US Health Care

US Health Care The documentary Sicko has revitalized much of the debate regarding the sad state of health care in the US. The underlying problem is the soaring costs of medical care. While Medicare/Medicaid is the flashpoint, the costs of medical care for everyone is escalating out of control. HMOs are acting like any other insurance company when faced with soaring costs. They squeeze the service providers, charge the cutomaers more and reduce claims. And big companies, the traditonal source of health insurance are being squeezed in the process. IBM US retirees have had 100% coverage but with the cost escalation, IBM moved to a co-pay scheme, and with continued cost escalation, the co-pay will eventually eat up half their pension payments.

Ironically, outsourcing to places like Thailand may ultimately be the only solution to these escalating costs. I think if you look at the trends in the last eight years, it is clear that healthcare premiums are also escalating out of reach of other costs and services.

This seems to indicate that leaving it to the private sector is not optimum. Although if you are a shareholder in an HMO, you will like the following chart:

The growing spread between these two lines indicates a growing profit margin for the HMOs. At the same time, co-payments are growing, especially for family coverage even though these numbers indicate little justification for the increases. So while Medicare/Medicaid gets a lot of focus in the debate, healthcare in general seems to be in trouble in the US, and many western societies.

The key differentiator is which system keeps people healthier. It is tough to compare the US to other civilized societies because of the commercial excesses that exist there. There are countless documented cases of how the US system is increasingly broken. Here is how the US systems ranks with many other countries:

Note how the UK with its National Health System has slightly better longevity (2 ahead of the US but with less the half the cost per capita. Canada and France, often held up for comparison have much better longevity for about half the price. And the US costs, even being so high, do not cover an estimated 45 million people. To try and see another perspective in this data, here is a scatter diagram of the two measures:

The first place to start in fixing the problem is changing the way medicare/medicaid pays. For example. The base rate medicare/medicaid will pay for dialysis is $80 per treatment. However, the government will pay an additional 20% of the amount billed over and above this amount. So, if a clinic or hospital needs $180 per treatment to make ends meet, then they need an additional $100 and at 20% recover, they need to add $500 to their charge. So, the new rate for dialysis treatment is $580. It would make sense if they could charge insurance companies and individuals without insurance the $180 they need, but that would be medicare/medicaid fraud. The system is broken and needs to be fixed.

Hospital CEO's and CFO's are actually paid bonuses on any amounts over and above the base rates medicare/medicaid pays that the hospital is able to collect. Now you see why most hospitals have a 500%-1000% markup on costs and services. A typical CEO makes $3 million a year. The nurses make between $9.50 and $17 an hour.

There needs to be some common sense when it comes to medical care on the part of Doctors, hospitals, and patients and their families. Here are some actual cases as recounted anonymously by a hospital worker:

82 yr old male with stage 5 cancer gets triple cardiac bypass. Dies 10 days later. This man refused to go to a hospice and refused to be a DNR (do not resusitate)
53 yr old female with a drug addiction comes to the ER every 2-3 weeks claiming that she is vomiting and has diarrhea. She is a charity case and has been admitted to our hospital 63 times in the last 2 years. No pay.
A New Orleans evacuee who is stable and ready to go home for the last week, but there is no home to discharge her to, and we can't get oxygen equipment delivered to a motel, so we still have her. A charity case.
Patients that sign up for hospice care, but then continue to come to the hospital emergency room every 3-4 days (and they get admitted) because they are afraid of dying.
An 84 yr old male with congestive heart failure and pulmonary edema. He has a tracheotomy, a stomach tube for feeding, is in total kidney failure and on dialysis. He also has MRSA (resistent staph). He is a full code! We get him over the staph and back to the nursing home and in about a month we get him back for 2 weeks. Get him over the staph and repeat the process over and over.

Half of our patients needing stents or bypass are also diabetics and weigh over 300 lbs----some as much as 400 lbs. They are not compliant with their insulin, their diet, or their meds. And then there are the lawsuits:
400 lb 41 yr old male with diabetes and heart and kidney problems lands in the hospital yet again. He is on disability due to his health problems. After a week in the hospital, he is discharged. Stops at Walmart on the way home and dies in the bathroom of a massive heart attack. The family is suing.
69 yr old male in total kidney failure. Has been on dialysis for 2 years and had a major stroke---totally unresponsive. We transferred him to our transitional unit and he passed away 20 minutes after getting there. The family is suing us, claiming we caused his untimely death.

The list goes on and on and on and on. In my opinion, many of these people don't need to be in the hospital. Many people simply need to take a more proactive role in their own health. None of us gets out of here alive and at some point, we all must face the end of life. At what point do we say individually that enough heroic measures have been done and we just need to be comfortable to die in peace?

Both Canada and Mexico have state-sponsored Medicare Insurance. Individuals (or their companies) pay the premiums. Dental and drugs are not covered. Premiums are waived based upon ability to pay. Individual premiums are $27/mo in Mexico and $54/mo in Canada (varies by province).

Critical care is generally available readily while elective surgery can sometimes have long delays. There is some abuse when people go to the doctor or a clinic for a cold or the flu because they pay nothing. But they end up paying for any medication prescribed. Walk-in clinics relieve the load on hospital emergency wards and supply needed care at substantial savings to hospitals. Usually they can offer more prompt service and free parking too.

Competition in the US insurance market seems to lead to denial of legitimate claims so the companies can remain competitive (for their shareholders). This is one of the few situations where the elimination of a private claims adjuster can probably lead to improved patient care. The irony today is that those without any coverage seem to get better care than those with HMOs.

There seem to be a few lessons that can be learned from other systems. Have a copayment to ensure that no patients abuse the system. Have a deductible so that those who can afford it pay for a part of their care. This seems to work for all other forms of insurance. For the poor, give them an opportunity to claim their payments back at the welfare office. It has been shown that having to pay imposes a discipline that is not present when the service is "free".

PS The basic data for the charts came from a landmark Henry J. Kaiser Foundation study.

The comparisons to other countries comes from a study by the University of California Atlas of Global Inequality Conference.

Family.