Economist blog post on Health care:
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In hindsight there seems something rather perverse about only providing the best care to retired workers. In theory, the government should make private insurance cheaper for everyone else because then the young won’t have to subsidise (at least through their health-care premiums) the old. The main problem, which European countries have learned, is that sustainable, government-provided care and timely access to the most innovative treatments tends to be mutually exclusive.
Related: Many Experts Say Health-Care System Inefficient, Wasteful – Improving the Health Care System – USA Spent $2.2 Trillion, 16.2% of GDP, on Health Care in 2007
The health care system in the USA is broken, and has been for decades. The economic consequences of failing to implement effectively solutions has been immense. Finally, the momentum demanding change is growing. I still think the entrenched interests are going to delay needed reform, but hopefully I am wrong. An interesting proposal for ending medical status pricing is in the news – Health Insurers Propose End to Medical-Status Pricing
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Health insurers oppose a Democratic push to create a government-run health plan to compete with private insurers for customers. Supporters of a public plan, including President Barack Obama, say it would guarantee affordable coverage, especially among those denied insurance or charged higher rates because of pre-existing medical conditions.
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Insurers still would adjust variations in the price of premiums to an applicant’s age, family size and place of residence, according to Zirkelbach’s group. The organization speaks for 1,300 companies that provide public or privately funded benefits, led by UnitedHealth Group Inc. of Minnetonka, Minnesota, and Indianapolis-based WellPoint Inc.
This federal employees health benefit plan provides any federal employee the option to buy the insurance with no cost difference depending on health status. Some option, building off that is one that seems to have some possibility of success. I think some such system would be an improvement. However, it is far from the solution. Many problems are not solved by that at all. The huge amount of waste generated by insures and all the forms, needless bureaucracy… they generate is hard to justify. What value to they provide for the enormous costs?
Related: Broken Health Care System: Self-Employed Insurance – Traveling for Health Care – Employees Face Soaring Health Insurance Costs – Personal Finance Basics: Health Insurance – USA Spent $2.2 Trillion, 16.2% of GDP, on Health Care in 2007
Health spending in the United States grew 6.1 percent in 2007, to $2.2 trillion or $7,421 per person.
For comparison the total GDP per person in China is $6,100. This continues the trend of health care spending taking an every increasing portion of the economic output (the economy grew by 4.8 percent in 2007). This brings health care spending to 16.2% of GDP (which is yet another, in a string of record high percentages of GDP spent on health care). In 2003 the total health care spending was 15.3 of GDP.
With the exception of prescription drugs (which grew at 1.4% in 2007, compared to the 3.5% in 2006), spending for most other health care services grew at about the same rate or faster than in 2006. Hospital spending, which accounts for about 30 percent of total health care spending, grew 7.3 percent in 2007, compared to 6.9 percent in 2006.
Spending growth for both nursing home and home health services accelerated in 2007 (4.8% v. 4.0%). Spending growth for freestanding home health care services increased to 11.3 percent. Total health care spending by public programs, such as Medicare and Medicaid, grew 6.4% in 2007 v. 8.2% in 2006. In comparison, health care spending by private sources grew 5.8% compared to 5.4%.
Private health insurance premiums grew 6.0 percent in 2007, the same rate as in 2006. Out-of-pocket spending grew 5.3 percent in 2007, an acceleration from 3.3 percent growth in 2006. Out-of-pocket spending accounted for 12.0 percent of national health spending in 2007. This share has been steadily declining both recently and over the long-run; in 1998, it accounted for 14.7 percent of health spending and, in 1968, out-of-pocket spending accounted for 34.8 percent of all health spending.
The costs for health services and supplies for 2007 were distributed among businesses (25%), households (31%), other private sponsors (4%), and governments (40%).
Decades ago Dr. Deming included excessive health care costs as one of the seven deadly diseases of western management. We have only seen the problem get worse. Finally it seems that a significant number of people are in agreement that the system is broken. Still, admitting the system is broken is not the same as agreeing on how to fix it. The way forward to workable solutions still seems very difficult.
Full press release from the United States Department of Health and Human Services.
Related: International Health Care System Performance – Personal Finance Basics: Health Insurance – Many Experts Say Health-Care System Inefficient, Wasteful – How to Improve the Health Care System
Drug giant GlaxoSmithKline pledges cheap medicine for world’s poor
In a major change of strategy, the new head of GlaxoSmithKline, Andrew Witty, has told the Guardian he will slash prices on all medicines in the poorest countries, give back profits to be spent on hospitals and clinics and – most ground-breaking of all – share knowledge about potential drugs that are currently protected by patents.
