Tag Archives: u.s. healthcare

Fixing Misconceptions on U.S. Healthcare

Today’s healthcare system is an absolute mess. It’s outrageously expensive, needlessly complicated and driven by transactions instead of relationships. People are paying more and more each year – always for less insurance coverage and very little “real” healthcare. Of course, the system is broken…. Or is it?

To begin to transform healthcare, it’s important to identify and correct our misconceptions about the system. Let’s start with two big ones:

Misconception #1: Americans spend nearly $3 trillion a year on healthcare (and this number is rising).

Three trillion dollars is about 18% of our nation’s gross domestic product. We rank terribly against other developed countries for overall healthcare system costs.

But there is a major problem with this statistic. It doesn’t represent what’s really happening.

Look at Canada, which ranks much better than the U.S., spending less than 12% of its GDP on healthcare — but we are calling foul on this stat. I lived in Canada for 23 years. I received my education there, trained there, practiced there, owned a company there and was a patient of the Canadian healthcare system on several occasions. I also have many friends and family members who still live there. The truth is that many Canadians come to the U.S. for routine and not-so-routine healthcare because it is not easy to access in Canada. In fact, if you’re in Canada and need healthcare urgently, you may find yourself in a terrible bind.

The truth is that the Canadian healthcare system simply doesn’t match up to the U.S. system for quality, accessibility and true effectiveness. It’s not even close. The most privileged people in Canada wait (and sometimes die waiting) for services that the poorest and most average Americans can access right away, very successfully, every hour of every day. I’ve seen it over and over again with my own family and with many strangers looking for help. Americans wouldn’t tolerate for one day what even the most privileged Canadians endure indefinitely before finally coming to the U.S. for care.

So how can Canada’s better healthcare GDP ranking be explained?

Let’s start by breaking down U.S. “healthcare” spending:

Do we really spend $3 trillion a year? Or is a large portion of this money wasted on excessive administration and poor planning but billed as “healthcare” spending? Are there healthcare companies that depend on revenue and profits generated by this waste and administration? Yes, there are.

Here’s my take. Many status quo healthcare players are certain to disagree, but, as Upton Sinclair said, “It is impossible to prove something to someone whose salary depends on believing the opposite.”

I believe that true healthcare costs in the U.S. are only about $1 trillion (6% to 8% of GDP) and that many industries are turning a nice profit by structuring their systems to capitalize on predictable waste, administration, inefficiencies and poor planning – built right into the U.S. healthcare design.

See also: Why Healthcare Must Be Transparent  

I’m not saying that there isn’t any waste or unnecessary administration that spur extra spending in Canada – there’s lots of it. I’m just saying that the financial incentives are much different. Waste and administration don’t pay as profitably in Canada as they do in the U.S. I’m also not saying that the Canadian healthcare system is better than in the U.S. I believe healthcare is far superior here. I’m just saying that in the U.S., we allow big industries to earn humongous profits off of waste, administration, inefficiency and poor planning. Canada does not.

“Waste” is a bit abstract, so let’s provide a couple of examples. In Canada, an MRI completed at a cost of $300 to $500 in an independent lab is not performed again a week later in a hospital at a much higher cost, as can happen in the U.S. And a gall bladder surgery that can be performed at one site for $3,200 will not be performed at another hospital for $14,000. This happens in the U.S. many times every day, contributing greatly to our $3 trillion in costs. This difference in cost is “waste,” not “real healthcare.”

“Poor planning” is also a bit abstract. But imagine the diabetic child of one of your employees running out of her 90-cent glucose monitoring strips that are essential for determining the correct dose of insulin she needs. It would not be uncommon for this situation to lead to a $20,000-plus hospital admission. So, you tell me, was the hospital’s $20,000-plus in revenue a result of a need for “healthcare,” or was it really because of “poor planning” built right into a system that limits diabetic supplies? Maybe we’d be going overboard if we claimed that this design was deliberate, but the fact remains that limiting basic, inexpensive primary care, education and diabetic supplies benefits the status quo players in healthcare. This amount also contributes to America’s $3 trillion in healthcare spending.

