Why does the greatest healthcare system in the world cost over twice as much per person in the population, leave out 44 million people and provide inadequate results? The US has lower life-expectancy and higher infant-mortality rates than other industrialized countries?
Paul Krugman addresses this today. Here are some key points:
"According to the World Health Organization, in the United States administrative expenses eat up about 15 percent of the money paid in premiums to private health insurance companies, but only 4 percent of the budgets of public insurance programs, which consist mainly of Medicare and Medicaid. The numbers for both public and private insurance are similar in other countries - but because we rely much more heavily than anyone else on private insurance, our total administrative costs are much higher.
According to the health organization, the higher costs of private insurers are "mainly due to the extensive bureaucracy required to assess risk, rate premiums, design benefit packages and review, pay or refuse claims." Public insurance plans have far less bureaucracy because they don't try to screen out high-risk clients or charge them higher fees.
"And the costs directly incurred by insurers are only half the story. Doctors "must hire office personnel just to deal with the insurance companies," Dr. Atul Gawande, a practicing physician, wrote in The New Yorker. "A well-run office can get the insurer's rejection rate down from 30 percent to, say, 15 percent. That's how a doctor makes money. ... It's a war with insurance, every step of the way." "
"Isn't competition supposed to make the private sector more efficient than the public sector? Well, as the World Health Organization put it in a discussion of Western Europe, private insurers generally don't compete by delivering care at lower cost. Instead, they "compete on the basis of risk selection" - that is, by turning away people who are likely to have high medical bills and by refusing or delaying any payment they can."
So the private enterprise model builds in excessive costs designed the reduce the expenses for each individual company, but those costs are not eliminated from the system. Instead, they are simply shifted to other payers.
Then there are the other costs of this private insurance healthcare system.
"First, in the U.S. system, medical costs act as a tax on employment. For example, General Motors is losing money on every car it makes because of the burden of health care costs. As a result, it may be forced to lay off thousands of workers, or may even go out of business. Yet the insurance premiums saved by firing workers are no saving at all to society as a whole: somebody still ends up paying the bills.
This is a drag on our productive economy because we demand that employers cover the cost of healthcare out of profits rather than recognizing that it is a social cost properly paid by society out of tax money. GM and other producers will save money by firing American workers and having the goods produced in other countries that do not force employers to pay the healthcare expenses. This isn't recognized as a cost of healthcare, but it is a cost paid by all Americans.
"Second, Americans without insurance eventually receive medical care - but the operative word is "eventually." According to Kaiser Family Foundation data, the uninsured are about three times as likely as the insured to postpone seeking care, fail to get needed care, leave prescriptions unfilled or skip recommended treatment. And many end up disabled - or die - because of these delays."
Here we have part of the reason why the healthcare results in the US are worse than in other industrialized nations.
The solution is a national, tax funded, single payer system that funds private healthcare suppliers. A review of the French and German systems would offer guidance.
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