One reason Hillary lost the election is the perception around healthcare cost. The ACA (aka “Obamacare”) was blamed for the rising costs, and the hope among those seeing their bills climb was that Trump would make good on promises to “rip it out, ” promises he’s already dialing back on now, for good reason. The system isn’t perfect, and here are a few observations about how it’s been received.
- Some poor are using it and glad to have it.
- Some wealthy or middle class don’t like paying extra to subsidize the poor. What they see is that their premiums continue to rise and rise with fewer choices and less coverage. They see this as a byproduct of “Obamacare.”
- Many still prefer to pay the penalty than to pay for insurance (more on that later).
Still, the costs of healthcare continue to rise, usually with less coverage and fewer options. Obamacare was partly created in response to this problem. In some ways it has helped, and it has also created more cost by providing a way for more people to be ensured. It has spread the cost of care to those who are more affluent, many of whom have balked at these cost increases.
Here are some pet theories about what’s driving healthcare costs higher (quotes are from this white paper by the National Association of Health Underwriters written in June 2015):
- Obamacare. Premiums through the open exchange are based on income levels as reported through your taxes. The more you make, the more you pay. It’s a simple formula, with one (smart) caveat: the poor pay a lower percentage of their total income than do those in the middle and upper class, and that’s because a flat tax would be regressive. The poor have a much lower percentage of “disposable” income. Here’s an example of how premiums differ based on income for the exact same “Silver” level plan on the exchange [1]:
- $50K income = $226 per month in premiums (5% of income). This rate is achieved through subsidies.
- $75K income = $545 per month in premiums (9% of income)
- $100K income = $815 per month in premiums (10% of income)
- Lawsuits. When we compare to other countries, one aspect of our rising costs that other countries don’t bear is our high litigation impacts. Malpractice insurance is an expense that varies based on type of practice and where you practice. New York has the highest litigation rate and cost, and OB/GYNs are one of the most sued types of practice. And yet, malpractice insurance is not a key driver of healthcare costs as seen in several studies: here, here, and here. Malpractice law has led to reforms that improves patient care and mortality rates as seen here.
- Another article talks about the potential high cost of “defensive medicine,” which means ordering unnecessary tests that might make malpractice less likely. One key point the article makes is that doctors don’t know what these tests cost when they order them. When it comes to healthcare, we have a serious lack of transparency.
It is estimated that medical malpractice adds between $55-200 billion annually, and that medical liability costs and defensive medicine combined account for 7.2 to 12.7 percent of the increase of health care costs.
- Unhealthy Behaviors and Increased Longevity. Most certainly the American obesity epidemic combined with longer life expectancy is a driver of healthcare costs. We don’t want to be told how to live. We just want to live no matter what we do. This additional cost adds strain to the system. As older people require more care (and more is available for things that simply used to kill you), these costs hit the system. When the poor who are uninsured have illnesses or disease related to poor habits, this adds cost to the system in the form of write offs when the bills aren’t paid.
Research shows that behavior is the most significant determinant of health status, with as much as 70 percent of health care costs attributable to individual behaviors such as smoking, alcohol abuse, and obesity. . . nearly 80 million Americans (34.9 percent) are obese, according to the National Center for Health Statistics. . . Each smoker costs an employer an additional $5,128 a year in health care costs and lost productivity. Other sources show that smoking is responsible for approximately 8.7 percent of total U.S. health care costs.
- Insurance companies. There are several cost increases here: administrative costs for an increasingly complicated system, and a monopolistic trend in some markets. For example, aside from employers that provide coverage, there is only one healthcare provider for the state of AZ among the government-approved providers. Three providers exited this year because Arizona isn’t lucrative enough, probably due to all the retirees. Exiting the system doesn’t prevent them from being a “government approved” healthcare provider. There are no regulations in place that force them to provide services in less lucrative markets. Another cost associated with the insurance companies is cost-shifting. Insurers move expenses from the uninsured or from declined Medicare claims to private paying individuals and companies. This means premiums go up while benefits remain the same or lower.
- Provider consolidations. As medical practices and hospitals combine, they create a monopolistic hold on pricing, enabling them to set pricing relatively competition-free.
As small business owners, we will have no real choice but to go to the market exchange next year. The sole provider left in our market is significantly more expensive and raising prices by 116%.
