Why do we have profit in health care financing?

America’s for-profit, multiple payer system for financing health care might just be the stupidest idea ever conceived.


One look at America’s system for financing health care, a patchwork of multiple, for-profit payers, leaves the impression it must have been conceived by a rocket scientist.

How else to explain it? Certainly for-profit, multiple payer financing wasn’t conceived by an economist, an accountant or a fiscal conservative, because no true conservative or expert in the field would ever tolerate the current system’s inefficiencies.

After all, health care systems have one simple task: providing expedient and quality health care services for all. That is what, when push comes to shove in the form of an injury or illness, rocket scientists, economists, accountants, fiscal conservatives and the rest of us all want.

Logically, the mechanisms for funding such a system would be designed and optimized for fulfilling just that mission. Indeed, according to Dr. Philip Caper, founding member of Maine AllCare, the role of health insurance is exactly that:

“The purpose of health care financing systems is to facilitate the delivery of health care services, to protect individuals and families against huge medical care expenses and to avoid breaking the national bank while they do so.” ¹⁾

Note there’s no ‘making a profit’ in that list. There are reasons it is missing.

The Problem of Profit in Financing Health Care

Health management organizations (HMOs) like Kaiser Permanente, Aetna, United Healthcare, CIGNA, Humana, Blue Cross Blue Shield and others constitute the foundational core of our current for-profit, multiple payer financing of health care.

Unfortunately, it is a foundation built on sand versus rock, where much of the health care expenditure leaks away due to inefficiencies and waste. The sad fact is our profit-seeking private health insurers don’t even come close to delivering the return on investment that a public single-payer would in terms of:

• Efficiencies,
• Quality of services provided, and
• Universality of coverage.

Efficiency

One of the primary reasons Americans pay more and get less for health care is the extra large administrative overhead built into private for-profit health financing versus the same for a single-payer system.

All private health financing entities must devise a paper-shuffling system for managing personal accounts, securing premiums, and paying health providers. For a single-payer, one centrally administered system services all and delivers cost control, whereas in a system with multiple payers, each private insurer creates its own system where no two corporate systems are alike. The problem with this redundancy is the clinics and hospitals providing health care are also saddled with additional staff and administrative overhead simply because of the need to deal with the varied, ever-changing administrative systems of the multiple private payers.

Furthermore, unlike the governmental single-payer, the private health insurer accrues additional overhead in the form of:

• Marketing and sales
• Underwriting liability, and
• Profit

None of these contribute one iota to the amount or quality of health care; to the contrary, the need for such in the private sector, where none exists in a governmental single-payer system, only leads to less bang-for-buck for each dollar spent.

Moreover, the current trend towards exorbitant CEO and high-level executive salaries and benefits means additional revenues must be generated by private sector payers.

A 2003 study by the New England Journal of Medicine noted that administrative overhead consumes 31 percent of America’s health-care expenditures, ²⁾ a figure also used by Physicians for a National Health Program (PNHP). ³⁾

Contrast that to Canada’s governmentally-funded single-payer system, where administrative overhead is less than 17 percent. ⁴⁾ Or contrast it to our own Medicare program, a government-managed single-payer system, financed principally by taxes and publically mandated premiums, which insures many of those aged 65 and older and does so with only five percent administrative overhead. ⁵⁾

One of the stipulations of Obamacare, enacted by Congress in March of 2011, states that private health insurers must keep administrative overhead to less than 20 percent, a level that has led to considerable squawking from the private payers. ⁶⁾

Gee, too bad. The fact is, if the private health insurers can’t keep their administrative costs as low or lower than public single-payers then they probably shouldn’t be in business.

Interestingly, if the bureaucratic waste in U.S. health care could be cut to match Canadian levels, funding universal health care would cease to be an issue:

The U.S. wastes more on health care bureaucracy than it would cost to provide health care to all of the uninsured. Administrative expenses will consume at least $399.4 billion out of total health expenditures of $1,660.5 billion in 2003. Streamlining administrative overhead to Canadian levels would save approximately $286.0 billion in 2003, $6,940 for each of the 41.2 million Americans who were uninsured as of 2001. This is substantially more than would be needed to provide full insurance coverage. ⁷⁾

Physicians for a National Health Program (PNHP) essentially echo the same message: that a potential savings of more than $400 billion per year on paperwork alone is enough to provide comprehensive coverage to everyone without paying any more than Americans already do. ⁸⁾

Quality of Services Provided

It’s easy to understand why the for-profit motive of America’s private health insurers, which is to create share-holder (and corporate executive) wealth through maximizing profitability, adversely affects the quality of health services provided.

