It is a common assumption that Americans benefit from the best health care available in the world. To a certain degree, this is true. The United States either leads, or is among the leaders, in medical technology research and development.
Proponents of the status quo argue that our multi-layered system has served us well. The average life expectancy of an American has increased in nearly every decade since 1900.
Critics of the system argue that this may actually be the first generation of Americans to have a shorter life expectancy than their parents. Americans are uninsured in record numbers, and the trend is only expected to increase in the coming years.
Health care costs are rising faster than the rate of inflation, locking many lower-income citizens out of the system. At the same time, the powerful insurance industry lobby has been successful in getting laws passed that limit the rights of patients, allow insurance companies more latitude, and limit the number of people eligible for federal medical assistance programs.
To date, the system has been relatively beneficial for the patients and the overall economy. Huge profits have spurred innovation and made cutting edge treatments available to American systems. At the same time, there is an inequity inherent in the system.
This inequity worsened significantly in the closing decades of the 20th century. The problem has now reached a tipping point. Too many people are effectively closed out of the system.
The health of the American work force and the economy as a whole are at risk. Fortunately, there are examples of innovative approaches in practice that could be emulated. The only question that remains is; can the political will to make fundamental to our health care system be mustered?
Economics of modern healthcare
The American multi-payer health care system has been highly beneficial for some and non-effectual for others. Private insurance companies have grown into mammoth corporations with tremendous political power. The development of HMOs has been a boon for big insurance, but has also led to rationing of health care for others.
The nature of the multi-payer system creates tremendous administrative costs. Individual claims are passed back and forth and negotiated between multiple agencies. As a result administrative costs make up a large percentage of industry costs. Those costs are then passed on to the consumer.
A recent statistic cited by The Washington Post has stunning implications. Marc Kaufman and Rob Stein reported that overall spending on health care “doubled from 1993 to 2004” (2006).
The record levels of spending on health care might lead the casual observer to believe that, one way or another, Americans are able to gain access to quality health. This is true for some, but not for others. Kaufman and Stein from The Washington Post report that “Even as health care costs continue to escalate, however, many
Americans – especially minorities and the poor – still do not receive high-quality care, according to two other federal reports yesterday” (2006).
The rising cost of health care is putting an increasing burden on the working public. While earnings have only risen 20% since 2000, health insurance premiums have risen 87% in the same time period (Appleby, 2006). Overall, health care spending is increasing at double the rate of inflation.
Health care spending now accounts for 16 percent of the gross domestic product of the U.S. Expenditures in 2005 surpassed $2 trillion and are expected to approach $3 trillion by 2009 (NCHC, 2007).Despite those expenditures, the NCHC reports that at least 47 million Americans are uninsured (2007).
The increased costs affect not only individuals, but businesses as well. Premiums for employer-sponsored health insurance plans are on the rise. The increased cost is typically split between the employer and the individual employees.
Compared to 2000 levels, the average worker is now paying over $1,000 more per year for the same amount of coverage. This represents a cost increase that outstrips both the national rate of price inflation and the rate of wage increase. At the same time, the amount spent on co-payments, deductibles and coinsurance rose 115 percent between 2000 and 2005.
National surveys show that the primary reason people are uninsured is the cost of health insurance (NCHC, 2007). An increasing number of people are reporting that they have delayed or avoided seeking care for a medical problem because of the cost.
The rapidly rising cost of health care has a ripple effect on the overall economy. Employees miss more work because of untreated illnesses. Many are forced to file for personal bankruptcy because of staggering medical debt.
Fifty percent of bankruptcy claims are wholly or partially due to medical debt. Bankruptcy costs money to the government and creditors who don’t get paid. It also limits the ability of the individual to participate in the economy.
In turn, the lack of employee health hurts company productivity and competitiveness. In the long run, a company making less money can contribute less to employee health plans and pays less to the government in taxes. This can then hurt government funded health programs, creating a downward cycle that perpetuates itself.
Working-class citizens are being hit the hardest by the rising costs. Half of workers in minimum wage jobs report having problems with medical bills or carrying ongoing debt.
The same workers also report having housing and credit problems due to the medical debt. For older citizens it is estimated that as much as $300,000 in savings will be needed to pay for medical care after retirement (NCHC, 2007). Seeing an impending economic collapse some have suggested that the government take a more active role in protecting the health of its citizens.