America's Healthcare Problems Are Making It Less Competitive

The Obama administration is currently working to push healthcare reform down the pipeline at an alarming rate. The reason for this is that President Obama is trying to make good on his promise that sweeping healthcare reform will be completed by the end of 2009. I even touched on the fact that this push would come in “Acting Quickly” from June 15^th.

What’s really important here though is not whether or not he meets that deadline. Hitting that deadline is actually quite irrelevant as the proposed options to fix the system won’t address the real problems in health care. Even worse yet it seems to me that the administration doesn’t care that the real problems won’t be addressed. Let’s take a look at the healthcare problem, analyze the facts, discuss the proposed solution, and identify what changes REALLY need to be made.

The Facts

As of 2007 there were 45.7 million uninsured Americans; this is where President Obama gets his 46 million people figure. Within that group of people, 20% (just over 9 million) were not US citizens. Also, of that 45.7 million people 36% of them had a family income of greater than $40,000, which is about $20,000 (or more) higher than the 2009 poverty line for a family of 4.

This in my opinion raises significant questions about the relationship between not having access to healthcare and being uninsured. On top of that, 80% of these people were employed (this number has likely fallen due to the Great Recession). As a direct result of this level of employment the average stay on the uninsured rolls was just under 5.3 months. The 45.7 million people represents about 15.3% of the US population, this percentage has remained fairly static since 1993 which may suggest that some of the people on the rolls are voluntarily uninsured (especially when considering the last fact). In this group of known uninsured people, 39% of those without insurance are between the ages of 18 and 39, the group least likely to have medical complications.

The Problem

Since 1999, premiums for a family of four have increased by about 120% and are now at levels which are becoming unmanageable for many Americans. This statistic is a bit misleading as a vast majority of insurance costs are carried by subsidies. Some estimates suggest that as much as 88% of total health care costs are incurred by a third party whether that be an insurance company, an employer, or the US government.

Due to the overwhelming costs increase on insurance and overall healthcare to both individuals and companies, America is also becoming less competitive. This was taken from the Washington Post in 2005 and the figures have since gotten worse:

GM says health expenditures -- $1,525 per car produced; there is more health care than steel in a GM vehicle's price tag – [This is] one of the main reasons it lost $1.1 billion in the first quarter of 2005

[My Comment: Remember that in 2005 GM (GMGMQ.PK) was on the cusp of breaking sales records by peddling 17.4 million cars and trucks. Also at this time GM’s Asian competitors had health care input costs on cars built abroad of around $100 per vehicle.]

…GM says its health care burdens, negotiated with the United Auto Workers, put it at a $5 billion disadvantage against Toyota in the United States, because Japan's government, not Japanese employers, provides almost all health care in Japan. This reasoning could produce a push by much of corporate America for the federal government to assume more health care costs. This would be done in the name of "leveling the playing field" to produce competitive "fairness."

In addition to increasing costs to businesses and society, the so called “Silver Tsunami” is rapidly approaching and will hit the US citizenship. As of 2005 roughly 6% of the US population was older than 75 years of age; that figure will double to 12% by 2050. This is incredibly problematic as the elderly community consumes the greatest amount of medical resources. It is more worrisome for the US government as people aged 65 and upward also rely on Medicare and Medicaid more than any other age group for their healthcare needs. Further, once the silver tsunami hits recent projections show the US will have a shortfall of physicians by 2020. This is due to a gap in the rate of increase between the number of people who will need a physician and the speed at which our educational system is able to make doctors available to them.

Lastly, from a macroeconomic prospective, the current cost of health care is mathematically unsustainable. In 2009 healthcare costs are expected to increase by roughly 5.5%, yet our GDP is expected to fall by an ever increasing forecast amount. To paint a picture of the healthcare burden in dollar terms, during 2008 the US spent roughly 16.6% of its GDP on health care costs. In 2007, where we have hard numbers available we spent $2.2 trillion or $7,421 for every PERSON in the US.