Moreover, Canadian private insurance companies simply cannot demand double-digit premium increases from employers every year to pay for this waste, administration and poor planning, but it is tolerated by most businesses in the U.S.

Misconception #2: The healthcare system is broken.

Like most people, I used to agree with the commonly stated premise that the healthcare system is broken. I now have concluded that the American private healthcare system is working exactly as intended. Let me explain.

America’s healthcare system is run and controlled by trillion-dollar industries with multi-hundred-billion-dollar companies that are publicly traded and exert a lot of influence on the actions of our governments. With all of the talk about the expenses resulting from the Affordable Care Act, it’s shocking to learn that the most profitable stocks from 2011-2016 were U.S. insurance, pharmaceutical, hospital and other related healthcare companies. In fact, the percent growth in American health insurance stocks during that period are four to five times greater than the Dow, and the Dow is up more than 100%!

These public companies have a goal (and fiduciary duty) to grow revenue and profits (and share prices) by any legal means. Because these companies can easily leverage their size and influence to exert control, I believe it is reasonable to conclude that today’s U.S. healthcare system is working perfectly for what it was designed to do – return shareholder value to these companies. It’s just not working that well for the rest of us. Maybe it’s just not designed for us.

Are there any business owners or employees who still feel that the healthcare system exists primarily to serve them? If the system did exist for you, wouldn’t you expect to see much more transparency in pricing? Would you accept insurance premiums that go up 10% to 40% percent every year? Wouldn’t your employees be able to make appointments much more easily and have more access to their doctors via the phone? Wouldn’t their doctors’ appointments begin on time, minimizing time wasted in a waiting room?

In a nutshell, healthcare would be much easier, more convenient, more affordable and more accessible, and you wouldn’t have the hassle, frustration and feeling that you were being taken advantage of at every renewal time. Clearly, the system is not designed to serve the employer and employee. But this doesn’t mean it isn’t doing what those in power want it to do. Share prices don’t lie.

The more we have studied it, the more we see that the only two stakeholders in the entire healthcare system who are aligned for costs, quality and customer experience are the purchaser of healthcare (the employer) and the user (the employee). All other stakeholders (e.g., hospitals, doctors, insurance companies, brokers, pharmaceutical companies, and even our politicians) have incentives to do things and make decisions that are not aligned with the employer and employee. At the very least, there are many things that happen in the healthcare system that do not benefit the employer and employee but do benefit other stakeholders in the system.

But there is a secret:

When an employer and employees team up and recognize their aligned interests, they gain a tremendous new capability for lowering healthcare costs, getting better quality and results and receiving the customer experience they want.

Even though it could seem that the more organized stakeholders of healthcare (e.g., the hospitals, insurance companies, brokers, doctors, etc.) are conspiring to take advantage of employers and their employees, we would encourage you instead to consider that, in most cases, the people running the system are very good people who want the best and want to help people. This is why they pursued a career in healthcare in the first place. It is just unfortunate that the system in which they work has evolved and now essentially forces them to add the costs of profitable waste and unnecessary administration, and often they don’t even know they are doing it.

See also: Not Your Mama’s Recipe for Healthcare  

It doesn’t have to be this way — and there are ways that employers can take back control. It always starts with challenging the status quo thinking, and by taking a common sense approach to simplifying and gaining price transparency. Designing an employer health plan that makes routine primary care, labs, chiropractic and preventive exams super easy, convenient and affordable is always the foundation for minimizing the high-dollar expenses that eat up most of the healthcare claims budget.

Read “Business Owner’s Guide to FIGHTING HEALTHCARE” for more details on how anyone can make healthcare work for them.

The Myth of Lousy Healthcare in the U.S.

Few complaints about the U.S. healthcare system are as common as the claim that we spend too much on healthcare and get too little in return, especially compared with other industrialized nations.

A new Commonwealth Fund report is the latest to indict U.S. healthcare. It pegs the American system dead last in a survey of 11 developed countries.

But, like virtually every other study that trashes the U.S. healthcare system, Commonwealth’s rankings rely on questionable assumptions, like giving weight to those systems that treat people equally rather than well. At the same time, Commonwealth ignores the problems that countries with socialized healthcare systems have with treating people once they’re sick.

