For some inexplicable reason, health care financing is considered "controversial". I believe our implementation of health care financing is, indeed, controversial, as it is irrational (unless you are a for-profit insurer), costly for everyone, and fails to keep people healthy.

The USA has two institutionalized ways to pay for health care: public (Medicare, Medicaid), and Private (employer-provided and individual/family). It seems obvious that the Affordable Care Act ("Obamacare"), signed into law in 2010, is an extension of the private model of funding health care, requiring all Americans to obtain health insurance through private insurers.

Given that this is the greatest possible gift to the insurance industry, one would think that the conservatives would love it. But no, the "individual mandate", which requires citizens who do not have employer-provided insurance to find it on their own, is reviled because making citizens do stuff is inherently bad.

At this time, the Affordable Care Act has survived a Supreme Court challenge based on the intividual mandate, and appears to be safe for a few years more. Over the longer run, its fate will depend on the strength of the will of the American public, who are growing more supportive as newer provisions kick in, versus the will of the conservatives, who still regard the act, with its individual mandate, anathema.

When the Affordable Care Act was passed, there were some 50 million Americans ( 17%, or more than one in six) not covered by any form of health insurance. For people living of less than 200% of the federal poverty level, the number was 30%, or about 30 million people. (Source: Census Bureau.) Over time, these dismal figures will improve as more people get coverage under provisions of the act, just as they have under the Massachusetts Health Care Reform Law ("Romneycare"?) passed in 2006 (Source: Wikipedia.)

There are three things everyone should know about the US healthcare financing system:

  1. We are the only developed nation in the world that fails to provide government-financed healthcare as an affordable, basic human right.
  2. We pay about 53% more per capita per year for health care than the next most expensive nation, Norway. Our cost: $8,233; Norway's: $5,388. We pay over 2.5 TIMES the average of the 34 most developed nations. (Source: OECD)
  3. By nearly all measures of public health, that is, statistical measures of the access to healthcare as well as personal health, the U.S. ranks near the bottom. (Source: OECD)

Our healthcare system, with its historical reliance on employer-financing, leaves 17% of our citizens without healthcare coverage and thus without the means for preventive or curative care except by paying "retail" astronomical, back-breaking, bankrupting costs when they need care. The entirely predictable consequence of this cost barrier to access of the healthcare system results in most of the un-insured (and many of the under-insured) failure to seek treatment until their condition is dire, with the inevitable result that many forms of cancer, diabetes, heart disease and other killers, often relatively easy to control with early diagnoses, get to burrow in and savage the individual who avoids treatment because she can't afford it. And then she dies. Makes ya proud to be an American, doesn't it?

Public health: the measure of the health of a population

The Organization for Economic Cooperation and Development (OECD) report above contains information from the 35 most developed nations. The ranking of the United States within this group speaks eloquently of the effectiveness of our healthcare system:

US Healthcare Rank
 Measure  USA Measure USA Rank Average OECD
Measure/Rank 
 Life Expectancy  78.7 years  27  79.8/23
Infant Mortality 6.1 deaths/1,000
live births
30 4.2/24
Doctor Visits/Year 3.9 29 6.4/15

Statistics like these are maintained by the World Health Organization as well as the OECD. The methodologies for collection and reporting are diferent, but the stories are similar: the US spends a boatload of money and gets mediocre results.

Why do we spend so much money? Because of the Private component of our healthcare financing system. Whether paid for by employers (including employee premium payments, employer supplements, co-pays and deductables) or by individuals (with extortionate premiums, deductables and co-pays), all this money gets filtered through insurance companies. Insurance companies are largely in it for the money, and for every dollar they spend, $0.20-30 is used for "administrative" costs. That is: shareholder dividends, executive compensation (salary and bonuses), advertising/promotion, paperwork. This amount will be capped at 15% for large employers, 20% otherwise, by the Affordable Care Act. By contrast, Medicare's administrative burden is a few percent: 2% or so is the average estimate. 

 So the insurance companies paying dividends and executives, advertising their wares and paperwork is certainly part of it, but there must be more. Focusing on the insurance companies is easy because they are low-hanging fruit, being on nobody's most-admired list. But the system itself runs primarily as a fee-for-service machine. THis means that medical providers are paid like shop owners: you buy somehting, you pay for it. You buy a bunch of things, you pay for each one. Needless to say, there is an incentive to provide services because, as the notorious bank robber Willie Sutton said, when asked why he robbed banks: "That's where the money is." In other words, if healthcare providers were paid a salary, like most of the people they treat, and were paid that salary based on their performance, like most of the people they treat, their incentive would be to keep their patients healthy and long-lived, not to prescribe treatments, procedures or medication that "could/should/oughta" cure what ail the patients.

A couple of cases in point:

  • A man in his mid-70s had congestive heart failure and diabetes. In the last year of his life, he was admitted to his local hospital a dozen times or more because of pain, difficulty breathing, excessive "zaps" from his implanted defibrilator and other problems. In each case he was released after a few days and a barrage of tests, all of which confirmed that (surprise!) he had congestive heart failure and diabetes. What was the value to the patient in terms of extending his life or improving its quality? None. What was the cost: a lot! Eventually he stopped treatment, and was at home for about a week under Hospice care. Then he died.
  • A man in his early 70s was diagnosed with lymphoma. He underwent various chemotherapies, but experienced sever pain and cramps as side-effects of the chemo. Eventually, after a couple of years of treatment, the pain broke through (the cancer had outwitted the chemo, as happens) and couldn't be controlled. The solution? Replace both hip joints! Although I was not privy to the details, apparently proximate to the hip replacement his pelvis was discovered to have become cancerous, likely a metastasis of the lymphoma. And the pain was worse than ever. What to do? Admit him to a rehab facility so they could provide physical therapy to help him walk again. This was deemed a lost cause after a few days, and he was sent home under Hospice care. He died two weeks later after being in hospice care for about two days.

I am convinced that in either of these cases - which are duplicated daily (long periods of suffering, "fighting" the condition, and refusing to acknowledge the inevitable end) across the nation daily. You probable know of cases like these. Why didn't the care-givers counsel the patients and their families on the inalterable course of their conditions and the options for continuing treatment? I don't know the individual caregivers in these cases, but I do know the families, and the subject of end-of-life was never broached until it became obvious that the end would be measured in hours or days, not months. 

Could this have been because the more "care" and "treatment" that could be "recommended" (sold) while the patient lived, the more money the caregiver would receive? I am certain each of the caregivers would say they were "just doing as much for the patient as possible" or similar. But with no incentive to stop treatment (and cut off a source of income), and a positive monetary incentive to continue treatment by any means available - or would that be salable? why wouldn't they continue. Ethics? (Congresscritters say, of course, that campaign contributions would never influence their votes. Honest. Because of their ethics.) 

Our system of healthcare financing incentivizes questionable behavior (over-treatment, predictably ineffectual treatment) and fails to reward good behavior (end-of-life counseling - payment for which was removed from the Affordable Health Care bill when it acquired the Sarah Palin sobriequet "Death Panel"). So it's exorbitantly priced, flagrantly wasteful, shamefully ineffective, and still, so hard-fought and hard-won it will never be changed. America at its best!