Why America has the most expensive healthcare in the world!
Published on March 27, 2018
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.
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.
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.
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!
That's the fourth secret. As horrifyingly expensive as our healthcare is, if we don't make fundamental changes, it's going to keep growing until it consumes... everything!
Healthcare has consistently outgrown inflation for decades. All that growth is how millions of workers are employed in pharmacies, hospitals, drug companies, insurance firms, and the rest of the healthcare juggernaut. Reducing the cost of healthcare means... losing jobs.
Some firms and individuals may make a fortune off of healthcare, but a lot of the cost of healthcare pays for millions of middle-class jobs. Unlike other industries, like oil or agriculture, those healthcare jobs are not concentrated in just a few states. Healthcare is everywhere! Cuts to healthcare will cause layoffs in every state, regardless if it is a blue state or red state, if voters are conservative or liberal... everyone gets a share of the pain.
Wow. That's a big problem! Now that you have been informed, it's pretty obvious. Isn't it? It's more important than how costs are split between states and the Feds, more important than theological issues over reproductive rights, it's even more important than when we approve the use of experimental drugs. It's the one issue that both parties are keeping secret. Washington just doesn't have an answer. If you're an elected official you know that you never ask a question unless you already know the answer.
But... there is an answer. We already know that copying models from other countries will slash the cost of healthcare. We just need to cut the right costs. Of the estimated $1.6 trillion we spend on healthcare
, about a third of that money goes towards the pay of 16.8 million American workers. The rest goes to overhead, interest, and profits. All we need to do is make our cuts in that other two-thirds of healthcare!
Simple, right? Do I hear naysayers muttering, "Sure, sure... real easy"? Well, it is! Do you want to know how we can do it? It's a secret .
At least, until our next healthcare article!!