The health care debate-7: Why health care is so expensive in the US

(For previous posts on the issue of health care, see here.)

The current health system in the US is a disgrace. Let us take some indisputable facts.

  • Health care costs in the US are way higher than in any other country.
  • Despite this, close to 15% of the population is uninsured, with the only option for such people being to go to expensive emergency rooms if the situation is dire, while in every other developed country everyone has access to primary care.
  • Using almost any statistical measure of health (life expectancy, infant mortality, etc.), the US ranks way below other developed countries.

These facts are so obvious that even conservative and right wing publications that are not ideological to the point of willful blindness have to concede the problem. Take for example, The Economist. It says:

NO ONE will be astonished to hear that health care costs more in Indiana than in India. However, a few might be surprised to learn that Americans spend more than twice as much per person on health care as Swedes do. And many may be shocked to be told that in Miami people pay twice as much as in Minnesota, even for far worse care.

The American health-care system, which gobbles up about 16% of the country’s economic output, is by far the most expensive in the world.

Another magazine, Forbes which calls itself a ‘capitalist tool’ points out that the US is unique among developed countries in that people actually go bankrupt because of health needs.

In 2007, medical problems and expenses contributed to nearly two-thirds of all bankruptcies in the United States, a jump of nearly 50 percent from 2001, new research has found

They randomly surveyed 2,314 bankruptcy filers in early 2007 and found that 77.9 percent of those bankrupted by medical problems had health insurance at the start of the bankrupting illness, including 60 percent who had private coverage.

Most of those bankrupted by medical problems were “solidly middle class” before they suffered financial disaster — two-thirds were homeowners and three-fifths had gone to college. In many cases, these people were hit at the same time by high medical bills and loss of income as illness forced breadwinners to take time off work. It was common for illness to lead to job loss and the disappearance of work-based health insurance.

When you read about the quality of health care that you get in countries with single payer systems like in France, the pathetic state of affairs in the US become readily apparent. As BusinessWeek points out:

[T]he French system is much more generous to its entire population than the U.S. is to its seniors. Unlike with Medicare, there are no deductibles, just modest co- payments that are dismissed for the chronically ill. Additionally, almost all French buy supplemental insurance, similar to Medigap, which reduces their out-of-pocket costs and covers extra expenses such as private hospital rooms, eyeglasses, and dental care.

In France, the sicker you get, the less you pay. Chronic diseases, such as diabetes, and critical surgeries, such as a coronary bypass, are reimbursed at 100%. Cancer patients are treated free of charge. Patients suffering from colon cancer, for instance, can receive Genentech Inc.’s (DNA) Avastin without charge. In the U.S., a patient may pay $48,000 a year.

France particularly excels in prenatal and early childhood care. Since 1945 the country has built a widespread network of thousands of health-care facilities, called Protection Maternelle et Infantile (PMI), to ensure that every mother and child in the country receives basic preventive care. Children are evaluated by a team of private-practice pediatricians, nurses, midwives, psychologists, and social workers. When parents fail to bring their children in for regular checkups, social workers are dispatched to the family home. Mothers even receive a financial incentive for attending their pre- and post-natal visits. (my italics)

This must mean that the French system is really expensive right? Wrong. In France, the cost per capita of health care is about half that in the US! And this is despite the fact that in France, every single person is covered, while in the US 15% of its population is without health insurance. So health care should become much cheaper if we adopt the French model.

So why do people claim that providing that level of quality will be expensive here? Because the policy-makers and the media who are subservient to the profit-seeking, money-driven health industry start with the assumption that you have to preserve the interests (and of course the profits) of that industry, and then add the presently uninsured and underinsured on top of it. Of course that will be more expensive.

The economics of the situation are simple. The only way to get a better health system at lower cost is to drive the profit-seeking elements out of the system and institute a single-payer system.

POST SCRIPT: William Shatner on Sarah Palin’s farewell speech

Sarah Palin stepped down as governor of Alaska, presumably to devote her full attention to giving us early warning if Russian planes should invade American airspace via Alaska (because they haven’t figured out that the great circle route over the pole is much shorter) or if Vladimir Putin should unexpectedly raise his head.

Her farewell speech was the work of art we have come to expect of her, disjointed phrases that consist of brazen pandering to the military and Alaskans, swipes at the media, petty personal grievances gussied up as high principle, non sequiturs, sentences that don’t seem to end, all interwoven with ghastly and mangled imagery in the grand style of Thomas Friedman.

Conan O’Brien tried to make sense of her speech and, after several viewings, it finally clicked. It was meant as a poem.

If you can’t believe that Palin said this and think Shatner is making stuff up, watch her speech. The passage Shatner quoted verbatim comes very early on.


  1. Evan says

    One reason that the American system is higher is because of our system of educating our doctors. We require our medical students to fund their own education, usually via loans to get through medical school, which are repaid via their own salary as a doctor. Many countries with single-payer plans also offer their medical students tuition paid by taxpayers. Practically, the difference amounts to the cost of education being in a different category when discussing the statistics (plus whatever is lost to interest on the loan in addition).

    This isn’t an argument against single-payer plans, and United States has a fortune to save by making such a switch. It merely means that, were we to switch, our “health care costs” will still be higher than most other single-payer countries because we will still have to pay doctors more to fund their education.

    In fact, it’s probably an argument to reform our education-finance system as well.

    A little more on the math here:

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