America’s Health Care System

[icon name=”user” class=”” unprefixed_class=””]  Perry McLimore, MD., JD.

The U.S. health and medical care system are matchless compared to the remaining “industrialized” countries. No uniform healthcare system and no universal health care coverage exist for U.S. citizens. However, U.S. health care is, by far, the costliest in the world. Americans will spend 2.8 trillion dollars on medical care this year. If health care in the United States became a separate economy, it would be the fifth st in the world.

Health care spending in the U.S. stems from private insurance funds, federal government subsidies, and state sources. In 2010, 50 percent came from private insurance resources, 38 percent from the federal government, and state programs paid for 12 percent.

The U.S. spent 8,508 dollars per person on medical care in 2011, which calculates to 17.7 percent of the country’s GDP.i The 34 countries that make up the Organization for Economic Co-operation and Development (OECD) averaged 9.3 percent per person.ii Per capita, America spends more than twice the 3,322 dollar average of all OECD countries.iii

The exorbitant cost of medical care in the U.S. is not forecast to go lower. The Health and Human Services Department (HHS) expects the health care share of GDP to reach 19.5 percent by 2017.iv Of every dollar spent on medical attention in America: 31 percent goes to hospitals, 21 percent goes to physician services, 10 percent is spent on pharmaceuticals, 4 percent to dental, 6 percent of nursing homes, 3 percent is paid to home health care, 3 percent for other retail products, 3 percent towards public health activities, 7 percent goes to administrative costs, 7 percent of investment, and 6 percent are paid for other professional services such as physical therapists.v

So what do Americans receive for all this money spent on health care? The life expectancy of a U.S. citizen (78.4 years) ranks 50th among 221 countries and 27th in the 34 industrialized nations of the In 2011, the U.S. infant mortality rate was 6.1 per 1,000 live births, compared to the OECD median of 4.1.vii A U.S. male will live four years less than men in industrialized countries.viii The World Health Organization (WHO), in 2000, ranked the U.S. health care system as highest in cost, 37th in overall performance, and 72nd by level of health compared to 191 nations.ix

America ranks near to the bottom contrasted with other industrialized countries regarding many health issues: infant mortality, murder, teen pregnancy, STDs, HIV and AIDS, drug overdoses, obesity, diabetes, heart disease, lung disease, and disability.x

Apparently, more money spent on medical care does not translate to better overall health. Americans are not getting what they are paying for. The problem is systemic. Why is U.S. healthcare so dysfunctional? Let’s examine some of the reasons.



Private Insurance

Around 1929, group insurance was first introduced. Employer-based insurance benefits showed up during World War II. The Internal Revenue Service Tax Code in 1954 codified employer-based employee health care benefits and coverage to become tax deductible. In 1954, the majority of Americans did not possess health insurance. After the 1954 tax code went into effect, employer-based health coverage quickly caught on. For workers, a dollar in health care benefits became more valuable than a dollars-worth in wages. The 1954 tax code transformed employer-based health care insurance into the most affordable option.

Thus, started the private insurance reliant, employment aligned, administratively convoluted health care system. The cost of medical care began to rise quickly. The 1954 tax code turned into the st tax break in the federal budget, now costing 260 billion dollars annually. Workers became unaware of how much medical care cost. So what, my employer is paying for it. The rapidly increasing cost of health care flew under the radar.

Then, in 1965, the federal government passed Medicare and Medicaid. They adopted the same model of health care. Suddenly, 12 percent of the population had paid for medical attention. The fee-for-service (FFS) system, where providers are paid based on how much they do despite the outcome, became ingrained into the U.S. health care system. After 1965, health care spending started to upsurge, outpacing inflation. In 1966, 1 percent of the federal budget paid for Medicare, nowadays the program makes up 20 percent of federal spending.

In 2012, 84 percent of the U.S. population had health insurance, including 64 percent covered by employer-based health benefits.xi Of the insured, 33 percent received medical care coverage through Medicare (48 million), Medicaid (51 million), and the Veteran’s Administration (VA) covered around 14 million people.xii About 48 million citizens, in 2012, were uninsured.xiii

Apparently, as medical care costs skyrocketed, health insurance premiums and deductibles increased, and benefits decreased. The Commonwealth Fund found premiums for family coverage increased 62 percent from 2003 to 2011.xiv Deductibles, during that time span, doubled.xv The lowest deductible nowadays is 1,000 dollars. Family premiums averaged 6,438 dollars annually in 2000; however, in 2013, the average premium cost yearly for families rose to 16,351 dollars.xvi

In 2013, 43.5 percent of Americans received health insurance from employer-based benefits.xvii This number continues to decline. Coverage by an employer varies considerably based on wage level and the size of the company. Among enterprises (3-199 workers) only 61 percent offered health care benefits to their employees.xviii For many employers or firms, despite being tax deductible, providing workers with health benefits has become financially prohibitive. Still, wages are not increased, and workers get upset. Most employees have no realization how much their medical care costs.

