Of that, 64 percent of
US total health care expenditure, or about $2 trillion dollars, are public
funds raised from taxation, and about $3 billion of the Rhode Island
expenditures are public funds, raised from state taxes.
Between 30 and 50
percent of all health care expenditures are unnecessary, fraudulently obtained,
dangerous or harmful. (The 30 percent number comes from analyzing existing
healthcare expenditures in the US. The 50 percent number comes from comparing
the US to other industrialized nations, which spend half of what we spend on
health care and get much better public health outcomes.)
That means the nation
is wasting $1-1.5 trillion a year, and the state is wasting $4-6 billion a year
in total. Of that, $600 billion to $1 trillion of the wasted funds are federal
tax revenues; and $900 million to $1.5 billion are wasted Rhode Island tax
funds. (For context, the Federal Government spends about $4 trillion dollars a
year; and the state budget is about $9 billion a year, which means a quarter to
a half of all public spending is being wasted or is unnecessary.
But it is worse than that when you sit and think about it: Unnecessary spending is really income or profit for people who sell goods and services. Which means a whole lot of profiteers are stealing a whole lot of money from the public pocketbook and from the rest of us all at the same time.)
Who are those profiteers? Insurance company executives. Hospital
executives, many of whom work for non-profits but still manage to make hundreds
of thousands—or millions of dollars a year. Pharmaceutical company executives.
Specialists — ophthalmologists, orthopedists, radiologists and the like, most
of whom make $400,000 a year or more – and some of whom make millions of
dollars a year, in a profession that claims to be about doing good for
humanity. Corporate shareholders. Venture capitalists. A host of consultants
and lobbyists, who make sure that the deck is stacked against ordinary Americans
and for corporations that make money from medical care.
We spend about $10,000
per person per year, which is about twice what the average of other
industrialized countries spend but our life expectancy and infant mortality
rates rank us between 37th and 58th in the world.
Of that money, 10-20
percent, or $1000 to $2000 per person per year, stays with the insurance
company, for administrative cost, marketing, investment and profit.
For context, we spend
about 5 percent, or about $500 per person per year on primary care, on the
medical practices and doctors and other clinicians who see when you are sick,
fill out all your forms, do your physical examinations, and take your phone
calls at 3 AM.
But 50 percent of all the contact with Americans on any given day is contact one of us makes to a primary care clinician or practice.
And the number of primary care clinicians in a state or region care turns out to be the only medical service that our science has ever shown makes a difference in terms of public health, in terms of how healthy the population is, and how affordable health care is.
But 50 percent of all the contact with Americans on any given day is contact one of us makes to a primary care clinician or practice.
And the number of primary care clinicians in a state or region care turns out to be the only medical service that our science has ever shown makes a difference in terms of public health, in terms of how healthy the population is, and how affordable health care is.
(How market forces
managed to displace and underfund the only medical service that is affordable
and effective with lots of medical services that are expensive and ineffective
or dangerous is another and different discussion. Not our proudest moment, as a
nation.)
But wait, the story is
more complicated when you look at other countries. If you look at the countries
with great public health, with little infant mortality and long life
expectancies, it runs out that many of them have much lower costs — $2500 to
$4000 per person per year, compared to our $10,000.
They do that by spending fifty percent of what they spend on primary care (which turns out to be $1000 to $1500 a year, or two to three times what we spend on primary care), so that everyone has a primary care doctor or other clinician to work with, in their own communities, often in their own neighborhoods.
We have allowed a generation or two of health care profiteers to give us health insurance instead of the medical care that actually works, and we now confront a political morass involving lots of people who are draining the public pocketbook and stealing from the pay envelopes of every employed American, creating profit for themselves, all under the banner of health care, all while they claim to be working for the good of humanity.
They do that by spending fifty percent of what they spend on primary care (which turns out to be $1000 to $1500 a year, or two to three times what we spend on primary care), so that everyone has a primary care doctor or other clinician to work with, in their own communities, often in their own neighborhoods.
We have allowed a generation or two of health care profiteers to give us health insurance instead of the medical care that actually works, and we now confront a political morass involving lots of people who are draining the public pocketbook and stealing from the pay envelopes of every employed American, creating profit for themselves, all under the banner of health care, all while they claim to be working for the good of humanity.
But there is another
important wrinkle. We are wasting all this money, but it also turns out that
most of the medical care, which is what we are spending the money on, isn’t an
effective way to improve the public’s health.
Only about 10 percent of public health outcomes that matter – life expectancy and infant mortality – are improved by the medical care a population receives.
It turns out that if we want to make our communities’ healthier, we need to spend money on education, housing, public transportation, community centers, public safety and the environment.
