UNITED STATES: by Jeffry Babb News Weekly
Health care - America's shame
, July 19, 2008
The US is the only industrialised democracy which denies its citizens universal access to health cover. Jeffry Babb reports.America's healthcare system is great - if you are a millionaire. For just about anyone else, it's a national scandal. Americans have the right to life, liberty and the pursuit of happiness, but not to medical treatment if they fall ill.
So much self-interested propaganda floats around about how marvellous America's health system is that its true awfulness is not readily apparent.
Here are just a few examples from my own experience.
As soon as Americans get together, it doesn't take long for conversation to get around to health care cover - what "plan" they are on. Those with top cover feel comfortable, if they can find the money or the employer to pay for it.
Basic cover for catastrophic illness costs about $800 per month if you pay for it yourself. Americans ask, "If you have a heart attack in Australia, will the emergency department ask what your health plan is before they will treat you?"
Many Americans stay in Taiwan partly because they can get excellent health care under Taiwan's national health scheme for a basic, uniform premium.Those who can't pay
Stories abound in America of people who can't pay their hospital bill being dumped out of the backs of ambulances in the worst parts of the city, still in hospital gowns.
The sister of a Chinese friend of mine was studying in America. Apparently bent on financial suicide, she failed to take out health cover, even though the university she was attending offered it.
She was in a car accident - she was not wearing a seatbelt, as seatbelts are resented in the Land of the Free. She was in intensive care for several weeks. Her hospital treatment cost over $750,000, and her extended family almost went bankrupt paying the bill.
Ideologues go on about the evils of "socialised medicine". This is rubbish. America has the worst of both worlds - part socialism, and part free enterprise gone feral.
Let's look at some basic facts. Every year in America, there are over 700,000 medical bankruptcies. That's equivalent to half the population of Brisbane going bankrupt every year
because they cannot pay their medical bills. Illness and medical bills account for half the personal bankruptcies in the United States. The truly shocking thing about this is that most had health insurance.
According to a study carried out jointly by the Harvard Law School and Harvard Medical School in 2005, more than three-quarters of those bankrupted by illness were insured at the start of the bankrupting illness. However, 38 per cent had lost coverage, at least temporarily, by the time they filed for bankruptcy.
"Most of the medical bankruptcy filers were middle class; 56 per cent owned a home and the same number had attended college. In many cases, illness forced breadwinners to take time off from work - losing income and job-based health insurance precisely when families needed it most. Families in bankruptcy suffered many privations - 30 per cent had a utility cut off and 61 per cent went without needed medical care," the Harvard study found.
In the United States, most health insurance is based on employment. In 2006, 47 million Americans (i.e., 36 million citizens and 11 million non-citizens), or 16 per cent of the total population, had no health insurance at all.
Of the 84 per cent with insurance, 60 per cent was employer-based and 9 per cent was by direct purchase. Most large employers have health insurance plans, but only 59 per cent of small firms (between 3 to 199 employees) offer health plans.
The smaller the firm, the less likely it is to offer a health plan. This means that employees of small firms - the most innovative and competitive enterprises, the cutting edge of the economy - are the most exposed to financial ruin through illness.
What about big firms? Surely their employees are not exposed to these horrors? Not until the company goes bankrupt.
Take General Motors (GM), for example. Once the beating heart of American industrial might, its share price is the lowest it's been in decades. GM is an excellent company. Along with Toyota, it is still either the number one or two automaker by volume in the world.
GM makes money just about everywhere, including Australia - but not in America. Why? Health cover makes it uncompetitive in its home market. Every vehicle that rolls off the assembly line in the US has $2,000 in health-care costs tacked onto it. That's 20 per cent of the cost of a $10,000 car. That's why GM and Ford make big cars and light trucks - they can't compete with the Japanese, or anyone else for that matter, by making small cars.
It's been said that GM is a health care fund that produces cars as a by-product. The betting is that GM is going to have to dump health cover to survive. The powerful United Auto Workers (UAW) will bargain away just about anything except health cover. Not only current employees, but also hundreds of thousands of retirees depend on GM for health cover.