Take premiums. Profit-driven insurers will charge whatever the market will bear. In theory, the competition between multiple private insurers should drive down health-care costs: at least, that’s what proponents of private health financing continually tell us. In reality, that has not happened. According to the American Medical Student Association (AMSA), profits for the top 17 private health insurers rose by 114% between 2004 and 2007 compared to an average of just 5% for the S&P 500, while health premiums rose by 60% and the ranks of the uninsured by six million (note the increase in the number of uninsured came principally from citizens, not immigrants)! ⁹⁾ AMSA’s conclusion on this outcome speaks volumes concerning why ‘for profit’ has no place in health-care financing:

This situation- private insurance companies making record profits while health insurance premiums and the number of uninsured skyrocket- suggests that insurance companies have an incentive to price people out of health care to maximize profit. ¹⁰⁾

Certainly profit-driven insurers are motivated to implement measures that will either directly raise revenues or provide the equivalent through cost-savings.

Raising deductibles and co-pays is one means of raising revenue, while cost-savings may be achieved by limiting the services that are funded or limiting access to such services. This is accomplished by:

• Profiling to ensure health providers insure only the healthiest and least-risk prone, or charging higher premiums to those deemed less healthy,
• Denying insurance to those with pre-existing conditions,
• Retroactively dumping those who have filed claims by asserting their health care history was inaccurately stated, a practice known as “rescission”, and
• Establishing coverage conditions that limit or minimize what they actually
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Frankly, for-profit health insurers exist to generate profit: a mission for which they excel. The problem is their bottom-line driven mission undermines society’s broader need to finance expedient and quality health care for all.

Universal Coverage

The inadequacy of for-profit financing is probably most exposed when it comes to the issue of universal health care.

In 2010, the U.S. Census Bureau reported 50 million uninsured Americans, ¹³⁾ while a study by the Commonwealth Fund placed the number at 52 million with another 73 million who had trouble paying for their health care. ¹⁴⁾ Then, the U.S. Center for Disease Control (CDC) reported 59 million Americans were without health care coverage for at least part of 2010. ¹⁵⁾ These are staggering numbers for a society that totals 300 million, especially when contrasted to the situation in most other industrialized nations where health care is available for all.

Moralists would argue something is seriously wrong with any society that would leave 1 of 6 without health care. A statement by H.E Javier Perez de Cuellar, former Peruvian Secretary General of the United Nations, places the issue in perspective:

"A society is judged not so much by the standards attained by its more affluent and privileged members as by the quality of life which it is able to assure for its weakest members.” ¹⁶⁾

From a religious perspective, I do not know whether Perez de Cuellar was Christian, but certainly his comment echoes the essence of the Christian mandate to care for the least, the lost and the last. Given numerous right-wing politicians and pundits portray America as a ‘Christian’ nation rather than a pluralist religious melting-pot, and that, demographically, it is undeniably true that America is predominantly Christian, it begs these questions: Wouldn’t a Christian nation care for its weakest members? Or does a large segment of America simply want to claim Christianity while not actually being Christian?

After all, access to basic health care is a human right, per Article 25 of the United Nation’s 1948 Universal Declaration of Human Rights (UDHR):

Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control. ¹⁷⁾

The UDHR was neither covenant nor treaty so was not ratified by signatories, but many nations adopted it into constitutions or law. While that has not been done in the U.S., note that, per the U.S. State Department, the Universal Declaration of Human Rights is official U.S. policy:

The protection of fundamental human rights was a foundation stone in the establishment of the United States over 200 years ago. Since then, a central goal of U.S. foreign policy has been the promotion of respect for human rights, as embodied in the Universal Declaration of Human Rights. The United States understands that the existence of human rights helps secure the peace, deter aggression, promote the rule of law, combat crime and corruption, strengthen democracies, and prevent humanitarian crises. ¹⁸⁾

Furthermore, note the United States did ratify the U.N. International Covenant on Economic, Cultural and Social Rights, whose Article 12 declares signatories must recognize “the right of everyone to the enjoyment of the highest attainable standard of physical and mental health,” and compels signatories to “create conditions which will ensure all medical service and attention in the event of sickness.” ¹⁹⁾

As documents signed by the U.S. under international law become part of the law of the land, in fact, America has been failing its legal obligations in terms of universal health care.

Naturally, there are those who, despite the legal, religious or moral arguments, dispute this right. Most Republicans are of this ilk, like Tennessee congressman Zach Wamp:

“For some people it's (health care) a right. But for everyone, frankly, it's not necessarily a right. Some people choose not to pay." ²⁰⁾

Wamp contends one-half of the more than 50-million Americans without health care coverage simply choose not to have it. He says they reject their employer’s health care because they don’t want any money deducted from their pay check. ²¹⁾

Personally, I don’t know anyone who has done that. Regardless, let’s literally play devil’s advocate. Suppose Wamp is correct in that some people decline health care because they don’t want to pay. What then to do concerning the other 25 million?

Jesus must have a diabolical twin in Wamp’s world. Take these two perspectives: Jesus as an individual needing health care, and Jesus as health care provider. In the first, if Jesus can’t pay, Jesus presumably dies; in the second, Jesus heals only if the sick are on a plan and the premium has been paid. Frankly, neither meshes with the essence of any scripture I’ve read; perhaps it derives from the Social Gospels of the Holy Bible: The Bush Translation.

