Critical Flaws in the U.S. Healthcare System

It is estimated that 46 million Americans do not have health insurance and sadly the United States ranks 42nd in the world in terms of life expectancy.  Yet in the U.S. approximately 16% of Gross Domestic Product (GDP) is spent on healthcare, totaling almost $1.9 trillion dollars annually.  It is difficult to reconcile that while the U.S. has the most expensive healthcare system in the industrialized world, it produces worse results for its citizens than Australia, Canada, Germany, Great Britain or New Zealand to name a few.  Several key differences between that of the U.S. system and the healthcare systems of “healthier” nations include: 1) the U.S. lacks universal health insurance for all its citizens 2) a third of Americans are obese while almost two-thirds are over-weight 3) Americans tend to over-use costly prescription medications to a greater degree than healthcare consumers of other countries.  So while the U.S. is outspending other nations it is reaping worse healthcare results over all and insuring fewer Americans in the process.  It appears that system inefficiencies and resulting ineffectiveness are also critical contributors to the problem.  Estimates are that between 15%-25% of private sector healthcare spending covers administrative costs while surprisingly the government, under Medicare, tends to operate with far greater efficiency resulting in lower overhead of approximately 3% in contrast with the private sector.  Note there are areas of the U.S. healthcare system which are more effective than that of other nations and they include: cancer survival rates, treatment of heart disease and advances in dealing with traumatic injuries. The areas where the U.S. does far worse than other nations include: the number of patient infections contracted during a hospital stay as well as producing higher rates of dangerous medical errors. 

Many Americans may not realize how much healthcare spending has increased.  Forty years ago we, as healthcare consumers, actually paid directly for over 50% of our healthcare expenses while today this percentage has fallen to under 15%.  Contributing greatly to the problem is that rather than having a direct form of insurance where the insurance company pays the insured consumer directly, what is currently in place is a third party payment system where the insurance company pays the healthcare provider, not the insured patient.  Because the patient or healthcare consumer does not pay for their healthcare services directly, they do not know what the actual cost of services provided are and therefore normal competitive market forces are not at play.  The healthcare providers themselves are under no real pressure to contain costs, or conserve treatment options, because the greater the number of services provided the more they are paid and the less likely they will be to confront a malpractice claim.  When the insurance companies then attempt to control costs by dictating a healthcare providers treatment of their patient, healthcare is compromised by over-generalized patient protocols that cannot possibly meet the needs of each individual.   

It is this indirect relationship between the insurance company, the insured patient and the healthcare provider which leads to a failure of accountability and wasteful spending.  This expensive and rapidly mounting problem must be dealt with rather than avoided as simply too complicated a quagmire to resolve.  Compromise is in everyone’s interest, and rather than trying to reinvent the wheel, we must consider the systems of countries which are more effective than that of the U.S. and develop a model that offers incentives for preventive care and cost containment along with permitting both healthcare provider and patient choice.  Costly medications should be reserved for those cases where changes in lifestyle, such as exercise and diet modification, would not produce a similar favorable patient result. The pharmaceutical industry must be stopped from pushing pills and costly medications onto the American public by advertising and marketing to them directly and healthcare providers must be banned from accepting any type of benefit from the pharmaceutical companies which result in questionable conflicts of interest when determining how best to treat a patient.  In the end it may be that a private for-profit system of health insurers cannot function to adequately serve the health needs of a country and a public system of some type is the only viable option.  But our nation’s leaders need to figure this out sooner rather than later as nothing less than our very health as a country is at stake.

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