The American Healthcare Crisis: Profits, Propaganda, and the Failure of Privatization
With the massive costs Americans pay for their healthcare one would think America would have the best healthcare in the world. Unfortunately that is certainly not the case. America has the only privatized healthcare system in the western world, and it is also the on of the worst; if not the worst. America has the highest infant mortality rate along with the highest death-rate for children between the ages of one and four and adults between the ages 15 and 24. The following is from Shannon Brownlee’s book about healthcare issues, facts, and statistics.
"Today, forty-seven million Americans, or one in six under age sixty-five, have no health insurance. Two million of them are veterans who have been denied access to VA hospitals either because they earn more than twenty-five thousand dollars a year or because their condition is not service related. Huge and unplayable medical bills have become the leading cause of personal bankruptcy.
Uninsured cancer patients receive half as much care as the insured and may be more likely to die, depending upon the type of cancer. Uninsured car crash victims receive less care in the hospital and have a higher mortality rate than the insured. Women who lack insurance don’t get regular Pap Smears to check for cervical cancer. Children who are uninsured go without routine vaccinations; those with asthma don’t get preventive treatment.
In 2006, we spent an estimated $2.1 trillion on health care. That’s almost as much as the worldwide market for petroleum and more than the United States spends on food. We spend more per capita on health care than the Chinese spend, per capita, on everything. Looking to the future, the Centers for Medicare and Medicaid Services predicts annual health care costs will hit $4.1 trillion by 2016, eating up nearly 20 percent of our gross domestic product. We currently spend nearly $6,000 apiece on health care, two and a half times the median for the rest of the industrialized world.
What do we get for our money? Politicians are constantly telling us we have the best health care in the world, but that’s simply not the case. By every conceivable measure, the health of Americans lags behind the health of citizens in other developed countries, starting with life expectancy. In 2001, U.S. life expectancy at birth was seventy-seven years, which put us a few months ahead of Cyprus, Costa Rica, and Chile buy years behind Canada, Japan, and Western Europe. We rank twenty-eight in the world on infant mortality rates, behind Cuba, the Czech Republic, and the United Kingdom, countries that ought to be beating us at soccer, not health. We are no less diseased than citizen of most developed nations, and our medical care is, with few exceptions, no better at helping us survive specific diseases.
Some policy analysts argue that American health care costs a lot because prices are higher here than they are in other countries. We pay dearly for innovation, for new technology like cardiac stents and surgical robots and faster CT scanners. We also pay more than other countries for everything from malpractice to drugs to doctors. In a famous paper titled “it’s the Price, Stupid,: three health care policy analysts and an economist point out that the number of doctors per capita is lower in the United States than the median number in the rest of the developed world, but our doctors have much higher incomes. The average American specialist earns $274,000 a year, and the average general practitioner makes $173,000 amounts that are, respectively, 6.6 and 4.2 times the income of the average patient. The rates in other countries average out to 4 and 3.2. U.S. doctors make so much more than physicians in the rest of the world not so much because they charge more, but because of the volume of services they deliver, the large number of colonoscopies, for example, hip replacements, and office visits. When it comes to hospital and drug costs, on the other hand, the culprit is higher prices. The average cost per day in the U.S. hospital is $1,666, four times the average in the rest of the developed world." 1
History
How did we get this far? How was this system of such unethical conduct created? Where did the HMO (Health maintenance organization) a type of managed care organization (MCO) start?
It all started with President Richard Nixon. John Daniel Ehrlichman was counsel and assistant to the President for Domestic Affairs (who ended up serving a year and a half in prison for the Watergate scandal). A recording from February 17th, 1971 where Nixon and Ehrlichman talked about healthcare revealed their willful acknowledgment that privatizing healthcare would create an unethical and profitable system.
Ehrlichman: “We have now narrowed down the vice president’s problems on this thing to one issue, and that is whether we should include these Halth Maintenance Organizations like Edgar Kaiser’s Permanente thing.” Nixon: “Now let me ask you… You know I’m not too keen on any of these damn medical programs.” Ehrlichman: “This is a private enterprise.” Nixon: “Well that appeals to me.” Ehrlichman: “Edgar Kaiser is running his Permanente deal for profit and the reason he can do it… I had Edgar Kaiser come in, talk to me about this and I went into some depth. All the incentives are toward less medical care because the less care they give them the more money they make.” Nixon: “Fine” Ehrlichman: “… and the incentives run the right way.” Nixon: “Not bad.” 2
The next day on February 18th, 1971 Nixon addressed the nation stating the following. “I am proposing a new national health strategy. The purpose of this program is simply this. I want America to have the finest health care in the world and I want every American to be able to have that care when he needs it.”
It seems Nixon’s plan, although he had to lie through his teeth, worked. Patients are receiving less and less care if they are uninsured or over treatment in some cases if insured. While one in six today do not have medical insurance the medical-industrial complex, one of the major ten sections of the stock market grew to be exuberantly rich and wealthy.
Privatized medicine was promoted throughout the Reagan administration which made the American public afraid of socialize medicine by attaching the justification of all means; they called it a communist plot. Ronald Reagan in his audio recording Ronald Reagan speaks out against Socialized Medicine makes the following illogical conclusions about socialized medicine.