The basis of any insurance remains a , diverse population pool spreads the risk keeping premiums reasonable. In the U.S., this concept has been distorted regarding health insurance. Medicare removed the highest risk population, and government employees and the military removed the lowest risk pool. The rest of the demographic population has been entered into the cherry-picking, for-profit private insurers with high premiums, deductibles, and an outlandishly elaborate bureaucracy.

Private health insurance companies have become very profitable. According to Fortune magazine, the top 15 American health insurance companies, from 2000 to 2007 had a profit increase of 3.5 billion dollars to 15 billion dollars. Most have shareholders to which they are responsible. Thus, an enormous conflict of interest exists between shareholders and beneficiaries. Employees of health insurance providers get paid bonuses for how little care they approve. Having private health insurance paying for an individual’s medical care is akin to buying groceries with home or household insurance. The system is a setup for exorbitant costs. Look at the facts.




Writing about the uninsured or uncovered population is distinctive about America’s health care system. In this country, 48 million people, in 2012, did not have medical care insurance.xix Although, 63 percent of uninsured households had at least one full-time worker living there.xx These facts are in comparison to the rest of the OECD countries, which reached universal coverage of their citizens (98.4%) by 1990.xxi A 2004 Institute of Medicine (IOM) report stated, “United States is among the few industrialized nations that do not guarantee access to health care for its population.”xxii It is an embarrassing shame.

The consequences of having uninsured citizens are numerous. According to one study, 45,000 to 48,000 U.S. citizens die each year due to not possessing medical care coverage.xxiii Not having insurance results in not accessing the health care system to receive appropriate and adequate attention and treatment.xxiv The uninsured underutilize preventative medical care that promotes chronic illness. Chronic disease among the uninsured becomes a liability on the system and greatly increases health care spending in the U.S.xxv Last year, 37 percent of the population reported they had skipped medical care due to cost, avoided going to the physician, declined medications, and not followed recommended treatments.xxvi Another study revealed that insured people were less likely to be diagnosed with advanced-stage cancer compared to the uninsured.xxvii The uninsured do not visit a doctor when sick, have a recommended test done, follow treatment advice, fill a prescription, or go to follow-up.xxviii

Excessively represented in the uninsured pool are minorities and children. In 2012, 11.1 percent of Caucasians were uninsured versus 19 percent of African- Americans, 15.1 percent of Asians, and 29.1 percent of Hispanics. Around 10 percent of U.S. children are uninsured.xxix Minorities make up a r proportion of the population suffering from chronic illnesses such as diabetes, hypertension, heart disease, strokes, and Because of the high incidence of chronic diseases among the uninsured, it costs more than covering this group by a state or federal government program.

Many of the uninsured population receive health care through emergency departments. This is expensive. Providers as charity care absorb costs of treating the uninsured or indigent population. Hospitals are reimbursed by the federal government for their indigent care expenses through the Disproportionate Share Payments Program. The Hill-Burton Act of 1946 provided federal funds to go to hospitals for treating the poor. Charity care hospitals shift overhead costs to their emergency department, so charity care spending remains high. The hospital receives that money from the federal government.

Of course, somebody must pay for the uninsured. The expense incurred by having an uninsured pool of the population is shifted to the insured through higher premiums or paid by taxpayers through higher taxes. There is no such a thing as “free” medical care.

The Patient Protection and Affordable Care Act (PPACA) or “Obamacare’s” primary focus is to provide coverage to everyone. However, even if Obamacare becomes fully instituted, there will still be uninsured. The quoted estimates are 31 million citizens, or 11 percent of the population will lack medical care coverage. In addition, with reform by Obamacare, 2.7 percent of the U.S. populace (8.2 million) will earn too much money to qualify for subsidies, but will not earn enough cash to afford health insurance.

The bottom line is having a significant uninsured pool of the population is costing America’s health care system much money.



Percentage of Uninsured by States



Uncompetiveness and Non-Transparency

It is proven economic dogma, increasing supply of a product or service will result in lower prices and better quality. In all other businesses, prices and quality are transparent so the consumer can formulate an appropriate choice. These principles are not present in the medical care business in the U.S. In America, health insurance companies, and the government set prices, so supply and demand go out the window.

