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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. 

The Yosemite Democratic Club did publish this essay, also. 

After the AHCA passed the House on May 4, 2017, the head of the Center for Budget and Policy Priorities, Robert Greenstein, issued a short report, stating, "I have been in Washington, D.C. for 45 years.  But I have never seen members of Congress vote to so deeply hurt so many of their own constituents.  If enacted, this bill will stand as the biggest assault on ordinary Americans — and the largest Robin-Hood-in-reverse transfer of income up the income scale, from low- and middle-income families to those at the top — in our country’s modern history."
This short CBPP report succinctly clarifies both the Trump/Ryan AHCA and the previous ACA which may be repealed with Senate approval. The AHCA passed the House 217 to 213 with all Dems voting against and 20 Reps joining them. As Nancy Pelosi said, this vote will make those Reps glow in the dark. 

On September 19, 2017, I came across this video presentation by Dr. Ed Weisbart of Physicians for a National Health Program. It's 39 minutes and the most convincing argument I've found for the  Medicare for All proposal. Watch it here

Now for my take, written in March, 2017: 

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. The IFHP 2015 report here. Bypass surgery in England, $24,059, in the U.S., $78,318. Angioplasty in U.K., 7.264, in U.S. $31,620.  

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. A friend with a possible colon obstruction spent the night in the emergency room, received some laxatives, total cost $21,000. 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.” Says Kwak at his web page:

"The Trump administration is rhetorically committed to deregulating health insurance; the question is whether they are willing to accept the political consequences of pricing millions of people out of not dying."

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 Kathleen Short, the author  of the U.S. Census Supplemental Poverty Measure (SPM). (see here, page 23) 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 SPM of 2016 for 2015 states, Table 5.A, 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 (see page 9)  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. The Congressional Research Service reported, page 8: "Private health insurance premiums have generally grown faster than the economy as a whole. The Office of the Actuary at CMS estimates that the average premium per enrollee in all private markets grew from about $2,320 in 2000 to about $5,080 in 2013, indicating an average annual growth rate of 6.2 percent.10"However, private insurance premiums grew more slowly from 2005 to 2013 (4.5 percent per year, on average) than they did from 2000 to 2005 (9 percent per year). 
 So medical expenses drive low-income families below the federal  poverty line, some into bankruptcy, some have to avoid medical appointments due to high costs, and in general weigh heavily on the family budgets of all the nation's households. 

(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 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. The Economic Policy Institute states the minimum would be $19 an hour (see here, the first graph). And that by 2024 the minimum would be $21.34, and a yearly income would be the unrealistic amount of $42,680, which is above the average wage income for all wage earners -- an obviously unrealistic prediction. 

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 (Personal Income Table 2.1)  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, showing 61% increase) 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 out of 160.7 million) of U.S. workers   (Social Security Administration report on wage income) earned less than $15,000 a year. The mean average income for all 48 million (30%) was $6,246 in 2015. From the same Social Security Administration report, 50% (or 80 million) of U.S. workers earned less than $30,000, and their average income was $12,770. And the median for all workers, or the upper limit for the lower half, was $29,930.  

     An Inequality of Income Review      

The Bureau of Economic Analysis, Department of Commerce, (Table 2.1, Personal Income) states the average “disposable” income per capita in 2017 is $44,313, and this implies an average income of $177,252 for all four-person families in the U.S.  The U.S. median income of $84,000 for a four-person household is less than 50% of the average. At the BEA the total personal income is $16.4 trillion, and "disposable income" -- which is post-tax income -- is, by deduction, $14.4 trillion. This is different, considerably, from the total posted at The Congressional Joint Committee on Taxation, Overview, page 31, which shows a total income of $14.375 trillion. The highest-earning 6.1% of taxpayers, with incomes over $200,000, earn 35.3% of all income. The lowest-earning 66.7 (2/3rds) with incomes under $100,000, earn 36.2% of all income. 

  Therefore the collective income of 6% is nearly equal to the collective income of 67%.      And 67% collectively earn a little more than the 6%.   

Yet the best article on distribution is the Saez, Piketty and Zucman, showing an average income of $16,000 per year for all in the lower-half of U.S. adults (which I have already posted a link to, and do so again here and here). 