Is Insurance even worth it?
Many who are uninsured are banking on remaining in good health, preferring to either self-pay if they need to go to the doctor, or rotate getting coverage every other year to keep their costs down. Even with the increasing cost to opt out, many choose to pay the fee because it’s lower than the cost of coverage.
- Self-Pay. Without insurance, the uninsured used to just pay for their care as it happened. Some doctors have self-pay prices that are universally lower than the prices they charge to insurance companies. If an uninsured patient couldn’t cover their bills, doctors often would end up writing it off. That was a drain on the system, too, but one the system was already dealing with.
- Ministry Plans. Based on Christian principles of sharing one another’s burdens, some ministries have crafted coverage plans that involve paying a “share” on a monthly basis and withdrawing to cover expenses that surpass a deductible amount. To be involved in these, you have to agree to their behavior and belief code including things like church attendance (some require a pastor’s approval), a “religious” belief that government doesn’t have the right to force you to buy insurance (this one feels a bit loose but does exempt you from the Affordable Care Act opt-out penalties), and healthy lifestyle choices (no smoking, limited alcohol, and some require you to lose weight). While these are not a government-approved healthcare system, they are designed to support members of the group in covering each others’ medical costs, kind of like a virtual United Order. There are currently 4 ministry plans out there, the best of which by far is Liberty HealthShare. As costs rise, this is a new trend we can expect to see more.
- Medical Tourism. If you are a self-payer and you get hit with a big cost, one of your options is to hit the road. Healthcare costs are significantly lower and often on par in other countries like Thailand, Philippines, India and even Mexico. Prescription drugs also cost less in many of these countries. Even after the price of an airline ticket, you could be paying a fraction of what you would pay in the US. Case in point, when we were in the Philippines in 2011, my husband broke a crown at dinner. He walked in to a local dentist near our hotel and got a temporary crown for $18. That was the total cost.
Solutions – A Final Thought
Healthcare solutions are usually a push-pull between liberals and conservatives, liberals wanting government-run healthcare, and conservatives wanting it to be completely privatized. At the extreme ends you would have doctors being government employees (on the liberal end) and unregulated frontier medicine (on the conservative end). Our current system is already a mix of both: we have a privatized healthcare system with government regulation. What we need to do is:
- Smarter regulations that limit the rising cost of prescriptions and care and prevent monopolies from forming by limiting consolidations and requiring healthcare companies to participate in all markets in order to be “government-approved.” [2]
- More transparency to the cost and effectiveness of healthcare. There is nowhere near enough assessment of how effective various tests, medications, and preventive treatments are. The costs alone are not transparent, given that the “price” of services varies based on who your insurance provider is (meaning, the “price” is whatever they will pay).
- Better lifestyle choices. We need to continue to provide incentives for these lifestyle choices. I guess if you want to be unhealthy and pay for it, whatevs. It’s literally your funeral. But if you are uninsured, you really need to be living clean since the rest of the country is paying for your care.
Although it’s certainly not true that the US has the best health care in the world, we do have innovations that many other countries do not. While innovation doesn’t happen in a vacuum, it also doesn’t excuse some of the utterly wasteful aspects of our system.
I’ve been wondering why all healthcare is lumped into one plan. There are three different aims or stages to healthcare needs. Why not have different types of insurance for each, some that are government provided or subsidized (through everyone’s taxes) and others that are supplemental? That would segment the costs for each further so that we could create better transparency. The three types I’m thinking of are:
- Wellness care. This is preventive stuff like routine checkups once a year with a blood panel, gynecological exams and mammograms for women, proctology exams for men, vaccinations for children, and a weigh in for us all.
- Mid-range sickness care. This should include things like pregnancy, ongoing illnesses like blood pressure, diabetes, hypoglycemia, thyroid, gall bladder, heart medication, etc. Patients who are “well” can afford to play the odds and get a higher deductible for these types of costs.
- Crisis care. This is for high dollar out-of-the-blue stuff like cancer or HIV or Hep-C. These are financially devastating and often life-threatening.
If we were talking about car insurance, these would not all be the same types of coverage. Wellness is like a maintenance plan you buy for lubes, tire rotation, and all points checkup. Car insurance covers some repairs (mid-range), but only after a deductible amount. And if you wreck your car, yeah, you need that insurance coverage to be great. Likewise with health insurance.