The government tries to control costs rather than prices by limiting reimbursement to the hospitals and providers. However, in the fee-for-service model present in the U.S., the hospitals and providers can just do more or prescribe expensive treatments and get paid. The consumer or patient is left in the dark. Patients are only paying a percentage of the cost, so there is no incentive to ask, inquire, or shop around. The best way a doctor can make money is by doing more tests, procedures or expensive treatments. Fee-for-service guarantees it, despite the outcome or quality.

More availability of expensive, state-of-the-art technologies and drugs just fuels medical care costs because they inherently generate demand, no matter supply, even though such services are not cost effective.xxxi

The government heavily regulates all technology, treatments, pharmaceuticals, and medical devices by depending on authorization through some agency or by licensing. This stifles competition. The system continually creates new drugs, treatments, and devices, no matter the cost. The manner in which the government dealt with this was by requiring Certificates of Need (CON) before the new technology could be implemented. So, by keeping the supply down the government feels it can control prices. CON have been shown to increase costs and weaken competition.xxxii Such actions, of course, defy standard economic principles. The U.S. has 6 times the number of CT Scanners compared to Germany, and 4 times the MRIs as the U.K. However, cost for these radiologic procedures is twice the price in this country compared to OECD nations. Generally, in other types of businesses, the higher supply would result in lower prices and better quality. Not in America’s health care system. The government keeps paying the bills and restricting competition.

The primary objective of companies in a non-competitive, non-transparent market is the keep the status quo. There is no interest in price control, innovation, or greater quality of products or services.

Other nations negotiate prices down from pharmaceutical and medical device firms. In America, negotiation is not allowed for Medicare due to the Medicare Prescription Drug Improvement and Modernization Act of 2003. Nexium, a drug for acid reflux, is priced at 215 dollars for a 30-day supply in the U.S. versus 23 dollars in The Netherlands.

Medical institutions keep prices obscure to avoid competition and maintain prices high. This non-transparency favors the hospitals and providers. The patient or consumer cannot access information on rates and fees or quality. There is no shopping around for a hip replacement. Hospitals and a few doctors advertize, but never is price and quality ranking part of the advertisement.

The American Medical Association (AMA) keeps medical school enrollment down. This creates a shortage of certain physicians and in particular areas. This maintains doctor’s services to cost more. For example, there is a shortage of family practitioners because doctors get paid for what they do family practitioners do not perform many procedures. Specialists implement many procedures and prescribe expensive treatments. Therefore, there exists a substantial gap on the amount of money a family practitioner makes compared to the earnings of specialists. Who wants to be a family practitioner?

There is one example of market economics at work in the medical field, LASIK eye surgery. Insurance plans rarely cover it. In the 1990s, the procedure cost thousands of dollars. As more and more ophthalmologists bought the equipment to perform LASIK eye surgery, competition increased. Nowadays, Lasik eye surgery is performed for hundreds of dollars. Supply and demand at work.

Non-competitiveness and non-transparency of pricing and quality keep health care spending high. Consumers or the patient remains in the dark. Consumers should be able to access information on medical-surgical care costs and quality, as well as, hospital pricing and quality rankings. If medical care followed basic economic and antitrust principles and laws, health care expenses would naturally fall. The federal government should exert its power and negotiate with drug and medical device companies to maintain lower pricing. Keeping the current system ensures medical care spending will continue to rise. New devices, drugs, and treatments should be analyzed for cost effectiveness before being placed in the mainstream of medical attention. Currently, it is a vicious cycle, and American citizens are losing.



Pennsylvania Hospital was the first hospital in the Americas. It was founded by Benjamin Franklin and Dr. Thomas Bond, in 1751, “for the care of the sick and poor.”

Hospitals have evolved extensively since the 1700s. During the first half of the 20th century, most community hospitals were non-profit. Frequently, the hospital has a religious affiliation. When employer-based health insurance took effect (1954), for-profit hospitals started to become established. In the 1960s, Medicare and Medicaid materialized, which had a huge impact on hospital care.

During the 1960s and 1970s, hospitals flourished. Medicare hospital expense for hospital stays was 3.1 billion dollars in 1965. By 1970, spending increased to almost 6 billion dollars. Of this increase, 10 percent went to expanded utilization, and 23 percent was due to economic inflation. The remaining two-thirds increase was secondary to hospital payroll and non-payroll expenses, along with profits.xxxiii An average patient bill per day stay doubled from 1966 to 1976.xxxiv

In the 1980s, for-profit hospitals expanded and grew. Over 600 community, non-profit hospitals closed during the decade.xxxv For-profit and non-profit facilities started to merge creating medical centers.

