Why Americans pay more for worse care

Matt Taibbi explains how the presence of private, for-profit health insurance companies in the US are a direct threat to people’s health.

Many years ago, while researching a book chapter on health care reform, I visited a hospital in Bayonne, New Jersey that was having problems. Upon arrival, administrators told me a story that summed up everything that is terrible and stupid about American health care.

A patient of theirs suffering from a chronic illness took a bad turn and had to come in for a minor surgical procedure. The only problem was, the patient had been taking Coumadin, a common blood thinner, as part of his outpatient care.

So they brought him in to the hospital, weaned him off the Coumadin, did the surgery successfully, then sent him home. All was well until they billed the insurer. The answer came back: coverage denied, because the operation had not been conducted in “timely fashion.”

Of course, had they operated in a more “timely fashion,” the patient would have bled to death on the operating table. But such is the logic of the American health care system, a Frankenstein’s monster of monopolistic insurance zones peppered with over a thousand different carriers, each with their own (often cruel) procedures and billing systems.

And why is it so expensive?

The hospitals I visited all told me they devoted enormous resources – as much as half of all administrative staff, in one case – to chasing claims. Patient care in American is in this way consistently reduced to a ludicrous and irrational negotiation of two competing professional disciplines: medicine, and extracting money from insurance companies.

Patients get trapped between hospitals that overcharge for simple procedures and insurers who deny coverage for serious ones. Administrative costs and profit are two of the bigger factors explaining why Americans spend about twice as much per person or more on health care compared with other industrialized countries, but get consistently worse results.

A government-run single payer system is of course the solution. The easiest way would be by slowly expanding Medicare because that system is already in place. At present, only those age 65 and over are eligible. We could start by immediately enrolling everyone under 21 and then gradually lowering the 65 limit until the gap is eliminated. At that point Medicaid, that is available only to those who are poorer, would become redundant and could be folded into Medicare.

Taibbi says that it is encouraging that more and more people are coming around to the idea that health care is a right, not a privilege and that even pragmatists like Paul Krugman who just last year were arguing that it was unrealistic for the US to have single payer have come over to the idea that there should be universal coverage. The reason for the change is likely because they expected Hillary Clinton to win and continue the Democratic plan of tinkering with the health system rather than confront the health insurance companies that are large Democratic donors. But with Donald Trump threatening to wreck even the modest progress made under Obamacare, they seem to have realized that only the idea that health care is a fundamental human right and that there must be universal coverage makes any sense.

But the Democratic party establishment still is beholden to the insurers, as Lee Fang writes.

[Richard] Gephardt, who serves as a Democratic “superdelegate” responsible for choosing the party’s presidential nominee, was asked about the possibility of single payer at the Centene Corporation annual investor day conference at The Pierre, a ritzy five-star hotel in New York City.

Centene, which merged with Health Net two years ago, is a health insurance company that sells coverage in 28 states. At the conference, which included investors and Centene executives as well as lobbyists, an unidentified participant asked Gephardt about whether the industry should fear being replaced by a single-payer-style system. Such a move, the questioner remarked, would present an “existential threat.”

“There is no way you could pass single payer in any intermediate future,” Gephardt declared. America, he added, has the “greatest health care system in the world, bar none.” And while single payer would provide universal coverage, there would be less quality and innovation without the “involvement of the private sector.”

Gephardt, notably, became a corporate lobbyist after serving as a populist Democratic lawmaker from Missouri. His clients have included Peabody Coal and Goldman Sachs, among others. He also serves on the board of Centene, receiving annual compensation of around $315,965 in cash and stock awards.

And there you see the problem in a nutshell. Many of the big shots in the Democratic party are in the pockets of the health insurance industry.


  1. rjw1 says

    Other countries have been using ‘single payer’ schemes for generations, it’s not as if the US would be entering uncharted waters.
    I have a terminal, debilitating disease that requires regular and expensive medical treatment, however I’m a citizen of a country with socialized medicine, so it doesn’t cost me a cent. I’d probably be bankrupt under the US ‘system’.

    Essentially conservatives generally don’t care about outcomes.

    Do Americans really believe that they have the best health care system in the world?

  2. Holms says

    And while single payer would provide universal coverage, there would be less quality and innovation without the “involvement of the private sector.”

    A very popular lie. The insurance companies are not the ones pursuing reasearch in any medical field, as they are only tasked with the administration of taking people’s money and (reluctantly) disbursing it. Pharmaceutical companies, universities, government research centers and the like are the sources of medical innovation.

  3. Heidi Nemeth says

    Expanding Medicare is not the way to go. I am 64 and looking at Medicare. Which means insurance companies are soliciting me the way colleges solicited my kids when the were high school seniors They are soliciting me because Medicare (Part A) pays only some health care costs -- nursing home care for the indigent, hospitalization, and limited rehab care for those 65 and older . Seniors are at least partially responsible for Part B. Part B means insurance companies sell you insurance to cover doctor visits, dentistry, eye care and glasses, and mental health care. And, separately, they sell you insurance for prescription medicines (Part D). There is a Part C, too. It is more comprehensive than Part B , covering copays and deductibles; and it can be more portable. The whole system is a welter of bureaucracy. It is not a single payer system.

    Medicaid, which I was on for a year recently, paid all my medical bills. Everything. Dentist, doctor, mental health, glasses, prescriptions, podiatry and possibly more. No copays. No deductibles. That part I liked.

    What I didn’t like was I had to designate an insurance company as an intermediary. Yes, the government pays the intermediary insurance company! (I certainly didn’t.)

    Medicaid is closer to the single payer system I would choose, given a choice between Medicare and Medicaid. Yet even Medicaid is flawed. Can’t we look at other nations’ national health care systems and come up with something better than what we now have? A system which doesn’t insert an insurance company or two between the health care provider, the payer, and the patient?

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