Looking at Table 1 of the report shows the average income for adults in the lower half in 2015 at $16,000, with a gap of 81 to the income of the earners in the top 1%, whose average income is almost $1.3 million per adult. But comparing the two halves of U.S. adults we get a ratio of  1 to 7 in income. The lower-half average is $16,000, while the higher half average is $113,000. The lower earns 12.5% of all income, therefore the upper therefore 87.5%, the ratio is 1 to 7. 

I try to repeatedly display the inequality so readers will be left with no doubt. IF only I could find more readers! 

As I said, healthcare is wildly unaffordable and compared with other nations Americans pay double and receive less. And now after the Trump/Ryan Care passage in the House on May 4, 2017, it is more unaffordable. 
Today I read that the owner of the Amazon retail web pages, Jeff Bezos, increases each hour his net worth by more than one lawyer will make in his entire lifetime. This was reported at on May 8, 2017

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. 

                                  Even More           
On May 23, 2017, a continuation . . . 

I have read Ed Dolan's essays on healthcare and I find this graph very useful for understanding the costs of healthcare. It shows that 1% of recipients cost the system each year 23% of all costs, 5% of them rack-up 50% of costs, and 10% of the sick cost the nation 67% of all expenditures. His source is this Kaiser Family Foundation report


The Kaiser report states: "In any given year, among the 50% least expensive people in a year, 73% will remain in that group for a second year; similarly, of people who are among the most expensive 10% of the population in one year, only 45% would still be in that group the following year.1"
Five percent (or almost half of the most expensive 10%) of total U.S. population, will slip out of the high expense and uninsurable category -- perhaps many of them die. While 36% of total population (73% times 50%) remain in the insurable category, the lower half who consume just 3% of all medical expenses, going year to year. 

            The Republican Plan, Perhaps Workable
Dolan's article contends that caps on health expenditures will automatically shift patients from the private insurance market, the General Tier that covers 70% of all citizens, to the High Risk Tier that covers 10% who generate 66% of all costs. The remaining 20% are those in the Low-Income Tier. As I see it, this Republican plan is an extension of Medicare. It appears that if 66% of the costs are covered in the High Risk Tier, and perhaps 10% are covered in the Low-Income Tier, that places 76% of costs under government coverage, and allows the private market access to 70% of the population who generate only 24% of the costs. I may be wrong, as this is a hasty conclusion. The problem of pre-assigning people to certain risk categories therefore is corrected by automatic spending caps, year to year; the "Uninsurable" or the "Marginally Insurable" or the "Insurable" groups are fluid. And this makes the Republican plan, outlined in Dolan's article, workable. But the major issue of  egregiously high-costs-for-everything remains to be dealt with. 

The book The American Health Care Paradox, Why Spending More Is Getting Us Less, by E. Bradley and L. Taylor, makes the case that low social spending in the U.S. exacerbates health outcomes.  It says, p. 16, "The study found that if we counted countries' combined investment in health care and in social services, the United States was no longer spending the larest percentage of GDP -- far from it. In 2007, for example, the United States devoted only 25 percent of gross domestic product to health and social services combined, while such countries as Sweden, France, Austria, Switzerland, and Denmark dedicated about 30 to 33 percent of their respective GDP to the combination. In 2007, while the United States ranked highest in health spending, it ranked only thirteenth in spending on health services and social services combined (see Figure 1.4)." 
The New Yorker magazine carried an article from these authors

And lastly, Paul Starr at the American Prospect lays out a plan for expanding Medicare to middle age citizens, beginning at age 50. This would incorporate more of the "Uninsurable" and "Marginally Insurable" into the government risk pool. He makes a strong case, and he has written exhaustively about the medical health care problem. He concludes, "We need to move in a more promising direction that takes into account the difficulties that progressive reform has long faced in health care. Midlife Medicare could be a big next step toward a system that works better for everyone." 

     California Moves Closer to Universal Health Care Measure      
In the first week of June, 2017, the California Senate passed a bill to provide universal health care. Here is an excellent article concerning the measure.
Listen !! to Robert Pollin speak on Doug Henwood's radio interview show. Pollin authored the PERI assessment of California's universal plan that is linked to in the article above. He spoke to the California Senate before they voted, favorably, to go forward with the plan. I found it very informative. 

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. 

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