Cost containment was the premise in the 1990s. Thousands of mergers and acquisitions occurred between hospital systems in this decade. Health Maintenance Organizations (HMOs) sprung up in an attempt to hold down health care spending. In 1996, 235 deals involving 768 hospitals was documented.xxxvi Unfortunately, medical spending was not controlled.

So far in the 21st century, hospitals continue to expand. Mergers and acquisitions endure, some triggering antitrust lawsuits. There are fewer hospitals, but the remaining facilities persistently become more sprawling. Such is despite many alternatives to inpatient hospitalization available. Outpatient clinics, ambulatory surgical units, and clinical networks have become common. A decline in inpatient utilization has happened, and length of stay has fallen off.

Of hospitals in the 21st century, 58 percent are non-profit, 21 percent are government owned, and 21 percent are for-profit.xxxvii The Veteran’s Administration (VA) hospitals are for military veterans only. The Indian Health Service (IHS) operates facilities exclusive to Native Americans. Still, non-profit hospitals account for 70 percent of total hospital capacity in the U.S. Despite out-of-hospital facilities; hospitals have managed to maintain the same one-third of all health care spending in this country.xxxviii

Since 1975, hospitals have experience massive revenue growth no matter a 35 percent decline in hospital beds, no increase in admissions and a 50 percent decline in length of stay. From 1970 to 2006, annual medical payments to hospitals grew 3,800 percent from 5 billion dollars yearly to 192 billion dollars.xxxix Yes, that is three-thousand, eight-hundred percent. The annual hospital care costs in America, for all patients, went from 28 billion dollars in 1970 to 650 billion dollars a year in 2006.xl Charges for surgical procedures or injuries, maternal care, and neonatal treatment have increased more than 2 percent a year from 2003 to 2011, while hospital discharges remained stable.xli Per patient average hospital costs rose from 9,100 dollars in 2003 to over 11,000 dollars by 2013.xlii

Non-profit hospitals have flourished too. In a recent Internal Revenue Service (IRS) survey of 500 non-profit hospitals, 60 percent reported providing charity care equal to or less than 5 percent of total revenue. Around 20 percent of the 500 hospitals surveyed stated charity care costs were less than 2 percent. The Wall Street Journal found the 50 st non-profit hospitals combined income (profits) was 4.27 billion dollars in 2006. It seems all types of hospitals are generating profits except governmental facilities.

Inpatient or hospital care is stamped onto the U.S. health care system. It is expensive compared to the alternatives. Hospitals exist because they are protected by regulations and favored by governmental payment policies. The current scheme of health care law and regulations has so warped the functioning of the market that it is impossible to measure public costs and benefits of maintaining the hospital’s importance in America’s health care system.



Administration Costs

With private insurers, federal government insurers, and state government providers, it is no surprise administrative expenses in the U.S. health care system are exorbitant. There are hundreds of insurance companies along with the government, so there is a vast number of employees. High administrative costs fuel American medical care spending. Federal and state governments outsource some of their bureaucratic tasks.xliii This is expensive to the taxpayer. For every two doctors in the U.S., there is one health insurance employee.

The administrative expenditures on the system are in the hundreds of billions of dollars. One source quotes 361 billion dollars a year spent on administrative bureaucracy.xliv The McKinsey Global Institute estimated 21 percent of administrative costs (477 billion dollars in 2003) was excess spending.xlv A 2004 Harvard study found of 399.4 billion dollars spent on medical bureaucracy, 286 billion dollars could have been saved with a single-payer system. Another study by Harvard Medical School and the Canadian Institute of Health Information determined 31 percent of America’s medical care dollars, or 1,000 dollars per citizen, went to administrative outlays.xlvi This compares to 16 percent of expenditures in Canada.xlvii

Premiums are affected by the bureaucracy. Administrative costs account for 12 percent of premium charges.xlviii A 2003 study by Blue Cross and Blue Shield yielded similar results: 12 percent of premium charges went to cover bureaucratic expenses.xlix This amounts to a lot of money out of the average U.S. citizen’s wallet.

As long as there are multiple providers of medical care coverage in the U.S., there will be high administrative overhead. Still, it seems the bureaucracy could be streamlined. Four hundred billion dollars annually could provide a significant number of uninsured citizens with coverage. Current attempts such as bundling billing for medical care may help, but it is a drop in the bucket. Until a single-payer system is adopted, Americans may as well accept the enormous price tag of health care administration.



