The Growing Health Care Crisis in the United States

Why do we say that

there is a health care

crisis in America today?

Health Care Crisis

I. The United States spends more money than any other country on health care.

II. We spend more per person, than any other country.

We Are the Richest Country in the World, Yet:

III. Yet we are not the healthiest people in the world.

We Are the Richest Country in the World, Yet:

IV. Many people have no health care coverage.

V. The number of people without health care coverage is rising.

We Are the Richest Country in the World, Yet:

VI. In addition, many people are underinsured.

VII. The number of people who are underinsured is increasing.

We Are the Richest Country in the World, Yet:

VIII. The number of people who have difficulties paying their bills has increased rapidly.

We Are the Richest Country in the World, Yet:

I. NATIONAL COST COMPARISON

– In 1997, the United States spent 13.7% of our GDP on Health Care.

– Germany spent 10.5%

– Canada spent 8.6%

– Australia spent 7.8%

I. NATIONAL COST COMPARISON

– In 2005, the United States spent 15.3% of our GDP on Health Care.

– Germany spent 10.7%

– Canada spent 9.8%– *Source OECD Health at a Glance, 2007

II. FAMILY COST COMPARISON: HEALTH VOCABULARY

PREMIUMS

DEDUCTIBLES

COPAYMENTS

II. FAMILY COST COMPARISON: HEALTH VOCABULARY

PREMIUMS – what it costs you to buy insurance

DEDUCTIBLES – what you have to pay before the insurance helps you

COPAYMENTS – your share of the medical bill

IIA Rising Individual Costs

– The average annual health insurance premium costs for a family in 2000 was $6,438 (both individual and employer contributions counted).

– The average annual health insurance premium costs for a family in 2003 was $9,068.

IIB Rising Individual Costs

– In the year 2000, the average co-payment for non-preferred drugs was $17.

– In the year 2003, average co-payment for the same was $29.

III NATIONAL HEALTH COMPARISONS:

INFANT MORTALITY and LONGEVITY

– These are two universal and outstanding measures of the health of a population.

IIIA NATIONAL HEALTH COMPARISON:

Infant Mortality

INFANT MORTALITY - measures how many children die before their first birthday.

Thirty-three nations have fewer children die this young, than the United States.

IIIB NATIONAL HEALTH COMPARISON:

Longevity

LONGEVITY - measures how long people live on average.

Thirty-seven nations have better longevity rates than the United States.

IIIC Source

United Nations World Population Prospect: 2005-2010

Accessed at Wikipedia by

- List of countries by life expectancy

- List of countries by infant mortality rates, (2011 revision)

IIIC NATIONAL HEALTH COMPARISON:

OVERALL PERFORMANCE

A World Health Organization report places the US performance as 37, with 36 nations doing better.

IV. LACK OF INSURANCE

– In 2010, before the Obama Reforms, 47 million Americans had no health insurance.

– Most of them are working full time, or are from families whose breadwinner is working full time.

IV. LACK OF INSURANCE

– Not the same people every year.

– As with poverty, many people churn from health insurance coverage to no insurance back to coverage

V. RISING LACK OF INSURANCE

– The number of Americans without coverage was increasing at more than one million a year.

– Many Americans have experienced a period without health insurance coverage.

VI. UNDERINSURED

– The number underinsured went from 16 to 25 million between 2004 and 2007.

– To be underinsured means to pay more than 10% of your income directly to medical bills.

VIII. RISING BURDENS

– In 2005, 58 million people under 65 had problems paying their bills.

– In 2007, 72 million had similar problems.

Source:

Health Care in Canada: A Citizen’s Guide to Policy and Politics

– Katherine Fierlbeck

– University of Toronto Press, (Toronto, 2011)

WHY IS THE UNITED STATES DOING SO POORLY?

CAUSES OF THE HEALTH CARE CRISES

1) Age-health care equation

2) Too much new technology

3) Change in service providers

4) Lack of preventative care

Causes of the Health Care Crisis

5) Other

6) Pharmaceutical Industry

7) Health Insurance Industry

Causes of the Health Care Crisis

AGE-HEALTH CARE EQUATION

As countries become richer, their citizens live longer.

But older people require more medical care.

As countries become richer, they spend more to take care of increasing numbers of more expensive elderly.

Age-Health Care Equation

• 5% of the patients generate over 50% of all health care costs.

• These 5% include the following groups:– The elderly, especially those over 75 years– Severe accident victims– Premature babies, special needs infants

• Elderly use 4 times the amount of health care than the rest of the population.

The Age-Health Care Equation is the single most important cause of rising medical expenses in all wealthy countries.

BUT THE AGE-HEALTH CARE EQUATION DOESN’T EXPLAIN WHY THE US IS SO MUCH MORE EXPENSIVE THAN OTHER WEALTHY COUNTRIES.

NEW TECHNOLOGY

• New Technology is expensive.

• New Technology is used too much.

New Technology

• New Technology is used too much:• Hospitals, doctors’ offices COMPETE with

each other by purchasing the most recent technology.

• Then they have to pay for it…

New Technology

• New Technology is used too much:• Actually, they make everyone pay for it by

charging patients higher prices, and

• Creating more patients for the equipment

New Technology

CHANGE IN SERVICE PROVIDERS

• Switch from General Practitioners to specialists.

• Rapid increase in the for-profit sector.

• Merger mania among service providers.

Change in Service Providers

CHANGE IN SERVICE PROVIDERS

Specialists

• Specialists are more expensive to train and need a support staff.

