Sick Economy, Sick Healthcare System

We are already paying for a lot of care for the uninsured in a very indirect, untransparent, and inefficient way.
Oct 01, 2008
Volume 21, Issue 10

Laura Bush
As we went to press, the country—and to some extent, the world—was reeling from US Treasury Secretary Henry Paulson's proposed $700 billion Wall Street bailout. In appealing for support, Paulson stressed this was a crisis.

This sense of urgency is reminiscent of the way millions of Americans without health insurance cope with medical problems—in the emergency room, because they have no access to routine and preventive care.

And just as the cost of shoring up the financial sector would not be so astronomical if we had started treating the condition before it became life-threatening, much less would be spent on emergency care if everyone had access to routine checkups. A visit to the emergency room costs three times as much as a visit to a physician's office.1 And of course, when treatment is delayed, patient outcomes are much worse.

In 2006, we spent more than $2 trillion on healthcare in this country. That's $7,026 per person, nearly twice the per capita spend in France and Germany.2 Yet the results are unimpressive. The United States ranks 41st in infant mortality, just behind Cuba, and 46th in life expectancy.3 And, of course, 45 million Americans remain uninsured.4

Americans wonder whether we can afford to insure everyone. But lack of insurance is not cheap either. The uninsured pay about 35% of their own medical bills. The remaining costs of uncompensated (charity) care are mostly covered by taxpayers through subsidies to hospitals and clinics that total about $50 billion a year.5,6 As former Tennessee Senator Bill Frist put it, "We are already paying for a lot of care for the uninsured in a very indirect, untransparent, inefficient way."6

So how much would it cost to insure everyone? A 2002 Institute of Medicine (IOM) study estimated the costs at $34–$69 billion per year for the additional healthcare that would be used by the uninsured if they had coverage, plus $26 billion to cover out-of-pocket costs the uninsured currently pay by themselves.7

That makes the total about $60–$95 billion.

On the flip side, what is the cost of not insuring everyone? Using a "health capital" model, covering factors like lost productivity, the IOM study estimates that poorer health resulting from lack of insurance costs between $65 and $130 billion annually. So according to the IOM's figures, the net cost of insuring everyone could be as high as $35 billion, or, surprisingly, could provide a net gain of up to $40 billion.

It is also important to consider how much is spent in our complex system because of its inefficiency. One study found that administrative waste consumes 31% of health spending in the US, double the proportion in Canada (16.7%).8

Regardless of the numbers, however, we should be reminded of the moral imperative to provide healthcare to all. In a developed country, no patient should go untreated.

The current financial crisis has left us all feeling a bit at risk. It's a stark reminder of how unprotected America's uninsured already were before the current crisis—and will continue to be afterward, unless we get serious about changing the situation.

Laura Bush is the editor in chief of BioPharm International,

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