerful and pervasive that it becomes invisible. A recent example was the Medicare Drug Act passed into law in 2003. This has cost taxpayers about $50 billion a year, simply to pay for a negotiated prescription drug price that far exceeds what the identical medication costs in other countries. There were numerous allegations of improper offers to legislators to get the necessary votes, but all that has been forgotten.
Social Conflicts
This is the disagreement over whether health care is a right of every citizen or whether it’s a service that has to be paid for at a mutually agreeable price. One may thing that health care is a critical necessary thing for people, but you could make that same argument for electrical service. I don’t think anyone has made the argument that electrical service should be free and available to anyone regardless of his or her ability to pay! There is certainly a big chunk of humanitarianism in health care, but it’s really a business, just like any service business.
For any provider, the real argument here is this: in such a giant and complex system, how can we deliver safe, cost-effective care and at least make a difference in the areas where we have some measure of influence? I’ll address a couple of these areas in my next post.