When did government place themselves and insurance companies between patients and doctors? The result was predictable.
The charts in this article are truly disturbing. When you take into account the decrease in jobs, stagnant wages, skyrocketing college tuition, zero return in the stock market since 1999, tripling of gas prices since 2000, relentlessly higher food costs, and astronomical increases in health insurance costs and premiums, you realize why the middle class has been wiped out in the last twelve years. When the median household income is $50,000 and the average family of four has to pay $21,000 per year in healthcare costs, that doesn’t leave much money for everything else.
Our healthcare system is severely broken and Obamacare does absolutely nothing to fix it. Giving more control to government bureaucracies, health insurance conglomerates, and powerful drug companies will surely reduce costs. The chart that shows the average compensation of doctors ranging from $150,000 to $300,000 proves they are not the problem. That is a reasonable compensation level for the amount of education and cost they incurred to become a doctor. Is a Wall Street shyster really worth $2 million per year when an oncologist gets paid $250,000 and puts up with all the crap from Medicare, Medicaid and the health insurance conglomerates?
The real problem is the complete disconnect between the patient and the cost of a service. With the Federal government insurance system and the monster insurance companies between the patient and the doctor, the cost of services becomes warped. The patient pays a premium, or their employer pays a premium, so they don’t care about the cost that is charged for a test or procedure. Everyone along the chain needs to game the system to get their fair share, driving the costs sky high. The organizations that profit are the public insurance companies, the drug companies, hospital corporations and the medical instrument makers. The American middle class taxpayer gets screwed twice. They get screwed by the high premiums they pay for lousy service and they get screwed as Medicare blows a hole in the national budget and results in massive budget deficits and higher taxes.
The amount spent in the last couple years of life is off the charts. How much of this is due to hospitals and insurance companies milking the system versus families choosing to keep parents alive with machines, even though their quality of life is zero?
No matter how you dice it, this picture is unsustainable. There is no money left to sustain this delusion. It will all come crashing down because math is hard and reality bites.
2012 – The Year In Healthcare Charts
By: Dan Munro
There were a few charts that made the radar this year. In some cases, the data is older than 2012, but all too often, the data hasn’t really changed or improved with age.
First up is our National Healthcare Expenditure (NHE). According to the Deloitte Center for Health Solutions, this number has been historically underreported – by a significant amount. In their report (The Hidden Costs of U.S. Health Care), they cite two important components that have not been included in tradtional calculations. The first is out-of-pocket spending by consumers on professional services and the second is the “imputed value of supervisory care provided to a friend or family member.” Using a conservative annual growth rate of 4% (from Deloitte’s baseline year of 2010), here’s what Deloitte suggests is our real NHE.
Next up is the 2012 Milliman Medical Index – which eclisped $20,000 for the first time this year. According to the index, every U.S. family of 4 is paying the dollar equivalent of a new Chevy Cruze in healthcare costs. Every year. Without financing.
The largest single component, of course, is the underlying cost of health insurance. The Kaiser Family Foundation (KFF) released this chart to highlight just that growth. One clear takeaway (when compared to the Milliman Index above) is the corresponding increase in out-of-pocket healthcare expenses.
The Kaiser Family Foundation also provided a comparison of cumulative increases in health insurance premiums – relative to Workers’ Contributions, Inflation and Workers’ Earnings (from 2000 to 2012).
Another annual chart is Medscape’s Physician Compensation Report: 2012 Results (slide #2 – 2011 data). I wasn’t that surprised by those on the lower end, but it was surprising (at least to me) to see Radiology as the highest (average) compensation.
For those that may be relying exclusively on the transformative effects of PPACA (Obamacare) – this chart highlights the nominal impact of PPACA reform on our National Healthcare Expenditure. It’s from a Commonwealth Fund Issue Brief (May, 2010) – The Impact of Health Reform on Health System Spending (Exhibit #3 – page 5).
This next one was orignally assembled by Carnegie Mellon University professor Paul Fischbeck – and reported by Mark Roth of the Pittsburgh Post-Gazette (December, 2009) – and highlights our Per Capita Healthcare Costs by Age as compared to four other countries (Germany, the U.K., Sweden and Spain).
This last one from Mary Meeker’s landmark report – USA, Inc. (slide #111) – is definitely not new but it is foundational. It compares per capita costs and life expectancy across all 34 OECD member countries using OECD data from 2009.
Below are two charts from Karl Denninger that tell the true story. The projected chart for 2020 will not happen because the entire rotting edifice will implode before 2020. Math is hard, especially for lying politicians and corrupt government bureaucrats. To read his entire article click here:
Health Care (all programs) was $55.3 billion.
In 2011 the Federal Budget looked like this:
And Health Care spending was $858.2 billion.
That is approximately a 9.3% annualized growth over that period of time.
Note that as a percentage of the budget Pensions (that is, Social Security) and Defense did not materially change. Health care exploded.
This is where the problem is.
This is where the Democrats and Republicans and Libertarians don’t want to get into details.
But it is where we must, because if we do not this growth in Health Care spending will absolutely, with certainty, destroy the Federal Budget and our government.
Here is Jesse’s take on the high cost of healthcare. I’m sure our doctor friends can provide some insight.
28 December 2011
I am struggling a bit with the idea that reimportation back to the US of drugs made in America and sold to Canada is one of the solutions.
I believe Canada regulates prices, so they are much lower. So it does seem as that if one wishes to lower prices it makes more sense to merely emulate the Canadian approach, rather than add a Canada as a middleman.
One could make a decent case that the US consumer is filling the profit gap created by single payer price regulations in other countries.
I have not looked at it recently, but SGA (Sales, General and Administrative) Costs at big US Pharma firms had ballooned in the past twenty years as a factor on corporate balance sheets.
“In 1999, health administration costs totaled at least $294.3 billion in the United States, or $1,059 per capita, as compared with $307 per capita in Canada. After exclusions, administration accounted for 31.0 percent of health care expenditures in the United States and 16.7 percent of health care expenditures in Canada. Canada’s national health insurance program had overhead of 1.3 percent; the overhead among Canada’s private insurers was higher than that in the United States (13.2 percent vs. 11.7 percent). Providers’ administrative costs were far lower in Canada.”
New England Journal of Medicine, Aug 21, 2003
Blame government if you will, but based on my own look into this it is yet another instance of regulatory capture and a political campaign financing problem vis a vis influence peddling by powerful corporations.
The study below seems to try and make a linkage between direct marketing and high prices, but the only two countries that allow direct markets are the US and NZ, and NZ is later shown to be one of the lowest cost countries! So obviously it is something else.
Health care costs in the US are driven by the health corporations and Big Pharma, and are borderline insane, as most who have had a recent major illness in the States might attest.
Most of the physicians with whom I have discussed this felt the same way and have even stronger feelings about the healthcare monopolies formed of partnerships between hospitals and private healthcare insurance companies, and the marketing pressures and role of the drug and equipment companies in driving up costs.
And then of course there is the tort and malpractice system which is in the hands of Big Law. But that is a matter for another discussion.
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