Thursday, October 20, 2016

Some Health Care Musings

One of the many problems of this year's terrible election is the failure of anyone to make sense out of the nation's significant multi-faceted problems. Both the press and the esteemed candidates are content with insults and shallow personal revelations but resistant to anything of substance. Questions about the national debt, the direction of the deficit, the underfunded pension funds, the growing entitlements, the rise of hostile and well armed self-declared enemies, the obvious security problems in both government and industry, terrorism--all of these topics are ignored for the apparently more important topics of accusations of misogynies, bribery, spousal infidelities, crypto-fascism and religious bigotry.

One topic that should be of interest is health care, an area the federal government has volunteered for more and more responsibility. The Obama administration has spent mush of its political capital in the creation of what they feel is a health care solution. The debate over the Affordable Care Act is intense and partisan but strangely is an untouched area in the national campaign. What is more surprising is that Hillary Clinton, for all her faults, is uniquely qualified to comment upon it as she designed an overhaul of medical care while her husband was president. Still, she has said little. One might wonder why. Maybe, as with so much of her responses, she really does not remember. Or, more likely, we poor working stiffs do not deserve or --more likely--would be scared witless to know.

As you will see, a lot is known. And there is plenty of room for discussion. But we have become a people of fortitude who have leaders of single-mindedness. Those qualities are quite different.
Here are a few graphs and statistics to ponder from recent national articles on the state of the health of health care. Ponder on:


The costs of providing health care to an average American family surpassed $25,000 for the first time in 2016 — even as the rate of health cost increases slowed to a record low, a new analysis revealed.
The $25,826 in health-care costs for a typical family of four covered by a employer-sponsored "preferred provider plan" is $1,155 higher than last year, and triple what it cost to provide health care for the same family in 2001, the first year that Milliman Medical Index analysis was done.


2010, prescription drug costs grew by just 1.2 percent while hospital and physician costs grew by 4.9 percent.

A 2014 study by the private American foundation The Commonwealth Fund found that although the U.S. health care system is the most expensive in the world, it ranks last on most dimensions of performance when compared with Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland and the United Kingdom. Recent studies find growing gaps in life expectancy in the U.S.based on income and geography.
The United States life expectancy of 78.4 years at birth, up from 75.2 years in 1990, ranks it 50th among 221 nations, and 27th out of the 34 industrialized OECD countries, down from 20th in 1990.
Some errors in comparisons exist in how infant mortality is determined. There is also a risk in the U.S. of violent death in young people--homicides and auto accidents--that other countries do not experience and which weigh heavily upon American cost and survival statistics.

Wasteful spending likely accounts for between one-third and one-half of all U.S. health care spending. PricewaterhouseCoopers calculates that up to $1.2 trillion, or half of all health care spending, is the result of waste. An Institute of Medicine (IOM) report estimated unnecessary health spending totaled $750 billion in 2009 alone. The biggest area of excess is defensive medicine, including redundant, inappropriate or unnecessary tests and procedures.
How these determinations are made are not clearly known but many studies include "bad lifestyles" like smoking, drinking and obesity as "waste."  For example, obesity accounts for an estimated 12 percent of the health spending growth in recent years.

A Yahoo Finance analysis places the health insurance sector’s average profit margin in 2012 at just 4.5 percent. But admin costs are 27-30%.  By comparison, major drug manufacturers have an average profit margin of 16.7 percent; medical instrument and supply companies, 13.6 percent; biotechnology, 11.9 percent; and medical appliance and equipment companies, 13.7 percent
Health care spending will account for nearly 20 percent of gross domestic product (GDP), or one-fifth of the U.S. economy, by 2021.

58% of US community hospitals are non-profit, 21% are government owned, and 21% are for-profit.

Of each dollar spent on health care in the United States, 31% goes to hospital care, 21% goes to physician/clinical services, 10% to pharmaceuticals, 4% to dental, 6% to nursing homes and 3% to home health care, 3% for other retail products, 3% for government public health activities, 7% to administrative costs, 7% to investment, and 6% to other professional services (physical therapists, optometrists, etc.).

​One percent of the population accounts for 30 percent of the nation's health care expenditures.
10 percent of Medicare beneficiaries account for 70 percent of program spending.
​According to one study (Banarto, McClellan, Kagy and Garber, 2004), 30% of all Medicare expenditures are attributed to the 5% of beneficiaries that die each year, with 1/3 of that cost occurring in the last month of life.

And finally, a trip down memory lane. When Hillary was chosen, for no reason anyone can discern, to come up with a plan to change health care, she amassed a large group and spent millions on the effort. Over one thousand people contributed to the process. What emerged was a plan loosely based upon the writings of economist Uwe Reinhardt. Of those thousand people, three were physicians. Why so few, you ask? Because health care is only a small part of it.

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