- What solutions do you propose to the US Healthcare crisis?
- Do you foresee costs ever coming down or simply rising indefinitely?
- What do you expect to happen under the Republicans? Do you feel it’s fair to blame rising costs on Obamacare?
Discuss.
[1] I’m using plan Mbetter Balanced Care 9 as a baseline for these numbers. All other costs of the plan vary based on income also: deductibles, max out of pocket, doctor visits and prescriptions, etc.
[2] Conservatives aren’t going to like that suggestion.
Wheat & Tares 
Hawk – very good and comprehensive commentary.
To those of us outside the USA and with universal health care, commentary like this is puzzling.
I would consider that the situation is unlikely to ever fundamentally change whilst:
1. There is such unquestioned support for the free market, and
2. A well supported position that universal health care is either socialist, communist or satanist.
I am in my 40’s. My wife and I have had four children, the kids have had operations, and we have been to the doctor plenty of times. We have always had world class treatment and are all healthy and alive. I pay just less than 2% of my wage – like everyone else. And for what it’s worth I don’t worship Stalin , Marx or satan.
Good job on pointing out the costs of our lawsuit-prone society.
One important issue is emergency room care, which is the most expensive setting of all. Prior to ACA, folks were seeking care in the ER for the flu, asthma, diabetes–conditions that could be managed better in a primary care setting. Although EDs do triage, it still created a clog so that some people with critical problems experienced a life-threatening delay. With ACA. emergency departments could do what they were designed to do. Patients in cardiac arrest could see a physician sooner. Some hospitals have opened a family practice clinic nearby, so that if someone shows up in the ED, they are directed across the street where a social worker will help them get coverage and appropriate care.
I am not sure that segmentation of coverage would be helpful because it is hard to buy a product when you don’t know what your needs will be….there was a movie in the 2000s “John Q” that was not easy to watch, but about a father whose insurance would not pay for his son’s transplant, and he kept saying over and over, “But we have insurance…….”
I am not sure this is liberal vs. conservative split. I think whether or not someone has had to use the healthcare system is a more serious divider.
Also, don’t get me started on the “conservative” retirees who say, “keep the government hands off my Medicare” as if that is not a government-run plan and the closest thing we have to universal coverage in the US.
Great summary. Just one caveat: Obesity is a description of relative size, not a behavior. It’s often used as a stand-in for various behaviors, but it’s more accurate (and less shaming) to simply refer to the behaviors themselves. Regardless of size, various behaviors are health-promoting and should be supported/celebrated.
One of the biggest reasons our healthcare costs are so high is that healthcare professionals get paid for how many operations, procedures, tests, etc. they do. This creates an incentive to do more work, even when that work may be unnecessary and even when it may do as much harm as good.
I worked in the healthcare industry for a couple years, and I saw this all the time. Borderline cases that should’ve gotten a couple of minor recommendations for lifestyle changes instead got major and expensive operations.
Another major reason is end-of-life care. If I recall correctly, one third of all healthcare costs are related to end-of-life care. Encouraging people to get a living will can cut that dramatically, while also making sure that individuals wishes are honored.
LDS Aussie: I think that aside from the love of the free market and fear of socialism (as I pointed out, the horse is already out of the barn on that since the system we have is a mix of regulation and free market), the other two issues are 1) difficulty of transitioning from today’s existing system to a gov’t run system, and 2) we imagine that a gov’t run system would be like the DMV (motor vehicles division) but with doctors. We also imagine that the quality of doctors will go down if their salaries are regulated by the gov’t.
Naismith: Excellent point about the more accurate divider being those who’ve used it vs. those who haven’t. I’ve still got “election brain.” Hopefully that will wear off in four years. And funny story about the retirees who hated Obamacare, a good friend of mine home teaches a vocal Trump supporter who was gleeful about the Mexicans being deported and welfare recipients being kicked off the dole. Then she heard her candidate’s thoughts on her Medicaid and she realized that her candidate thinks of HER as being on the dole. In a twist of irony, this friend pointed out that Mexico is a good choice for medical tourism if she does lose her benefits. Thus we see that the first shall be last or something along those lines.
