The United States spends more than any other country on health care.
In 2018, we spent 17% of our gross domestic product on health care. This is almost twice as much as the average industrialized country and over three times the percent of our GDP in 1960.
The U.S. spends almost $11,000 per person every year, which is over twice that of France, Canada or the United Kingdom.
Where the U.S. really stands out is in private sector versus public funding.
In most western counties, the bulk of the funding for health care comes from governmental sources, with a small fraction coming from private insurance or out of pocket expenses.
This is not the case in the U.S. where about half of health care funding comes from the government and the other half is private insurance with some out of pocket costs.
Since the U.S. spends the most for health care with a large portion from private funding, why is the life expectancy of our citizens significantly lower than our European counterparts?
The average life expectancy of U.S. citizens is currently 78.6 years, while Canada and France are over 82 years and the United Kingdom is 81.3 years.
Are we really getting our monies’ worth?
One answer to this question is that Americans are not taking care of themselves as well as people in these other countries.
We have the highest rates of both chronic diseases and obesity. Plus, Americans visit the doctor less than other countries, resulting in one of the highest avoidable death rates in the West.
It is true that we need to take responsible for our own health by spending more time, energy and money on disease prevention rather than relying on expensive treatments for often-avoidable chronic disease.
Yet, this still would not fully account for the excess cost of health care.
Another contributing factor is the rising cost of prescription drugs. Even with Medicare, Medicaid or private insurance, drug costs have far outpaced inflation rates.
Unfortunately, this trend is expected to continue. The Good Rx Price Index estimates that the average prescription cost will increase by 4.5% in 2021.
This is significant for everyone, but particularly for Medicare recipients. Without a supplemental policy, they can be stuck paying 25% of the cost of medications.
Considering the average senior adult takes four prescriptions drugs, this could create a situation where many seniors have to choose between housing or food and medications.
In 2018, Good Rx released a survey showing that one third of Americans have skipped filling prescriptions because of the out-of-pocket cost.
West Health Policy Center estimated in November 2020 that if current drug pricing continues, 1.1 million Medicare beneficiaries could die during the next decade due to an inability to afford needed medications.
In light of these challenges, what do we need to do both collectively and individually?
First, we need to take a deep breath and acknowledge that the rate of health care inflation has actually slowed.
Yes, things feel out of control, but we have made some progress.
We forget that in the 70’s through the early 90’s, it was common to see health care prices rise by 10% or more every year. The use of HMOs in the 90’s slowed the process to single digits, but costs remain three-to-four times higher than the rate of inflation.
Since the passage of the Affordable Care Act in 2008, we have seen the lowest inflation rates since 1960, even as low as 3%. While this is good news, we still need to address the excess cost of health care and actually see health care deflation.
It is unwise for 17% of our GDP to be health care related. A percentage that high makes our economy dependent upon people staying sick and discourages a push for preventative health care.
We need to celebrate our victories, but also focus doing more.
Second, we need to stop finger pointing about why costs are so high.
Insurance companies, “Big Pharma,” pharmacy benefit managers and Congress have all been blamed for the problem.
In reality, it is not one event, decision or group that has got us here. It is a chain of events going back to the 1960’s that have been well documented by health care economists.
Blame is no longer helpful, even as political theater. It is time to set aside partisanship for the greater good. The American public want a solution and deserves to see progress on viable solutions.
Third, we need to look for solutions that we can easily agree upon and then act.
One area is drug costs.
Even in Congress, there is agreement. The last few years have seen a flurry of legislation from both sides of the aisle attempting to address the issue.
Most notably was the Democrat-proposed Elijah E. Cummings Lower Drug Cost Now Act. This would require the government to set drug prices based on a comparative formula of what other countries pay and encourage direct negotiation with pharmaceutical companies.
It is estimated that if the bill were passed that it would save Medicare $475.9 billion by 2030 and dramatically reduce unnecessary deaths related to drug costs.
In like manner, President Trump signed four executive orders last year that were targeted at reducing drug costs.
Most notably was the order addressing rebates offered to drugs companies by pharmacy benefit managers. The order was estimated by the administration to save seniors $30 billion a year.
What is important is that both parties are proposing solutions that are similar to each other, but so far neither side seems willing to work together on a bipartisan basis.
It is sad that many elected officials from both sides of the aisle see the same problems and want to solve them, but they just cannot seem to work with each other for the American people.
This is not a partisan issue, it’s an issue about national survival. We cannot keep going on this way.
It is time for us to reform our pharmaceutical industry and take a serious look at our health care system as a whole. The cost savings could then be redirected to disease prevention.
Our political process has done this before and its time we insist our elected officials do it again.