Issues and Policy
The Problem with United States Healthcare
Source: Roosa Tikkanen and Melinda K. Abrams, U.S. Health Care from a Global Perspective, 2019: Higher Spending, Worse Outcomes? (Commonwealth Fund, Jan. 2020). https://doi.org/10.26099/7avy-fc29
Costs and Spending
"Americans spend vast sums on health care. Certainly, health care is expensive all over the world, and it makes good sense for rich countries to spend large amounts to extend their citizens’ lives and to reduce pain and suffering. But America does this about as badly as it is possible to imagine."
- From Deaths of Despair and the Future of Capitalism, by Anne Case and Angus Deaton
Compared to 10 wealthy nations (Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, and the United Kingdom), the United States ranks poorly in health care.
High Spending, Little Reward
While government spending per-capita is similar to other nations, private costs (consisting partially of employer-sponsored health insurance premiums) and out-of-pocket costs are higher. Despite this, Americans have worse health than others.
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Lowest life expectancy
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Highest suicide rates
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Most chronic disease (two or more of the following: joint pain, arthritis, asthma, chronic lung disease, diabetes, heart disease, including heart attack, hypertension/high blood pressure)
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Highest rate of obesity
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Fewer visits to the doctor
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Smallest number of physicians
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Highest hospitalizations for preventable causes
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Highest rate of avoidable deaths
The only measure by which the United States excels is preventative action, such as breast cancer screening and flu vaccinations.
Where does the money go?
A large portion of spending is delivered to wealthy individuals and groups, including:
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Physicians​​​
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Pharmaceutical companies and their executives
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Manufacturers of medical devices
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Insurers
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Large hospitals
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Why are costs so high?
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​Of the top 1% of earners, physicians make up the majority. Part of the reason wages remain high (almost twice the pay compared to other wealthy nations) is the small number of doctors in the United States​​. The high wages and lower numbers cancel out in terms of total spending, but reduce access to care.
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The insurance system in the US requires a large amount of administration, increasing spending for insurance companies, doctors, and hospitals.
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As hospitals consolidate, there is less competition, and they can raise prices without losing patients.
"Surprise Billing"
Insurance plans have set providers that are covered, considered to be in-network. In most cases, patients will ensure their medical care comes from in-network providers, so that they are covered by insurance.
Sometimes, this is not possible. This occurs mostly with hospital visits.
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Planned Hospital Visits: When patients plan for procedures, they can select an in-network hospital. Usually, the hospital and the lead doctor will be in-network, but other providers, such as anesthesiologists or radiologists that are part of the team are not.
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Emergency Hospital Visits: In this case, there is even less control over which hospitals and providers patients go to. Ambulances, doctors, and even entire hospitals could be out-of-network.
When patients receive out-of-network care, some of the cost might be covered by the insurer, but the remainder of the list price is billed to the patient. The list price hasn't been negotiated by an insurance company like in-network prices are, and so they are often very expensive.
Since patients can choose surgeons, primary care physicians, and obstetricians, these providers often join networks. Other providers, where patients don't have choice, have less incentive to join. As a result, they can negotiate higher prices from insurers, raising premiums for all consumers.
High Deductibles
Even when patients can afford to pay premiums, their health insurance doesn't cover anything until they pay the deductible. The high costs for services have led insurers to increase deductibles. As a result, many patients don't make appointments when recommended, as the cost of their appointments still comes out-of-pocket.
One testimonial reported by the New York Times described a patient that visits the doctor less now that she has health insurance, as she can't receive provider discounts for uninsured patients.
At the time the Affordable Care Act was written, this was a concern for staffers and legislators. However, budget restrictions prompted them to set caps at $8,150 individual deductibles and $16,300 for families.
There was some hope that new legislation would increase subsidies over time, but Republicans have instead focused more on repealing the ACA.
Employer Health Insurance
An approximate 158 million Americans are covered by employer-sponsored plans. Depending on their plan (individual versus family), an employee will pay 18-29% of the cost for their plan. This is in addition to taxes (i.e. Medicare taxes), copayments, and deductibles.
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The problem with this is that the portion covered by employers (71-82%) is compensated for in other ways- for example, by lowering wages, eliminating jobs, or working with other companies that give less benefits, rather than hiring their own workers (with better benefits) to do the same jobs.
Coverage
Other Issues
The following statistics on coverage come from the 2019 U.S. Census Bureau report on Health Insurance Coverage in the United States
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In 2019, 26.1 (8%) million people did not have health insurance at any point in the year, compared to 29.6 million (9.2%) at the time of the U.S. Census report.
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16.7% of Hispanics and 9.6% of Blacks were uninsured, compared to 5.2% for non-Hispanic Whites and 6.2% for Asians.
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Generally, the percentage of uninsured people was higher in states that did not use federal funding to expand Medicaid eligibility (18.4% compared to 9.8%
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Effective Care and Chronic Conditions
Some analysis calculates that 25% of annual U.S. spending on health care is wasteful- adding to $760-935 billion. Part of this waste comes from overtreatment and care that is relatively low value, as evidenced by high numbers of MRIs and hip replacements compared to other wealthy nations.
The United States also has disproportionate amounts of patients with chronic conditions, which is likely related to lower rates of physician visits. Limited access to primary care can make it more difficult to prevent and manage chronic conditions. The U.S. also has the highest number of preventable deaths among wealthy nations, which is suggestive of a lack of primary care and chronic condition support.
Source: Roosa Tikkanen and Melinda K. Abrams, U.S. Health Care from a Global Perspective, 2019: Higher Spending, Worse Outcomes? (Commonwealth Fund, Jan. 2020). https://doi.org/10.26099/7avy-fc29
Case, Anne, and Agnus Deaton. “How Healthcare Costs Hurt American Workers and Benefit the Wealthy.” Time,
Time, 20 Feb. 2020, time.com/5785945/health-care-problems-america/.
Goodnough, Abby, et al. “Obamacare Turns 10. Here's a Look at What Works and Doesn't.” The New York Times,
The New York Times, 23 Mar. 2020, www.nytimes.com/2020/03/23/health/obamacare-aca-coverage-cost-history.html.
Tikkanen , Roosa, and Melinda K. Abrams. “U.S. Health Care from a Global Perspective, 2019: Higher Spending,
Worse Outcomes?” U.S. Health Care from a Global Perspective, 2019 | Commonwealth Fund, 30 Jan. 2020, www.commonwealthfund.org/publications/issue-briefs/2020/jan/us-health-care-global-perspective-2019.
United States, Congress, United States Department of Commerce, et al. Health Insurance Coverage in the United
States: 2019, U.S. Government Publishing Office, Sept. 2020. www.census.gov/content/dam/Census/library/publications/2020/demo/p60-271.pdf.
Young, Christen Linke, et al. “What Is Surprise Billing for Medical Care?” Brookings, Brookings, 15 Oct. 2019,
www.brookings.edu/policy2020/votervital/what-is-surprise-billing-for-medical-care/.