AuntM: point taken. The studies I used to put this together all used that term, so I was just using their short-hand language. I tried to be more careful in my own statements, but it’s not always easy to see where I’m speaking myself vs. paraphrasing a study I linked.
Tim: As to unnecessary tests, this is a big one, but it wasn’t just doctors gouging by ordering up a bevy of scans for no reason. Reasons given: 1) doctors usually don’t know what these tests cost, 2) it’s “defensive medicine” to order to prevent claims of malpractice, and 3) patients expect to be well despite poor life choices (as you alluded). End of life care is definitely a factor and probably a whole ‘nother post. That’s a giant hairball waiting to be unraveled.
The figure that always amazes me is the cost of healthcare in first world countries see https://en.wikipedia.org/wiki/List_of_countries_by_total_health_expenditure_per_capita
If you have a national health care controller they have an incentive to make the package as economical as possible, so they negotiate with doctors a fee for a procedure, they negotiate with drug companies a price for a drug they will supply, or subsidise, and they own the hospitals. This system also allows for the collection of data which shows up if a hospital or doctor is doing more of a particular procedure, and question why. It also means we have public health campaigns to reduce risk factors.
There must be a central control for Obamacare, could they not negotiate similarly with insurance companies. The differences are that insurance companies make a profit, hospitals make a profit, and everyone else makes a profit, but could these profits be more reasonable. As you say these profit making bodies naturally want to not cover those who are expensive. If you are going to have a national scheme they must agree that they have a responsibility to provide for everyone. In effect when a country has a national scheme they accept they must cover everyone, and then work to do it as economically as possible.
There does seem to be a political element to this though. When we have a conservative government they try to reduce services, even though they claim to support the system. The political right is much further to the right in the USA than in most countries with universal health care, which is why various countries are where they are regarding this matter.
Good luck with fixing the US system
Geoff Aus
LDS Aussie: “There must be a central control for Obamacare” This is actually another element of complexity in the US system: state vs. federal oversight. Federal law will require states to cover certain costs and provide certain benefits, and every state has a unique demographic and budget constraints. States’ rights are big in the US. In fact, this is the key reason that Mitt Romney didn’t support Obamacare when it was based on his own Massachusetts HealthCare system he implemented very successfully. His main reason to criticize Obamacare is that trying to apply it federally doesn’t work because Massachusetts has a unique demographic: a lot of young, healthy high earning singles (who commute to NY or Boston) who were choosing to be uninsured. Mandating that they be covered made it possible to extend coverage to low income families. But most states don’t have those same demographics at all. It’s quite unique.Geoff-a good example of the the oversight necessary is the recent case in the UK where the government has won a case against a drug company who hiked the price for an epilepsy medicine once it had embedded it in the NHS market by over a 1,000 per cent. They do that even when they know we’re watching. Obama is no the enemy.
Interestingly,the NHS was not the choice of most of the medical profession when it was instigated, it was pretty much railroaded through parliament and established in a very draconian manner. I thank God for that daily. Some things are just the right thing to do.
Hawk – I think you may have confused me with Geoff Aus. Us Australians often have a bit to say on comparative healthcare..!!!
The USA health care economy has too many people earning too much money for it to change radically. Kinda like the gun control thing. When there is a system in place – particularly for a long time – where so many people are dependant upon it continuing, the fact that it needs to change may take a back seat.
LDS Aussie: Yes, I did get you two mixed up. Sorry, mate! The other issue with gun control (which is really IMO the core problem) is that there are already so many guns out there. The horse is out of the barn. But yes, gun culture, gun clubs, and gun nuts who like shooting their mouths off as much as their guns are of course a big part of it. Everyone’s got a finger in the pie or a bullet in the chamber, as it were. My solution to gun control (different post, one I did a long time ago) was to hold the gun owner responsible for the acts committed with their gun. Now the downside of that idea is that whenever someone dies, their gun will go to the blackmarket. But I can’t fix all the problems! I’m just one blogger!
One federally mandated area that is also an issue is the FDA. Several of the articles I linked talked about the inefficiencies and expense associated with FDA approval. There are effective drugs that don’t get approved and ineffective ones that do, and there are also monopolistic practices there.
Here we have the National Institute for Clinical Excellence (NICE) who approve medicines, produce guidelines etc for the NHS. Sometimes there’s controversy over which treatments or drugs get approval, but it’s probably better then a freeforall.
