Craig Klugman, Ph.D.
In the Leviathan, Thomas Hobbes said that in the state of nature, life is “solitary, poor, nasty, brutish and short.” While Hobbes was describing a world without a government, he might as well have been describing the state of health in the United States in 2013. Last week the Institute of Medicine (IOM) released a report, “U.S. Health in International Perspective: Shorter Lives, Poorer Health.” The report compares U.S. health data with that of 16 peer countries including Australia, Austria, Canada, Denmark, Finland, France, Germany, Italy, Japan, Norway, Portugal, Spain, Sweden, Switzerland, the Netherlands, and the United Kingdom for the years 1990 to 2008.i The results, in short, are nasty.
The United States spends 17.6% of its gross domestic product (GDP)—about $2.3 trillion—on health care. That is more than any other nation. We spend $8,362 per capita on health care and pay 46% of our health care costs out-of-pocket. For that money, we have 24.22 physicians per 10,000 residents. The next closest industrialized country in terms of GDP spending is the Netherlands, which spends 11.9% of its GDP or $5038 per capita (13.6% out-of-pocket). France spends 11.9% of GPD, totaling $4,021 per capita (22.2% out-of-pocket) and they have 34.47 physicians per 10,000 residents.ii
With the U.S. spending so much more money on health care, one would expect much better health outcomes. After all, we tell ourselves that we have the greatest medical care in the world. However, IOM report demonstrates that the U.S. lags in many areas of health care. We do rank number one in 9 health domains among the 17 nations examined: (1) Highest infant mortality and the highest for those under 5 years of age; (2) Highest death rates from motor vehicle crashes, and homicide; (3) highest rate of teenage pregnancy and sexually transmitted infections; (4) highest rate of HIV infections and incidence of AIDS; (5) highest rate of death from drugs and alcohol; (6) highest obesity rates and diabetes rates; (7) highest death rate from heart disease; (8) highest death rate from lung disease; and (9) highest rate of arthritis and other activity limiting disabilities.
In addition, consider that the average life expectancy at birth in the U.S. is 78. In the Netherlands and France the number is 81. iii The highest anywhere in the world is Japan (9.5% GDP, $3,204 per capita, 21.42 physicians per 10,000 residents).
In other words, for all of the money we spend on health care, we are sicker and we die younger. For all of our technology, money, and bravado, we are not as healthy as other industrialized nations. The IOM suggests that the cause is (1) our high numbers of uninsured residents, (2) our unhealthy habits (we eat too much, abuse drugs, don’t use seat belts, drive more while intoxicated, and use more firearms), (3) our higher levels of poverty, lower levels of education, fewer safety programs, and lower rates of social mobility; and (4) a physical environment that is more conducive to driving than walking and other physical activity.
The IOM proposes that we can reverse these problems by collecting better statistics, creating national health goals, having more media campaigns, and conducting more studies. All of which do little to address the real problems.
A cynical mentor of mine once said that if you want to see what is happening, “follow the money.” In the U.S., it turns out that more than 7% of our health care dollars (about $160 billion) go toward administrative costs. The government cost for administration of its programs is 1 to 2%. Private pay insurance plans and health care have higher administrative costs. The reason may be that the executives in these companies make high salaries and for those companies that are for-profit, they expect to make money to return to their investors and shareholders. According to Forbes magazine, the CEO of one pharmacy company earned $51.25 million in one recent year while the CEO of a health care group earned $48.83 million that same year.iv One of the tenets of the Affordable Care Act that was criticized strongly by insurance and health industry lobbies was a rule that says 80% of the dollars collected by insurers must be spent on actual patient care. This lowers the percent of dollars that go toward non-care costs suggesting that the 7% may not be the full picture.
If we want more efficient (i.e. less expensive and more effective) health care, we need to find other models, perhaps by looking at the successes of our peer countries. Other industrialized nations tend to limit the amount of profit a company can make on health care, have controlled costs for medical care and pharmaceuticals, and have single-payer or highly regulated insurance programs. These countries also have populations with healthier habits including better nutrition, more exercise (granted their populations live in more urban, pedestrian friendly areas with great public transportation choices), better educational systems that rely less on teaching to a test and more on actual learning, strict regulations on firearms, and take care of their poor and underserved. If we really want to tackle this problem we need to change how we fund health care, how we manage health care, and how we build our cities.
This is one contest in which being number one is not a distinction we want to maintain.