Medical care in the U.S. is so much more expensive than every other country. How can we fix that? A dollar in U.S. medical spending looks like this: 31 cents goes to hospitals, 20 cents to doctors and clinical services, other personnel get 15 cents, prescription drugs account for 10 cents, nursing care and home health care about 8 cents (numbers are from 2010, rounded). Drug costs are now higher.
A letter to the editor a few weeks ago mentioned the necessity of oversight and I couldn’t agree more. A recurring theme becomes obvious: This is best carried out in a single system, such as improved Medicare for all.
Medicare fraud is already investigated by the FBI, pretty good oversight indeed. The letter also mentioned cutting physician salaries. While there are some physicians who are overpaid, cutting across the board would not go very far in lowering overall costs. There are also many reasons why physician income will remain high, which I will discuss at another time, if requested.
Likewise, the much-praised tort reform would do little to bring down medical costs, even if some form of it is desirable for other reasons. The approach to these complex issues is, again, best undertaken if there is a single-payer healthcare system.
Drugs cost more than we would like. Why? Because the manufacturers can charge whatever they want. A CEO making $43 million is just the tip of the iceberg. By the way, that is about $17,200 per hour. Then there is $84,000 for the drug to cure hepatitis C, at a time when pharma companies spend more on marketing and administration than research and development.
Other companies in the medical marketplace have similar balance sheets. For example, the CEO of Centene Corporation, which provides Medicaid services to several states, received more than $40 million in a recent year. The 11 top insurance company CEOs made a total of $200 million. Obviously, some people are making a killing making people well.
These examples help point to the real fat, that is, administration and overhead. Since 1970, the number of physicians has grown by 240 percent while the number of administrators has grown by over 3,000 percent. Administrative costs in the U.S. were more than $3,000 per capita in 2014 but under $900 in Canada.
Physicians for a National Health Program believes the solution, a single-payer system, would increase costs by $326 billion to cover everyone, but decrease costs by $569 billion, a net savings of $243 billion, by decreasing administrative and insurance costs, and lowering drug and device costs through negotiations. Everybody covered better, for less money.
In the meantime, please don’t get fooled into some silly proposals, like offering insurance policies across state lines, or choosing your own less-expensive plan. Insurance companies make money by denying care; we have all experienced the crazy and expensive ways they go about this. And the only way that choosing your plan makes sense is if you get to choose the diseases you will develop in the future.
Next time: the business case for single-payer healthcare.
Dr. Kluzak, an Idyllwild resident, is board certified in Anatomic Pathology, Obstetrics and Gynecology. He also is a freelance photographer for the Town Crier.