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CEO of several companies in the past. Currently pure investor. MBA Wisconsin 1976
  • Do We Really Have A Choice In Health Care? 0 comments
    Nov 12, 2012 12:17 PM

    This year, the "Affordable Health Care Act" will increasingly affect us and we should be prepared for the debate.

    Politicians will seek our votes by presenting all sides of the health care issue. Actual facts will often be distorted or left out of the discussion.

    Health care is extremely important to all of us. We do need to pay attention and try to sort through the facts.

    The following information came from the latest Organization of Economic Development and Cooperation Report on Healthcare for 34 leading industrialized nations. (Source:

    Annually, the US spends $2.7 Trillion or 18% of our gross domestic product (GDP) on health care. This is $7980 per person. In 2000 it was $4793 per person or 12.4% of GDP. This is a 66% increase in just over a decade.

    The other 33 industrialized countries spend about half of what we do. Canada spends $4478, UK $3487 and Denmark $4348

    The money we spend on health care is the reason we believe we have the "best medical care in the world". Sadly it is untrue.

    Child mortality and life expectancy validate the untruth.

    The child mortality rate in the US is 6.5 deaths per 1000 live births compared with Australia 4.3, Italy 3.7, and Finland 2.6.

    Life expectancy at birth for the US is 78.2 years versus 82.3 years in Switzerland, 81.8 years in Spain and 80.3 years in Greece.

    So why do we spend so much and perform so poorly?

    There are several reasons. Spending on drugs is one.

    In the US we spend $956 per person per year on drugs compared to $275 in New Zealand, $521 in Switzerland and $734 in Canada.

    Senator Kohl (D-WI) and Grassley (R-Iowa) may have moderated drug expense in the US by requiring the drug companies to report money and other items like trips and dinners given to doctors. A New York Times analysis published on 1/16/12 stated that 25% of doctors take cash directly from the drug companies.

    Digging deeper into the data it is clear some of the disparities can only be explained by widespread disease conditions. The first and maybe the largest is obesity. Being obese means you are 20% or more over your ideal body weight.

    In the US, 27.7% of us are obese compared to 13.4% in Denmark, 11.2% in Sweden and 10.2% in Italy.

    Hospital beds, in the US are 3.1 beds per thousand people versus 13.7 in Japan, 8.2 in Germany and 5.1 in Switzerland.

    The number of nurses per 1000 people is also an indicator of how well people are being cared for. We have 10.8 nurses for every 1000 people compared to 15.3 in Iceland, 15.2 in Switzerland, 14.8 in Belgium and 11.0 in Germany.

    In addition to an apparent nurse shortage, medical doctor graduations, per 100,000 people, are also coming up short. The US graduates 6.5 doctors each year for every 100,000 people. This is two thirds lower than other countries with Ireland graduating 16.2, Denmark 16.4 and Germany 12.5.

    Tragically, over 50 million Americans do not have access to regular health care. This is in direct opposition to the rest of the industrialized world that, without exception, provides coverage for all their citizens.

    If we normalized our total spending on health care to include the 50 million people that currently do not have access (Source: Kaiser Report on the Uninsured), our cost would soar to over $3.25 Trillion per year or 22% of our total GDP.

    That is the cost if we continue to operate health care as we do now.

    Insurance companies extract as much as 40% of the premiums we and our employers pay. The insurance companies use these funds for non-medical corporate expenses including marketing, administration, bonuses, dividends and profits.

    The "Affordable Health Care Act" will limit the amount of funds that insurance companies can extract to 15% of premiums paid, but this is still being lobbied. Medicare manages the same functions for an economical 2-3% according to the Congressional Budget Office.

    We should remember health care insurance companies never deliver actual health care. It is heart-breaking that as much as 40% of what we pay is carved out by these companies.

    Private insurance explains much of the cost disparity between the US and other industrialized countries. We need to remember that all comparative industrialized countries have universal national health care systems similar to our Medicare for Americans over 65 years.

    When it comes to health care in the US it is evident we are paying for a Cadillac, but we are driving a Kia.

    According to a January article in the Atlantic magazine, the concentration of health care spending is excessive, with the top 5% of people consuming 50% of total expenditures. The major cause is that they are often elderly, gravely ill, and approaching death.

    We also have a system of "paying" for procedures versus outcomes. If we pay doctors for success in outcomes, they would do it as cost effectively as possible, without calling for excessive procedures to achieve maximum allowable billing while avoiding potential lawsuits through un-needed "defensive medicine".

    All of this means we really have disease management versus true healthcare. We need to strategically change this as soon as possible to achieve better outcomes and greater economy.

    The health care issue in America could be resolved for less than the $3.25 Trillion needed to cover everyone.

    Simply modify the existing Medicare eligibility language to, "All Americans qualify for Medicare at minus nine months of age."

    Doing this will "transform" health care in America.

    We could begin to pay for medical outcomes versus services provided. We would have everyone in the plan with effective preventative care. We would reduce infant mortality. We would improve our overall health and extend our lives. We would train more doctors and nurses. We would become healthier and more competitive as a nation as we would be more productive at work. We would have everyone contributing to the program. We would have more resources for actual health services.

    Importantly we would forever be free of insurance and drug companies tampering with our personal freedom and democracy. Their corrupting influence on our health care, via lobbying in Congress, would end.

    What we have today is an unbalanced, inadequate, unsustainable and outrageously expensive system which, some would suggest, looks a lot like a "racket".

    As we move into this election year, it is important that we convey our point of view to our political representatives at the local, state and national levels of government.

    As we think this issue through, we might ask ourselves these questions:

    "Can the current health care I have with my family, continue into the future?"

    "Will my employer continue to pay for it? And for how long?"

    "What will the price of health care be five, ten and twenty years from now?"

    "If the current trends continue, will my family be able to afford health care?"

    "What will I do if my family and I lose our healthcare tomorrow?"

    So, do we really have a choice in Health Care? I believe we do.

    It is called, "Medicare for all".

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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