Medical Errors

A medical error is a preventable cause of morbidity and mortality. It might result from an inaccurate diagnosis, surgical mishap, medication mistake, nursing oversight, or lack of patient safety. A medical error occurs when a health provider utilizes an inappropriate method of care or improperly performs it. This is versus a medical injury, which is just medical care with a bad outcome. A medical injury can happen without a medical error, and a medical error can occur without a medical injury. A medical error is a safety or negligence issue. An adverse event is a circumstance where the patient has suffered substantial harm or death. Adverse events are more severe than a medical error.

A 2000 Institute of Medicine (IOM) report, To Err is Human: Building a Safer Health System, found that medical errors caused around 100,000 deaths in this country every year.l It was an eye-opening report. A 2006 follow-up study revealed medication errors harmed 1.5 million people in the U.S.

Many medical mishaps are due to human negligence. About 1 percent of hospital admissions result in an adverse event secondary to negligence.lii Mistakes, though, are much more widespread. One study states only 55 percent of U.S. patients actually receive recommended care.liii Around 30 percent of medical care delivered is unnecessary.liv Both errors and unneeded care are

Numerous factors cause medical errors. Lack of, or poor, communication and distorted lines of authority contribute to mistakes.lvi Disconnected reporting systems and inadequate “hand-off” of patients result in the lack of coordination and errors.lvii The Joint Commission’s Annual Report on Quality and Safety in 2007, found ineffective communication between health care providers or among providers and patient or family was the root cause of over one-half of serious adverse events in hospitals.lviii Other factors include reliance on automated systems, cost-cutting measures, insufficient staffing, improper medical devices, and faulty infrastructure. This is an incomplete list.

Medical errors are expensive. The best estimate is mistakes that harm a patient costs 17.1 billion dollars a year in the U.S.lix The most common medical error was bed sores followed by post-operative infections, and persistent pain after back surgery.lx A 2009 study found the five most common misdiagnoses were infection, cancer, heart attack, pulmonary embolus or blood clot to the lung, and cardiovascular disease.lxi

Humans deliver medical care, and humans make mistakes. However, the frequency of errors and adverse event is appalling. It is the third-leading cause of death in the United States. Many measures have been instituted since the 2000 Institute of Medicine report. Still, injury and death occur at an unacceptable rate. Standard of care guidelines and automation needs to be implemented to minimize human error. Lines of communication should be open and utilized. A team approach to patient care has been proven to decrease errors and adverse events. When medical mistakes or adverse events happen, there should be honest disclosure to everyone involved. Hopefully, errors will be diminished by reform measures.


Regulation and Lobbyists

All individuals (doctors, nurses, etc.), companies, pharmaceuticals, enterprises, and firms within the business of health care in the U.S. are immensely regulated, and function in a significantly subsidized industry. Unfortunately, regulations are focused on prices and not cost. It is the laws and policies that insulate hospitals and the non-competitive market that makes up the dysfunctional system. All the players are subject to both federal and state control.

The McCarran-Ferguson Act (1945) places primary responsibility for health care, particularly health insurance, regulation by individual state governments. States are accountable for licensing providers and overseeing health insurance companies. Under the Act, Congress cannot pass laws that preempt state laws concerning health care insurance. Federal antitrust laws do not apply to state-run medical coverage policies. They only exception to preempting state health insurance regulations is self-funded plans ( employers) which can override state law through the Employee Retirement Income Security Act (ERISA). State governments fund and oversee local and community health departments.

At the federal level, oversight of health care stems from the Department of Health and Human Services (HHS), which includes the Center for Medicare and Medicaid (CMS). There is a plethora of federal agencies involved in health care regulation in America. It includes the U.S. Public Health Service, Food and Drug Administration (FDA), Centers for Disease Prevention (CDC); the list goes on and on. The Joint Commission on Accreditation of Hospitals (JCAHO) directing regulates and accredits hospitals. The Patient Protection and Affordable Care Act (PPACA), or “Obamacare,” just added more laws and regulations to the pile. It is a dysfunctional mess.


A lobbyist tries to exert his opinion or his employer’s desires upon members of the U.S. Congress. In this way, the lobbyist’s employer keeps the status quo or attempts to pass bills that favor him financially. There are six health care lobbyists for every member of the House of Representatives and the Senate, 3,000 to 4,000 in all. In 2009, health care lobbyists spent 263.4 million dollars on congressional members. The drug companies alone paid 134 million dollars on lobbyists. Lobbyists possess an enormous influence on what bill is passed or not passed through Congress. It resembles pouring cement on the congressional floor. Lobbying is a huge reason significant reform does not happen concerning the U.S. health care system.



Health Care Regulation in the U.S.


