Americans spend $2.4 trillion a year on health care. The Business Roundtable report says Americans in 2006 spent $1,928 per capita on health care, at least two-and-a-half times more per person than any other advanced country.
Medical costs…have long been a problem for U.S. auto companies. General Motors spends more per car on health care than it does on steel. But as more American companies face global competition, the “value gap” is being felt by more CEOs — and their hard pressed workers.
Free market competition encourages efficiency, but government bureucracies seek to grow themselves. So you would expect Americans would get more bang for their health care buck than nations with nationalized health care. But this isn’t the case. Why is that?
As a 20+ veteran of health care, I have a few thoughts and observations.
The first is that health care cannot be separated from other factors at work in society. America is a very litigious place. Not just willful evildoing but even innocent mistakes with limited effects become excuses for people to seek bonanza legal settlements. Think several million dollars to the person who spilled hot McDonalds coffee on themself. When a corporation that provides goods or services to the community is sued for a large amount of money, it doesn’t take that money from the profits to rich fatcat investors; it passes on that cost to the consumer in the form of higher prices or fees. So the plaintiff makes money, the lawyer gets a hefty cut, and the public pays. (Funny how a system set up by trial lawyers ends up profiting trial lawyers.)
The cost doesn’t ends there, however. Organizations that are sued and even ones that aren’t take steps that decrease exposure to lawsuits but make their activities less efficient. In hopsitals, staff spend quite a bit of their time doing things that have limited or no benefit to the quality of patient care but lessen legal liability. Nurses have limited time to interact with patients because they are buried in an ever-increasing burden of paperwork. Some of this paperwork improves patient care, but not all. In my own field of clinical laboratory science, a lot of time is spent meeting regulations, documenting, and documenting that we’re documenting. A former coworker of mine was a great proponent of documenting everything, because a doctor who had been sued for malpractice had tried to pin his mistake on supposedly erroneous lab results. It was only because my coworker documented everything so meticulously that he was able to refute the doctor’s blame-shifting and keep his job and life savings. But meanwhile hospitals have to hire more staff than patient needs require, because staff levels that would be sufficient for patient care are tied up in tasks that cover their backsides. Thsi in turn raises the hospital’s costs and thus the fees it charges patients. Elimination of punitive-damage bonanza lawsuits would let health care workers get back to tending to patients and hospitals would have the option of passing that savings on to patients, insurance companies and government.
There is also a problem of price gouging. We see this in the price of drugs costing significantly more in the U.S. than the same drugs do in Canada, where provincial governments decide how much they are willing to pay for them. That pharmaceutical companies don’t stop supplying drugs to Canada suggests that they still make a profit at those significantly reduced prices. In the lab, we use instruments that cost several hundred thousand dollars each. Manufacturers must train lab staff how to use and maintain them. The last such week-long training I attended, the manufacturer flew me to the East Coast, put me up in the Hilton and wined and dined us all week, hoping to establish goodwill that will remain the next time we have to choose a new instrument. Guess who else was at the Hilton! A gathering of sales reps for a major pharmaceutical company. The cost from all that flying, wining and dining is built into the cost of the medical products hospitals and patients buy.
Even at the not-for-profit community hospital I work at, which lacks shareholders seeking profits, administration serves its own ends in ways that drive up costs. At the beginning of the year employees were informed that due to the economic situation nobody was getting a raise. Shortly after that, the CEO, the board members (who the CEO answers to) and their spouses all jetted off to a retreat in Hawaii. That sort of thing doesn’t just happen at AIG. And again, this “cost of doing business” is covered in the hospital’s fees. The CEO has a personal friend who is a department manager at the hospital. Consensus is that this department manager got, and keeps his position despite notorious laziness and incompetence, due to this personal relationship. Because of his inability to do the job of his predecessor, the CEO gave him permission to hire an assistant manager. Cronyism adds to costs as well.
So at least some of the inefficiency in American health care has the same causes as the current economic crisis: greed, corruption, and a refusal to acknowledge inconvenient realities. Who is going to fix it? The same Congress that accepts large campaign contributions from the very same entities (trial lawyers, pharmaceutical companies, physicians and investors) who have a vested interest in the status quo? I’m not holding my breath. I still see no evidence that the American public is as interested in the political forces that affect their day-to-day lives as they are in American Idol. Sure, there will be a lot of talk and a big show of making changes, but the changes will be minor and end up benefiting (surprise!) those whose money politicians depend on for reelection. Why do I expect that? Because that’s what happens every time in recent years when a crisis, real or imagined, is addressed by Washington. They will increase the spending of borrowed money, which ultimately ends up in the pockets of special interests, without addressing factors that drive up costs, because then they couldn’t justify spending quite as much.
I hope they prove me wrong, but it appears to me that corruption is no longer a part of politics in Washington but its very nature and essence.