The fact is, for-profit, multiple payer systems can’t easily accommodate universal health care. It’s like trying to put a square peg in a round hole; the mechanism is simply incapable of performing the needed task. Perhaps the best analogy on why private health insurers should be abolished comes from Dr. Philip Caper:

“They (for-profit insurers) are like a camel entered into the Kentucky Derby. No matter how much it is trained, how hard it tries, how hard it is whipped or who the jockey is, it never wins. It just wasn’t designed for the job.” ²²⁾

The recent U.S. health care reform commonly referred to as ‘Obamacare’ also falls short in getting the country to a state of universal health coverage. A 2010 report by the Congressional Budget Office (CBO) projects the program will take 32 million off the roll of the non-elderly uninsured by 2019, but that 23 million will remain uncovered. The CBO projects the rate of legal non-elderly citizens who are insured at that time will have raised from 83 to 94 percent. ²³⁾ Paying More for Less

The 34-member Organization for Economic Co-operation and Development (OECD) released its latest report on the state of international health care in November, 2011. While the study includes some statistics for 2010, for comprehensive comparisons one must generally look to the tabulations for 2009 or years prior.

Here’s the succinct summary: The U.S. pays far more for health care than any other OECD nation, but we get far less in return.

First, expenditures. Whether measured on a per capita basis, or as a percentage of gross national product (GNP), what America spends on health care is much greater than any other OECD member:

Total health expenditure, per capita, with parity on U.S. purchasing power (2009)
	United States	$7960
	OECD average	$3361
	Rank in OECD	Highest of 29 24)

Total health expenditure as percentage of gross national product (2009)
	United States	17.4%
	OECD average	9.7%
	Rank in OECD	Highest of 29 25)

The OECD also studied health care expenditure in terms of public versus private financing, and what is interesting is the U.S. ranked 27th of 28. That is, almost all other nations outspend the U.S. in terms of public financing of health care. In essence, due to America’s primary system of for-profit, multiple health insurers, the public outlay for health care is only 47.7 percent, whereas the OECD average is 72.2%. ²⁶⁾

U.S. spending on pharmaceuticals is also worth noting. There, America’s 2009 total expenditure on a per capita basis with parity on U.S. purchasing power shows $956 versus less than $507 for the OECD average. Moreover, the U.S. again trails the field, ranking last of the 25 nations where statistics were reported. ²⁷⁾

Obviously, spending more on health care is not necessarily bad as long as you get a lot more in return- but that’s not the case. Contemplate these statistics:

Life expectancy, total population, from birth (2009)
	United States	78.2 years
	OECD average	79.4 years
	Rank in OECD	25th of 32 28)

Obesity, percentage of population (2009)
	United States	27.7%
	OECD average	15.5%
	Rank in OECD	10th of 10 29)

Infant mortality, deaths per 1,000 population (2008)
	United States	6.5
	OECD average	4.6
	Rank in OECD	30th of 33 30)

Hospital beds per 1,000 population (2009)
	United States		3.1
	OECD average		5.3
	Rank in OECD		25th of 28 31)

Physicians per 1,000 population (2009)
	United States		2.4
	OECD average		3.2
	Rank in OECD		20th of 26 32)

It’s like the New York Yankees, the major league baseball club that has the highest payroll by far (approximately two standard deviations above the norm), somehow also having the worst record in baseball not just once, but year-after-year-after-year. It just doesn’t happen, yet the healthcare equivalent-- the U.S. system-- is exactly that type of nightmarish scenario which never ends.

To be fair, there are a few success stories. America is number two in terms of per-capita MRI capabilities, number two in the five-year colon cancer survival rate, and number one in the five-year breast cancer survival rate; ³³⁾ unfortunately, that is not nearly enough given our massive health care expenditure: we should expect to be at or near the top across the board.

The World Health Organization (WHO) has also analyzed and ranked health systems by country. The last WHO report was in 2000 and, although dated, its relative rankings remain insightful. At the time, overall health care rankings for these notable nations were: France (1), Italy (2), Spain (7), Austria (9), Japan (10), Norway (11), Greece (14), Netherlands (17), United Kingdom (18), Ireland (19), Switzerland (20), Belgium (21), Columbia (22), Sweden (23), Germany (25), Saudi Arabia (26), Israel (28), Canada (30), Finland (31), Australia (32), Chile (33), and Denmark (34). The United States? America was found at number 37, just ahead of Slovenia and Cuba. ³⁴⁾

Americans should be very angry given they spend 2.5 times more per person on health care than the rest of the world, and yet trail badly in virtually all the most important measures of public health.

Given the American love of capitalism, one would presume America loves analyzing cost-benefit ratios. If so… how come Americans put up with this??? The U.S. must demand a higher return on investment from its health care expenditure.

