Economically, “ObamaCare” must be just the beginning
Forget screaming or whining politics from the right or the left in this column, as I consider myself a centrist, and that stuff bores me to tears, or infuriates me. As in Dragnet, it’s just the facts. Rather than the political fiction that is wall to wall on TV commercials these days, this article talks about potential real trillions in savings and Americans’ health and longevity.
How about starting off with some math? Arithmetic. Yup, that stuff that is historically responsible for many students thinking they’re somehow stuck in the Twilight Zone as they wait for the clock on the wall to make its arduous journey towards the second when the bell rings.
If the US reduced its percentage of Gross Domestic Product (GDP) taken up by health care (17.6% as of this year) to the Canadian level (11.4% — not the lowest in the western world, by the way, but is similar to Switzerland, Japan and France) and adopted some sort of health care hybrid program made up of stuff that works everywhere else in countries with comparative economies and standards of living, we would save 6.2% of GDP and cover everyone. That equates to $904 Billion in annual savings directly related to GDP. That is roughly equivalent to all outstanding US student loans or credit card debt. What could the US do with an additional $1 Trillion each and every year for its citizens needing jobs, rebuilding infrastructure (which needs $2 Trillion of duct tape) and paying down the national debt? I don’t know, but probably quite a lot.
How much is $1 Trillion? $1,000,000,000,000.00. A nice $3,209 Christmas Bonus for every person living in the US. Or about 285 billion Big Macs.
The governments of both the US and Canada spend about the same percentage of GDP on public health care. Didn’t know that, eh? Because the pundits and “news” people haven’t told you. However, Canadians spend far less of their private wealth on health care (3% compared to 8.3% of US GDP as of 2009). With that knowledge, even Forrest Gump could figure out that the health care industry in the US is making out like bandits on the backs of the middle class. Because Uncle Sam pays for much of the poor’s or elderly’s care.
The Fiscal Emergency headed our way: according to US government projections, health care expenditures will climb to a crippling 27% of GDP in 2035. So, obviously, it’s not time for the status quo. We desperately need cost controls, and the only entity in any position to put that in place is the federal government. Capitalism is not driving down prices; in fact, it is the reverse.
The US does not have a taxation and fiscal crisis when these numbers are considered. It has a profiteering health care crisis fed by corporate greed which is promoted by politicians who prey on many Americans’ inherent fear of government to hand big paydays to multinational companies. The Affordable Care Act (ACA), often referred to as “ObamaCare” by its detractors, is the first step in what must be a future adoption of a single payer system with tightly-controlled fees, whether federally or state operated as in most other western countries, or run by private industry that is uniformly price regulated as in Switzerland. FYI, Swiss insurance companies cannot make a profit on standard care, but can on optional services, while hospitals and doctors in Canada effectively work as contractors and are allowed regulated profits.
We simply can’t afford the status quo any longer, nor anything the Republicans are recommending (if they are recommending anything — I’ve yet to see a real plan — and that’s not a political statement).
Unlike the untruthful “$2 Trillion ObamaCare tax” as some shadily-funded political ads are touting during this election season, the reality is quite different. If anything, the nominal “tax” or “penalty” (however you consider it) affects only the 1% of the population who can afford coverage but don’t buy it and risk getting sick or injured — and then get treated at the expense of the rest of us when they don’t pay their bills. The penalty the IRS collects (or doesn’t if the patient refuses to pay) will be exhausted within a day or two at the hospital, so that is not much of a penalty at all. It is simply designed to change behavior, not increase tax coffers.
Each of us pays 45% to 275% more than those in other western countries for lesser coverage
Anti-ACA commercials falsely talk about it being “the largest tax increase in American history.” But, effectively, Americans have had that additional taxation in health care for decades without calling it a tax: spending much more than any other western country as a percentage of GDP — without covering all of its citizens — and realizing extremely high rates of infant mortality (worse than Cuba) while being the richest country in the world. It’s just been hidden; much of it paid by employers. If Americans saw a deduction of $833 per month on their paychecks every month strictly for what employers currently pay per employee on average, then the argument against the ACA might not be so ferocious. (Source: Aon Hewitt, 2011) Then there are individual “taxes” such as deductibles and insurance premiums that add up to much more than what is taxed by governments in other countries. We just haven’t been calling it a “tax” because it went to private companies that take their piece of the action off the top, and most of it was hidden.
I was in an IHOP restaurant in Indiana last week, and there was a collection box for a server who had cancer — like many minimum wage workers, she has no insurance; that kind of collection is rarely seen in Canada, Europe or Japan. Opposition arguments to the “individual mandate” are easy to make — until you get sick, or take advantage of Medicare or Medicaid.
The rest of the world looks upon the US and its caustic health care argument with puzzlement. Germany’s Der Spiegel newspaper this week concisely described how their countrymen and other western countries can’t Fathom US Aversion to Obama’s Healthcare Reform:
The requirement that everyone buy health insurance is based on a simple concept, healthcare experts agree. Allowing healthy people to opt out of having health insurance destroys the insurance community and leaves insurers covering only the sick.” It also asks the excellent question: Don’t Religious Americans Love Their Neighbors?: “‘For me the US is a very religious country. It doesn’t matter which religion I look at — love thy neighbor is a very, very important point in religion,’ German health insurance spokesperson Ann Marini says. For her, the apparent deep religiousness of many Americans doesn’t jibe with their unwillingness to be part of a healthcare community.