And on that metric — that is, actually delivering care to those who need it — the U.S. is without peer.

The Commonwealth Fund report begins by asserting that the U.S. healthcare system “is the most expensive in the world.”

It’s true that the U.S. spends a larger share of its gross domestic product — 18%, or almost $3 trillion  on healthcare than other countries do. But by itself that statistic means nothing.

The U.S. also happens to be one of the richest countries in the world. Once basic needs are taken care of, an increasing share of each extra dollar will go to what were once considered luxuries. You can only spend so much on food, after all.

That assertion is borne out by national spending data. Between 1990 and 2012, for example, spending on healthcare climbed 290%, significantly faster than GDP growth of 171%. But household spending on pets climbed 353% over those same years; on live entertainment, it went up more than 500%. Americans spend 639% more on telephones and 900% more on computers.

By the Commonwealth Fund’s logic, America also faces a pet-care spending crisis.

In contrast, spending on staples like food, clothing, housing and furnishings all climbed more slowly than GDP.

The Commonwealth Fund concludes that the U.S. “underperforms relative to most other countries on most other dimensions of performance” despite having the most expensive healthcare system in the world. But a closer look at those “dimensions” calls that claim into question.

Take infant mortality rates, where the U.S. typically places far down the list behind France, Greece, Italy, Hungary, even Cuba. This comparison is notoriously unreliable because countries either use different definitions of a live birth — or fudge their numbers.

The U.S. counts every live birth in its infant mortality statistics. But France only includes babies born after 22 weeks of gestation. In Poland, a baby has to weigh more than 1 pound, 2 ounces to count as a live birth. The World Health Organization notes that it’s common practice in several countries, including Belgium, France and Spain, “to register as live births only those infants who survived for a specified period beyond birth.”

What’s more, the U.S. has significantly more pre-term births than other countries. That fact alone accounts for “much of the high infant mortality rate in the U.S.,” according to a report from the Centers for Disease Control and Prevention (CDC). The CDC found that if the U.S. had the same pre-term birth rate as Sweden, our infant mortality rate would be cut nearly in half.

What about life expectancy, where the U.S. ranks below its peers, as well?

International measures of longevity typically fail to account for differences in obesity, accidental deaths, car accidents, murders and the like, all of which shorten lives no matter how good a nation’s healthcare system is.

The U.S. murder rate, for example, is more than four times the United Kingdom’s — and far higher than all the other countries in the Commonwealth Fund study. The U.S. has a worse highway death rate than all but one of them. And U.S. obesity rates are more than double Canada’s and more than four times Switzerland’s.

A far more meaningful comparison of international health systems would take stock of how people afflicted with diseases such as cancer fare in different countries. And on this measure, there’s no question the U.S. stands above the rest.

Five-year survival rates for breast cancer are higher in the U.S. than in England, Denmark, Germany and Spain, according to the American Cancer Society. In the U.S., the survival rate for prostate cancer is 99%. In Denmark, it’s 48%. For kidney cancer patients, the survival rate here is 68%. It’s just 46% in England — which the Commonwealth Fund ranked as the No. 1 healthcare system in the world.

Finally, the Commonwealth Fund study also ignores massive problems with actual access to care in the countries it heralds. Every citizen of a country with socialized medicine may have insurance. But that doesn’t mean they can get the care they need.

Treatment delays were so chronic in the United Kingdom, for example, that the government had to issue a formal requirement that patients shouldn’t have to wait more than four months for treatments authorized by their general practitioner. The Royal College of Physicians found that poor care — including doctors trying to keep costs down — caused nearly two-thirds of asthma deaths in the U.K. in 2012.

In Canada, the average patient seeking an elective medical service has to wait four-and-a-half months between being recommended for treatment by their primary care physician and actually receiving it. Waiting for care is the norm in Canada, even though Madam Chief Justice Beverley McLachlin of the Canadian Supreme Court declared nine years ago, in a ruling holding a ban on private health insurance in Quebec illegal, “Access to a waiting list is not access to healthcare.”

The Commonwealth Fund is right about one thing — the U.S. healthcare system is too expensive. But rationing care — as Commonwealth’s favored systems do — is not the answer.