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Richard (RJ) Eskow
Published: Friday 4 January 2013
Pharmaceutical corporations, for-profit hospital companies, private insurers—our system is sick—the diagnosis: Corporate greed.

Our Deficit Debate’s “Sick Secret” is Killing Us, Literally

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Imagine a nation with a terrible problem – one its leaders refuse to discuss. The problem will needlessly drain trillions of dollars from its economy in the next ten years.

Now imagine that this problem also robs that nation’s citizens of life itself, draining years from their lifespans while depriving them of large sums of money. Imagine that it sickens and disables countless others, drives many people into bankrupcty, and kills more than two newborn infants out of every thousand born.

Imagine that fixing this problem would make result in a dramatic decline in publicly-held debt. It wouldn’t just “help” the debt problem, mind you – it would cause that debt to plunge.

And now imagine a national “deficit debate” which completely ignores this problem.

Imagine a news media which pretends the problem doesn’t exist. Imagine a corporate-funded “Fix the Debt” movement that refuses to mention it, and yet is treated as an objective source of information. Imagine a political consensus in which the debate isn’t around how to fix this problem, but how to cut service programs that help people cope with it.

Welcome to the United States of America, Jan. 2013.  It’s a land where the population is broke, sick, gypped, and mistreated. But the problem’s fixable – if we can find the political will.

Broke

The problem, of course, is our health care system – although “system” seems like a flattering word for this greed-driven, anarchic three-ring circus. Our health care system – guess we’ll need to call it that for lack of an alternativer – is the worst in the developed world. It costs far more, provides much less, and has worse outcomes than any system that’s even remotely comparable.

How bad is it?

Our health care spending is 17.6 percent of GDP , compared with an average of 9.6 percent for all developed countries. (All figures are from the compendium of health and economic statistics published by the Organization for Economic Cooperation and Development ( OECD ), unless otherwise indicated.)

Total health spending (from all sources, not just insurance-related) averages $7,960 per person in the United States, versus an average of $3,233 for all developed countries.

If we spent the same on health as the average developed country (as a percentage of GDP ) that would inject more than a trillion dollars per year into other parts of the economy. ( $1.14 trillion, by my rough calculation.)

Sick

What are we getting for our money?

Life expectancy at birth in the United States is 78.2 years, compared with an OECD average of 79.5 years and Japan’s life expectancy of 83 years. Our expected lifespan is the shortest of any among the countries we normally think of as “developed.” The ones that trail us are newer entrants into the “developed” category — like Mexico, Turkey, Brazil, Indonesia, and the Eastern European countries.Our infant mortality rate is 6.5 deaths per 1,000 live births, as opposed to the OECD average of 4.4 deaths. As with life expectancy, we lag behind all the other long-term “developed” nations.

We score even more poorly on another metric, “Premature Mortality,” which measures the number of years someone loses “before their time” (essentially by calculating how many years it would have taken on average to reach the age of 70).

Our high rates of premature mortality are affected by our high rates of accidents and suicide, too, and from a homicide rate for males that’s five times the average. (That’s a figure worth citing in the gun control debate.)

Gypped

The question becomes, Why? Why do we pay so much and get so little for our money?

Part of the answer lies in the fact that, despite the high cost of private-insurance premiums, our health plans don’t provide enough coverage. According to survey data, Americans were unable to meet their medical needs because of cost more often than citizens of ten comparable countries ( OECD , Table 6.1.3).

That statistic applied to lower-income Americans, as might be expected. But interestingly, it was also true for higher-income Americans – those that are most likely to have private health insurance. 39 percent of Americans with higher-than-average income had an unmet medical need due to cost in 2010. For the runner-up, Germany, that figure was 27 percent. (It was 12 percent in Switzlerland and 4 percent in Great Britain.)

Higher-income Americans also led the pack in reporting out-of-pocket expenditures of $1,000 or more per year, along with their lower-income peers, with 45 percent in the higher-earner category spending that much or more per year. The figure was 37 percent for runner-up Switzerland. It was 2 percent in Sweden. And in much-reviled “socialist” Great Britain the figure was effectively zero.

These results reinforce the findings of studies on medical bankruptcies by Prof. Elizabeth Warren, which showed that medical costs were a dominant reason for bankruptcy even for people with health insurance. (She was officially sworn in as Senator Warren today – congratulations!)

Mistreated

Where does all the money go? Much of it goes to profit margins for private insurance companies, of course. (They’re experts at understanding their margins, which are much higher than most observers believe.)  There are also profit margins for a number of health providers, including for-profit hospitals, medical imaging companies, and physician practice management groups.

Underlying much of our explosive cost growth is the phenomenon we described in “Sick Money:" Investors like Bain Capital buy up health care companies, load them up with debt, and demand highly aggressive profit margins. Many of them respond to the problem the way the Bain companies did in our piece: through fraud.

But many other providers overtreat, subjecting the population to a barrage of needless (and sometimes invasive) procedures while other basic health needs go unmet.