How and Why Other Countries Provide Better Health Care

The reasons why other developed nations provide better health care versus the U.S. are complex and vary greatly due to the nature of the system adopted by a country. However, inefficiencies and waste in America’s for-profit, multiple payer system are probably the biggest culprits in the crime that is U.S. health care.

Here is the perspective of Wendell Potter, Senior Fellow on Health Care for the Center for Media and Democracy and former Vice President of Corporate Communications at CIGNA, concerning the recent OECD study:

The OECD report is just the most recent evidence that Americans are not getting nearly as much bang for the health care buck as citizens of most other developed countries -- and even some countries in the developing world.

The OECD found that the United States spends two-and-a-half times more on health care per person than the OECD average. The U.S. even spends more than twice as much as France, which many experts contend has one of the best health care systems on the planet.

The average expenditure per person in the U.S. is $7,960, a third more than in Norway, the second highest. The OECD average, by comparison, is just $3,233. It is $3,873 in France.

Here are some reasons why: Hospital spending is 60 percent higher than the average of five other relatively expensive countries (Switzerland, Canada, Germany, France and Japan); spending on pharmaceuticals and medical goods is much higher here than any of the other countries; and administrative costs are more than two-and-a-half times the average of the others. ³⁵⁾

Other nations like France, Canada, the United Kingdom and Japan provide universal health care, deliver better medical outcomes, and are more cost effective while doing it versus the U.S., so it behooves Americans to understand how they have accomplished it. A synopsis of the health care system in each country follows where we see the mechanisms for health financing and delivery are unique to each. Commonality is found only in the end product: excellent health services, and, not surprisingly, popularity with the citizens who receive those services.

France

Northern Arizona University’s Paul Dutton encourages Americans to look to France’s model for universal health care versus concentrating on the Canadian model, which also has much to recommend. Dutton writes the French system achieved its 2000 WHO ranking on the basis of the health and longevity of the country’s citizens, its universal coverage, excellence in its health care providers, and the freedoms allotted its patients and providers. ³⁶⁾

Note the French have achieved excellence in health care at very little cost relative America: according to the OECD, the French spend, on a per capita basis adjusted for parity through U.S. purchasing power, just one-half of what an American does: the average French citizen spends $3978 in U.S. dollars on health care, while the average American spends $7960! ³⁷⁾

What is interesting is that, ideologically, the French are quite similar to Americans. Writes Dutton:

An understanding of how France came to its healthcare system would be instructive in any renewed debate in the United States. That’s because the French share Americans’ distaste for restrictions on patient choice and they insist on autonomous private practitioners rather than a British-style national health service, which the French dismiss as “socialized medicine.” ³⁸⁾

For physicians there are significant differences between the respective systems:

Virtually all physicians in France participate in the nation’s public health insurance, Sécurité Sociale. Doctors only agreed to participate… … if the law protected a patient’s choice of practitioner and guaranteed physicians’ control over medical decision-making. Their freedoms of diagnosis and therapy are protected in ways that would make their managed-care-controlled U.S. counterparts envious. However, the average American physician earns more than five times the average U.S. wage while the average French physician makes only about two times the average earnings of his or her compatriots. But the lower income of French physicians is allayed by two factors. Practice liability is greatly diminished by a tort-averse legal system, and medical schools, although extremely competitive to enter, are tuition-free. Thus, French physicians enter their careers with little if any debt and pay much lower malpractice insurance premiums. ³⁹⁾

As Dutton notes, this begs an obvious question: Would American doctors support universal health care if it protected their professional judgment and came with an efficient and expedient system for billing and reimbursement? One would certainly hope so.

The French system has minimized administrative overhead to the point it’s system is much more efficient than America’s:

France’s doctors do not face the high nonmedical personnel payroll expenses that burden American physicians. Sécurité Sociale has created a standardized and speedy system for physician billing and patient reimbursement using electronic funds.

It’s not uncommon to visit a French medical office and see no nonmedical personnel. What a concept! No back office army of billing specialists who do daily battle with insurers’ arcane and constantly changing rules of payment. ⁴⁰⁾

So how did this French system come to be?

French legislators overcame insurance industry resistance by permitting the nation’s already existing insurers to administer its new healthcare funds. Private health insurers are also central to the system as supplemental insurers who cover patient expenses that are not paid for by Sécurité Sociale. Indeed, nearly 90 percent of the French population possesses such coverage, making France home to a booming private health insurance market. The French system strongly discourages the kind of experience rating that occurs in the United States, making it more difficult for insurers to deny coverage for preexisting conditions or to those who are not in good health. In fact, in France, the sicker you are, the more coverage, care, and treatment you get. Would American insurance companies cut a comparable deal? ⁴¹⁾

Therefore, while health care financing in France remains private, it is highly regulated. Here’s another take on the matter from Dr. Philip Caper:

It is true that in many wealthy countries private insurance companies are used in the financing of universal health care systems. But they are generally little like American companies. They are regulated public utilities and are told by their governments who to insure, what to cover and how much and when to pay. Most are prohibited from making a profit, or profit is regulated, and are required to pay any willing provider. Not exactly the American model. ⁴²⁾

When we examine standard health care metrics, we see that outcomes given French health care financing significantly outshine the U.S.:

• Life expectancy, total population from birth: 81.0 years versus 78.2 (2009).
• Obesity: 11.2% of total population versus 27.6 (2008).
• Infant mortality: 3.9 deaths per 1,000 population versus 6.5 (2008).
• Hospital beds: 6.6 per 1,000 population versus 3.1 (2009).
• Physicians: 3.3 per 1,000 population versus 2.4 (2009). ⁴³⁾

Thus, even though the French implementation for health care financing and delivery differs from the U.S., its return on investment makes it well worth consideration as a model for emulation.