Since the “imposition” (as I’ve heard some US politicians call it) of tax-supported socialized health care in Canada several decades ago (a program the vast majority Canadians would not give up now for anything), our neighbors to the north are now outliving Americans by 2.5 years on average — tied for 10th place in the world, while the US is in 38th — again, one place behind Cuba.
Canadians complain and moan about their health care at times, and often for good reason. None of this criticism is directly related to the policy, but to how it’s practiced from time to time. Anti-single payer Congressmen and Senators often talk about issues of long waiting times and doctor shortages in Canada, but those problems are more related to good ol’ boy licensing authorities who keep foreign doctors out of the system for a decade and the country historically not educating enough doctors, and are less the fault of socialized care policies. But Canadians will also say in the same breath that tens of millions of people not having any coverage is stupid. Even after the ACA is fully enacted, the US will still have 27 million people uninsured, and the health care industry and insurance companies will see their significant profits continue, if not soar.
Questions to consider
From this side of the Pond, a Globe and Mail newspaper reader from Calgary, Canada, in the most conservative province, wrote:
Astonishingly, I have never heard this simple question asked in any US debate on health care insurance: Do poor people have a right to a reasonable standard of medical care, even in the event of long-term chronic or catastrophic illness? Yes or no? Or, to tweak that question a bit: Do poor children have the right to the same standard of medical care as rich children? Again, yes or no? Instead, the debate has become about ‘liberties.’ Americans should first ask themselves the basic questions above, or some derivative of them. If the consensus answer is ‘No,’ fair enough, continue as is.
A personal story this week from a visitor to the US from that same Globe and Mail:
I am a Canadian who was in Florida last December on vacation. Developed an eye infection. I called my company’s employee insurer as they offer coverage for up to 31 days out of country. The insurer sent me to a local hospital for treatment. Within a minute of my arrival at the hospital, I was triaged and admitted to the emergency ward of the hospital. I was made to lie down in the hospital bed and then swarms of medical personnel came at me. They hooked me up to various machines, BP monitors, etc.
I tried to tell anyone who attended me that all I had was a minor eye infection but the staff insisted they had to do this. Within a few minutes I was seen by a doctor who wrote a prescription for antibiotic eye drops and I was released. I went to the hospital account department and was told that the billings would be sent directly to my insurer. I asked how much this cost and was told $700!… for a minor eye infection!
I received great service, over the top service, but all I had was a minor eye infection….$700??? I don’t know how anyone in the US can afford medical expenses.
Obviously, the reason for the $700 bill and swarm of medical professionals and tests was that the patient had insurance, so was a target for profit. If he had no travel insurance, it would have been a completely different story: likely a quick $50 look-see by a physician’s assistant and a written prescription that was all he needed in the first place.
As a US citizen and resident, I had something similar happen to me in Canada recently. I was charged $20 without insurance at an “after hours” clinic for something about as minor as the eye infection mentioned above. After 15 minutes with a doctor who took the time to fully review my condition, they couldn’t even find their receipt book, as paying customers without a government health care card were so rare. No Visa accepted. No MasterCard. Priceless! Oh, and the prescription was $45 at the cash price at the pharmacy. The same exact name-brand stuff in the US made by the same American manufacturer is $150 if bought without insurance. To be fair, Canadians should not be completely smug about their system, as it does not provide what the UK and European systems do: prescription drugs (although they are usually much cheaper than in the US), eye care, dentistry and hearing care (even in-home baby care in some countries); those are all covered in Canada by private insurers and employers or are cash based for those without.
Something is deeply wrong here, and needs to be fixed
The ACA is the first step. But logically and financially, the US must adopt some flavor of single payer program, and incorporate limits on malpractice awards and insurance to help control costs. A surgeon in the US can pay more than $200,000 per year in premiums; his counterpart in Canada will pay between $10,000 and $30,000, since the maximum pain and suffering award is $300,000 — while the government picks up the hospitalization tab.
Long-term, financially, and for the well-being of all our citizens and country, we can’t afford any other system but regulated single payer.
UPDATE August 8, 2012: The Brookings Institution confirms much of what I argue here in With Health Care Costs, the U.S. Is a Huge Outlier:
If the nation obtained better-than-average health outcomes in exchange for its much-higher-than-average health spending, we would have little reason to complain. However, there is almost no evidence U.S. health outcomes are better than those in other rich countries. A variety of statistics on mortality and morbidity suggest outcomes may be worse in this country than they are elsewhere.
UPDATE January 15, 2013: According to the New York Times, the Institute of Medicine found that, on average, Americans experience higher rates of disease and injury and die sooner than people in other high-income countries:
That is true at all ages between birth and 75 and for even well-off Americans who mistakenly think that top-tier medical care ensures that they will remain in good health. The study found that even upper-income Americans with health insurance and college educations appear to be sicker than their peers in other rich nations.” … “Likely explanations include a large uninsured population and more limited access to primary care.
Per Capita Health Care Costs Chart source: OECD 2011
Health expenditures from 2009 *Japan and Australia data 2008