The Government Solution

Taken from the Associated Press in the afternoon of July 8th:

At its core, legislation is designed to achieve twin purposes: expand health insurance to an estimated 50 million who now lack it, and reduce the explosive growth in health care generally.

[My Note- Where did 3.3 million more uninsured people come from since the end of June?]

…there was general sentiment among Democratic leaders that health care legislation must contain an option for the government to sell insurance in competition with private companies, according to these officials. They spoke on condition of anonymity, saying they were not authorized to disclose details of private talks.

Any bill is expected to require insurance companies to issue a policy, without the ability either to deny coverage or charge higher premiums on the basis of preexisting medical conditions.

A long menu of possible tax increases was also in circulation, including one that would fall on the upper-income. Officials said a proposed hike in the Medicare payroll tax had lost favor in recent days. If included in the bill, it would violate Obama's campaign pledge not to raise taxes on the middle class.

[Senator Kent]Conrad said, "We’re looking at other options" to help finance a bill whose price tag is expected to reach $1 trillion or slightly more. He did not identify any.

In a nutshell, the government is looking to tax those making higher wages to subsidize the care of those making lower wages. They want to do this in order to grant health insurance to everyone and create a public health care option. Don’t take my word for it though, read up on Barack Obama’s initial proposal and see for yourself.

Comments

[YoYoMama:]

You've missed an important statistic.

Medical bankruptcies account for over 50% of bankruptcy filings. Of those filers, 75% HAVE INSURANCE.

You are assuming that because persons are insured that the insurance is adequate. Nothing could be further from the truth.

The average rate of premium increase is 10% per year. NOT COSTS. Premium. This means what comes out of our own pocket. This increases come also with a decrease in coverage. ALL Americans are receiving less for their insurance at greater cost with each passing year. This is a problem whether the author wishes to acknowledge this or not.

The problem with these anti-health care reform articles is that is assumes that ONLY Obama proposals are on the table. On the contrary, there are all sorts alternate proposals being considered in Congress.

A key problem with health care in America is one can only receive a competitive insurance plan if one works for a large business or the government (or received Medicare/Medicaid). One of the best proposals being considered is cooperative health care, where small businesses and individuals can band together to form large groups. Allowing cooperatives would go a long way in bringing the costs of insurance down for many Americans.

The Obama administration, through Raum Emmanuel, has also signaled they are willing to compromise on universal coverage, as well as extend the debate into the next session. So while it's great to read Obama's initial proposal (I have), far better to be in tuned with ALL aspects of the debate that is happening NOW.

Jul 10 09:31 AM

[Leftfield:]

I am one of the statistics YoYoMama writes of; had insurance, had an accident, went bankrupt as a result. Those with great coverage that most self-employed could never afford as long as our taxes pay for gold-plated government worker benefits, are likely to have an insurance "product" that the company never intends to pay benefits from.
Sadly, if I had the premiums in the bank I had paid for years, I could have negotiated a cash settlement with the hospital. My bankruptcy lawyer's accountant wife had a similar policy and it took them 13 months to get their similar insurance company to pay. A lawyer and an account!
A brother-in-law of mine had a complicated procedure after a heart attack and if he didn't have rich relatives flying from NY to LA to negotiate on his behalf, through the landmine of procedures, government and private, he would be bankrupt and without care as he can't fend for himself so well in his condition.
It is evident NAFTA, sold as a free-market wealth builder for US workers by banksters and international corporations and ALL government pretenses of fixing any and all problems, it is increasingly clear that average citizens have no representation. Healthcare problems, like all others, will put us increasingly in the hands of large corporations and government with the intent that we will completely "owe our souls to the company store."

Jul 10 10:47 AM

[Economyst:]

The problem with the US system is it's a business. Take away the capital motive to make profits and you can have effective healthcare.