Canada

As Paul Dutton indicated, many Americans look to their northerly neighbor for inspiration on how to provide universal health care.

Financing Canada’s health care is done through a publically-funded, single-payer system whereas most providers of health care are private. Thus the financing of Canada’s health care is socialized whereas the clinics, hospitals and physicians responsible for delivering health care are capitalist.

The single-payer financing streamlines administrative overhead in billing and reimbursement because providers deal with only one agency versus the multiple payers that providers must accommodate in the U.S. That results in less waste: as previously noted, the percent of each health care dollar that goes to administrative overhead is 16.7% in Canada versus 31% in the U.S. ⁴⁴⁾ This is not to say there is no room for improvement. The 2007 National Physician Survey conducted by the Canadian Medical Association in partnership with the Royal College of Physicians and Surgeons of Canada found 46% of doctors saw paperwork or bureaucracy as major impediments to the delivery of care to their patients. ⁴⁵⁾

Savings are also achieved by a public system that has no need for marketing, profit or paying exorbitant C.E.O salaries and benefits. According to the OECD, Canada’s total health expenditure as a percent of gross national product is 11.4. That exceeds the OECD average of 9.7% but is vastly smaller in comparison with the U.S., where 17.4 percent is spent. On a per-capita basis with parity for U.S. purchasing power, Canadians spend just $4363 for health care versus $7960 for American counterparts. ⁴⁶⁾

Canadian public opinion strongly supports their publically-financed system. A July, 2009 Harris-Decima poll showed 82 percent of Canadians prefer their system whereas only eight percent would be willing to adopt the American model. ⁴⁷⁾ Reverence for Tommy Douglas, former Canadian Prime Minister and the father of Canada’s universal health care, is also insightful given he was chosen as the ‘greatest Canadian’ in a 2004 Canadian Broadcasting Corporation (CBC) contest. ⁴⁸⁾

As for metrics, Canada, like France, out-performs the United States:

• Life expectancy, total population from birth: 80.7 years (2007, last available) versus 78.2 (2009).
• Obesity: 16.5% of total population versus 27.7 (2009).
• Infant mortality: 5.1 deaths per 1,000 population (2007, past available) versus 6.5 (2008).
• Hospital beds: 3.3 per 1,000 population versus 3.1 (2009).
• Physicians: 2.9 per 1,000 population versus 2.4 (2009). ⁴⁹⁾

Thus, while the Canadian implementation for health care financing resembles America’s Medicare, it bears no resemblance whatsoever to the U.S. system of multiple, for-profit payers. However, its return on investment makes it a model well worth considering for emulation.

United Kingdom

The United Kingdom (U.K.), which consists of the sovereign nations of England, Scotland, Wales and Northern Ireland, provides a truly socialized model in that the state not only finances universal health care but generally owns the hospitals and clinics where medical care is dispensed.

The system is known as the National Health Service (NHS) in England, Scotland and Wales and as Health and Social Care in Northern Ireland. Core principles for the NHS are to:

• Meet the health needs of everyone.
• Be free at the point of delivery, and
• Be based on clinical need, not patient ability to pay. ⁵⁰⁾

In the NHS, each patient is registered to a general practitioner who is generally the patient’s first point-of-contact, other than for accidents and in emergencies. That doctor acts as a ‘gatekeeper’ for the system, where premiums do not exist because funding comes from taxation. There are no fees for hospital care, small charges for primary care prescriptions, and slightly greater costs for ophthalmic and dental services. Due to the design, there are no bills to collect or claims to review, so administrative overhead is greatly reduced. ^{51), 52)}

Indeed, a 2010 Commonwealth Fund study of health care for seven nations, including the U.S., ranked the U.K. number two in terms of efficiency trailing only Holland. Naturally, the U.S. ranked last in this category. ⁵³⁾

Critics of the U.K. health care system decry long waits and limited choice, to which the NHS has instituted some reform. Since the Wanless Report was issued in 2004, NHS has moved toward a primary health care (PHC) model that represents a more holistic approach, enabling a wider range of practitioners to provide health services- although doctors, dentists and midwives remain the core providers. ⁵⁴⁾

