Sunday, October 16, 2011

IV. Medicare Report - The High Cost of U.S. Health Care! ©

By: Dan Reed, American Citizen

Structural Problems Within U.S. Health care Delivery

I conclude my four part report on Medicare by reviewing why Medicare, and all other U.S. health care costs are constantly rising. 

Delivering efficient health care to 300 million Americans spread across 50 states is surely the major challenge of our time! The scope of providing health care is extremely variable, which makes it almost impossible to predict and plan for the quantity and type of health services that will be required at any given time. Add to this, the long neglected structural problems within America’s health care delivery system, and what you get is extremely high costs and rationed access.

The following report outlines the major structural problems with U.S. health care delivery, and suggests a few solutions:
  • The complex, disjointed U.S. health care business
  • Why is health care is so expensive in the U.S.
  • Five big health care dilemmas
  • How can we bring down health care costs
  • At it’s best, U.S. health care is “Second-Rate”

The Complex, Disjointed, U.S. Health care Business

America’s health care delivery system maybe the most complex in the world! In order to properly evaluate America’s health care delivery system, we must view the entire system as a whole, and resist simply focusing on individual parts of the system! After review, I learned the overall system is made up of the following four groups, and twelve individual parts:


1. CORPORATE AND SMALL BUSINESS EMPLOYERS represent the largest subgroup in the U.S. health care system. In this "employer based system", workers are provided health care insurance through their employers. This health insurance benefit represents an untaxed portion of each employees annual income.

2. PRIVATE FOR-PROFIT HEALTH INSURANCE CORPORATIONS service the employer-based market. These health care insurance corporations contract with employers to provide their employees group health care insurance policies. 


3. MEDICARE provides taxpayer assisted health care coverage to people over the age of 65, and people under 65 who are permanently disabled. FICA payroll taxes, deductions from retirees monthly Social Security benefits, and general tax revenues fund Medicare.

4. VETERANS HEALTH CARE Is a taxpayer-funded entitlement, awarded to military veterans for their long military service, and/or their wounds received during combat.

5. CHILDREN'S HEALTH CARE is taxpayer-funded welfare provided by the government to children who's parents do not have health care insurance.

6. MEDICAID is taxpayer-funded welfare that provides health care coverage to the poor.


7. DOCTORS provide real medical treatment to sick and injured patients. Currently Doctors operate on a "fee-for-service-billing-method", which allows the doctor to charge patients for each treatment or test performed by the Doctor!

8. HOSPITALS support doctors and patients by providing the facilities, medical equipment, and specialized staffing required to perform life saving medical procedures like cancer treatment, surgeries, scans, x-rays, and much more.

9. PHARMACEUTICAL CORPORATIONS provide life saving prescription drugs to patients. Pharmaceutical Corporations complete final research on new drugs developed in University Research labs, which are funded by U.S. government grants.

10. MEDICAL EQUIPMENT SUPPLIERS manufacture, sell, and rent special purpose equipment used by doctors and hospitals in the treatment, recovery, and on-going support of patients.


11.UNINSURED PEOPLE make up about 33% of the overall U.S. health care system. Uninsured people cannot afford early stage medical treatment, which worsens over time, and leads them to the hospital emergency room, and hospitalization with advanced illnesses that greatly drive up their treatment costs.

12. HOSPITAL EMERGENCY ROOMS are overloaded with uninsured people who cannot afford medical treatment. The cost of this hospital care is not free! Hospitals recover the cost of treating uninsured people by adding these costs onto the bills of everyone else.

Why Is Health care So Expensive In The U.S.?

The U.S. spends twice per capita what other industrialized countries spend on health care! When compared with other industrialized countries, the U.S. ranks around 30th in measured health care performance! About 30 million American’s receive little or no heath care because they are either not insured or under insured. And, the U.S. is the only industrialized country where people go bankrupt when they get sick! Why is health care so expensive? 

There are six major issues that significantly drive up health care costs in the U.S.:

1. America’s health care system is focused on treating sick people, not preventing their illness!

2. Health care in America is not viewed as a public health issue! Instead, health care in America is run like a business that supplies for-profit health care products/services to customers!

3. American doctors charge too much compared to doctors in other countries!

4. The existing employer-based system dates to the 1940’s, and is extremely obsolete for today!

5. Private for-profit health insurance corporations are allowed to operate as “market monopolies”, free to: fix prices, ration health care, and eliminate competition!

6. America’s health care system is overly complex and disjointed! The system sustains itself through a combination of: extremely high cost, brutally rationed access, and political power!

Five Big Health care Dilemmas

Providing affordable health care coverage to 300 million people spread across 50 States is a daunting task to be sure! A June 15, 2009 Time magazine article titled “The 5 Big Health Care Dilemmas” identified the following five big health care issues:

1. Big new government system? This highly controversial solution would give everyone the option of being covered by a government-run plan similar to Medicare. A public plan could charge premiums 30% less then those of private for profit health insurance plans. Survey’s show that about two-thirds of those who currently have private insurance would move to a public plan if available! A public plan of this magnitude would be a powerful force to contain costs! However, it could also destroy the private for-profit health insurance industry!