You have Drs who will chase the dollar, you have insurance companies trying not to pay out, you have the drug makers charging huge amounts for their medication allied to this you have Universities charging huge fees to train Medics who then charge huge fees to recoup their investment.

The losers are the patients.

The NHS in the UK is not perfect but we spend around 7% of our GDP on healthcare for better results. Drs still get paid well - £100k average (3.5x avg wage) - but compared to US Drs its less (circa x6 average salary) and that the Government buys medication in bulk.

Just like the housing boom -pumping more money into healthcare will not solve the problem. It will just cause inflation and raise prices.

Read about Baumols cost diseases and then come back.

Jul 10 10:57 AM

[Bob 123:]

Excellent rebuttal.
The only genuine solution that would reduce costs and take the burden off the backs of industry would be a Government-run, single-payer system that everyone -- young, old, healthy, sick, whatever -- pays into via their taxes. Medicare for everyone.
The savings would be immense, as redundant health-care agencies such as the VA could be made unnecessary.
Big-bad goobermint running health-care scare you? Medicare has only a 3% overhead and administration cost. Private plans -- 20% or more.
Of course this would be the end of the private health insurance industry and they won't go quietly. They'll pull up every analyst directly or indirectly in their pay (like this one) to scare us as to how it can't work, it would too expensive, service would suck ,etc.
The smoke they blow in our face is to confuse us into thinking that access to health INSURANCE is the problem. No it isn't, the problem is access to health CARE.

On Jul 10 09:31 AM YoYoMama wrote:

> You've missed an important statistic.
>
> Medical bankruptcies account for over 50% of bankruptcy filings.
> Of those filers, 75% HAVE INSURANCE.
>
> You are assuming that because persons are insured that the insurance
> is adequate. Nothing could be further from the truth.
>
> The average rate of premium increase is 10% per year. NOT COSTS.
> Premium. This means what comes out of our own pocket. This increases
> come also with a decrease in coverage. ALL Americans are receiving
> less for their insurance at greater cost with each passing year.
> This is a problem whether the author wishes to acknowledge this or
> not.
>
> The problem with these anti-health care reform articles is that is
> assumes that ONLY Obama proposals are on the table. On the contrary,
> there are all sorts alternate proposals being considered in Congress.
>
>
> A key problem with health care in America is one can only receive
> a competitive insurance plan if one works for a large business or
> the government (or received Medicare/Medicaid). One of the best
> proposals being considered is cooperative health care, where small
> businesses and individuals can band together to form large groups.
> Allowing cooperatives would go a long way in bringing the costs of
> insurance down for many Americans.
>
> The Obama administration, through Raum Emmanuel, has also signaled
> they are willing to compromise on universal coverage, as well as
> extend the debate into the next session. So while it's great to
> read Obama's initial proposal (I have), far better to be in tuned
> with ALL aspects of the debate that is happening NOW.

Jul 10 11:02 AM

[ppt:]

As usual all the people who oppose health care reform have no solutions of their own. At the start of the article the author writes
"Let’s take a look at the healthcare problem, analyze the facts, discuss the proposed solution, and identify what changes REALLY need to be made."

The author analyzed some of the facts, and discussed one of the proposed solutions, but he hasn't identified what changes REALLY need to be made. Am I missing something? Or does he think that nothing no changes are needed?

Jul 10 11:35 AM

[ed martinez:]

Re. Comment 32. Economyst's analysis, "take away capital motive....and you can have effective health care", is right on target. Right now, however, Congress is in a state of paralysis by analysis; the numbers are as intimidating as the patriotic fear of creeping socialism.

And that is the way it'll be until someone ambitious Congressperson decides to paint himself (or herself) in courage and say: "The right to universal health care is as inalienable as the rights to Public Education and Civil Rights."
Fear of creeping socialism is silly in a country that's been confiscating salaries since the First World War. As for costs, those numbers now held as obstacles will be irrelevant in a socialized system.
More so when our doctors will be selected not just on their smarts but also on their psychological profiles as determined by modern testing techniques. Rejects will undoubtedly help us manage our national economy to higher highs.