"My name is Ronald Reagan. One of the traditional methods of imposing state-ism or socialism on a people has been by way of medicine. The doctor begins to loose freedoms; it’s like telling a lie, one leads to another. A doctor decides he wants to practice in one town and the government has to say to him you can’t live in that town they already have enough doctors you have to go someplace else. All of us can see what happens once you establish the president that the government can determine a man’s working place and his working methods and behind will come other federal programs that will invade every area of freedom as we have known it in this country until one day we will awake to find we have socialism." 3
The previous explanation is a rather interesting piece of literary work not designed for the intellectual. First, Reagan was an actor not a doctor, sociologist, or involved in any other educated area having to do with socialized medicine. He should not be taken as an authority figure in such a context. His entire statement isn’t even a complete thought. Even if it was it is not backed up by any credible sources or concise reasoning. This is a great example of propaganda used in America to promote the opposite of what the public should desire.
To further the history of privatized health care brings up to the Clinton administration. In 1993 Bill Clinton created the presidents task force on national health reform. This was referred to by opponents as Hillarycare because Hillary Clinton, the first lady, headed the operation. Hillary put up a fight, created head-aches, and nightmares for the federal government and medical industry alike. The healthcare industry spent hundreds of millions of dollars to stop Hillary’s healthcare plan. They even bought Hilary out for the remaining years of Bill’s presidency. Hillary never brought up healthcare again.
After this ordeal and a decade and a half of no reforms the health care industry doubled and tripled profits making obscene wealth for such unethical conduct. “Then there’s the $30 billion in after-tax profits earned by health insurance companies.” 4 The CEO’s of the healthcare industry became million and billionaires like Mike McAllister (CEO of Humana), John W. Rowe (CEO of Aetna), and Bill McGuire (CEO of United Health). The industry itself broke the law because it was cheaper to pay the court fees than follow the law. Aetna was hit with a $120 Million settlement for cutting reimbursements to doctors. Blue Cross/Blue Shield paid a $117 Million settlement for 67 companies cheating Medicare. CIGNA was charge $85 Million for not paying doctors. HCA settled for $1.7 billion after being accused of false Medicare claims and other offenses. 5
The largest exercise of unethical conduct however was buying the U.S. congress just like the industry bought Hilary. One can read for themselves in The New York Times article Once an Enemy, Health Industry Warms to Clinton written on July 12th, 2006 by Raymond Hernadez and Robert Pear. It is easy to control the congress when there are three to four times as many health care lobbyists as there are members of the U.S. congress. 6
The privatized insurance companies only act as the middle man between the outlandishly expensive and unregulated prescription drug providers. Congressman Billy Tozan pushed hard for the reform of drug laws that ended up bringing about the bill that is now law, The Medicare Drug Prescription Improvement and Modernization Act. It was the largest overhaul of Medicare in public health in about four decades. The money need for such a program was estimated to be around $534 billion. 7 Luckily for the insurance and drug companies and unfortunately for taxpayers in early 2005 the White House announced that $1.2 trillion would be needed. 8 After the bill was maid law more than a dozen congressional aids went to work for the healthcare industry. The largest check went to Billy Tozan to become the CEO of PhRMA making a $2 million salary. 9
Comparing other nations
Of course foreign healthcare is slandered by American news organizations, the leader of which is FOX news. One must realize that with consolidated wealth and power the same people that own a number of large corporations and conglomerates such as Time-Warner or ABC-Disney own the news organization and are not going to point out their own faults and greedy propaganda ploys. However some reporters and news organizations are being bold such as MSNBC publishing the article U.S. ranks 42nd in life expectancy, published in 2007. 10
In other countries hospitals do not have to check to see if they have insurance for health coverage. One does not have to sit down and fill out a piece of paper before they will be permitted to see a doctor. All you need is yourself, driver’s license, or a home address. Concurrently doctors are paid less but are guaranteed payment so they do not worry about financial matters stemming from the patient, they can just work in the patients best interest.
Doctors rightfully complain that they would make less if a plan for “socialized” medicine would be enacted. However, one must take into account what they pay for. Doctors either have a private practice in which they have to pay for their own health care and insurance against medical malpractice. If they work for a company or corporation they become a salary employee with the same risks for being fired along with the ever decreasing job security small and big business are portraying. They also have to cover their astronomical school bills. All these factors justify such high pay because the risk-reward, cost-benefit factor.
However, in all other westernized countries were there is cheap and free education, job security because jobs are provided by the state and medical malpractice insurance is unheard of. The cost-benefit, risk-reward threshold for doctors in other countries is much lower. Arguably doctors in other countries live more comfortably, especially when taking peace-of-mind into account, then those in America.
Doctors in other countries get paid better for the better their patients feel. If doctor get their patients to stop smoking, lower their cholesterol, or lower their blood pressure they get a raise. One can pick their own doctor and there are no referral programs that must be complete for insurance companies.
Other healthcare systems have criteria for releasing patients not on whether the patient has paid their bill but whether they are fit to leave. Some go so far as to provide monetary reimbursement to those who need to pay for their transpiration home.