Like Canada, savings are achieved by a public system that has no need for marketing, profit or paying exorbitant C.E.O salaries and benefits. According to the OECD, the U.K.’s total health expenditure as a percent of GNP is 9.8: just one-tenth over the OECD average, significantly less than either Canada or France and substantially under the U.S. mark of 17.4%. On a per-capita basis with parity for U.S. purchasing power, the U.K. spends just $3478 for health care: again beating both Canada and France and way under the $7960 spent by Americans. ⁵⁵⁾

NHS remains a popular institution within the kingdom; it was popular at its inception in July of 1948, and its ideals remain popular today. ⁵⁶⁾ Interestingly, a 2008 Financial Times / Harris Poll study showed that nearly 60 percent of those in the U.K. feel NHS is “the envy of the world,” while only 15% would “completely rebuild the system.” ⁵⁷⁾

In health care metrics, the United Kingdom outranks the United States:

• Life expectancy, total population from birth: 80.4 years versus 78.2 (2009).
• Infant mortality: 4.7 deaths per 1,000 population versus 6.5 (2008).
• Hospital beds: 3.3 per 1,000 population versus 3.1 (2009).
• Physicians: 2.7 per 1,000 population versus 2.4 (2009). ⁵⁸⁾

Certainly the U.K.’s socialist approach to health care is the diametric opposite of the U.S. model, but its positive returns on expenditure leave it a system well worth considering for emulation.

Japan

The Japanese provide yet another variation for how to manage health care costs with excellence.

Japan employs a type of ‘social insurance’ program. All citizens are required to purchase health insurance either through their employer or a community-based, non-profit insurer, and public assistance is provided to those can’t afford premiums. The average cost for a family premium is $280 per month, with employers paying more than half. Co-pays are set at 30% per procedure, but the total monthly outlay is capped according to the patient’s income. Most health insurance is private, but tightly regulated, and doctors and most hospitals are privately owned. The cost for procedures is re-negotiated between the Ministry of Health and physicians on a bi-yearly basis. Doctors do not act as ‘gatekeepers;’ unlike the U.K., specialists may be seen as often as the patient likes. ⁵⁹⁾

In terms of fiscal outlay, Japan’s 2009 total health expenditure as a percent of gross national product was not provided by the OECD, but a three-year weighted average for 2006-2008 projects to 8.6: less than the OECD average of 9.7% and well below the U.K., Canada or France, and substantially under America’s 17.4%. Likewise, on a per-capita basis with parity for U.S. purchasing power, the three-year weighted average for health dollars spent comes in at only $3007: again easily beating the U.K., Canada and France, and far under the $7960 spent by Americans. ⁶⁰⁾

The Japanese like their health care system so much that, following talk of ‘new American-based free market reform’ earlier in the decade, opposition came from the Ministry of Health, Labor and Welfare (MHLW), the Japanese Medical Association (JMA) and public opinion: one poll showed “an overwhelming majority of the public does not want to reform the present system so that the quantity or quality of care one receives would come to reflect one’s ability to pay.” ⁶¹⁾
As for health care metrics, Japan also out-performs the United States:

• Life expectancy, total population from birth: 83.0 years versus 78.2 (2009).
• Infant mortality: 2.6 deaths per 1,000 population versus 6.5 (2008).
• Hospital beds: 13.7 per 1,000 population versus 3.1 (2009).
• Physicians: 2.2 per 1,000 population versus 2.4 (2008). ⁶²⁾

As with the other countries examined, Japan’s approach to health care also differs from the United States, but its return on investment makes it a system well worth considering for emulation.

Summary and Solutions

Trying to evolve the American health care system and change it ‘for the better’ will likely never be an easy task. Donald Light of the University of Medicine and Dentistry of New Jersey, Stratford, offers Americans some advice from lessons learned from the British experience:

The U.S. is the only remaining industrialized country without some form of universal access to medical services, in part because policy debates are driven by false, self-defeating beliefs. One such belief is that the U.S. cannot afford to cover the uninsured, when in fact a coordinated financing system is the key tool for holding costs down, and there are affordable ways to do it. Even the largest employers are unable to hold major cost drivers in check.

A second belief, held by the medical profession, is that they would lose still more power than they have already under corporate managed care. Yet universal health care systems elsewhere give the profession greater institutional powers.

Third, many believe that the only alternative to voluntary, market-based health insurance is a single-payer system financed by tax revenues, when there are a number of options.

Fourth, many believe that the United States is so large and diverse that any lessons one might learn from smaller and less diverse countries do not apply there, so why bother with possible lessons from anywhere else?

Finally, conservative policymakers and providers imagine that a universal health care system would mean low salaries, rundown facilities, poor quality, and endless waits to see a doctor, as with the British NHS. In U.S. policy debates, the NHS serves as a dreary image of everything one wants to avoid and might get if one actually developed a universal system that was equitable and efficient. U.S. journalists almost never describe the remarkable achievements or innovative and instructive reforms of NHS. One wonders, then, why any sensible reader should waste time on an article about the NHS.