Jul 10 02:29 PM

[James Bibbings:]

My solutions will be available via Commodity News Center's news letter to be published Tuesday of next week. You can sign up for that at:

www.commoditynewscente...

Seeking Alpha cut the last portion of my article, it is available in my instablog at this time though and reads:

The Right Solution

There is a very feasible multipronged solution to the healthcare issues listed above. That answer does not lie in Barack Obama’s proposed solution. It also does not lie in any of the proposed solutions which have been brought to the table in recent memory. The proposed solution must come from the very core of America’s great foundation. I know what that solution is and I’m going to tell you about it in “America’s Sick Part II” which will be found exclusively in the CNC weekly newsletter going out July 14th, 2009. To sign up for this free weekly commodities and market news letter follow the link, fill out the form, and you’ll be on your way. Since I put the newsletter together I can assure you we do not spam or sell our subscriber names to third parties. All my best, stay healthy, and as always thanks for reading.

Jul 10 02:53 PM

[James Bibbings:]

Oh I can also tell you that we don't spam or sell our mailing list...I manage it and put it together so after two seconds you'll have acess to the last half of the article. Here's a teaser excerpt....

...As a country we should be asking our doctors what is required, what is necessary, and what is most efficient for getting well. We should not be asking “Does my insurance cover that?” and knowing deep down that a “no” response means you won’t take the service while a “yes” means you will....

Jul 10 02:55 PM

[TinyTim:]

Interesting article.

You touch on this issue, but here's a bugs eye view of the most likely cause:
www.newyorker.com/repo...

Unfortunately, no solution

Jul 10 03:40 PM

[jimboy:]

I read this piece and it's a very impressive piece of journalism. Thanks.


On Jul 10 03:40 PM TinyTim wrote:

> Interesting article.
>
> You touch on this issue, but here's a bugs eye view of the most likely
> cause:
> www.newyorker.com/repo...
>
>
> Unfortunately, no solution

Jul 10 04:51 PM

[Economyst:]

Drs and the AMA are the last people you should be asking as they will always want to protect their own incomes. It would be like asking a Turkey to vote for Christmas.

The NHS Is less of a drain on UK businesses than paying for expensive healthcare insurance. If you want to solve the healthcare problem in the US - first start by looking at the litigation happy system which means that the service you receive has more to do with the Dr wanting to cover their own back than actually giving you what you need. This leads to the overuse of scans - look at the salary of Radiologists in the US has gone through the roof as people now expect MRS scans when not needed as they feel it should be part of the insurance cover. MRI scans are not cheap.

That is just one example. Another is that the US it costs about x4 as much to stay in a US hospital bed as it does in the UK so this leads to alot of procedures being done on day cases which is not ideal - in the US doing an ACL op can be a day case in the UK that would never be the case.

When you are running around counting the cost of each cotton bud then you are just adding to the cost of healthcare and not to the service received by patients.

A US Dr once gave a lecture I attended it was about the Physician Entrepreneur where he was talking about how to be a better businessman - what has this got to do with healthcare? In the UK our Drs may not be as business oriented as the ones in the US but at least they do not have conflicted interests.

Jul 10 05:30 PM

[YoYoMama:]

How about instead of fishing for trolls to sign up for your newsletter, you just post your response on Seeking Alpha. I for one am NOT signing up.