In France they have a 35 hour work week and get work off 3 months a year. They have free healthcare where doctors will make house calls. If you’re to sick to cook, clean, or take care of your kids, a government paid service person will do those things for you. They have cheap (if not free), professional childcare programs, cheap (if not free) college education, and cheap (meaning under ten dollars, if you can afford it) prescription drugs.
Many other facets of American life are socialized because they are more cost-effective for the public that way. These services include a public library, the United State Postal Service, and a police and fire department. The healthcare system would be a nice addition as well.
Finance
Prescription drug coverage, costs, and companies are an exuberantly long and important topic. Before we embark on that adventure it is significant to understand that the biggest issue with American privatized healthcare is that it will bankrupt our economy if it isn’t changed. Not only will it bankrupt the America in the future it is also bankrupting citizens today.
Laurence J. Kotlikoff is Professor of Economics at Boston University. He is one of the nation’s leading experts on fiscal policy, national saving, and personal finance. He is also the author of various books, documents, and essays published by The MIT Press. In his book The Healthcare Fix written in 2007 he expands on the ramifications of privatized health care and states the following in his book.
"The United States is now engaged in… perpetuating a suicidal status quo. Its policies, primarily those connected with Medicare, Medicaid, and the rest of the healthcare system, are driving the country to fiscal, financial, and economic ruin. The only question is when the crash will occur and who will be in the passenger seats.Back in 1965 MMS [Medicare, Medicaid (state as well as federal) and Social Security programs] costs represented 2.5 percent of GDP. Today they represent 9.4 percent. In a decade, they’ll constitute 11.9 percent. By 2020 they’ll be 13.6 percent. In 2035 they’ll represent 18.4 percent. In 2050, they’ll total 21.8 percent.Buying health insurance on one’s own (outside of an employer’s plan) is astronomically expensive. Today Blue Cross Blue Shield is charging a family of four living in Boston $19,757 to buy a plan with full coverage. United Health is charging $45,166, an amount larger than U.S. per capita income.The average premium cost to employers of insuring the health expenses of their employees and their families is lower but still incredibly high: over $12,000 per worker for large firms with 200 plus employees. Small businesses with fewer than 200 employees aren’t so lucky: they pay 80 to 90 percent of the price charged to individual purchasers of health insurance. If all this weren’t bad enough, rising health care costs are driving American companies broke. Collectively, our nation’s firms are now paying some $500 billion annually in employee and retiree health insurance premiums and health expenditure claims (in the case of companies that self-insure). It’s no coincidence that Ford Motor Company is spending over $3 billion per year for healthcare for its retirees and current workers, that these costs are rising annually in real terms at roughly 6 percent, and that it is in the process of laying off 40 percent of its workforce. Nor is it a coincidence that General Motors is sitting on a $15 billion healthcare liability.Many employers are starting to… get out of… providing health insurance coverage for workers. In 2000, 66 percent of non-elderly Americans were covered by employer-based health insurance. Today’s figure is 59 percent. Employers… are beginning to renege on their implicit contracts [for healthcare] by asking their employees to pay for ever larger shares of the premiums. Much of what has the appearance of higher employer costs is starting to come out of the hides of employees.Our current public-private healthcare system is incredibly expensive, inefficient, and exceptionally financially hazardous to maintain. This U.S. level of per capita healthcare spending is the highest in the world; indeed, it’s roughly twice that of the typical developed country.To be sure, much of the support for universal healthcare is coming from the 47 million uninsured, and much is coming from the millions of insured who see the prospects of losing their own coverage and even their jobs because of escalating healthcare costs.Those who are really sick can walk into most emergency rooms in the country’s hospitals and receive care regardless of whether they can pay for it. (They may get stuck with a big credit card bill, but they’ll be seen and treated.)" 11
References:
1. Brownlee, Shannon. “Overtreated: Why Too Much Medicine Is Making Us Sicker and Poorer.” Holzbrinck Publishers. 2007
2. 3. Moore, Michael. “Sicko” Dog Eat Dog Films. 2007
4. Brownlee, Shannon. “Overtreated: Why Too Much Medicine Is Making Us Sicker and Poorer.” Holzbrinck Publishers. 2007
5. Moore, Michael. “Sicko” Dog Eat Dog Films. 2007
6. Hernandez, Raymond and Pear, Robert. “Once an Enemy, Health Industry Warms to Clinton.” July 23, 2006 <http:>
7. Office of the Press Secretary. “Fact Sheet: Medicare Prescription Drug, Improvement, and Modernization Act of 2003.” “The White House. <http:>
8. “2008 Budget Fact Scheets” The White House. <www.whitehouse.gov>
9. Moore, Michael. “Sicko” Dog Eat Dog Films. 2007
10. “U.S. ranks just 42nd in life expectancy.” MSNBC. August 11, 2007 <http:>
11. Kotlikoff, Laurence J. The Halthcare Fix. The MIT Press. 2007.
Other References:
Ohlemacher, Stephen. “US Slipping in Life Expectancy Rankings.” August 12 2007. <http:></http:></http:></www.whitehouse.gov></http:></http:>
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