Most of the NHS’s dreary problems… …stem from chronic underfunding and undersupply of personnel and equipment. Many universal health care systems avoid these problems. How well a system is designed must always be distinguished from how well it is funded; the NHS is quite well designed but underprovisioned. By contrast, the U.S. health care system is richly funded but designed so that it maximizes waste, inefficiency, and inequity. ⁶³⁾

‘Well built but under-funded’ was a recurring theme seen while researching NHS. On the other extreme, ‘Over-funded but poorly designed’ is an excellent description of the American health care system.

Frankly, when it comes to health care financing, that the U.S. model even exists simply dumfounds rational thought. One could actually believe a rocket scientist dabbling in accounting might be responsible, rather than the greedy corporatists who wanted, designed and now profit exclusively from it.

Whether measured as a percentage of GDP or on a per-capita basis, America spends far more on health care than any other nation. Unfortunately, it receives very little for its monetary outlay.

Reaching the highest levels of quality health care in the U.S. is far too often limited to the realm of only those who may afford it. Far too many citizens-- perhaps upwards of one-hundred million or more-- either have no health insurance, or at best, inadequate health coverage. Far too many Americans are only one job loss and one major medical bill away from being homeless. Even with the reform measures of Obama’s 2011 health care program, the notion of universal health care in the United States remains just that: a notion.

As the systems in France, Canada, the United Kingdom and Japan show, there are a myriad of ways that quality universal health care could be achieved with less expense.

Inefficiency in the U.S. for-profit, multiple payer system of health financing constitutes the primary reason America has an ‘upside-down’ health care system.

There is no scenario where the current unregulated, for-profit approach to health care financing may work.

If America desires to retain ‘private’ health care financing, the for-profit element must either be eliminated or very tightly regulated, as in France and Japan, with strong consumer oversight. In such a model, the future private insurers bear no resemblance to the current crop of private health financiers.

Otherwise, the option is a publically funded single-payer system, similar to that employed in Canada or the United Kingdom. Like those systems, an American single-payer solution would offer many promises:

• A single payment plan administered by a public agency
• Universal comprehensive health care coverage
• No out-of-pocket expenses
• Free choice of medical provider
• Public accountability versus corporate dictates
• Improved efficiencies and a higher return-on-investment
• A healthier and more productive society

Either solution would be confronted with extremely difficult road blocks, principally from the vast fiscal resources of the Washington lobby of the health care and pharmaceutical industries, and in a larger sense from the ideological mindset of those politicians and pundits who are beholden not to public opinion or the common good but to their corporate masters. In other words, the biggest road block is the ideology of the 99% in Congress who take their marching orders from the 1% of their constituency made up of the obscenely rich (the plutocrats).

These legislative school-yard bullies have screwed all hard-working Americans, regardless of how those Americans have voted, for decades. And that’s being gentle. In fact, Americans needlessly die daily from lack of or insufficient health care, or from delaying medical care because they feel they really can’t afford it, or because they were denied health care by an insurer or provider when they needed it most. Or, they slowly and prematurely die when loss of a job, the health care associated with that job, and an overwhelming medical expense combine to throw them out on the street. Actually, I suspect there’s a million ways a system that’s intended to “do no harm” does just the opposite.

What is the real human cost of America’s health financing fiasco? I haven’t a clue, other than a feeling it must be staggering.

Hopefully Americans will eventually see through the corporate and political propaganda, stand up to the bullies, and hold them accountable. Ultimately, real health care reform will come only when ‘We the People’ demand it. Don’t expect the likes of Bernie Sanders or Dennis Kucinich to be successful if carrying the torch alone.