Witty says he believes drug companies have an obligation to help the poor get treatment. He challenges other pharmaceutical giants to follow his lead.
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He said that GSK will:
• Cut its prices for all drugs in the 50 least developed countries to no more than 25% of the levels in the UK and US – and less if possible – and make drugs more affordable in middle-income countries such as Brazil and India.
• Put any chemicals or processes over which it has intellectual property rights that are relevant to finding drugs for neglected diseases into a “patent pool”, so they can be explored by other researchers.
• Reinvest 20% of any profits it makes in the least developed countries in hospitals, clinics and staff.
• Invite scientists from other companies, NGOs or governments to join the hunt for tropical disease treatments at its dedicated institute at Tres Cantos, Spain.
The extent of the changes Witty is setting in train is likely to stun drug company critics and other pharmaceutical companies, who risk being left exposed.
This is a good move by GSK.
Related: Shop Around for Drugs – Traveling To Avoid USA Health Care Costs – International Development Fair: The Human Factor
The costs to employees for health insurance keep increasing, even as employers pay more also. A Premium Sucker Punch:
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The Corporate Executive Board found in its survey that a quarter of officials from 350 large corporations said they had increased deductibles an average of 9 percent in 2008. But 30 percent of the employers said they expected to raise deductibles an average of 14 percent in 2009. Mercer, a global benefits consulting firm, surveyed nearly 2,000 large corporations in a representative poll and found that 44 percent planned to increase employee-paid portion of premiums in 2009, compared with 40 percent in 2008.
The economic slowdown, according to analysts, is making it more difficult for many employers to subsidize health care costs at previous levels. On average, experts say, benefit packages contain the biggest increases for workers since the recession of 2001. Workers’ health costs are rising much faster than wages.
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Premiums for employer-sponsored plans over a decade on average have risen to $12,680 a year from $5,791, according to the Henry J. Kaiser Family Foundation. The median deductible for the plans was $1,000 in 2008, compared with $500 from 2001 to 2007, according to a survey of 2,900 employers conducted by Mercer.
The broken health care system in the USA has been a huge drain on the economy and people’s standard of living for decades. The longer we allow the system to decline (increasing costs, declining results) the more damage the economy suffers and the larger the costs to implementing fixes become.
Related: Personal Finance Basics: Long-term Care Insurance – Medical Debt Increases as Economy Declines – International Health Care System Performance – Many Experts Say Health-Care System Inefficient, Wasteful – posts on improving the health care system
The health care system in the USA is broken, as I have written about previously: USA Paying More for Health Care, International Health Care System Performance… One of the many problems created by the current system is ruined person finances for millions of people in the USA due to health care costs. The Rising Costs of Care And a Failing Economy Drive More Americans Into Medical Debt
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Medical debt can quickly snowball. Consumers with unpaid bills can wind up in court defending themselves against lawsuits filed by doctors and hospitals, which typically charge the uninsured full price for care, without the hefty discounts negotiated by health plans. Debtors’ wages can be garnished, liens can be placed on their homes, and their future job and housing prospects torpedoed by bad credit ratings.
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Unwilling to wait for federal action, a handful of states, most notably Massachusetts, have passed laws designed to expand health coverage or to protect medical debtors. An Illinois law passed last year caps rates that hospitals can charge the uninsured, while a New York statute bars foreclosures intended to pay off medical bills.
Purchasing health insurance against the risk of medical costs is critical to any financial plan. The concept (buying health insurance) is simple but securing that coverage is not as easy as knowing it is required for a sensible financial plan.
Related: Broken Health Care System: Self-Employed Insurance – Resources Focused on Improving the Health Care System – Excessive Health Care Costs
Many Experts Say Health-Care System Inefficient, Wasteful
“We’re not getting what we pay for,” says Denis Cortese, president and chief executive of the Mayo Clinic. “It’s just that simple.”
“Our health-care system is fraught with waste,” says Gary Kaplan, chairman of Seattle’s cutting-edge Virginia Mason Medical Center. As much as half of the $2.3 trillion spent today does nothing to improve health, he says.
Not only is American health care inefficient and wasteful, says Kaiser Permanente chief executive George Halvorson, much of it is dangerous.