Spending on some kinds of medical care – vaccinations, prenatal care, smoking cessation, the identification and treatment of high blood pressure and diabetes, for example — may improve the population’s health a little, but most population health improvement comes from spending on social services, spending we have not been able to do much of in the last 30 years because we spend so much on medical care.
There is a real sense in which the cost of medical care is making health impossible, because medical care sucks up all public spending, and takes the money we didn’t waste and diverts that money from effective investments in health to useless spending on medicines and doctors that don’t accomplish much.
Only about 10 percent of public health outcomes that matter – life expectancy and infant mortality – are improved by the medical care a population receives.
It turns out that if we want to make our communities’ healthier, we need to spend money on education, housing, public transportation, community centers, public safety and the environment.
Spending on some kinds of medical care – vaccinations, prenatal care, smoking cessation, the identification and treatment of high blood pressure and diabetes, for example — may improve the population’s health a little, but most population health improvement comes from spending on social services, spending we have not been able to do much of in the last 30 years because we spend so much on medical care.
There is a real sense in which the cost of medical care is making health impossible, because medical care sucks up all public spending, and takes the money we didn’t waste and diverts that money from effective investments in health to useless spending on medicines and doctors that don’t accomplish much.
And health care cost
inflation is an important part of the story of waste and of the way medical
care is at war with health. As I mentioned earlier, health care costs increase
6 to 10 percent a year and have been increasing at that pace for the past 30 years.
6 to 10 percent is more than twice the rate of general inflation, which means
more and more of the money working people earn goes to pay for health insurance
and co-pays and deductibles, whether we like it or not.
In 2003, health insurance and health costs represented 17 percent of the family income.
Now health insurance and health costs represent 30 percent of family income.
The best estimates suggest that in 2025, 50 percent of family income will go to health insurance and health care costs.
And by 2031, the estimate is that we will be spending 100 percent of average income and costs, a clearly untenable situation – so it is very likely that the current system of health care distribution and financing will break apart by 2031.
In 2003, health insurance and health costs represented 17 percent of the family income.
Now health insurance and health costs represent 30 percent of family income.
The best estimates suggest that in 2025, 50 percent of family income will go to health insurance and health care costs.
And by 2031, the estimate is that we will be spending 100 percent of average income and costs, a clearly untenable situation – so it is very likely that the current system of health care distribution and financing will break apart by 2031.
Understood another
way, health insurance has become a form of wage theft, and we have a wealth
extraction system, not a healthcare system. Our culture has frightened and
bullied people into buying health insurance, though the money they spend for
insurance doesn’t have much impact on how long people live or on how healthy we
are.
Most of the money people spend on health care ( though their insurance) is unnecessary or wasted, but is profit for the health care profiteers – insurance companies, pharmaceutical manufacturers, hospitalists and specialists. None of us actually voted for that money to be removed from our paycheck, although more and more money comes out of our paychecks each year, because of medical care cost inflation.
And what we don’t see and so never look at is how much money we would have made as raises and bonuses if our employers weren’t spending so much of the money we earned on medical care and health insurance we didn’t ask for, don’t want, isn’t helping us and is both unnecessary and wasted.
Most of the money people spend on health care ( though their insurance) is unnecessary or wasted, but is profit for the health care profiteers – insurance companies, pharmaceutical manufacturers, hospitalists and specialists. None of us actually voted for that money to be removed from our paycheck, although more and more money comes out of our paychecks each year, because of medical care cost inflation.
And what we don’t see and so never look at is how much money we would have made as raises and bonuses if our employers weren’t spending so much of the money we earned on medical care and health insurance we didn’t ask for, don’t want, isn’t helping us and is both unnecessary and wasted.
Regardless, all these
numbers mean we need to rethink what we know about health insurance and health
care reform and change our focus away from health insurance for all Americans.
We need to provide primary care to all Rhode Islanders in their own
communities, and use the money we save to rebuild those communities, so that we
all do better together.
Michael Fine, M.D. is Health Policy Advisor to Mayor James
Diossa of Central Falls, Rhode Island and Senior Population Health and Clinical
Services Officer at Blackstone Valley Health Care, Inc. He is facilitating a
partnership between the City and Blackstone to create the Central Falls
Neighborhood Health Station, the US first attempt to build a population based
primary care and public health collaboration that serves the entire population
of a place. Dr. Fine served in the Cabinet of Governor Lincoln Chafee as
Director of the Rhode Island Department of Health (HEALTH) from February of
2011 until March of 2015, overseeing a broad range of public health programs
and services, overseeing 450 public health professionals and managing a budget
of $110 million a year.