Recently, a Harvard Business Review article entitled “Employer’s Can’t Fix US Healthcare Alone” caught my attention. It recounts the recent closure of Haven, a company founded by Amazon, JPMorgan Chase, and Berkshire Hathaway to save money on their employee healthcare. In only three short years, they have folded the company with little to show for it.
The United States spends more per capita on healthcare than any other country on Earth. We spend 16.9% of our GDP vs. 12% for the closest comparison (Switzerland) and 8.8% Average of all countries. Public spending is comparable to other countries. According to a Johns Hopkins study, health care accounts for 48% of federal spending. Private spending and out of pocket is the difference.
The United States has the lowest life expectancy among our peer wealthy nations. As a matter of fact, the United States has the lowest life expectancy of any of the top 36 high income countries. Our life expectancy stands at 78.6 years. The average of the other rich countries is 80.7. The US currently has the 46th longest life expectancy worldwide.
We spend more than any other country on healthcare, but have the lowest life expectancy of our 36 high income peer countries. How do you pay more and have worse outcomes? The answer, on the cost side, is clearly waste.
Caveat: I realize that life expectancy is not the only indication of a thriving healthcare industry. I also know that it takes more than great healthcare to generate longevity.
What do our major political parties suggest to fix the problem?
The democratic party wants to make it easier for all Americans to be covered by adequate health insurance. Currently, the US Census Bureau estimated that more than 26 million Americans did not have health insurance as of 2019. That number is almost definitely higher today, due to the unemployment increase since then. President Biden’s health care plan would reintroduce the individual mandate to carry health insurance under the Affordable Care Act and reduce the cost of insurance for low income Americans.
Will getting more Americans insured boost our life expectancy? There is little doubt. The Institute of Medicine found “The odds of dying among the insured relative to the uninsured is 0.71 to 0.97.”
So, will President Biden’s plan solve the problem? Well, the evidence suggests that we will see an increase in life expectancy. How much? Hard to tell. However, even if we catch up to the rest of the wealthy world on longevity, it will also increase the cost of our healthcare. We will be paying even more and only, maybe, match their success.
What in President Biden’s plan might chip away at the problem of paying more for healthcare? The Biden plan would repeal laws that prohibit the federal government from negotiating drug prices that are paid for by medicare with the pharmaceutical industry. Small step… for sure, but at least it chips away at the cost.
In the end, we are likely to have a system that generates similar results as the balance of the world and costs much, much more. Not great, but an improvement.
At this point, you may be wondering, what is the republican plan to address this issue? After all, it is a big issue in the minds of many voting Americans, and it should be. Well, there isn’t one. Former President Trump indicated many times that we would get a plan (famously “in two weeks”), but it was never delivered. They are content to simply criticize, and try to repeal, the Affordable Care Act with no plan to replace it.
Perhaps that is because we used to pay less than other countries for healthcare before the ACA? Nope, we have paid the most since the very early 1980s (long before the ACA). Perhaps, that is because we lived longer in 2010 when the ACA was adopted? Nope, our life expectancy was 78.5 years back then (78.6 years now) and still lagged all other developed nations.
So, where does that leave us? Well, I hope you will join me in cheering for progress. Thank you President Biden for attempting to improve our healthcare system. I suspect that it will make some small, albeit profoundly imperfect, progress.
I hope you will also join me in demanding better from our right of center republican party. It is not enough to simply criticize what others propose. You must propose a better plan yourself.
My guess is that the party of more limited government could find some ways to strip regulation from a bloated industry. The United States has an entire industry dedicated to just navigating an incredibly complex medical billing process. We have a situation where it requires more time to do the paperwork than to deliver the baby. There is an opportunity for huge improvement for the brave ones that embark upon the necessary innovation.
Just my opinion. What do you think? Let me know in the comments.
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