On Jul 10 02:53 PM James Bibbings wrote:

> My solutions will be available via Commodity News Center's news letter
> to be published Tuesday of next week. You can sign up for that at:
>
>
> www.commoditynewscente...;br/>
>
> Seeking Alpha cut the last portion of my article, it is available
> in my instablog at this time though and reads:
>
> The Right Solution
>
> There is a very feasible multipronged solution to the healthcare
> issues listed above. That answer does not lie in Barack Obama’s
> proposed solution. It also does not lie in any of the proposed solutions
> which have been brought to the table in recent memory. The proposed
> solution must come from the very core of America’s great foundation.
> I know what that solution is and I’m going to tell you about it in
> “America’s Sick Part II” which will be found exclusively in the CNC
> weekly newsletter going out July 14th, 2009. To sign up for this
> free weekly commodities and market news letter follow the link, fill
> out the form, and you’ll be on your way. Since I put the newsletter
> together I can assure you we do not spam or sell our subscriber names
> to third parties. All my best, stay healthy, and as always thanks
> for reading.
>

Jul 10 05:39 PM

[tresspass:]

"In a nutshell, the government is looking to tax those making higher wages to subsidize the care of those making lower wages. They want to do this in order to grant health insurance to everyone and create a public health care option. Don’t take my word for it though, read up on Barack Obama’s initial proposal and see for yourself."

Gee, I like that idea. Anyone think Robin Hood was the bad guy? or was it the Sheriff of Nottingham?

What?..... you think the wealthy 2% who outright own 40+% of the assets in this country need third and fourth homes, 4 cars,a humvee ( i forgot the Land Rover, almost ), the third peal necklace for their daughter; 6th ruby, emerald, diamond whatever for their wives?

What's is your problem? Wealthy enough to afford health care or by extension let those without, get sick and die because you don't give a sh*t? Do you understand that process at all? It's really quite simple to understand if you dare go there.

My friend, this is coming to the point that if you and your cadres don't give a little , you will be losing a lot.
I believe you and the Mitch McConnel's, Grassleys and Hatches have lost your humanity some years back. It's gonna bite you in the ass one way or another.

Just another thought: What is the health care industry and obscenely paid lobbyists so afraid of in a government sponsored alternative? When their mantra has always been the gov't sucks at what they do?

Last, 15% ( as most know ) of health care costs in America go towards administering the dizzying plethora of different pieces of paper, " providers " use to administer.

With single payer, it's reduced by 2/3rds ( look to Scandanavia and the rest of Europe to ascertain those statistics--there there ). That's not billions but trillions of dollars---that'll would cover, handily, the 50 million uninsured, which easily ---via emergency room visits, getting sick and entering a hospital or any short or long term facility---costs the tax payer ( it hurts the middle class more---you know that, right? ), guess what? yep, trillions.
Why this happens? easy, holding off and not seeking preventative care because, duh....no insurance.

And , you and the AMA and their proxies in congress will like this ( the trial lawyers won't but who gives a sh.t?---they have too many "things " as it is )---no malpractice insurance required under single payer. Therefore no more extraneous, protective, unnecessary MRIs, x-rays, exploratory surgeries; specialists, ancillary procedures docs prescribe to cover, justifiably , their asses.

You know, we all know, the list is longer than this.

Jul 10 06:38 PM

[James Bibbings:]

Dearest tresspass,

So what you're saying is that this statement:

"In a nutshell, the government is looking to tax those making higher wages to subsidize the care of those making lower wages. They want to do this in order to grant health insurance to everyone and create a public health care option. Don’t take my word for it though, read up on Barack Obama’s initial proposal and see for yourself."

Is indeed accurate?

All I see above is a field of straw man arguments, which is interesting to me since you haven't read any of my solutions. What is it about the truth that makes you think I am against you? What if next week I propose a 1 party system? You'll probably never know because you're too angry to even consider options beyond those which you have already accepted to be reasonable.

Jul 10 07:50 PM

[tresspass:]

James,

With all due respect, all I garnered from the article were lightly veiled innuendoes, mildly to more than mildly, critical re: Obama's heathcare initiatives. What was clearly apparent was finding fault with having the richest Americans shed a relatively miniscule amount of their wealth to , not only help their fellow citizens, but also save the system that, within a few years, pay for itself.

Although I did not come up with a comprehensive plan, I did point out some problems and solution s to wit: emergency room expense, lack of preventative care, law suit expense---all resolved with single payer and why.

