How Healthcare Is Dooming the U.S. Economy (In Just 3 Charts)

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

As it stands now, U.S. healthcare will bankrupt the nation and doom it to permanent stagnation and recession.

That healthcare alone is dooming the U.S. economy is not news to Of Two Minds readers, as I have been covering the catastrophic consequences of our runaway healthcare system for the past decade.
Three charts crystallize the healthcare dynamics that are dooming the U.S. economy. The first depicts the runaway growth of healthcare costs–a rapid expansion that is a permanent feature of U.S. healthcare, regardless of which party is in office or what reforms are instituted.
This expansion of costs has many drivers, most of which result from the system’s perverse incentives for fraud, overbilling, marginal treatments and defensive medicine.Technological and medical advances offer more options for treatment, and can push costs up–but advances can just as readily push costs down, too.
The primary drivers of rapidly increasing costs are:
1. The cartel/crony-capitalist structure of U.S. healthcare
2. Defensive medicine to stave off litigation
3. Profiteering from needless or ineffective tests, procedures and medications
4. Fraud and overbilling
5. The concentration of expenditures in a small sector of the population
6. America’s inability and/or unwillingness to have an adult discussion over end-of-life care for the elderly.
Here is a chart of the rising cost of U.S. healthcare, which is far outstripping the growth of GDP, which is another way of saying healthcare costs are outstripping our ability to pay for healthcare.

Other advanced nations pay for universal healthcare with 8%-9% of their GDP, where the U.S. spends 18% of GDP on less-than-universal healthcare. How do other advanced countries provide healthcare for all for less than half of what America spends per person (per capita)?
Other advanced nations do not spend gargantuan sums on the elderly and end-of-life care. Please look carefully at this chart. No one with any knowledge of life in Sweden or Germany would declare their care of the elderly barbarous, yet somehow Sweden’s cost of care actually declines as the elderly approach the end of their lives, while the cost of care for the elderly skyrockets in the U.S.
Is medical care that different technologically in the U.S. and Sweden, or is it the difference between a system that is rational and one that is based on extracting the maximum profit from delivering whatever the government will pay for?
Now that the 60+ million Baby Boom generation is entering Medicare, the soaring cost of caring for the elderly American-style is about to explode higher. Anyone who holds the magical-thinking hope that America’s stagnant economy and job market can support healthcare costs that consume 25+% of GDP should study this article and the chart below: The Concentration of Health Care Spending (via B.C.)
Tt is clear that per-person spending among the highest users is substantial and represents a natural starting point when thinking about how to curb health care spending. For instance, the average expenditure for each of the approximately 3 million people comprising the top 1 percent of spenders was more than $90,000 in 2009 (Figure 2). The top 5 percent of spenders were responsible for $623 billion in expenditures or nearly $41,000 per patient. In contrast, mean annual spending for the bottom half of distribution was just $236 per person, totaling only $36 billion for the entire group of more than 150 million people.
The concentration of healthcare expenditures in a thin slice of the populace is astonishing: 20% of the costs are spent on 1% of the populace, typically elderly people with multiple chronic lifestyle-related diseases. 50% of the total costs are spent on the top 5% of high-use individuals.
One direct result of rising healthcare expenditures is recession, as this chart from frequent contributor B.C. illustrates. As healthcare expenditures rise, real sales stagnate and the economy cascades into recession.
The majority of U.S. healthcare spending is not productive; it is a drag on productivity. Subtract the fraud, overbilling, defensive medicine, marginal/ineffective overtreatments and tests and the extreme concentration of costs in 5% of the populace, and we’d have a system that we could afford, i.e. one that cost less than 10% of GDP, in line with our advanced-economy competitors.
As it stands now, U.S. healthcare will bankrupt the nation and doom it to permanent stagnation and recession. It’s our choice: live with a bankrupt system built almost entirely of perverse incentives, or begin an adult discussion about a system that delivers responsible care to the elderly in line with other advanced nations, but at a fraction of the current cost.
*  *  *
But it gets worse. Obamacare is set to add more than a quarter-of-a-trillion—that’s trillion—dollars in extra insurance administrative costs to the U.S. health-care system, according to a new report out Wednesday.
The $273.6 billion in additional insurance overhead represents an average of of $1,375 per newly insured person, per year, from 2012 through 2022.
The overhead cost equals a whopping 22.5 percent of the total estimated $2.76 trillion in all federal government spending for the Affordable Care Act programs during that time, according to the authors of the online report on the Health Affairs blog.
In contrast, the federal government’s traditional Medicare program has overhead of just 2 percent, according to the report.
*  *  *
But apart from that – it’s fair, right?

