The simple answer is that the providers of health care are simply making too much money. Health care is a $2-trillion-a-year business. It’s the biggest business in the United States. During the latest financial melt-down not one health-care insurance company, drug company or medical device company rushed up to the government asking for a bail-out. Why? They are essentially recession-proof.
When you hear the term health-care reform, it really means insurance reform. The health-care insurance industry knows that everyone doesn’t like the fact that they are getting third-world overall health care for top-tier pricing. So to head off a true revolt, they simply are rearranging the deck chairs on the Titanic, giving the appearance that health-care costs will come down in the future by eliminating waste in the system. Yet it is through that same waste that health-insurance companies make their money. It is the same type of administrative waste that makes government bigger each year with fewer and fewer true services to taxpayers. It’s the nature of any bureaucracy that only survives by continued growth.
To have true health-care reform, we have to face up to the fact that we have an aging society. Health care simply costs more the older a patient is. We also have to realize that unlike every other sector of society, the more high technology we apply to the area of health care, the more the costs seem to increase. If the quality of health care was increasing faster than cost of technology, it should have been bringing down overall costs since a healthier population should mean that fewer health-care resources were being utilized. Unfortunately, just the opposite is happening. In fact, chronic diseases are now appearing at younger and younger ages.
What American health care excels at are high-technology emergency services and heroic end-of-life interventions. Unfortunately, a health-care system is marked by overall quality of life. By that standard, the America health-care system is substandard. Worse than that, the cost of that poor quality of health care is considered significantly more expensive than any country in the world. I believe there are two primary reasons. One is that the people in other countries are healthier than Americans. The other reason is the rationing of health care abroad. The polite term is “allocation of resources”. Let’s examine each of these independently.
First, why are Americans less healthy compared to people in other industrialized countries? The answer comes from the second largest sector of the U.S. economy—the food industry. Food accounts for $1 trillion in annual revenues. Like the health-care industry, the food industry has been little affected by the economic meltdown because we have become addicted to highly processed food of which we are the masters of production. This processed food can be found in restaurants, processed food in aisles of the supermarket, fast food outlets, or incredibly tasty junk foods that can be eaten in your car. The one thing they all have in common is that it is cheaper for someone to do most of the food preparation for you than having to do it for yourself. It takes time to buy unprocessed food, prepare it yourself, eat it, and probably most importantly clean up the mess you have made in the kitchen. It takes time and money. In economics, it is called opportunity costs. If someone can do it cheaper for you, then you can use that time and money you just saved to pursue other things that give you greater happiness, like playing golf or getting a second job to provide the money so you can play golf. Either one is a lot more fun than making meals from scratch at home. Although cooking is tough to do, it was also the primary health-care safety net that kept a population healthy. Today that safety net in America is rapidly disappearing. The growing use of processed food in the American diet has caused increased dietary-induced inflammation, which in turn means increased acceleration of chronic disease. That will not change as long as the food industry continues to obtain massive subsidies from the government to keep corn and soy products incredibly cheap. The result is that processed food is incredibly inexpensive in America compared to every other country in the world.
Then there is rationing of health-care resources. At least one-third of one’s total health-care expenditures occur during the last year of life. So guess where the greatest health-care savings can come from? You guessed it, by restricting the use of high-tech medicine to try to prolong the life of the elderly. In many highly sophisticated countries, like Norway, the use of high technology is highly restricted after age 65. You can still get the treatment, but the health-care system will not reimburse it. It’s called allocation of resources. If you are willing to pay for it, you can squeeze out a little more life by reaching into your own pocket to pay for high-tech interventions. Society is going to place its bets on the younger generation that still pays taxes to support the health-care system. But don’t we have an obligation to the elderly? This is a recent concept in human history. Before World War II there was virtually no health insurance anywhere in the world. You were responsible for your own health future. In America, there was very limited health-care insurance before the 1960s. If you got sick, you paid the physician for his or her services just like you pay a lawyer or accountant today. The advent of government-backed health insurance (Medicare and Medicare) ensured that the insurance companies would get paid, and health insurance took off. Americans began to believe that health care was no longer a personal responsibility. Frankly, the economic fact is that the more insurance that you have, the more you tend to use the resources it pays for and take less personal responsibility. I am sure that lawyers and accountants are eagerly awaiting the day that will Americans demand lawyer and accountant insurance.
So what is the solution? It may be that less health insurance, not more, may be the answer. Fewer food subsidies, not more, might be a start. It also means more personal emphasis on staying healthy and less on expecting high-tech treatment if you get sick. Ultimately, this means spending more time preparing food from scratch so you know exactly what you are eating. It also means someone (male or female) is going to have to spend a lot more time in the kitchen. That may mean lost opportunity of food savings to make you “happier”, but you will be much healthier. Unfortunately, most Americans would rather be “happier” then healthy.
This is Dr. Sears’ latest blog on the Huffington Post.