I love the topic. Technology and medical advancements have made possible things that go beyond biblical miracles…yet we don’t look at them that way, and I don’t know why more people can’t accept God’s hand in the science and medical practice. It seems way more efficient than healing people one by one based on levels of faith.
I think our advancements have introduced new challenges…when to know when it is right to stop trying to fight the grim reaper, and accept death as part of our family and loved ones’ lives. We are not prepared often to handle death, talk about it, prepare for it. Too few people have Advanced Directives, or confuse them with will’s that they draw up with lawyers that don’t address end of life options.
And becuase of that…the system is burdened with very very expensive treatment and care for those fighting the inevitable.
Assisted suicide??? Not what I’m talking about, I think that is unethical…but more informed and prepared decisions around end of life care. Think of the savings to the system, and the savings families could have for future generations, if we could reduce spending so much on healthcare that only delays the inevitable for a short time, and is questionable what kind of quality of life it is providing…for the whole family.
Americans are worse at this than other countries. And it drives healthcare costs up.
I think solutions are around transparency of costs for doctors and patients, and more realistic approaches to end of life care.
Here is what the church has stated about it:
“The Church of Jesus Christ of Latter-day Saints opposes physician-assisted suicide and euthanasia, believing that taking one’s own life or the life of another violates God’s commandments and his plan for each person. “While acknowledging the suffering experienced by many, we firmly believe in the sanctity of human life and in its role in God’s plan,” says Lyman Kirkland, a spokesman in the church’s public affairs department.
However, the church teaches that when someone is dying, it is acceptable to forgo excessive or extraordinary therapies. “The church does not believe that allowing a person to die from natural causes” – removing a patient from artificial life support, for example – “falls within the definition of euthanasia,” Kirkland says, adding that “families should not feel obligated to extend life by unreasonable means.””
You can compare that position with other religions here by copying and following this link:
http://www.pewforum.org/2013/11/21/religious-groups-views-on-end-of-life-issues/
Will Trump change the direction and find solutions…or just replace Obamacare with Trumpcare and not get to the root cause of the healtchcare crisis? I dont’ know. To be seen.
But the USSR eventually fell from power when they spent over 25% of their GDP on military, and couldn’t sustain it.
The US is at risk of spending more than that on our Healthcare costs…and it isn’t sustainable. Something has to give.
Heber. Yes.
My father died this last spring of a progressively debilitating condition. He and my mother were given excellent support at home via occupational and physical therapists, equipment on loan, as well as a dedicated nursing team for the condition they could call on to visit them, all courtesy of the NHS. He was able to state that he did not want overly invasive (and uncomfortable) interventions that would only have prolonged the inevitable, and completed the necessary documents to say he did not wish to be resuscitated.
My father-in-law died in Japan last Christmas of cancer, diagnosed at stage 4. It was determined that treatment was not halting progress of the disease. He died in a Salvation Army hospice there, and was able to state that he did not want any form of artificial life support. Once he was no longer capable of feeding, drinking for himself that would be it, he’d said.
Both were afforded as much dignity as was possible given their respective conditions.
Tim: “healthcare professionals get paid for how many operations, procedures, tests, etc. they do. This creates an incentive to do more work, even when that work may be unnecessary and even when it may do as much harm as good.”
This has been true, and still is to some extent, but it is changing. There is a movement towards “Population Health” with incentives and safety metrics around the community care for the whole individual. So, instead of just getting paid by exam, and order as many as insurance will pay for….some doctors and hospitals are being incentivized to REDUCE unnecessary tests, or be penalized. For example, looking at total radiation exposure from x-rays, MRI’s, CTScans etc for the patient overall, instead of just if they need a test done for one event. It is the patient’s total exposure that should be looked at and reduced. Population health also goes beyond doctor or hospital services in the brick and mortar offices. Nurses can be sent to homes to see if medications and therapy orders are being followed, to reduce readmission rates and return office visits. Alcohol and tobacco screening and education…etc etc etc. It is a long term thing to get people on board…but they are realizing the patient and the healthcare industry are not benefitting by just one off testing for as many as they can bill for.
