Wednesday, December 04, 2013

By Almost Any Measure, the U.S. Healthcare System Is Failing

The U.S. spends more on healthcare each year than any other country in the world. Yet, according to a new report, the spending problem isn't the result of our rapidly growing segment of seniors.

Instead, most of the money is being spent on people under age 65, and it is being directed toward chronic and preventable conditions, such as diabetes and heart disease.

The U.S. spends a whopping $2.7 trillion per year on health care, or nearly 18 percent of gross domestic product (GDP). But the nation gets relatively little for the enormous amount it is spending. In fact, "The U.S. ‘system’ has performed relatively poorly,” reads the report.

The report, co-written by Dr. Hamilton Moses of the Alerion Institute in Virginia and Johns Hopkins University, had a rather surprising conclusion.

“In 2011, chronic illnesses account for 84 percent of costs overall among the entire population, not only of the elderly. Chronic illness among individuals younger than 65 years accounts for 67 percent of spending."

Despite the conventional wisdom, quite remarkably, the problem isn't old people.

The "price of professional services, drugs and devices, and administrative costs, not demand for services or aging of the population, produced 91 percent of cost increases since 2000,” reads the report.

Dr. Moses says that unlike a normal market, the healthcare market has no price discovery. Consumers operate in the darkness, entirely unaware of how much they are paying or what they are paying for. There are no market forces reigning in costs because healthcare in the U.S. doesn't exist in a true market.

“This is not a market," Moses says. "It’s far from a market. Few prices are known. They are not publicized.”

Moses also says his team’s study shows that one of the biggest problems in the U.S. healthcare system is that it is based on a fee-for-service model in which doctors and other caregivers are motivated to give lots of tests and individual treatments, as well as to prescribe drugs, instead of keeping patients well.

In other words, it's all about the treatment of illness and disease, rather than prevention. If the system was based on performance and outcomes, we'd be spending a whole lot less money.

Yet, individuals can play a bigger role in their own health and wellness than any doctor simply by making lifestyle choices that will lessen sickness, improve quality of life, and perhaps even longevity.

Keeping people from being afflicted by preventable diseases in the first place is the best way to reduce medical costs.

Some people contend that the U.S. has the world’s best health care system. But that claim simply doesn't square with the facts.

A study released in November (which was many years in the making) shows that Americans pay more per capita for health care than people in any other industrialized country. In return, we are sicker and die younger.

The Commonwealth Fund, which does research on health care and health reform, has continually shown that Americans spend far more on health care than any other nation — currently $2.7 trillion annually. That amounts to $8,508 per person, compared to $5,669 per person in Norway and $5,643 in Switzerland, the next-highest-spending countries.

In other words, no other nation's spending is even close to ours — even on a per capita basis.

Yet, all that money isn't buying us much. There's very little return on the investment.

The U.S. has the eighth-lowest life expectancy in the Organization for Economic Co-operation and Development (OECD), a group of 34 developed nations.

Commonwealth Fund researchers found that 37 percent of Americans went without recommended care, did not see a doctor when sick, or failed to fill prescriptions because of costs, compared to as few as 4 percent to 6 percent in Britain and Sweden.

Additionally, 23 percent of American adults either had serious problems paying medical bills or were unable to pay them, compared to fewer than 13 percent of adults in France and six percent or fewer in Britain, Sweden, and Norway.

But what about access? Defenders of the U.S. system say Americans have a much easier time seeing their physician than patients in other countries. Not so.

Americans wait longer to see primary care doctors. In Germany, 76 percent said they could get a same or next-day appointment, and 63 percent in the Netherlands said the same. Meanwhile, just 48 percent in the U.S. said they had that level of access. In fact, only Canada scored worse, with 41 percent saying they could see their doctor that soon.

Sadly, the U.S. health system is plagued by problems.

An Institute of Medicine report released in 2012 found that the U.S. health care system wasted $750 billion in 2009 (about 30 percent of all health spending) on unnecessary services, excessive administrative costs, fraud, and other problems.

The Institute also found that as many as 75,000 people who died in 2005 would have lived if they got the kind of care provided in the states with the best medical systems.

Quite plainly, all of the arguments that the U.S. healthcare system is the greatest in the world are plainly false or, at the least, misleading. By almost any measure, the U.S. lags the developed world, and even many developing nations.

Not only do Americans pay significantly more per capita for their healthcare than the citizens of any other nation on earth, they are also fatter, sicker, have less access, and die younger than those in other industrialized countries.

It's still unclear whether the Affordable Care Act (aka, Obamacare) will positively affect any of this, but it had better. The current state of affairs isn't just unacceptable; it's untenable.


  1. Anonymous7:20 AM

    A big issue not typically discussed is that our health care payment system is set up in such a way that the patient is spending what he perceives as "other peoples" money"-- not his own. He therefore doesn't "own his health issues and depends on others ( insurance companies and doctors) to make him well. Approximately 30% of a health care fee goes to the insurance company for "administration". The system plays games with negotiating fees based on coverage. No one is made aware of what percentage of fee goes to the doctor or the facility or to the drug companies. There is much obfuscation-- and tons of money being shoveled in to that hole. I believe that individuals should buy their INSURANCE policies not their health care based on their perceived needs. Insurance companies should honor their contracts this made. Employers should get out of the healthcare business. Government should provide access to the needy--truly needy. If you don't have homeowners insurance and your house burns down no one to blame but your self. You then go and live in a shelter. There is no cure for stupid choices to go uncovered-- but that is an individual responsibility, with a minimal government safety net.

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