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.