2. Can the nation afford health-care reform? Most experts agree that reforming the current system will significantly reduce costs in the future. However, this will require huge up-front investments in the short term, to expand coverage too millions of uninsured Americans! Another controversial solution would tax employer provided health coverage as income!

3. Can we really cover everyone? The present health care system allows many employers to refuse health care coverage to their employees, which shifts the costs onto everyone else! Another controversial solution would require all employers to provide health insurance to all their workers. Opponents claim this “Employer Mandate” would significantly increase payroll costs, and become a job killer!

4. What will be covered? Universal coverage would require establishing a minimum package of standard coverage. But, who would decide the make-up of this standard coverage package? Would congress decide? Would some independent agency decide?

5. How Can We Bring Down Health care Costs?

Experts that study the U.S. health care system explain the U.S. spends disproportionately more (16%) as a percent of GDP than similar industrial countries. By some estimates, as much as $0.30 of every U.S. health care dollar is spent on medical treatments that are unnecessary, ineffective, duplicated, and sometimes harmful! Changing this will require:

a. Starting with the way health care providers are reimbursed. Research published in the journal Health Affairs, shows that U.S. doctors charge much higher fee’s than doctors in all other countries. Furthermore, the U.S. doctors use a unique fee-for-service-billing-method, which multiplies their high fees, by charging for each and every treatment they perform! In France, 80% of French doctors work under a system that caps how much they can charge! All French citizens have access to a doctor, thanks in part to one of the highest rates of doctors per capita in the world.

b. Moving to computerized Medical records. In the U.S., Doctors, hospitals, and patients individually hold medical records. Other countries have created large medical record databases that support and track patient treatments and public health. In Denmark, Doctors and nurses carry wireless handheld computers, to call up the records of each patient. Instead of one single system, Denmark uses various compatible systems linked together as a network.

c. Putting the emphasis on preventative care. U.S. doctors focus on treating sick patients, not on low cost early stage prevention! In Britain – the National Institute for Health and Clinical Excellence (NICE), set up a controversial program, which uses a metric called quality-adjusted life year, which grades a person’s health-related quality of life from 0 to 1. U.S. opponents call this “death panels”, and say it’s unethical to consider costs when deciding how to treat patients. However, NICE doctors believe doing this in the U.S. would revolutionize the culture of major U.S. pharmaceutical companies, whose drug products cost more than twice what equivalent drug products cost in other countries.

d. Managing chronic health problems, which currently account for $0.75 of every medical dollar spent. The U.S. has the best cutting edge medicine in the world, yet 75% of our health-care costs are attributable to chronic, preventable diseases. Chronic disease like heart, asthma, diabetes, and cancer place the greatest strain on U.S. health care costs. Studies show that the vast majority of money spent is when these chronic diseases require emergency care and hospitalization. In Germany, they began “disease management” programs in 2002 to cover 3 million chronic patients.

e. Significantly reducing private for-profit health insurance administrative costs, which add $0.33 to health care premiums, but provide zero value. It’s a mystery, why Private for-profit health insurance corporations in the U.S. are allowed to operate as legal monopolies? One third of every health care dollar ($800 billion) is spent for corporate profits, executive salaries, advertising and marketing! In France, their state-run health insurance program reimburses 65% of most medical bills. The patient assumes the remaining costs. To cover these remaining costs, over 90% of French citizens pay for supplementary health insurance (similar to Medicare advantage), mostly through regulated providers called mutuals. In the U.S., the idea of making health insurance cheaper is off the table! Why?

There’s no doubt the above reforms would create a major cultural and economic revolution all over the complex, disjointed, self-interest motivated, U.S. health care industry! However, the alternative is staying the course: raise premiums, cut health care services, and ration access!

At it’s Best, Current U.S. Health care is “Second-Rate”!

Supporters of America’s existing health care system point to 21 renowned research hospitals: Johns Hopkins, Mayo Clinic, Cleveland Clinic, etc, along with U.S. pharmaceutical and medical technologies, as examples of America’s “best in the world” health care system. Its true these “Centers Of Excellence” are the best in the world! However, at it’s best, U.S. health care is “Second-Rate” for the following reasons:

1. U.S. health care provided by doctors, hospitals, and pharmaceutical corporations costs more than twice what it costs in other large industrial countries!

2. Private for-profit health insurance monopolies add zero value to health care, they actually duplicate existing FICA services, and they add 30% to U.S. health care costs!

3. Unlike other industrial countries, the U.S. does not provide health care too all its citizens!

The U.S. health care system maybe the best in the world if you’re wealthy, a corporate executive, belong too a large union, or on Medicare! However, if you’re among the general U.S. population: your health insurance is grossly expensive, your health insurance can be cancelled or denied when you get sick, your illness may bankrupt you, or you can’t afford the extremely high price of health insurance coverage!

© This document is property of Dan Reed and reproduction requires his prior approval. Approval may be attained through an emailed request to 

No comments:

Post a Comment

Add Your Comments In This Box