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Friday, March 17, 2017

Healthcare, One Aspect of a Failing System

                  A Failing Part of a Failing System 

My two previous essays are more important than this one. I should get a web page instead of a blog. 
I'll put up this essay's source-links soon. But this works for now. The Yosemite Democratic Club will publish this essay, soon. 

Healthcare — It’s a Complicated Issue

I received a new titanium hip last September, I had hip replacement surgery. I’m 70 years old, and the doctor tells me it will last for 20 years or more. I have Medicare, and when the hospital sent me a bill for $67,000, more or less, I was happy because I knew I was responsible for only $3,000. Medicare saved me. If I had been under 65 years old, I would now be in debt or using a walker or a wheel chair. Or I could have flown to London or Paris where this surgery costs $11,000 or $12,000. In London they do six surgeries for the cost of one in California. Or to India, Korea, Mexico. In Canada the cost of an angiogram (an x-ray of arteries and veins) costs $35, the average cost in the U.S. is $914. An MRI in France costs $363, in the U.S. $1,121; a one day stay in a hospital bed in the Netherlands at $731, compared to $4,287 in the U.S. An appendectomy in England, $3,408, in the U.S. $12,851. And so on from the IFHP 2012 Comparative Price Report.  

We all have stories about the delivery of healthcare services. A friend, age 52, went in for an appendectomy, and his wife’s insurance paid the $40,000 charge, otherwise he might have died. Another had a pig valve inserted into his heart 20 years ago. He was on MediCal. He has been a productive adult supporting his wife and daughter since then. Another, a PhD. in psychology, diagnosed with breast cancer, died because she could only get treatment by participating in an experimental treatment. We all have stories. 

Healthcare U.S.A. seems to be an irrational mess. We pay double per person what other advanced nations spend, and our outcome is worse. (We spend $9,500 per human, our yearly expense, about 18% of total annual GDP, a huge amount, while others average around $4,500 yearly, about 10% of GDP, with better outcomes). Author James Kwak states, “Of the [34] OECD countries, the United States ranks between twentieth and twenty-ninth on primary health status metrics, ranks in the bottom third for access to coverage, and has among the fewest doctors and hospital beds per capita.” Kwak concludes: “It seems quite possible that our high costs relative to the rest of the world are the result not of overconsumption but of a decentralized system organized around private profits rather than strong government spending controls.” 

Healthcare is just a part of a dysfunctional economy. 
The Federal Reserve’s “Report on the Economic Well-Being of U.S. Households, 2015” shows that 44% of households cannot pay an emergency $400 expense within a 30 day period. Even though the average household net worth is $721,000, and the average yearly household income is over $100,000, almost half of Americans live in “liquid asset” poverty. Thirty percent of Americans “may be characterized as not able to meet their basic needs and achieve a safe and decent standard of living, or as families with ‘low income’,” states the author of the U.S. Census Supplemental Poverty Measure (SPM). America has extreme inequality. 

The FRB report further shows that 22% of respondents in the past year had an emergency medical expense, and 45% of Americans carry an “unpaid balance” resulting from medical expenses. The initial median cost was $1,200 while the average cost was $2,383. And “Among those whose family income is under $40,000, 39 percent have gone without some form of medical treatment in the preceding 12 months.”  And the the SPM states that the poverty rate would decrease from 14.3% to 10.8%, without “medical out-of-pocket” expenses.
A report from The Center for American Progress shows that medical expenses doubled between 2000 and 2012, increasing from 5.5% of the family budget for the median four-person household to 10.1%. During the Bush years medical expenses were eating us out of house and home. So medical expenses drives low-income families into poverty, and affect the entire population. 

(From a Washington Post article)
I’m afraid I’ve used too many numbers, and it is numbing. But the general message is pretty clear. We need some reform, healthcare-wise and economy-wise. 

A recent report shows that the lower-earning 50% of French citizens enjoy an income 16% higher than the same group in the U.S., even though the French economy is less productive per person by 36%, $36,000 versus $56,000 per capita. 
While the bottom 50 percent of  incomes were 11 percent lower in France than in the United States in 1980, they are now 16 percent higher. (See Figure 3.)
Figure 3

In fact, this understates the facts because, "Since the welfare state is more generous in France, the gap between the bottom 50 percent of income earners in France and the United States would be even greater after taxes and transfers."

