Americans now spend close to $3 trillion a year for health care, around 18 percent of our GDP. That works out to almost $9,000 per person in Maine, almost twice as much per person as the average for other wealthy nations that provide health care for all their people.
Not only do we pay more, but we pay in far more ways than any other country. Some are obvious. They include health insurance premiums, “out of pocket” co-pays and deductibles, and payments for health care products and services that are not covered by insurance. Out-of-pocket payments are increasing every year as insurers shift more of the rising costs to their customers and employers to their employees.
We also pay in ways that are not so obvious. We all pay federal, state and local taxes to support programs such as Medicare and Medicaid, health care for federal, state and local employees, military personnel, the Veterans Affairs and many others. Since employment-related health insurance is tax exempt, we also pay around $250 billion a year in the form of lost tax revenues, that is then made up by higher taxes on all of us.
Other ways we pay are almost invisible, but we feel them anyway. Workers no longer bargain for increased wages or better working conditions. In a weak economy, any small gains they have made in total compensation have been more than consumed by increases in health care costs. As a result, real wages are declining.
At a recent national health care conference I attended, there was a panel discussion about the effects health care costs on a small central Maine town. Employee health care costs have risen dramatically over recent years. Benefits for the town’s 11 employees now total $18,000 each for a total of almost $200,000. This has forced severe cutbacks in other services such as road maintenance, public safety, libraries, education, and (ironically) emergency medical services. Diminished public services and a deteriorating quality of life is one more way we pay for our health care.
This should come as no surprise. During the past sixty years or so Americans have generously poured money into our health care system through thousands of channels that are individually difficult and collectively impossible to control.
Since Americans view health care as a business, we’ve allowed our health care system to become populated by thousands of profit seeking companies (some nominally nonprofit), each trying to maximize profits and competing for a larger share of an ever-growing pie. Many of these private businesses are heavily subsidized by tax-supported health care programs and tax breaks. So far, we have been unwilling to put any effective restraints around the growth of this huge pot of gold.
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This is not a failure of capitalism or corporations, They are simply doing what they are supposed to do — create wealth for their owners. It’s a massive failure of public policy. It’s the fault of all of us, including our political leaders, for failing to put any meaningful constraints around our health care system to keep it affordable for everybody.
The result has been the creation of a gargantuan medical-industrial complex that has become the pac-man of public and private budgets. It is riddled with inefficiency and waste including unjustifiably high prices and excessive use of lucrative services and products, many of them without demonstrated value or downright harmful,.
The Affordable Care Act begins to make some timid efforts at addressing this problem. Nobody I know thinks they will be sufficient. After seven years of “RomneyCare” (after which the Affordable Care Act was patterned), Massachusetts now has almost everybody insured, but it has the highest health care costs of any state in the country. Some public figures there are beginning to suggest moving toward a statewide single-payer system.
As I’ve written before, the market forces the ACA is trying to harness have not, will not and cannot solve this problem. As most other wealthy countries have done, we need to channel the many existing health care revenue streams together into a single funnel with a publicly managed flow-control valve, and then muster the political will to use it. That is what our neighbors in Vermont are now in the process of trying to do.
As one Canadian conference participant put it, “It breaks my heart to see Americans destroying your schools, libraries and public safety to pay for health care.”
It breaks my heart, too. We can do a lot better.