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NickelthroweR
NickelthroweR

Greetings,

The way I see it, the boomers are about to be thrown under the bus. Those in power are not about to see the empire fall to ruins over healthcare for non productive people.

Fairly soon the velvet gloves are going to come off and we will move from Huxley’s world of drugs and feelies to Orwell’s world of a boot coming down hard on the face of the useless eaters. It will play out that way.

Oddly enough, I expect to see the poor pushed out of the cities very soon as it is becoming more difficult to be a petty thug when everything and everyone are under surveillance. I see it here where I live as it is not possible to even so much as rent a single small room for under $1000 a month and if there is section 8 housing, I’ve yet to see it.

As I’ve said here numerous times, there will be owners and there will be the poor with little between (the middle class). If you are not thinking and preparing to be an owner then there will be no place for you as the resources run out.

The herd is about to be culled.

Gayle

Nickel

But what wil happen to Big Med and Big Pharma is spending on old Boomers is vastly reduced?

Anonymous
Anonymous

Mass man will always find a way to dissipate the vast wealth of today.

What difference does it make if, instead of whizzing away all this wealth on those providing and administering “medical” care, all this wealth was spent on clowns, mimes or sending out armies of shamans to smear blue paint on people’s foreheads to ward off evil spirits?

The Apogee of Politics promises that as long as people go along with the totems of coercive redistribution of wealth (taxes) and minute, detailed regulations of what people can and can’t do or say, then people will be freed of the consequences of their foolish choices and their utter ignorance.

So the predators and parasites among us figure out how to redirect a health chunk of the wasted wealth into their hands. Should we be surprised?

The whole thing is a joke. No one is going to live forever, and no one can escape the consequences of their actions. None of us can mitigate the fickle finger of fate, either, where perhaps 2/3rds of cancer is simply bad luck.

If people weren’t in ignorance and superstition pissing away most of their wealth in one way, they’d be doing it another.

Imagine if we got all the “medical care,” the warfare or the “government” we pay for!

DC Sunsets

Anon above is me.

Satori
Satori

the American public is absolutely schizophrenic on this issue

on one hand they’re screaming “death panels”

on the other they’re yelling about high taxes

where the hell do you think the money comes from???

you wanna spend a million dollars keeping someone alive another 2 months?

fine

we can do that

but be prepared to pay up

Westcoaster
Westcoaster

“Other advanced nations pay for universal healthcare with 8%-9% of their GDP, where the U.S. spends 18% of GDP on less-than-universal healthcare. How do other advanced countries provide healthcare for all for less than half of what America spends per person (per capita)?”
Mr. Smith skirts close to the edge, but the real answer is, the other “advanced countries” aren’t bending their laws over backwards to funnel healthcare money to private insurers and middlemen. THAT’S where the 9-10% is flowing; straight into the pockets of Blue Cross, Humana, Kaiser, Health Net, and the rest of the crowd.
The answer is socialized medicine (which is the system in these other “advanced countries”, however I’m sure the crowd here will slam me for saying it.

Don Levit

Typically in large employers 80 percent of the claims come from 20 percent of the participants
If the insurer uses these numbers to set the proper terms and conditions premiums can reduce each year for the group as a whole
It is not magic – it is math
To learn more go to nationalprosperity.com
Don Levit

Overthecliff
Overthecliff

Prediction: when the financial system collapses,if we do not have Civil War II, we will descend into full fledged socialism with more fascism. Very much like Nazi Germany. don’t know how it will be paid for. Probably with a gigantic reduction in standard of living.

Westcoaster
Westcoaster

One other point that is a huge factor and I do mean HUGE. We have too many fat-fucks in America! I’m for placing restrictions on healthcare for those who are waaay overweight from their diet and refuse to take steps to get healthy. Why should the rest of us shoulder their obesity? The other way to handle it is to place a “unhealthy” tax on companies that peddle high-carb products. Make this shit more expensive and maybe it’ll make their market shrink.

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