The enormous cost of health care in America is the root cause of over half of the bankruptcies in this country. A survey taken in 2013 revealed three out of five bankruptcy filings in the U.S. were due to medical expenses.lxii High medical bills are the culprit in 92 percent of health care-related insolvency.lxiii Around 78 percent of those filing a bankruptcy chapter had some form of health insurance.lxiv For people experiencing medical impoverishment, hospital bills were the cause in 48 percent of cases, prescription drugs in 19 percent, physician bills in 15 percent, and premiums in 4 percent.lxv Some type of illness occurred in 38 percent of instances that caused a loss of a job.lxvi According to a 2013 investigation, 25 percent of American senior citizens declare bankruptcy secondary to medical expenses.lxvii Health care bankruptcy is unheard of in OECD countries.



On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act (PPACA), also known as “Obamacare.” One week later, he signed into law the Healthcare and Education Reconciliation Act. In America, this constitutes major medical care reform. Before the ink dried on the Act’s paper, there were numerous adversaries seeking to overturn the new legislation. The case got all the way to the U.S. Supreme Court, which ruled the PPACA constitutional and valid. Despite the Supreme Court’s ruling, many right-wing politicians continue, to this day, to try to upend the Act. Cooperation between states has been lackluster.

Unfortunately, Obamacare is focused on access to care rather than cost. The PPACA expanded Medicaid eligibility, subsidizes insurance premiums for low-income folks, gives incentives to employers to provide health benefits, prevents denials from health insurance companies for pre-existing illnesses, set up health care exchanges by states so all citizens can obtain some type of medical coverage, and prohibits insurers from setting caps on a beneficiary’s health benefits. There is, however, a tax penalty for those individuals who do not sign up for health care insurance.

Supposedly, the PPACA’s cost will be paid for by a variety of taxes. The touted figure is that Obamacare will save 143 billion dollars in health care spending over the first decade implemented. For a country that will outlay almost 3 trillion dollars a year for health care, 143 billion dollars is a proverbial drop in the bucket. In reality, Obamacare is a band-aid on a , gaping wound. It is a start.

Many knowledgeable people in the U.S. support the country passing a single-payer program with coverage for all citizens, as the OECD nations. Multiple sound studies have shown a universal, single-payer system would save hundreds of billions of dollars in health care spending. Unfortunately, passing a universal program is currently not politically possible. The profiteers of U.S. medical care radically oppose a single-payer plan and funnels hundreds of millions of dollars lobbying against it. Only time will tell when actual reform of America’s health care system will happen.


America’s health care system is enormously expensive, administratively complex, heavily regulated, and uncompetitive. It emphasizes treatment over prevention because treatment in where the money is at. Health care spending keeps guzzling up our national and business resources. As a market industry, it is treated as an island. America’s health-care plan violates basic economic and insurance principles. Fraud in medical care has run rampant, although Medicare is performing much better at fishing out deceitful billing and heaping substantial penalties on the offenders, including criminal charges. Regulations and laws keep the dysfunctional system in place. Further regulation and legislation should support competition and transparency. It should put the consumer or patient at the center of the medical care plan; not the insurer or the government

There are demographic and geographic disparities in price and quality not touched on in the article. They exist. Variation in cost and efficiency is present depending on where one is located throughout the country. Mental health coverage is much inferior to other industrialized nations. Health insurance companies do not want to pay for treatment of mental illnesses.

Employer-based health insurance has evolved to be a disaster. It has caused health care spending to skyrocket and had traumatized industries. U.S. companies that provide health benefits to its employees cannot compete with international firms. Corporate costs for medical coverage runs about 16 percent of payroll expenses. Health care expenditures bankrupted the American automobile industry. Employees wonder why there are not wage increases: take a guess. There is no one else to pay.

Cost of health care benefits has ended up causing industries to outsource and relocate offshore. High medical insurance costs dissuade businesses to open. It is destructive to the business economy and America’s ability to compete internationally. The United States has the highest GDP going to health care, robbing money that could go toward the development of new industries and overhauling our failing infrastructure.

Each American family will spend an average of 1.8 million dollars on health care coverage and bills over its lifetime. Fee-for-service breeds greed and conflict of interest and the patient or consumer is the loser. When considering a knee replacement, the consumer would prefer a single price and bill rather than multiple, complex bills from the hospital, doctors, physical therapists, radiologists, and laboratories. This would put pressure on providers to be more efficient and minimize costly errors.

Lack of insurance for 50 million citizens puts up an obstacle to accessing necessary medical care until absolutely a must. Then, health care is provided by emergency rooms that are prohibitively expensive. A system where treatment of the uninsured is done in the most high-priced manner is paradoxical and contradictory. Simple math demonstrates providing coverage to the uninsured would save hundreds of billions of dollars.