In the past 34 years France's lower earning 50% saw their incomes increase at the same rate as productivity, both rose by 32%. In the U.S., over 34 years, 1980 to 2014, the lower-earning 50% had a 1% increase in earnings, despite the overall average growth of 61%. 

In the U.S. the higher earning groups all increased their incomes greater than the average: "In contrast, income skyrocketed at the top of the income distribution, rising 121 percent for the top 10 percent, 205 percent for the top 1 percent, and 636 percent for the top 0.001 percent." 

In my last post I show a graph of this uneven growth. The income gap tripled in size between the lower 50% and the top 1%, increasing from 27 times to 81 times, from $16,000 (per adult) to $432,000 in 1980, to $16,000 to $1,300,000 in 2014. This is the story of the past 30 years -- widening uneven income gaps, growing inequality. 

With commensurate growth, growth that matched productivity gains, today's U.S. minimum wage would be $15.77, not $7.25, --- multiply $9.80 an hour, the 1978 minimum wage, with 1.61 to arrive at $15.77 -- and yearly earnings would be $32,818, not today's $15,080. We're not France. 

Social expenditure and relative poverty rates in selected OECD countries, late 2000s

Extent to which taxes and transfer programs reduce the relative poverty rate, selected OECD countries, late 2000s

But I find that $32,818 much too high. So I refer you to the Economic Policy Institute web page "What Should You Be Earning?", where we find an annual income of $15,080, "would-be" $26,911 or $12.94 and hour, or still 78% higher than the current income. The site says that disposable income per capita in constant dollars rose, between 1980 and 2014, by 86%, not 78%, not 61%. But I think the Piketty, Saez, Zucman report is the most exhaustive. Today the "Average Weekly Earnings of Production and Nonsupervisory Employees" private sector", are $734.50 a week, and for a full-time year-round worker that equals $38,194 annually. The EPI says his/her pay would increase to $57,328, a 50% raise. I believe about 80% of U.S. workers are "non-supervisory". 
My two most recent essays cover the shift of wage income to the lower-earning 90% of earners; see them for details.  

In 2015 30% (48 million) of U.S. workers earned less than $15,000 a year, and 56% (90 million) earned less than $35,000. The average “disposable” income for a four-person family in the U.S. is $149,660 according to the Bureau of Economic Analysis. The U.S. median income of $84,000 for a four-person household is 56% of the average.  

Here are a few facts from the CBO report on the Affordable Care Act: 
The annual federal cost in 2016 was $110 billion. The average subsidy per enrollee receiving a subsidy through a marketplace or Basic Health Program was $4,240. Through the ACA in 2016, 22 million Americans are insured,11 million were made eligible for Medicaid, and 10 million purchased subsidized insurance through marketplaces (often called exchanges), and 2 million purchased individual policies unsubsidized through marketplaces. In 2016 the ACA increased the share of the U.S. population with healthcare insurance from 83% to 90% by insuring 22 million people. 

All this data is overwhelming, maybe incomprehensible. The gist is that the ACA improved the healthcare system but not enough, it is a miserably failing sector in an already dysfunctional economy. 

Listen to Dr. Steffie Woolhandler explain the need for real healthcare reform on Doug Henwood's Behind the News. And watch her videos on the Real News, March 17. 
I recommend Ellen Brown's article on Single Payer reform. 

The book Sixteen for '16 -- This is my choice for readers. It has the virtue of a snapshot. It clearly and persuasively details sixteen elements of a progressive economy. Salvatore Babones writes for the Institute for Policy Studies, the same group that sponsors Inequality (dot) org where you can read his articles. You can read a short selection from the book at Google books, see here. Babones also publishes at Truthout. Here is the publisher's promotion page. And The Real News Network interviewed him in June 2015 after the book was published. Amazon sells used copies for a buck plus shipping -- it's well worth it.