Healthcare — the Fundamental Choices

One of our fundamental choices about health care has moral and practical dimensions.  The other is purely practical.

Let’s first address the practical issue.  Our  appruoach to health care puts our businesses at a serious and growing competitive disadvantage.  US corporations currently spend $12,591 on average for coverage of a family of four, up 54% since 2005.

Our national health care spending, which was 5% of GDP fifty years ago, is now 17 % of GDP.  It has more than tripled.  Meanwhile, Germany’s spending is two thirds of ours and is growing much less rapidly.

We spend half again as much or more on health care as other advanced economies.  And the gap is growing.  Germany now spends 11% of GDP on health care, only increased from 9% half a century ago.  Japan spends 10%,  Britain 9%.

It’s no coincidence that our health care system is fundamentally different from our competitors’.

Our business leaders say their competitiveness is hobbled by corporate taxes, but while our health care spending has more than tripled in the last half century, corporate taxes that were then 4% of GDP are now half that at about 2%.

It’s true we have industrialized nations’ highest corporate tax rate but many of our great multinational corporations pay little or none.  It’s also true that our high tax rate hurts smaller domestic corporations but that’s much less important than our health care system’s costs.

To remain competitive, we must restructure our health care system.  

The choice with both moral and practical dimensions is whether everyone will have health care, or only those who can pay?  

If only those get health care who can pay, the others will suffer and die.  If we favor this approach we should consider, are we okay with that fact?

If everyone will get health care, there must be some rationing.   If we favor this approach, do we recognize that fact?

It’s misleading to think of health care as a human right.  Nations choose what rights their citizens will have and embody them in laws.  Those laws can and do change.

Our current legal system specifies that, with an exception I’ll get to in a minute, those of us who cannot pay for health care do not get it.  Why is that, and could it change?

It is an article of faith with us that we are rugged individuals who take responsibility for ourselves.  We resist anything we think could make us less responsible.

Another of our articles of faith is that competing organizations motivated by profit always get the best results.

But that could be about to change.  The Medicare for All act has 108 sponsors as of May 13, 2017:

We would get better results from a unified approach to health care.  We do not, after all, provide for our defense with autonomous, competing armies.  We know that kind of service can only be supplied effectively by our central government.  And we know our government has encouraged, not stifled innovation in that field.

Here are links to what I’ve written before about some important aspects of our approach to health care but if you’re out of time, just skip past them to the conclusion — a single payer system works best.

In I pointed out that we do currently provide not health care but at least medical treatment to all via the Emergency Medical Treatment and Active Labor Act (EMTALA) passed under President Reagan.  That approach means: “We have in the USA universal access to medical treatment via the most costly system possible.”

Data I posted at: show that:  “US health care delivers poorer results at higher cost because it is based on the flawed assumption that market based systems always deliver the best results. While in most cases they do, for health care they do not. The incentives are perverse”.

Exploring our Federal deficit at: I noted that: “more important even than getting rising Federal healthcare spending under control is to get rising health care cost under control.  As noted in previous posts, we spend double what other advanced economies do on healthcare without getting better results.”

Examining national spending and results at: I pointed out some contributors to our abnormally high costs:  “our obesity rate, the highest of all OECD countries and more than twice as high as the 15% OECD average …  The percentage of our adult population considered obese rose from 13% in 1965 to […] 34% in 2007.  Obesity-related medical spending in the USA doubled […] between 1998 and 2008.”  

Focusing at: on Medicare and Medicaid I pointed out that: “The primary cause of increased Medicaid spending is that it now services 16% of all Americans, up from 2% at its inception [while] Medicare now serves 15% of the population, up from 10% in 1966 and the percentage will continue to increase as our population ages … The key fact about Medicare is that an aging population, unhealthy lifestyles and technology advances are driving its costs up 8% annually, much higher than Medicaid.”

The conclusion?  Our need to remain competitive means we must restructure our health care.  Our competitors did that long ago.  They all established a unified system for all their people, they all have much lower costs than ours, and they all get the same or better results.

Our current approach to health care is not exceptional in a good way.

When the government acts as the one health care buyer it has the market power to negotiate the lowest price that is profitable for suppliers.

A competitive health care market benefits consumers only for procedures like breast enhancement where they have enough time to make an informed choice.

To remain competitive we must change our health care system.  We must either stop providing care to many millions more of those who can’t afford it or establish a single buyer to negotiate the lowest profitable price for providing care to the largest pool of consumers, which is both the currently healthy and the sick.

Socially Acceptable Healthcare

We have in the USA universal access to medical treatment via the most costly system possible.  What we need is a socially acceptable level of healthcare for all with a way for those who can pay more to get more.

Everyone on US soil regardless of citizenship has the right to medical treatment defined by the Emergency Medical Treatment and Active Labor Act (EMTALA) passed under President Reagan.  A frequently quoted court judgment about it says:  “The Emergency Act was passed in 1986 amid growing concern over the availability of emergency health care services to the poor and uninsured. The statute was designed principally to address the problem of “patient dumping,” whereby hospital emergency rooms deny uninsured patients the same treatment provided paying patients, either by refusing care outright or by transferring uninsured patients to other facilities. Reports of patient dumping rose in the 1980s, as hospitals, generally unencumbered by any state law duty to treat, faced new cost containment pressures combined with growing numbers of uninsured and underinsured patients. Congress responded with the Emergency Act, which imposes on Medicare-provider hospitals a duty to afford medical screening and stabilizing treatment to any patient who seeks care in a hospital emergency room.”

Since essentially all hospitals are Medicare providers, EMTALA in effect mandates that anyone who comes to a medical emergency department must be examined and, if suffering from an “emergency medical condition”, provided with treatment.  A pregnant woman in active labor, for example, must be admitted and treated until delivery is completed.  We treat everyone regardless whether they can pay but only after they need the most costly treatment.  Our cockamamie approach means hospitals must recover the cost of treating those who cannot pay via higher prices for those who do.

Medical insurance in the US is a significant burden on US employers who provide it, a burden their competitors do not bear.  In 1986 we decided to no longer accept that many Americans were being denied treatment for a medical emergency, but we have yet to face up to the competitive issue.

We need all Americans to be productive.  Getting everyone to want to be productive must also be addressed but that is outside the scope of this post.  To be productive you must be healthy, which means you must have access to healthcare.  Since some treatments are extremely expensive and everyone is at risk of needing them, insurance is necessary for all.  Because most people will not in fact need the most costly treatments, universal insurance has the lowest per capita cost.  We currently insure only those over 65 years of age and to a lesser extent those with a serious health issue who cannot afford treatment, i.e., only the most costly to insure.

We need our health care costs to be affordable.  We currently have no defined limits on what treatment will be supplied yet ever advancing technology makes what can be attempted to prolong deeply and irreversibly impaired life astronomically costly.  Who should get what level of treatment is a value judgment we avoid discussing.  We should debate openly what judgments about treatment we want in our society.

There is, however, no disagreement that we want the finest possible healthcare.  That means those who can pay for the best should be able to do so, and the best should be affordable by as many as possible so as to maximize its supply in our society.  If great healthcare isn’t available affordably within our system, we will increasingly go to other countries for treatment.

So what in the end does “socially acceptable” mean?  It implies a level of rationing we agree is OK at a cost we agree is OK.  Achieving that balance is among the most difficult of all challenges.  We will get nowhere until we accept that a balance is necessary.