• Specialists order more tests and procedures, and prefer expensive surgeries, thus raising costs.

Specialists

CHANGE IN SERVICE PROVIDERS

For-Profit Health Care

• No other country receives as much of its health care from for-profit corporations as the United States:

56% of health care money is spent on buying health from corporations

Increase in corporate medicine

• In Canada, only 28% of health care money is spent on corporate health care

• In France, only 23%

Increase in corporate medicine

• Stockholders and owners must receive their profits and dividends.

• CEO’s must receive large salaries.

• An additional layer of administrators, is added.

Consequences of increase in corporate medicine.

• These corporations spend lots more on advertising and marketing.

• These corporations compete by making hospitals ever more luxurious, high tech, and expensive. In other words, they buy too much technology.

Consequences of increase in corporate medicine

• These corporations are more profitable.

• When everything is taken into account, they are not necessarily more efficient.

• And they don’t automatically provide better care.

Consequences of increase in corporate medicine

CHANGE IN SERVICE PROVIDERS

Merger Mania

• There has been a wave of mergers among all sectors of the medical industry.

• Corporate buyouts take place with borrowed money, which has to be repaid, which adds to the costs.

Merger Mania

• Large corporations are not necessarily more efficient than state or non profit institutions in health care.

• And if they are, any savings goes to the owners, not to the rest of society.

Change in Service Providers

LACK OF PREVENTATIVE CARE

Part of the problem is individual choice: people don’t always choose a healthy lifestyle.

And by not choosing to be healthy, it adds to their medical costs, and everyone else’s.

Lack of Preventative Care

Yet our society makes it easy to be unhealthy, and hard to be healthy.

Lack of Preventative Care

• Lack of basic pregnancy /fetal/newborn care.

• Lack of basic, comprehensive care for all children.

Lack of Preventative Care

• Aren’t working hard enough to prevent people from starting to smoke

• Lack of sex education.

• Lack of basic nutrition education.

Lack of Preventative Care

• An ounce of prevention is worth a pound of cure: more money spent on all types of preventative care saves a lot more in the medium and long run.

Lack of Preventative Care

OTHER CAUSES

• Doctor’s salaries.

• Medical malpractice insurance.

Other Causes

• Doctors in the United States are the highest paid in the world.

But doctor's salaries are only a minor part of the problem.

Other Causes:Doctors’ Salaries

OTHER CAUSES

MEDICAL MALPRACTICE INSURANCE

Insurance for a doctors or hospital in case they are sued. It pays for lawsuits and lawyers.

Other Causes:Malpractice Insurance

• Doubtful if lawsuits have improved medical care– Money goes to insurance industry, which adds to

the cost

– Money goes to lawyers, which adds to the costs.

Other Causes:Malpractice Insurance

PHARMACEUTICAL INDUSTRY

• Think of a team with a lot of outstanding players, but incompetent coaches, managers and owners.

• Pharmaceutical industry has done a lot of good, but is also very mismanaged.

Pharmaceutical Industry

• Money wasted on advertising

• Copy-cat drugs

• Excessively long patents

• Misallocated research

• High profit margins

• Warped the practice of medicine

Pharmaceutical Industry

• The pharmaceutical industry spends almost twice as much on advertising and marketing as they do on research, on average.

• This represents a pure waste of money for society.

Advertising

• Pharmaceutical companies spend much of their research money on copy-cat drugs, drugs that are virtually identical to existing drugs.

• We end up with dozens of pain relievers, many of them virtually identical.

Copy Cat Drugs

• The magic number here is 15%: a company can copy an existing medicine, tweak it until it is only 15% different, and then sell it as a new drug.

• How do you do that? Add some harmless and useless molecules to the molecules that work.

Copy Cat Drugs

• Patents are the right to be the sole producer of a product. Given as an incentive to inventors.

• The pharmaceutical industry has a 17 year patent right, which allows the companies to receive monopoly profits.

Long Patents

• No other developed country has such a long patent system.

• This has dramatically driven drug prices upwards.

Long Patents

• In addition to copy-cat drugs, much of the research money is spent on drugs of dubious real social need

- Viagra, hair restoration medicines

• Necessary drugs, don’t receive a lot of money.- avian flu or safe contraceptives

Misallocated Research

• For the last 60 years, the pharmaceutical industry has averaged twice the net profit margin that other manufacturing industries have.

• Good for the owners, but adds costs to the country.

High Profit Margins

• The constant lobbying and marketing by the pharmaceutical industry has affected how we do medicine.

• Psychological problems? Don’t find out why, give them a pill.

• Health problems? Don’t find out why, give them a pill.

Warped Medicine

• In sum, while the industry has produced many amazing and useful drugs, the drive to maximize profits has seriously warped it.

• The pharmaceutical industry contributes to the problem.

Pharmaceutical Industry

HEALTH INSURANCE INDUSTRY

• Money wasted by doctors/hospitals.

• Money wasted by insurance industries.

• Lobby to block reforms.

Health Insurance Industry

• Doctors and hospitals employ hundreds of thousands of people to be paid by the insurance companies and/or the patients

• This represents a pure waste of money for society.

Waste by Doctors

• Insurance companies employ hundreds of thousands of people to process doctors’ and patients’ claims.

• This represents a pure waste of money for society.

Waste by Insurance Companies

• The health insurance industry has lobbied to block any sort of reforms for quite a while

• This represents a pure waste of money for society.

Fighting Reforms

• The private, for profit health insurance industry is the single most important cause of the worsening gap between the United States and other wealthy countries.

Health Insurance Companies