The PPACA or “Obamacare” is a minor fix and will likely increase health care spending. Even if fully implemented, there will still be uninsured or inadequately covered citizens. One good thing about Obamacare is it recognizes there is a problem. Americans need to confront the medical care system in this country and foster difficult changes before the nation goes bankrupt itself, and millions of citizens die unnecessarily.


i   OECD 2013, “Health at a Glance 2013.” OECD Indicators, OECD Publishing, 2013.

ii   Ibid.

iii  Ibid.

iv Keehan S, Sisko A, Truffer C, et al, “Health Spending Projections Through 2017: The Baby-Boom Generation is coming to Medicare.” Health Affairs, February 26, 2008.

v  Kaiser Permanente. “Trends in Health Care Costs and Spending-March 2009.”

vi  CIA, “Country Comparison: Life Expectancy at Birth.” The World Factbook, CIA.

vii OECD 2013, “Health at a Glance 2013:” OECD Indicators, OECD Publishing.

viii National Institutes of Health, “U.S. Health in International Perspective: Shorter Lives, Poorer Health.” (2013), National Institutes of Health Committee on Population, Board on Population Health and Public Health Practice.

ix World Health Organization, “World Health Organization assesses the World’s Health System.” Press release WHO/44 21 June 2000.

x  Szabo L, (January 10, 2013). “American Lives Shorter than those in other Countries.” Florida Today, Melbourne, Florida, pp. 1A.

xi Kaiser Permanente, “Graphic: Health Spending by Public and Private Sector,” Kaiser Health News, February 2010.

xii Ibid.

xiii DeNavas-Walt C, Proctor B, Smith J, “Income, Poverty, and Health Insurance Coverage in the United States: 2012.” U.S. Government Printing Office, Washington, D.C., 2013.

xiv Schoen J, Lippa J, Collins S, Radley D, “State Trends in Premiums and Deductibles, 2003-2011: Eroding Protection and Rising Costs Underscore the Need for Action.” The Commonwealth Fund, December 2012.

xv Ibid.

xvi Kaiser Permanente, “Employer Health Benefits 2013.” Kaiser Family Foundation, 2013.

xvii Mendes E, “Uninsured Rate for U.S. Young Adults Still Down from Past.” Gallup Well-Being, July 19, 2013.

xviii Kaiser Permanente. “Employer Health Benefits 2012 Annual Survey.” Kaiser Family Foundation, 2012.

xix DeNavas-Walt C, Proctor B, Smith, J, “Income, Poverty, and Health Insurance Coverage in the United States: 2012.” U.S. Government Printing Office, Washington D.C., 2013.

xx Kaiser Permanente, “Key Facts about the Uninsured Population, 2013.” Kaiser Family Foundation, 2013.

xxi Docteur E, Oxley, H, “Health-System Reform: Lessons from Experience.” Towards High-Performing Health Systems: Policy Studies, The OECD Health Project. 2004.

xxii Institute of Medicine, “Insuring America’s Health: Principles and Recommendations.” National Academies Press, pp.25, Washington D.C., 2004.

xxiii Cecere, D, “New Study Finds 45,000 Deaths Annually Linked to Lack of Health Coverage.” Harvard Gazette, 17 September 2009.

xxiv Baicker K, Finkelstein A, “The Effects of Medicaid Coverage, Learning from the Oregon Experiment.” N Engl J Med. 2011 Aug. 25; 365(8):683-685.

xxv National Prevention Council, National Preventive Strategy, Washington, D.C.: U.S. Department of Health and Human Services. Office of the Surgeon General, 2011.

xxvi Schoen C, Osborn R, et al, “Toward Higher-Performance Health Systems: Adults’ Health Care Experiences in Seven Counties, 2007.” Health Affairs 26 (6): 717-734.

xxvii Halpern MT, Ward EM, Pavluck AL, et al, “Association of Insurance Status and Ethnicity with Cancer Stage at Diagnosis for 12 Cancer Sites: a Retrospective analysis.” Lancet Oncol 9 (3): 222-231.

xxviii Davis K, Schoen C, Stremikis K, “Mirror, Mirror on the Wall: How the Performance of the U.S. Health Care System Compares Internationally, 2010 Update.” The Commonwealth Fund Commission, June, 2010.

xxix Ibid.

xxx Institute of Medicine, “How Far Have We Come in Reducing Health Disparities?: Progress since 2000.” The National Academies Press, Washington, D.C., 2012.

xxxi Beamesderfer A, Ranji U, “U.S. Health Care Costs.” Kaiser Family Foundation, February 2012.

