Kaiser Family Foundation Report on Health Care 9/28/2006 11:16:19 AM
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23% of Americans are without any coverage at all. The most authoritative report on the cost of health insurance is sure to cause some new outrage. The average cost of a family insurance plan that Americans get through their jobs has risen another 7.7 percent this year, to $11,500, according to the Kaiser Family Foundation. In only seven years, the cost has doubled, while incomes and company revenue, which pay for health insurance, haven’t risen nearly as much. All except those in Washington. Politicians wages have risen proportionately to inflation, while taxpayers wages, especially those who work several jobs for minimum wage, have stalled.
These spiraling costs in “health care” are creating a crisis. Many executives have decided that they cannot afford to keep insuring their workers, and the portion of Americans without coverage has jumped 23% since 1987.
General Motors, an industry that once defined the American economy, is sinking because of the cost of caring for its workers and retirees. For every vehicle that General Motors sells, fully $1500 of the purchase price goes to pay for medical care. “We must all do more to cut costs,” G.M.’s chief executive, Rick Wagoner, said on Capitol Hill this summer while testifying about health care. Unfortunately, it will cut costs to the people who worked all their lives for the perk. Mr. Wagoner’s argument has become the accepted wisdom about the crisis: the solution lies in restraining costs.
In 1950, the country spent less than $100 a year, or $500 in today’s dollars, on the average person’s medical care, compared with almost $6000 today, notes David M. Cutler, an economist who wrote a wonderful little book in 2004 titled, “Your Money or Your Life.” Most families in the 1950’s paid their medical bills with ease, but they also didn’t expect much in return. After a century of basic health improvements like indoor plumbing and penicillin, many experts thought that human beings were approaching the limits of longevity. “Modern medicine has little to offer for the prevention or treatment of chronic and degenerative diseases,” the biologist René Dubos wrote in the 1960’s. Then doctors figured out that high blood pressure and high cholesterol caused heart attacks, and they developed new treatments. Oncologists learned how to attack leukemia, enabling most children who receive a diagnosis of it today to triumph over a disease that was almost inevitably fatal a half-century ago. In the last few years, orphan drugs that combat rare diseases and medical devices like the implantable defibrillator have extended lives. Human longevity still hasn’t hit the wall that was feared 50 years ago.
Consider too, a baby born in the United States this year will live to age 78 on average, a decade longer than the average baby born in 1950. People who have already made it to their 40’s can now expect to reach age 80. These gains are probably bigger than the ones the British experienced in the entire millennium leading up to 1800. The choice today is: Would you prefer spending an extra $5,500 on health care every year, or losing 10 years off your lifespan? There is no question that the American medical system does suffer from a lot of waste, be it insurance industry bureaucracy or expensive procedures that haven’t been proven effective. But the No. 1 cause of the cost increases is still the one you can see at the hospital and in your medicine cabinet, defibrillators, chemotherapy, cholesterol drugs, neonatal care and other treatments that are both expensive and effective. Not even most forms of preventive care, like keeping diabetes under control, usually save money, despite what many people think. The care itself has some costs, and, more important, patients then live longer than they otherwise would have and rack up medical bills. “When I make this point, people accuse me of wanting people to die earlier. But it’s exactly the opposite,” Dr. Jay Bhattacharya, a researcher at Stanford Medical School, told me. “If these expenditures are keeping people alive, it’s money well spent.” What isn’t cost effective is the price gouging of the pharmaceutical industry, and the increasing inability of consumers to buy cheaper drugs out of the country.
The growing number of families without health insurance are families who have been kicked off the country’s health care rolls by “money saving” companies. Many will go without available treatment, will get sicker than they need to get, and will thereby save the rest of us money. This is what now passes for a solution to the health care mess.
The cost of health insurance can’t keep doubling every seven years, and wasteful spending, the brand-name drugs that are no better than generics, the treatments that haven’t been proved to extend lives or improve health, does need to be reined in. Too much of the discussion has been centered on this narrow idea. Somehow, going to the mall to buy clothes has come to be seen as a vaguely patriotic way to keep the economy humming, and taking out a risky mortgage is considered to be an investment in one’s future. But medical care? That’s just a cost that can be dispensed with, is the prevailing thinking.
The way to start meaningful change is by acknowledging that an affluent society should devote an ever-growing share of its resources to the health of its citizens.
