America’s High Medical Costs

By | February 11, 2020

America’s High Medical Costs A very pertinent article providing much insight and perspective was recently published in the Annals of Internal Medicine, vol 172, no. 2 January 21, 2020, Health Care Administrative Costs in the United States and Canada, 2017, David Himmelstein MD, et al, pages 134-142. To understand our ridiculously high healthcare costs we need to appreciate the last 40 to 50 years of our history, and how capitalism effected our decision making over this crucial period of time. It turns out that in the 1950’s the United States and Canada actually had similar health care systems, and in the 1970’s spent surprisingly the same percent of their GDP on healthcare ( 6.2 USA, and 6.4 Canada). By 2017, cost as percent of GDP widened significantly between the two nations ( 17.9 USA, 11.3 Canada) If we had achieved the same cost as percent of GDP as Canada our current 6.9 percent savings would amount to 6.9 times our current GDP of 19.4 trillion dollars, which accounts for an astonishing 1.34 trillion dollars of savings. It is interesting to know that the US GDP (19.4 trillion dollars) represents one quarter of the world’s total GDP (77 trillion dollars). Since the 1960’s the two countries took significantly different courses on health care. Canada embraced a single payer system, and relegated private insurers to a much smaller role. The US left private insurers in place and added new public coverages, Medicare for seniors, and Medicaid for the poor. Canada apparently controlled their health care expenses over the years, including fees paid to physicians, hospitals, and pharmacies. The US allowed the free market, and the insurance companies to set pricing under a free market approach. Inherent in our system are administrative costs that are also much higher than Canada’s. By 1999, these costs were 31 percent in the US, and 16.7 percent in Canada. If the US spends 2.8 trillion dollars per year on health care, 31 percent of that is approximately 870 billion dollars on administrative costs each year. By comparison about 550 billion dollars goes to America’s health care providers. The cost of operation, plus uncollectables in a medical office in the US are generally 50 percent of Billings. The profit generated by each medical health care provider is less than one half of what they bill for their services, and shows that the number of patients seen dictates their income. No wonder less time is spent with each patient. That’s why it is so important to maximize the value of these encounters by answering their questions succinctly as best and direct to the point as possible. That makes total sense given the current situation patients and providers face. The issue before Americans now is does changing to a single payer strategy help control health care costs? The politicians are trying to pay for health care, but it is hard for them since it is not their area of comfort and expertise. And until they look within the operations of this mega business, rather than how to pay for it overall, their proposals are likely to continue to be prohibitively expensive. The reality is the US has allowed capitalism to go unchecked and create an inefficient Medical Industrial Complex, with multiple insurers, and too often motivated by corporate profit, and greed. Also a sense of urgency exists in many providers arising out of the uncertainty of when “the bottom will fall out”. Thankfully, and hopefully not naively, many knowledgeable individuals and organizations are trying their best to figure it all out. Recently the ACP (American College of Physicians) and their new president Robert McLean M.D. from Yale, who I know professionally as an ethical and caring person, have come out with “A Call to Action”. They have recently released a knowledgeable well resourced document of their initial assessment of the problems and solutions to our ailing health care system. In it they do advocate for single payer, and many other suggestions. More to come. Sent from my T-Mobile 4G LTE Device

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