Another element of outreach programs is in the ED. They are using tools to gather information about a patient from all healthcare facilities in a community…so that ER doctors can see if a patient has been hitting multiple facilities with “tummy aches” hoping for medications to feed addictions…and with shared info…they can provide better care. So the ER has access to more info about the patient, without violating HIPPA. If htey know they had an accident recently elsewhere, and now have something different happening…the additional information can help treat the patient beyond the immediate cause for the ER visit.
It is still in it’s infancy. But doctors and healthcare professionals are not satisfied with “just bill as much as we can”. Many are actually in the profession to help. They just are frustrated with the constraints put upon them by Obamacare.
Hedgehog…I’m sorry for your family adn the loss. But that sounds like it was handled well. Dignity. Yes…that is how it should be handled. Good for them.
The major problem for “for profit” healthcare is the same problem that we face with American Corporation, — the greedy profit motive rather than the serve the public motive. Certainly, businesses are in business to make money, but in some cases, business passes through so many different hands that have to make money that there is “profit-stacking.” I saw this numerous times in my business, where every organization involved in a deal had to make their targeted profit margin, because that was how they are measured. By the time you add everyone’s margin, you are priced out of the deal. Not so with healthcare, which is a necessity and in many cases, a monopoly. It isn’t so much the providers themselves, but the insurance companies that are the real problems. Because of all the hands, the costs ( not the real costs, but the cost of doing business) gets out of hand.
Not that I think the government could do it better, but the profit motive is a real issue here.
Lots of good information here. But it wrong equates “preventive stuff like routine checkups once a year with a blood panel, gynecological exams and mammograms for women, proctology exams for men, vaccinations for children” with “wellness care.”
This preventive stuff has little to do with prevention of disease: they all diagnose, not prevent, disease or so-called diseases. It’s disease detection by a disease care system, which the criminal allopathic medical business calls the health care system. It’s the same deceptive lie like calling their disease-detecting procedures preventive tests.
Take mammography as an example….
Contrary to the official narrative (which is based on medical business-fabricated pro-mammogram “scientific” data), there is marginal, if any, reliable evidence that mammography, both conventional and digital (3D), reduces mortality from breast cancer in a significant way in any age bracket but a lot of solid evidence shows the procedure does provide more serious harm than serious benefit (read: ‘Mammography Screening: Truth, Lies and Controversy’ by Peter Gotzsche and ‘The Mammogram Myth’ by Rolf Hefti).
These two extensive investigations reveal to anyone that…
IF…….. women (and men) at large were to examine the mammogram data above and beyond the information of the mammogram business cartel (eg American Cancer Society, National Cancer Institute, Komen, the medical allopathy), they’d also find that it is almost exclusively the big profiteers of the test, ie. the “experts,” (eg radiologists, oncologists, medical trade associations, breast cancer “charities” etc) who promote the mass use of the test and that most pro-mammogram “research” is conducted by people with massive vested interests tied to the mammogram industry.
Most women are fooled by the misleading medical mantra that early detection by mammography saves lives simply because the public has been fed (“educated” or rather brainwashed) with a very one-sided biased pro-mammogram set of information circulated by the big business of mainstream medicine. The above mentioned two independent investigative works show that early detection does not mean that there is less breast cancer mortality.
Operating and reasoning based on this false body of information is the reason why very few women understand, for example, that a lot of breast cancer survivors are victims of harm instead of receivers of benefit. Therefore, almost all breast cancer “survivors” blindly repeat the official medical hype and nonsense.
That the author of this article here blindly repeats this medical propaganda (“preventive stuff” is “wellness care”) as if it were a fact shows the he/she still is considerably hypnotized by the medical glorification the popular society has been enculturated in since childhood.
“Although mammography’s effects on breast cancer mortality reduction appear murky, Vatten said that the benefits of treatment are much clearer. Citing statistics from a 2010 British Medical Journal study by Autier, himself, and other colleagues, Vatten said that countries where there’s access to modern treatment had the greatest reduction in breast cancer rates between 1989 and 2006—Iceland, England/Wales, and Spain topped the list—and those countries without such access, including Romania, Estonia, and Lithuania, had either minimal reduction in rates or, more troubling, significant increases. Vatten also said that two large overviews published in the Lancet in 1998 showed significant survival benefits for women who receive either chemotheraphy or the drug tamoxifen after breast cancer surgery.”
https://www.hsph.harvard.edu/news/features/vatten-mammography-screening/