Health Care in America

Why we’re paying more and getting less

than any other industrialized nation on Earth
(and what can be done about it)

By Richard J. McCann
November 2009

America is the richest country on Earth and spends a far greater percent of its wealth
on health care than any other nation, yet we are ranked below the Dominican
Republic in terms of access to health care and behind Bosnia Herzegovina in terms of
life expectancy. We’re paying top dollar and getting Third World service.

It’s easy to make a case that health care reform is needed, and at this point is seems
likely we’ll get some. But what kind? The debate rages on from the House to the
Senate to the White House, in blogs and town hall meetings, on Main Street and Wall
Street and your street. Wherever three people are gathered you’ll hear at least five
opinions, and just about the only thing you can count on is that these discussions will
generate far more heat than light.

This paper is designed to present the facts about the US health care system, dispel
rumors and give a realistic outline of what is really being proposed on Capitol Hill.
The House bill is a staggering 1100 pages, the Senate is still coming up with various
proposals, and no one knows exactly what is going to pass across the President’s desk
when the time comes for a signature. One thing we can be sure of: Health care reform
is going to have a profound effect on the future of every American, at home and
abroad.

What Is the Current State of Health Care in the US?

In 2009 health care spending in the United States is projected to surpass $2.5 trillion,
eating up a whopping 17.6% of our gross domestic product (GDP). By 2018 it is
expected to rise to $4.4 trillion, double that of 2007. The congressional budget office
estimates that the cost of health care insurance for an average family of four will be
$25,000 a year within the next decade.1

As a result of this high cost, 45 million Americans are living without health insurance
at any given time of the year. This number does not include the 16 million Americans
who are underinsured. A Harvard Medical School study recently reported that in 2008
2266 American military veterans died due to lack of health insurance. In the general
population, an estimated 20,000 US residents die every year due to a lack of health
insurance.2

A recent study found that 62% of all bankruptcies filed in 2007 were linked to
medical expenses. These people didn’t lose their homes because they were uninsured;
1
National Coalition on Health Care Health care costs Web site November 12 2009
2
The Healing of America, by T.R. Reed, 2009
nearly 80% of them did have health insurance.3 The costs simply went far beyond
what they and their insurance coverage could handle. According to another published
article, about 1.5 million families lose their homes to foreclosure every year due to
unaffordable medical costs.4

The United States now has the most expensive health care system in the world at
17.2% of our GDP. Switzerland is a distant second at about 11.6% GDP, followed
closely by France at 11.1% GDP5.

Our medical care is the most expensive on earth, but the quality is far below that of
most other industrialized nations. Take life expectancy. Where do we rank? At 77.85
years, we fall between Cyprus and Bosnia Herzegovina, ranked number 47 in the
world lineup.6 The numbers are slightly more encouraging if you look at the amount
of life you’re likely to enjoy without disabilities; in that category, the World Health
Organizations lists us as 24th in the world.

We know we’re paying more than any other country for our world-class doctors and
medical facilities, so how are we doing in terms of outcomes for surgery and medical
treatment? According to a 2008 Commonwealth Fund report about the world’s
industrialized nations, the US ranks 19th in curing people of diseases that could be
cured. 7

These are not the numbers you’d expect from the richest, most powerful nation on the
planet. When it comes to quality of life measurements, Americans aren’t used to
coming in 47th, 24th or even 19th . There is one category in which we have managed to
achieve number one ranking: deaths due to major surgical and medical mishaps.
According to The Healing of America, by T.R. Reed, “Americans diagnosed with
asthma die sooner than seven of the nine richest nations. Americans with diabetes die
younger than any of these countries. After kidney transplants Americans have the
worst survival rate. And if you are thinking of having major surgery in the United
States here’s a statistic to ponder: Among those nine rich nations, the per capita rate
of ‘Deaths Due to Major Surgical and Medical Mishaps’ was the highest in the US by
far.”8

Our kids are even in worse statistical shape. “Out of twenty-three wealthy countries,
the American health care systems ranks dead last when it comes to keeping newborns
alive. Our rate of infant mortality is more than twice as high as the rate in the top-
ranked countries, Sweden and Japan,” writes Reed.9

So who does have the best health care system in the world? The Commonwealth
3
Himmelstein, D, E., et al, “Medical Bankruptcy in the United States, 2007: Results
of a National Study, American Journal of Medicine, May 2009
4
Robertson, C.T., et al. “Get Sick, Get Out: The Medical Causes of Home Mortgage
Foreclosures,” Health Matrix, 2008
5
OECD health at a glance, 2007; Government of Taiwan
6
The Healing of America by T.R. Reed, 2009. P. 32
7
Ellen Nolte al. “Measuring the Health of Nations: Updating an Earlier Analysis,”
Health Affairs, January/February 2008. p..71
8
The Healing of America, by T.R. Reed, 2009. P32
9
Ibid.
Fund, a private research organization based in New York City, regularly evaluates the
quality and the access to health care of various countries throughout the world.
According to their analysis, the highest overall rating goes to France, with the United
States ranked 15th. 10