I didn't see any straw man as I reread my response again.

Further, you are absolutely right on one score: I am angry.

Was the reiterated paragraph accurate? Yes it is. Your " don't take my word for it, etc...... " comment was a dare implying this component of paying for the initiatives were wrong. Am I wrong to have gathered that?

You didn't have any solutions at all in this article; however, you did delineate some of the problems accurately. Like another poster pointed out, why not just cut and paste them for another article where all of us interested in debating this issue have material to work with.

I know you are just as passionate about this topic as most of your followers are and I, for one, respect that. So I again, for one, look forward to some of your ideas for the big fix.

frank


On Jul 10 07:50 PM James Bibbings wrote:

> Dearest tresspass,
>
> So what you're saying is that this statement:
>
> "In a nutshell, the government is looking to tax those making higher
> wages to subsidize the care of those making lower wages. They want
> to do this in order to grant health insurance to everyone and create
> a public health care option. Don’t take my word for it though, read
> up on Barack Obama’s initial proposal and see for yourself."
>
> Is indeed accurate?
>
> All I see above is a field of straw man arguments, which is interesting
> to me since you haven't read any of my solutions. What is it about
> the truth that makes you think I am against you? What if next week
> I propose a 1 party system? You'll probably never know because you're
> too angry to even consider options beyond those which you have already
> accepted to be reasonable.

Jul 11 09:52 AM

[bigmoney:]

why is it that many people think government is the worst solution for health care, when it makes a perfectly fine solution for fire, police, military? For those under 50, your biggest health risk is probably a car crash. First responders, those most likely to keep you alive, are government employees. Police, fire, EMT, etc.

After that, the for-profit medical system kicks in. And unlike the normal "free market", you can't negotiate prices, and there is no warranty for services. If the doctor / nurse staff has been working 24 hours straight, or whatever the sleep-deprivation de jour is popular in hospital culture, and you are more prone to things like sub optimal surgery, and or infection. Get a staff / MRSA, and watch your family wealth drain away.

Jul 11 12:56 PM

[D.Brinks:]

I always hear the argument that those who make the most in this country should share a greater tax burden than those who are not as fortunate, and for the most part I absolutely agree. The problem is that whenever an initiative comes forward that needs to be paid for the answer always seems to be that we should make the most successful amount us foot the bill, over time though, there tax bill has become a too burdensome heavy. Although I agree that the most successful should pay a greater share of the tax burden, making them pay almost all of it is ridicules.

Before any of you fall into distaste for me let’s take a step back and look at some facts. For the most recent information available, the top 1% of our population pays 39.89% of all of the income taxes paid within our country, the top 5% pay 60.14%, the top 25 % pay 86.27%, while the bottom 50% pays less than 3% of all income taxes. (Source: Internal Revenue Service, www.irs.gov/taxstats/i... ("Individual Income Tax Returns with Positive Adjusted Gross Income (AGI) Returns Classified by Tax Percentile)). Over the past 20 years income taxes on high income individuals have continued to rise. In fact, we are reaching a milestone in our country’s history in which the current tax proposals under Obama’s healthcare reform proposal would tax the rich more heavily than many of these readers have seen in their lifetimes.

My mother always taught me that if you cannot afford to pay for something, don’t buy it. It seems that in America we have forgotten this simple concept. We wish to have a comprehensive healthcare plan, but rather than pay for it out of our own pockets, we try to push the entire burden onto less than 5% of the population. The problem with our healthcare system is not that we do not spend enough money on it; in fact we pay more than most in the world, the problem is that we do not spend our money wisely. Rather than try and throw money at a heaping pile of trash, we need to indentify the problems and resolve them.

When used by politicians, the word “reform” has come to mean “spend lots of money.” I think we would be all better off if they used it by its actual definition: to change and improve something by correcting faults, removing inconsistencies and abuses, and imposing modern methods or values.

Jul 17 02:53 PM