As a result, GM can only get rid of this millstone by going bankrupt. Then it can offload its health and pension obligations - and every American GM employee past and present will suffer.
Why is American health insurance partially socialised? Three main programs cover large portions of the population.
First, war veterans are covered with a federal system of government-run care, similar to the old much-loved Repat for Australian veterans. Few would begrudge treatment to the veterans of wars such as Iraq, who, thanks to the miracles of modern medicine, now survive horrifying wounds that would have killed soldiers in past conflicts.
But the veterans' hospitals have a bad reputation. The system is basically like the socialised National Health Service (NHS) in the United Kingdom and suffers from the same faults. When Americans talk about "socialised medicine", this is what they have in mind.
The second major program is Medicare. Medicare is a program for Americans over 65 years of age. It is an insurance program, not an entitlement program; but its coverage is almost universal for the elderly and it is mostly paid for by the federal government.Prescription drugs
Medicare covers almost all Americans when they are most likely to get sick - when they are old. It pays for medical and hospital treatment, and now, thanks to President George W. Bush, for prescription drugs, at an extraordinary cost.
At current rates of claim, the Medicare trust will be insolvent by 2019. In the 2007 financial year, it cost US$460 billion dollars, or 16 per cent of all federal spending, only lagging in total cost behind defence and social security.
In 2007, 43 million Americans were covered, which will rise to 77 million in 2031, when retiring baby-boomer numbers peak. This program by itself will eventually bankrupt the US government at the current rate.
The third main program is Medicaid. This is a joint federal-state program for poor people. Medicaid is an entitlement program, that is, it is tied to welfare.
But not all poor Americans - even very poor Americans - are necessarily covered. Medicaid is state-administered and varies from state to state, accounting for 22 per cent of state budgets overall. The states pay for about half the cost of the Medicaid program. Some 60 per cent of all nursing home residents are on Medicaid, and 37 per cent of all childbirths are paid by Medicaid. About 6.5 million Americans have dual Medicare-Medicaid coverage.
Other programs include SCHIP - State Children's Health Insurance Program - and health programs for American Indians. About half of all AIDS patients get health cover.
These are the more or less lucky ones. Another 5 million Americans can't get any health cover at all - they are too sick and are therefore "uninsurable"! Hard to believe, but the sickest Americans can't get cover at all, and millions of others have pre-existing conditions excluded from commercial health care plans.
Health Maintenance Organisations (HMOs) are designed to keep people healthy, but are notorious for their complexity and unwillingness to pay for "excess" treatment. In Oregon, the one US state where physician-assisted suicide is legal, one HMO sent a letter to a claimant saying it was unwilling to pay for further medical treatment, but would cover physician-assisted death!
What are Americans paying for this mess? The US is the only industrialised democracy which denies its citizens universal access to health care. According to OECD figures, in 2003 the US spent 15.2 per cent of GDP on healthcare, at least 24 per cent higher than the next highest nation, and 90 per cent higher than its "global competitors".
In Australia, the figure is 9.2 per cent; for Germany, 10.8 per cent; and for the United Kingdom, 7.8 per cent. The US is ranked 37th in terms of health care by the OECD. Australia is ranked in the top 10. This is despite the fact that, of all the globe's health-care dollars, just under half are spent in the US.
Why is this so? This is easier to say than to say what is to be done.
The US has the world's highest paid medical profession and all the political clout that goes with it. The aim of most hospitals and insurance plans is to maximise profits. Technology is among the best and is overused, and is almost certainly the most expensive.
The US is the last unregulated major market for multinational drug companies. As an example of their influence, they sought to have Australia's government-funded Pharmaceutical Benefits Scheme (PBS) abolished in free trade negotiations with the US, and came within a whisker of success.
Almost everyone in the US believes the health system is broken. Can it be fixed? If the people of the US summon the will, it can; but it has to go beyond paying everyone's insurance premium for them.
It's going to cost some very powerful people money - a lot of money; not least American taxpayers.- Jeffry Babb.