Socialized Medicine

Some politicians and pundits sneer at America’s health care reform legislation as
another form of European socialized medicine, in which the government runs the
entire system, including hospitals and doctors. In fact, if you study the various
European systems, you will find that while there are some countries that do have this
type of socialized medicine (England and Spain), there are others operating on a
private model of health care (Germany, Switzerland and France). If you compare the
US to these last three countries, you will find that our health system is more
socialized than theirs, due to our Veteran’s Administration and the Indian Health
Services. The difference between these three private-model European countries and
the US is that in Germany, Switzerland and France 1) All citizens are required to have
health insurance, 2) Insurance companies that offer universal health services must be
non-profit, and 3) The government negotiates rates with all providers, and everyone
must charge the same rates.

Another statement that critics like to make is that the government is unable to
administer health services effectively, suggesting any government-run operation will
inevitably be bloated and inefficient. Many like to cite the US Postal Service as an
example of this kind of “bad deal” for the American public. A closer look shows that,
as an independent government agency that takes no taxpayer dollars, the USPS
manages to deliver billions of pieces of mail annually, door to door, for a mere 43
cents apiece. In comparison, FedEx can’t fly your letter from a pick-up center to its
destination in the next town for less than $14.42, and its cheapest four-day
FedExGround service is $4.75.

And then there’s patient satisfaction. What organization consistently receives the
highest rating of any health insurance provider in the US, public or private? The US
government. It receives top ranking for its Medicare, Department of Veterans Affairs
and Indian Health Services programs. And they provide all this satisfying health care
at administrative costs of 3%, compared to private heath insurance companies that run
around 20%.11 It’s the medical equivalent of the 43 cent stamp compared to the
private company charging $4.74 to $14.42 for the same service.

The Real Question

If the American people have learned anything in recent decades, it’s how to be good
consumers, and it’s past time we applied these skills to our health insurance. We’re
paying for Rolls Royce care and getting a used Hyundai with no air bags and
questionable brakes.
10
Cathy Schoen et al. Health Affairs Web Exclusive, November/ December 2006,
p.W457
11
http://www.nationaljournal.com/njonline/mp_20090629_2600.php
The inefficiencies, inequities and bloated expense of our health care system cost tens
of thousands of American lives each year. They also result in untold amounts of
human suffering, including the millions of American families that have been forced
into bankruptcy and/or out of their homes in the past two years due to medical bills.
And the situation is only going to get worse as the cost of health care continues to
rise. As mentioned above, in nine years we can expect costs to have doubled from
their 2007 levels, with a family of four paying premiums of $25,000 a year while still
remaining vulnerable to a catastrophic illness or injury that could wipe out their life
savings, take their home and leave their lives in ruins.

These steep rises in charges and premiums come after years of congress asking
insurers and providers to voluntarily control costs. It’s clear the voluntary option isn’t
viable.

For many, the solution starts with the philosophical question:

In a civilized society, should health care for all its citizens be considered a right
or a privilege?

Every society has a social contract with its members. In advanced industrialized
societies such as ours, this social contract gives every citizen the right to clean water,
an education, police protection, the services of fire and emergency response teams,
the use of public roads and so on. These are not privileges, reserved for those who can
afford them, but essential services every citizen has a right to expect. In America,
health care is already on that list, although in a limited way. No hospital can turn a
patient away in an emergency, and Medicare, Medicaid, the VA and other
government programs provide care for many of our citizens. Essentially we have
already agreed that for certain segments of the population, health care is a right, not a
privilege. Our social contract is based on the premise that those citizens who clearly
cannot afford to pay for health care, such as the very old and the very poor, are
entitled to medical care anyway. Today, it’s not just the elderly and poor who are
cannot afford health care, it’s everyone. Even solid middle-class citizens with jobs
and insurance are facing economic ruin over medical bills. Military veterans are dying
from lack of health care. If the government has a responsibility to provide health care
for all citizens who can’t afford it, then our social contract requires the government to
provide access for all our citizens, period.

The Proposed Legislation

As of this writing, only the House of Representatives has approved a health care
reform bill. The Senate is considering several bills, but does not have one that has
come to the floor. The White House is waiting to see what Congress will propose
before they will take a strong position. So this paper will address only the House Bill
version of health care reform.

The House Bill is 1100 pages long and convoluted in the way only professional
politicians can achieve. To cut to the heart of the bill, I’ve decided to address it in
question-and-answer form.
• Who will be covered by this bill? 96% of American citizens under the age of
65 will be covered by the proposed legislation. (Those over 65 are already
covered by Medicare.) That will leave approximately 18 million residents
uninsured. One third of those (6 million) are illegal aliens. The remaining 12
million people will be covered through other means yet to be determined.

• Will Medicare continue to exist? Yes. All citizens over 65 will continue to be
covered under Medicare.

• What benefits will be provided? A government committee will be appointed

to recommend a so-called “essential benefits package” including medical,
surgical and preventive services; out-of-pocket costs would be capped. The
essential benefits package would define the minimum benefits that every
citizen will receive.

