Greg’s Corner April 2007
The State of our Health Care System: Part I
By Greg Petty, Operations Manager

It was just 14 years ago that the Clinton administration attempted to debate and propose changes needed to our system of health insurance and care. We all know the results… the uproar was immediate, loud and continuous. The measure never gained enough support, even in a congress controlled by Democrats, to reach a floor vote in either house. This failed proposal came to be known as “Hillarycare.”

The mood in the country is now much different. The majority of Americans, our elected representatives, health care physicians, nurses, administrators and community care providers all realize that our system is fundamentally broken. Steps must be taken to change the structure of how America provides care and manages costs.

Despite huge annual expenditures for health care that are the largest per capita in the world, we rank in the lowest percentile of international ratings for some segments of quality, access and efficiency of care. At the very least, we have the worst ‘bang for the buck’ in the world. Our reliance on a health care system, which evolved from a mix of public-private systems of managed care, insurance and competitors in the market place, is clearly no longer adequate.

The Chasm before Us

The system, as it exists today, cannot be allowed to continue without alteration when you realize the massive medical demographic reality it now faces. A few facts to ponder:

• The boomer generation is an enormous demographic bubble that will demand more resources than the current system is able to provide at a reasonable cost.
• Type 2 diabetes is now considered to be at epidemic levels in America. To quote the February 17, 2007 The Economist article An American epidemic, “The economic costs of the disease were conservatively estimated at $132 billion in 2002 and the figure is rising. ‘If you look forward 10 or 15 years,’ says Dr C. Ronald Kahn of the Joslin Diabetes Centre in Boston, ‘we really won’t be able to afford the amount of health care this is going to cost.’” (See obesity below)
• Obesity for all age groups including youngsters, with its attendant long-term health care consequences, has seen dramatic increases. (Type 2 diabetes)

While we face the above-mentioned demographic medical surge, we are not currently providing comprehensive insured care for 47 million of our citizens. The uninsured come from all age and ethnic groups. These are folks who simply cannot afford the cost of insurance. They risk serious health consequences (and more costly care when it has to be provided) and financial ruin. A large percentage of the reasons cited for those filing bankruptcy was for health care bills they were unable to pay. In our current system, many of us are only one pink slip away from potential medical and financial disaster. I entreat you to read the front page USA Today article from Thursday March 15, 2007 Who’s uninsured in 2007?It’s more than just the poor. “As Americanswe are all in this dysfunctional system together so we better focus on fixing the largest elements that do not function well. We better do it quickly because we cannot debate reforms for another 14 years.”

Current Conditions

How can we devise a public-private system that provides quality care for all Americans, how do we pay for it and what compromises are necessary? Appropriate solutions must be based on solid analysis of the problems and inefficiencies that have the largest impacts on our system. Here are some of the issues and facts I have managed to gather concerning our health care insurance, care and delivery systems:

• 47 million uninsured, 61 million uninsured or under-insured. How do we insure them?

A. Costs for those without insurance or under-insured are passed along to the system. Actual medical costs for these patients are much higher because they have neglected their care. These costs are in addition to estimates of lost productivity. The Institute of Medicine estimates we can recover $130 billion of lost productivity if we cover the uninsured.

• In 2001, Americans spent $1.4 trillion for health care, 14.1% of GDP. Per capita expenditure-$4,631. This is 69% more than spent in Germany, 83% more than in Canada and 134% more than the average of all industrialized nations. Public and private spending for care is the highest in the world with private expenditures more than five times the median OECD cost. (Organization for Economic Development) (1)
• We spend the largest amount for health care but are the only major industrialized nation not to provide health coverage for all.
• Costs throughout the system are increasing dramatically.
• Health insurance premiums have been increasing 10-15% per year. (3)
• Administrative costs, already the highest in the world because of the private payer system, increasing at 11% per year. Current cost for administration alone is $111 billion dollars. (3)
• Prescription drugs are the fastest growing care item followed by hospitalization costs. (3)
• New medical technology accounts for 50-66% of increased spending costs. (2)

According to the benchmark scorecard produced by the Commonwealth Fund and the Alliance for Health Reform, the U.S. ranks 15th out of 19 countries for mortality from preventative causes before the age of 75 (Timely and effective care). To quote Health Affairs: It’s The Prices Stupid, “The researchers estimated that Americans paid 40 percent more per capita than Germans did but received 15 percent fewer real health care resources.”

Sources:

• Health Affairs 2003, 22, No.3 It’s The Prices, Stupid: Why The United States Is So Different From Other Countries
• The New England Journal of Medicine, October 14, 2004,Vol 351:1591-1593, No.16, Controlling Health care Costs
• Commonwealth Fund and The Alliance for Health Reform, Presentation for Health Care Scorecard

Next Month – Part Two Potential Solutions