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The United States today devotes 16 percent of its gross domestic product to medical care, more per capita than any other nation in the world. Yet numerous measures indicate the country lags in overall health: It ranks 29th in infant mortality, 48th in life expectancy and 19th out of 19 industrialized nations in preventable deaths.
One way to reconfigure health spending is to shift large sums into prevention and wellness, said Reed Tuckson, a physician and executive vice president at UnitedHealth Group in Minneapolis. The idea is to tackle the handful of preventable, chronic illnesses such as heart disease and diabetes that account for 75 percent of health-care costs.
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the Dartmouth team concluded that as much as 30 percent of medical spending — or $700 billion — does nothing to improve care.
I continue to write about this serious problem for the USA. The credit crisis is an immediate crisis (with roots in many bad decisions over the last decade). But the health care crisis is just as deadly. The health care crisis is like a person smoking. It might not kill the economy immediately, but the huge harm down to the economy by the broken healthcare system is like a cancer on the economy.
Previous posts on problems and suggestions for improvement: PBS Documentary on Improving Hospitals – site and books on improving the health care system – International Health Care System Performance – USA Health Care Improvement – Broken Health Care System: Self-Employed Insurance – Excessive Health Care Costs – USA Spent $2.1 Trillion on Health Care in 2006
Farmer in Chief by Michael Pollan
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Spending on health care has risen from 5 percent of national income in 1960 to 16 percent today, putting a significant drag on the economy. The goal of ensuring the health of all Americans depends on getting those costs under control. There are several reasons health care has gotten so expensive, but one of the biggest, and perhaps most tractable, is the cost to the system of preventable chronic diseases. Four of the top 10 killers in America today are chronic diseases linked to diet: heart disease, stroke, Type 2 diabetes and cancer.
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You cannot expect to reform the health care system, much less expand coverage, without confronting the public-health catastrophe that is the modern American diet.
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It must be recognized that the current food system — characterized by monocultures of corn and soy in the field and cheap calories of fat, sugar and feedlot meat on the table — is not simply the product of the free market. Rather, it is the product of a specific set of government policies that sponsored a shift from solar (and human) energy on the farm to fossil-fuel energy.
Read the full, long, interesting article. I have discussed both the failed special interest focused federal spending on farmers and the failed health care system.
Related: Farming Without Subsidies in New Zealand – Eat food. Not too much. Mostly plants. – International Health Care System Performance – USA Paying More for Health Care –
Bankruptcies among seniors soaring
The average age for filing bankruptcy has increased and the rate of bankruptcy among those ages 65 and older has more than doubled since 1991, say researchers Teresa Sullivan of the University of Michigan, Deborah Thorne of Ohio University and Elizabeth Warren of Harvard Law School.
Expensive health care costs from a serious illness before a patient received Medicare and the inability to work during and after a serious illness are the prime contributors to financial crises among those 55 and older. But even among those 75 to 84 and receiving retirement, Social Security and Medicare benefits, the rates soared—from just 1.8 percent of all filers in 1991 to 5 percent in 2007.
Most Americans have two major assets: their homes and their retirement plans. And borrowing against those assets can present new risks when home values and stock markets decline, Sullivan and colleagues say. In some cases, older Americans trying to help children and grandchildren, borrow too much, putting themselves at risk.
Related: Boomers Face Retirement – Retirement Tips from TIAA CREF – Saving for Retirement
More who need major surgery are leaving U.S.
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Medical tourism – surgery cost estimates
| Procedure | United States | India | Thailand | Singapore | Costa Rica |
| Coronary bypass | $130,000 | $6,650-$9,300 | $11,000 | $16,500 | $24,000 |
| Spinal fusion | 62,000 | 4,500-8,500 | 7,000 | 10,000 | 25,000 |
| Angioplasty | 57,000 | 5,000-7,500 | 13,000 | 11,200 | 9,000 |
| Hip replacement | 43,000 | 5,800-7,100 | 12,000 | 9,200 | 12,000 |
| Knee replacement | 40,000 | 6,200-8,500 | 10,000 | 11,100 | 11,000 |
Source: Medical Tourism Association (2007).
Related: Traveling for Health Care – International Health Care System Performance – USA Spent $2.1 Trillion on Health Care in 2006 – Broken Health Care System: Self-Employed Insurance – Personal Finance Basics: Health Insurance