• Can individuals or employers buy additional insurance on their own? Yes.

Just as in Spain, individuals and families can add private insurance if they
wish.

• Will private insurance companies continue to provide insurance? Yes. This

can be done through the insurance company itself, through an insurance
exchange where groups of individuals or businesses can band together to
negotiate insurance rates, or through employers, as is currently the case. If
none of these are available to an individual, a public option will be available
where the US government will negotiate on the citizen’s behalf.

• Will all American’s be required to have insurance? Yes. There will be

penalties (an excise tax) for both employers and individuals if workers do not
have insurance. Individuals not working will also be required to have
insurance. However, there will be subsidies for those who cannot afford it,
such as families of four earning less then $88,000 a year and small
businesses.

• Will individuals who live overseas be required to have US health

insurance? No. This bill exempts American’s living overseas from paying an
excise tax if they do not carry US health insurance.

• How will Americans receive care? Just as they do now, through private
doctors, hospitals and clinics.

• Can individual States opt out of this program? Yes.

• Will there be “death panels” in this legislation? No. The health care bill
states that patients can have voluntary discussions with a doctor once every
five years about living wills, power of attorney and end-of-life treatment
preferences. Doctors will be reimbursed for this consultation time.

• Can an individual be denied coverage because of preexisting conditions or

have their insurance canceled because they have contracted a disease? No.
 • Will this plan cover abortions? Insurers can choose to cover or not cover
abortion as they see fit. But people who receive federal subsidies to buy
insurance cannot choose a plan that includes abortion coverage. Federal tax
dollars can only be used for abortion as allowed by current law, in case of
rape or incest or if the life of a pregnant woman is in danger.

• What is the cost of the House bill? $1.05 trillion over 10 years. However it
must be budget neutral. In other words, it will be paid for by increased taxes
on those making more than $500,000 per year and by cost-cutting measures.
(To put this in some fiscal context, the US has spent $929 billion on the war
in Iraq and Afghanistan over the last 8 years.)

• Who has endorsed this bill? The American Medical Association and the
AARP (Association for the Advancement of Retired Persons) among others.

For more information comparing the various proposals in the House and Senate bills
please link to http://www.nytimes.com/interactive/2009/11/19/us/politics/1119-plan-
comparison.html?hp#tab=6

The Plan’s Weaknesses

This plan has weak areas, and every special interest group will be quick to exploit or
condemn specific sections.

Here are some issues that will eventually have to be addressed after the plan is
approved.

• A universal medical record is essential for cost control and quality of care.
France currently has a card that all citizens carry. When inserted into the
computer system of a health care provider, it gives a complete update on the
patient’s history and clinical tests, thereby reducing duplicate testing. (By the
way, this system was developed in the United States.)

• Insurance companies will eventually have to become non-profit

organizations. While some private, for-profit insurers may continue to exist,
those providing basic services to all citizens will need to become non-profit.

• Medical charges will have to be standardized through out the US.

• The public option will have to be tied to Medicare rates. The current
legislation says doctors and hospitals will be paid at rates 14% higher than
Medicare reimburses at this time.
• The concept of insurance exchanges is seriously flawed and should not be
controlled by the insurance industry as is currently proposed.

• Medical students will have to receive subsidies for their medical education
costs. Today, many doctors start their practices many hundreds of thousands
of dollars in debt.
 • Medical malpractice will have to be addressed and litigation awards will
have to be capped.

Conclusion

Is this a perfect bill? No. But it’s a start. “The worse thing we can do is nothing,” Bill
Clinton said recently. “It’s not important to be perfect here, it's important to act, to
move, to start the ball rolling, to claim the evident advantages that all these plans
agree with. And whatever they can get the votes for, I'm going to support."12

Attempts have been made to change the health system in the United States since the
days of Teddy Roosevelt. All have failed. The legislation being proposed is at least
100 years overdue; the health care model designed in the 19th century is seriously
dysfunctional today, and has dragged the richest nation on earth down below the level
of health care achieved by such nations as Bosnia Herzegovina and the Dominican
Republic. It is costing tens of thousands of American lives annually, and in recent
years has caused millions of Americans to lose their life savings and their homes.
What is decided about health care reform in the next several months will be a defining
moment for the United States.

The need has never been more desperate. The goal has never been more achievable.

Write to your senators and representatives. Tell them this: Health care reform is one
of the changes we voted for in November of 2008, and we are counting on them to
make it happen.

This post will periodically be updated as the legislation proceeds.

Rich McCann, treasurer of Democrats Abroad Seville, served as CEO

of health care systems in California and Ohio; these included
hospitals, clinics, doctors’ practices, nursing homes, home care
services, urgent care and health insurance companies. He has
traveled extensively throughout the world and currently volunteers
with non-governmental organizations to provide consulting services
to micro-enterprises in developing countries.

12
http://www.politicsdaily.com/2009/11/10/bill-clintons-health-bill-warning-the-
worst-thing-we-can-do/