xxxii Federal Trade Commission, “Improving Health Care: A Dose of Competition.” Report by the Federal Trade Commission and the Department of Justice, 2004.

xxxiii Stevens R, “In Sickness and in Wealth: American Hospitals in the Twentieth Century.” John Hopkins University Press. Baltimore, Md., 1999, pp. 286-287.

xxxiv Ibid.

xxxv Prince T, Ramanan R, “Operating Performance and Financial Constraints of Catholic Community Hospitals: 1986-1989.” Health Care Management Review, 19, no. 4 (1994): 38-48.

xxxvi Bellandi D, “Spinoffs, Big Deals Dominate in 1999.” Modern Healthcare 2000; 30: 36.

xxxvii Rosenthal E, “News Analysis-Health Care’s Road to Ruin.” New York Times, December 22, 2013.

xxxviii Ibid.

xxxix PriceWaterhouseCoopers, “The Factors Fueling Rising Healthcare Costs 2006.” PriceWaterhouseCoopers for Americans Health Insurance Plans, 2006.

xl Ibid.

xli Weiss A, Barrett M, Steiner C, “Trends and Projections in Inpatient Hospital Costs and Utilization, 2003-2013.” HCUP Statistical Brief #175, Agency for Healthcare Research and Quality, Rockville, Md., 2014.

xlii Ibid.

xliii Kelin E, “Administrative Costs in Healthcare: A Primer.” The Washington Post, July 7, 2009.

xliv Winkler E, Basch P, Cutler D, “Paper Cuts: Reducing Health Care Administrative Costs.” Center for American Progress, June 2012.

xlv Reinhardt U, “Why does U.S. Health Care Cost So Much? (Part II: Indefensible Administrative Costs)” The New York Times, November 21, 2008.

xlvi Woolhandler A, “Costs of Health Administration in the U.S. and Canada.” N Engl J Med, 349(8): September 21, 2003.

xlvii Ibid.

xlviii Lemieux J, “Perspective: Administrative Costs of Private Insurance Plans.” America’s Health Insurance Plans, 2005.

xlix Blue Cross and Blue Shield, “Understanding Health Plan Administrative Costs.” Blue Cross and Blue Shield Association, 2003.

l Institute of Medicine, “To Err is Human: Building a Safer Health System.” The National Academies Press, Washington, D.C., 2000.

li The National Academy of Science, “Medication Errors Injure 1.5 Million People and Cost Billions of Dollars Annually.” The National Academy of Science, Washington, D.C., 2006.

lii Brennan T, Leape L, Laird N, et al, “Incidence of Adverse Events and Negligence in Hospitalized Patients. Results of the Harvard Medical Practice Study I.” N Engl J Med, 324(6): 370-376, 1991.

liii McGlynn E, Asch S, Adams J, et al, “The Quality of Health Care Delivered to Adults in the United States.” N Engl J Med, 348(5): 2635-2645, 2003.

liv Fisher E, “Medical Care-Is More Always Better?” N Engl J Med, 349(17): 1665-1667, 2003.

lv Ibid.

lvi Neale G, Woloshynowych M, Vincent C, “Exploring the Causes of Adverse Events in NHS Hospital Practice.” Journal of the Royal Society of Medicine, 94(7):322-330, 2001.

lvii Gardner A, “Medication Errors during Surgeries Particularly Dangerous.” The Washington Post, March 6, 2007.

lviii The Joint Commission’s Annual Report on Quality and Safety 2007, “Improving America’s Hospitals.” The Joint Commission, Washington, D.C., 2007.

lix Van Den Bos J, Rustagi K, Gray T, et al, “The $17.1 Billion Problem: The Annual Cost of Measurable Medical Errors.” Health Aff April 2001 vol. 30 no. 4 596-603.

lx Ibid.

lxi McDonald C, Hernandez M, Gofman Y, et al, “The Five Most Common Misdiagnoses: a Meta-analysis of Autopsy and Malpractice Data.” The Internet Journal of Family Practice, 7(3): 2009.

lxii Mangan D, “”Medical Bills are the Biggest Cause of US Bankruptcies: Study.” CNBC, June 25, 2013.

lxiii Himmelstein D, Thorne D, Warren E, Woolhandler S, “Medical Bankruptcy in the United States, 2007: Results of a National Study.” The American Journal of Medicine, March 2009.

lxiv Ibid.

lxv Ibid.

lxvi Ibid.

lxvii Kelley a, McGarry K, Fahle S, Marshall, S, “Out-Of-Pocket Spending in the Last Five Years of Life.” Journal of

General Internal Medicine 28(2): 304, 2013.