Footnotes

¹ “Do we need health insurance?,” Dr. Philip Caper, Bangor Daily News, December 15, 2011.
² “Single Payer 101,” Kao-Ping Chua and Flavio Casoy, American Medical Student Association, 2008.
³ “Single-Payer National Health Insurance,” Physicians for a National Health Program, 2012.
⁴ “Single Payer 101,” Kao-Ping Chua and Flavio Casoy, American Medical Student Association, 2008.
⁵ “Do we need health insurance?,” Dr. Philip Caper, Bangor Daily News, December 15, 2011.
⁶ Caper, ibid.
⁷ “USA wastes more on health care bureaucracy than it would cost to provide health care to all the uninsured,” Medical News Today, May 28, 2004.
⁸ “Single-Payer National Health Insurance,” Physicians for a National Health Program, 2012.
⁹ “Single Payer 101,” Kao-Ping Chua and Flavio Casoy, American Medical Student Association, 2008.
¹⁰ Chua and Casoy, ibid.
¹¹ Chua and Casoy, ibid.
¹² “Do we need health insurance?,” Dr. Philip Caper, Bangor Daily News, December 15, 2011.
¹³ “Number of people without health insurance climbs,” Les Christie, CNN, September 13, 2011.
¹⁴ “Americans Without Health Insurance Rise to 52 Million on Job Loss, Expense,” Pat Weschler, Bloomberg, March 15, 2011.
¹⁵ “Report: 59 Million Americans Lack Health Care,” Joshua Norman, Health Watch, CBS News, November 10, 2010.
¹⁶ “Quotes,” Teaching Tolerance, Southern Poverty Law Center, 2012.
¹⁷ “The Universal Declaration of Human Rights,” Article 25, The United Nations, 1948.
¹⁸ “Human Rights,” Diplomacy in Action, U.S. Department of State, 2012
¹⁹ “International Covenant on Economic, Cultural and Social Rights,” Article 12, The United Nations, 1966.
²⁰ “Is health care a ‘privilege’ for some?”, Domenico Montanaro, First Read on MSNBC, March 5, 2009.
²¹ Montanaro, ibid.
²² “Do we need health insurance?,” Dr. Philip Caper, Bangor Daily News, December 15, 2011.
²³ “Estimate of the Direct Spending and Revenue Effects of a Substitute Amendment to H.R. 4872 aka Reconciliation Act of 2010,” Congressional Budget Office, March 20, 2010.
²⁴ “OECD Health Data 2011,” Organization for Economic Co-operation and Development, November, 2011.
²⁵ OECD, ibid.
²⁶ OECD, ibid.
²⁷ OECD, ibid.
²⁸ OECD, ibid.
²⁹ OECD, ibid.
³⁰ OECD, ibid.
³¹ OECD, ibid.
³² OECD, ibid.
³³ OECD, ibid.
³⁴ The World Health Report 2000,” World Health Organization, June 21, 2000.
³⁵ “Does the U.S. Have the World’s Best Health Care System? Yes, If You’re Talking About the Third World,” Wendell Potter, Common Dreams, November 29, 2011.
³⁶ “France’s model healthcare system,” Paul V. Dutton, American HealthCare Reform, August 11, 2007.
³⁷ “OECD Health Data 2011,” Organization for Economic Co-operation and Development, November, 2011.
³⁸ “France’s model healthcare system,” Paul V. Dutton, American HealthCare Reform, August 11, 2007.
³⁹ Dutton, ibid.
⁴⁰ Dutton, ibid.
⁴¹ Dutton, ibid.
⁴² “Do we need health insurance?,” Dr. Philip Caper, Bangor Daily News, December 15, 2011.
⁴³ “OECD Health Data 2011,” Organization for Economic Co-operation and Development, November, 2011.
⁴⁴ “Single Payer 101,” Kao-Ping Chua and Flavio Casoy, American Medical Student Association, 2008.
⁴⁵ “Cutting through the health system information fog: Royal College environmental scan,” Royal College of Physicians and Surgeons of Canada, August, 2009.
⁴⁶ “OECD Health Data 2011,” Organization for Economic Co-operation and Development, November, 2011.
⁴⁷ “Never mind the anecdotes: Do Canadians like their health-care system?,” Eric Zorn, Change of Subject, Chicago Tribune, August 6, 2009.
⁴⁸ “Tommy Douglas,” Wikipedia, 2012.
⁴⁹ “OECD Health Data 2011,” Organization for Economic Co-operation and Development, November, 2011.
⁵⁰ “NHS Core Principles,” About the NHS, National Health Service, November 4, 2011.
⁵¹ “Technology and Health Care in an Era of Limits,” Annetine Gelijns, U.S. Institute of Medicine, National Academy Press, 1992, pg 80.
⁵² “Sick Around the World: Five Capitalist Democracies & How They Do It,” Frontline, PBS, April 15, 2008.
⁵³ “NHS ranked most efficient in health care study, but ranked poorly in ‘long, healthy lives’,” The Daily Mail, June 23, 2010.
⁵⁴ “The NHS: what can we learn from history?,” Virginia Berridge, BBC History Magazine, January 12, 2012.
⁵⁵ “OECD Health Data 2011,” Organization for Economic Co-operation and Development, November, 2011.
⁵⁶ “The NHS: what can we learn from history?,” Virginia Berridge, BBC History Magazine, January 12, 2012.
⁵⁷ “Health Care Systems in Ten Developed Countries: The U.S. System is Most Unpopular and Dutch System Most Popular,” Harris Interactive (Harris Polls), July 7, 2008.
⁵⁸ “OECD Health Data 2011,” Organization for Economic Co-operation and Development, November, 2011.
⁵⁹ “Sick Around the World: Five Capitalist Democracies & How They Do It,” Frontline, PBS, April 15, 2008.
⁶⁰ “OECD Health Data 2011,” Organization for Economic Co-operation and Development, November, 2011.
⁶¹ “Japan’s Health Care System: Containing Costs and Attempting Reform,” Naoki Ikegami and John Creighton Campbell, Health Affairs, Volume 23, No. 3, May, 2004.
⁶² “OECD Health Data 2011,” Organization for Economic Co-operation and D evelopment, November, 2011.
⁶³ “Universal Health Care: Lessons Learned from the British Experiment,” Donald W. Light, PhD, American Journal of Public Health, January, 2003.