Here are two more OECD statistics that illustrate the point:

The U.S. is second only to technology-crazed Japan in the prevalence of high-cost (and high profit) MRI and CT devices for medical imaging, both in hospitals and in free-standing facilities. Many American facilities were financed by physicians who send their patients there, which poses a significant conflict of interest and which both public and private insurers have been attempting to limit. Many others are owned by sales-driven chains. Unsurprisingly, studies suggest there is significant overuse of this equipment in the U.S.

And let’s not forget drugs. When it comes to per-person pharmaceutical costs the U.S. is off the charts, spending $947 per person on average. That’s nearly twice the OECD average of $487.

And remember: Congress won’t even let Medicare negotiate with the drug companies.

Fixable

Pharmaceutical corporations, for-profit hospital companies, private insurers — our system is sick. The diagnosis: Corporate greed.

Our “sick secret” can be fixed. In our next piece we’ll discuss how to attack it — and what it will take to shift the debate away from a “consensus” plan to adopt the miserly failures of austerity and toward real solutions that can restore our Federal budget – and us – to health.



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ABOUT Richard (RJ) Eskow

Richard (RJ) Eskow is a well-known blogger and writer, a former Wall Street executive, an experienced consultant, and a former musician. He has experience in health insurance and economics, occupational health, benefits, risk management, finance, and information technology.

More emphasis please on the

More emphasis please on the cost of administering our "health care" system, far above those industrialized nations mentioned. Private health insurance companies have operating costs in the 20%+ range. Non-profits claim something lower but I haven't seen the figures for them. The administrative costs are about 6% according to my understanding, for programs like Medi-care. This is what they spend before ANYONE gets so much as a blood pressure check.

It's not fair to call it a Health care" system. It's a "health care company .....CARE" system.

We need to start thinking of health care as a right, and demand accordingly.

Healthcare is a NEED - to let

Healthcare is a NEED - to let it be "for profit" is to enable an addictions industry.

And how does gender equality

And how does gender equality play into this issue? According to the UN the US is with the top countries regarding human development but ranks far down the list in regards to gender equality.

Do we have poor health care because we pay too much for too little or because we don't elect enough women to leadership positions? Our materinal mortality rate is equal to Saudia Arabia's. Would women be as willing as men have been to let our medical care get this bad.

A healthcare system similar

A healthcare system similar to the one in Canada Would cost 40% of what is being spent now, and everyone would be covered- even on major procedures.
Check Facebook for " Mouseland ".

Great article! And the last

Great article! And the last comment summarized it all; "Pharmaceutical corporations, for-profit hospital companies, private insurers — our system is sick. The diagnosis: Corporate greed." Corporate greed is manifested by our lobbyists that control too many of our members of Congress with extraordinarily large sums of money. This will never change until we take away the only source of power the corporations have which is MONEY. So if you really want to do something about this click on or copy and paste into your browser - http://signon.org/sign/take-money-out-of-politics

An excellent article. When

An excellent article.
When you add the grossly disproportionate amount the USA spends on healthcare to the grossly disproportionate amount the USA spends on war, military and "security", and then subtract the huge amount the USA is losing on the two thirds of the Reagan tax cuts preserved by the Obama "tax increase" on the wealthy, and then subtract the huge amount the USA is losing on the tax-dodging trillions off-shored by USA-based corporations and wealthy individuals, you get a sum that would wipe out the deficit in a few years AND start to REVERSE the current transfer of wealth and well-being from the many to the few.

I just want to remind Obama fans that he championed a healthcare plan crafted by Republicans to create a mega-windfall for the health insurance cartel, as opposed to the "single-payor" (ie govt) systems that prevail in other developed countries. Obamacare will benefit millions, but not nearly so many as single-payor would. Neither will it reduce the % of GDP spent on healthcare.
And CBO estimates that some two million working Americans will have to pay tax penalties for inability to afford available insurance, which insurance like that of today will not protect insureds from uncovered costs great and small.

Thanks to Obama the chance of getting single-payor in our lifetimes is now remote.

Welcome to America January

Welcome to America January 2012
Editors beware it is now

2013.

Our "health care" problem is

Our "health care" problem is not a money problem, it is not a medical insurance problem (which is what most people mean when they say "health care" - they mean medical insurance). Our problem is a HEALTH CARE problem. We can keep sick people alive a long time with expensive treatments but are they >healthy

Our "health care" problem is

Our "health care" problem is not a money problem, it is not a medical insurance problem (which is what most people mean when they say "health care" - they mean medical insurance). Our problem is a HEALTH CARE problem. We can keep sick people alive a long time with expensive treatments but are they >healthy

Lots of places, like

Lots of places, like Providence RI, tout the idea of using the medical industrial complex as their strategy for economic development. the reality is that all that does is kick up the cost of health care and increase the medical bankruptcies in the community. Every bit of that research is paid for by us, either as tax payers or medical consumers, and then we pay double for patented life forms.

We need to close both the military and medical industrial complexes if our communities are to be prosperous.

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