U.S. Healthcare: A Kobayashi Maru

For those somehow unfamiliar with the term, The Kobayashi Maru is from the Star Trek universe and is an exam giving to Star Fleet Academy cadets. It exposes the cadets to a no-win scenario to test their problem solving under pressure. This no-win scenario is precisely what has become of healthcare in the United States.

The numbers on this should be reasonably familiar to anyone who is paying attention at all. Like this graph from The Commonwealth Fund showing that US Healthcare is 17.1% of our (very large) Gross Domestic Product (GDP – the total value of all goods and services produced in a country over the course of a year) compared to an average of 10.6% for other “developed” countries.Squires_OECD_exhibit_01

But, with all that spending, we must be getting something really great, right? Maybe it’s because we have so many doctors, or we go to see the doctors so often. Nope, that’s not it.

Squires_OECD_exhibit_03The same study shows (above) that the US has among the fewest practicing physicians per 1,000 people of population and a fairly low number of physician visits per year.

Well, maybe our health care is so expensive because we have more hospital beds or more hospitalized patients. Again, no.

Squires_OECD_exhibit_04As you can see, we are again below average in the number of hospital beds and the number of hospital discharges.

OK, it must be the doctors. The doctors are really raking it in and that’s our high cost of health care in the US, right. And again, nope.

DoctorPayThis graph, from Forbes in 2013 is especially interesting. It appears, from the first column, that US physicians are quite overpaid in comparison to other developed countries, averaging almost twice the pay. But, as the article points out, that’s not an “apples to apples” comparison. The US has about 30% primary care physicians and about 70% specialty physicians, a ratio that is almost opposite all of the other countries surveyed. Specialists earn, on average, more than primary care docs, so the concentration of higher earning specialists in the US skews the overall averages. Column 2 is the ratio of earnings of specialists to GDP per capita and it is still above other countries, but not as much as the combined specialists and primary care docs. Column 3 compares the earnings of specialist physicians to “high earners”. The article explains: “the more relevant comparison is not to the average worker but to members of the talent pool from which American physicians are recruited. When specialty earnings are compared to those of high earners—i.e., those in the 95-99% of the earnings distribution—it turns out that physicians in nearly all other countries, not just the U.S., are paid reasonably well“. By this same comparison, US primary care docs are slightly underpaid, but not grossly so.

OK, we don’t have more doctors or visits to the doctor. We don’t have more hospital beds or patients in the hospital. Our doctors are not really grossly overpaid and certainly not to the extent to explain our wildly out of line health care costs. It must be that we’re just getting better care, right? Sadly, this is not true either.

TCFchartThis chart from a Forbes article (reporting on The Commonwealth Fund‘s article) shows that US healthcare ranks 11th out of the 11 countries surveyed. Most worrisome, at least to me, are the last three measures; Efficiency, Equity, and Healthy Lives, where we rate dead last. Efficiency scored poorly because: “The U.S. has poor performance on measures of national health expenditures and administrative costs as well as on measures of administrative hassles, avoidable emergency room use, and duplicative medical testing.” We are last on equity because: “Americans with below-average incomes were much more likely than their counterparts in other countries to report not visiting a physician when sick; not getting a recommended test, treatment, or follow-up care; or not filling a prescription or skipping doses when needed because of costs. On each of these indicators, one-third or more lower-income adults in the U.S. said they went without needed care because of costs in the past year”. And we rated last on Healthy Lives because: “The U.S. ranks last overall with poor scores on all three indicators of healthy lives—mortality amenable to medical care, infant mortality, and healthy life expectancy at age 60″.

Note that the actual cost of services isn’t really discussed. But, as reported by PBS, the prices for many common procedures is higher in the United States compared to other countries. But, like with physician pay, the magnitude here is not enough to explain the huge discrepancy. US_prices_for_certain_procedures_are_much_higher_slideshowSo what is going on? How did our health care costs get so out of line and why, if we pay so much, so we get such poor care and leave so many people without care? The answer, I believe, is two-fold. First, the simple answer is profit. Second, we’ve lost sight of our priorities.

Let’s look at profit, first. Many of the countries named thus far, besides the US, have nationalized health care. That is to say that all citizens of those countries receive health care as a part of the rights they have for being citizens. Of course it is funded through taxation and many countries offer additional perks for those with the money to buy them. But everyone gets healthcare. The United States health care system is, of course, based upon profit. Physicians have been given an incentive to do more because doing more means getting paid more. Hospitals were given incentive to provide more services because they were able to make more money. It was not some evil conspiracy that created this, it’s just the way our system evolved. On the flip side, we have evolved private insurance companies who are given incentive to provide as little care as possible for those that buy their insurance because doing so maximizes the profit for the shareholders of the companies. And make no mistake, if you’re looking for the biggest hoard of money in medicine, look no further than health care companies. The revenue of the top 5 insurance companies in the US for 2014 is illustrated below. That’s about $350,000,000,000.

insurance profitsThat represents a lot of profit. And don’t think that just because you live in a state like Minnesota (like I do) where health care insurance is mandated to be provided by not-for-profit companies that they aren’t raking in the money. The St. Paul Pioneer Press reported that in 2012 the HMOs in Minnesota had cash reserves of $1,900,000,000. Yes, that’s 1.9 billion dollars. With cash reserves of $1.9 billion I have a heard time understanding why health insurance premiums in Minnesota rose, in 2014, 19% when the cost of living increased less than 3%. Did the cash reserves need to get bigger? And out of Minnesota, if United Health Care is earning around $5,000,000,000 in profit each year, why do their health insurance premiums keep going up? The answer is that UnitedHealth is not in the business of taking care of patients, it’s in the business of making money for it’s shareholders. And it’s all about profit.

Let’s take a minute to look at priorities. Obviously, the priorities for profit is a problem, but it’s not the only problem. Back to those that actually provide care to people, doctors and hospitals. First, they still get paid, to a large extent, by what and how much they do. There is a movement to slowly change the system to pay for outcomes (i.e. pay for keeping people healthy), but it will take a very long time for this to become the norm. A large amount of the payment that doctors and hospitals receive is also based upon “patient satisfaction” or HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems). But does anyone see the fundamental flaw in asking patients about their experience of care? What if the care you received was first rate, but it wasn’t what you wanted to hear? Who rates their experience of finding out they have cancer, heart disease, diabetes, or any other serious disease as good? And if your doctor came to your bedside and told you that you had bad heart disease and you needed to immediate adopt a low fat vegan diet if you wanted to live, would this be a good experience for you? What if you had successful triple bypass surgery? That might be good, but it hasn’t addressed the issues that clogged your vessels in the first place and it won’t really extend your life, but you feel like something good has happened and will probably relate that as a good experience. And now you’re just as much a part of the problem.

So what can be done to fix this depressing health care mess? Honestly, I don’t know. All I can do is take care of myself as best as possible. For me, that means a vegan diet. Actually, for most people that means a vegan diet, but I can’t make you eat right any more than I could get you to exercise regularly, quit smoking, quit drinking to excess or any of the other lifestyle choices that make such a difference. But I do know that if we don’t figure out a way to rein in our health care costs, it will be nothing but trouble in the future.

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