Five Secrets Of The Healthcare Industry – Why America Has The Most Expensive Healthcare In the World

When you listen to both sides of Congress arguing about healthcare, it’s hard to imagine that Conservatives and Liberals serve the same nation… or come from the same planet. Still, there is some consensus… healthcare is too expensive, too complicated, asks for too much paperwork, and just isn’t all that great. At least Washington agrees on something!

Whatever your politics, you just can’t escape the fact that Americans do not get value for their healthcare dollar. In 2016, healthcare in America cost $10,000 per person, the highest rate in the world. This is twice as much as the European average, but it is far from the best.

Pay & Live

The simplest measure of healthcare is life expectancy. Good healthcare stops diseases and medical issues from killing you. Great healthcare adds years to your life. Yet, the world’s most expensive healthcare system only ranks 31st in life expectancy, just behind Costa Rica. In America, 17.9% of our GDP is spent on healthcare. In Costa Rica, it is a mere 7%. They pay much less, and they live just a bit longer than Americans.

That’s the first little secret of healthcare. Paying more doesn’t necessarily deliver better health or longer life. Massive reductions in healthcare costs are possible.

Other Models

When you try to cut costs, the reaction is often, “Well, maybe you’re right about some other country, but it won’t work here!” Maybe Costa Rica isn’t the right model. Doctors might not get paid enough. What about Switzerland, the second most expensive healthcare system in the world?

At $8,000 the Swiss model is still expensive, but still 20% lower than the US. Life expectancy in the US it is 78.7 years, vs. 83.2 for the Swiss. Longer life and lower costs. Is there something unique to the Swiss that prevents us from following their lead? Then let’s try Luxembourg. The cost is very similar to Switzerland, and their life expectancy is 82.2.

Germany is next, with a cost of $5,600 and life expectancy of 81.1. We’ve already dropped to nearly half of the US cost and equal or better life expectancy. Why not? These are developed nations with technology as advanced as our own. What about the UK, France, Canada, and Japan? They have even lower costs and all live 4 or 5 years longer than Americans.

That’s secret number two. Reducing the cost of healthcare does not mean reducing quality. The other nations we’ve examined not only have comparable technology, they even EXPORT medical equipment, drugs, and supplies to the rest of the world.

Who Pays

Liberals believe that healthcare is a right and Conservatives believe that the free market can more efficiently deliver healthcare. A long time ago, that might have been true, but the fact is that the government (including states and municipalities) pay for two-thirds of all healthcare costs. Just our government’s share of healthcare costs is $6,500 per person. That’s 25% higher than the entire cost of comparable European healthcare models.

Which brings us to secret number three. Washington needs to stop arguing over whether we should have a government-funded national healthcare system, and deal with the fact that we’ve been paying for a fully government-funded system for years. We need to start managing healthcare as a national system.

Growth

In 1960, Amerian healthcare was just beginning to look like it does today. Doctors had a scientific understanding of why people got sick, drugs and vaccines could treat most illnesses, new and expensive equipment (x-rays, body scanners, radiation therapy, sonograms, etc.) had been developed, and doctors were increasingly becoming highly-paid specialists. The day of the town doctor was over. Yet, the group that most needed healthcare, the aged, were one of the poorest segments of society and completely unable to pay for lifesaving medical procedures.

As a result, Washington launched its first major civilian healthcare program, Medicare, which provided care for seniors. Just like today, Conservatives resisted the idea of government paid healthcare and Liberals supported it. Because it was limited to seniors, and everyone has parents, it eventually became the law of the land. Because age and healthcare costs rise together, longer lives mean higher healthcare costs.

In 1960, only 9% of American’s were age 65 or older. Today it is 15%. By mid-century, it will be 21%. With fewer young Americans and more seniors, the cost of healthcare is guaranteed to rise. In 1960, the healthcare industry accounted for just 5% of US GDP. By 2025 it will reach 20%, making healthcare the largest industry in America!

Leave a comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.