Third Party & Independents Archives

The Sickening Cost of American Healthcare

I knew that the United States spent more of its GNP on healthcare goods and services than any other nation on Earth, but I was amazed to discover the degree of that difference and how little we get in return.

According to the OECD, in 1960 the per capita cost of healthcare in America was only $144; by 2002 it had risen more than six times faster than the Consumer Price Index to $5,267. Most impressively, however, we have the most expensive healthcare system in the world, by far. The United States spent 52% more per capita than the country with the second most expensive healthcare system on earth, Switzerland; 80% more than Canada; and 144% more than the United Kingdom.

Those are depressing numbers certainly, but they're justifiable because everyone knows that high quality healthcare is expensive. After all, the best healthcare system in the world should be the most expensive, shouldn't it? Imagine my chagrin when I stumbled upon the World Health Organization's World Health Report - 2000, however, and searched it's national rankings for the land of the free and the home of the brave. OK, so we weren't number one. We weren't number two or even number three. We weren't in the top five or the top ten either. I really started to get worried though when we didn't make the top twenty or the top thirty. Where did we end up? Thirty-seventh! I was amazed. The WHO had ranked the quality of healthcare in the United States as on par the quality of healthcare in Costa Rica and Slovenia!

Ironically and shamefully, insult was added to injury when I discovered that the nation with the world's best healthcare system was France. Sacre bleu! How was it possible for the French to spend less than $2,800 per person and receive the highest quality healthcare in the world when we spend nearly twice as much per person as they do and end up ranked thirty-seventh? Digging a little deeper, I noticed that per capita public expenditures in France ($2,080) were only slightly less than they were here ($2,364). It was in the private spending for healthcare that America really showed its stuff to the rest of the world. In 2002 per capita private expenditures for healthcare amounted to $656 in France, $883 in Canada and $359 in the UK. In the good old US of A, however, every man woman and child spent nearly three thousand dollars ($2,903) out of their own pockets, an impressive margin of victory by any standard. Each of us spent nearly four and a half times more than the French, nearly three and a half times more than the Canadians and eight times more than the British. What did we get in return for all of our hard-earned dollars? We got the worst possible result: developing world healthcare at industrialized world prices. By any measure, the privatization of healthcare must be considered to be a colossal failure both quantitatively and qualitatively.

But why? Why is the most common medical procedure in the United States a walletectomy? The competitive forces of the marketplace succeed marvelously in providing high quality goods and services at efficient prices in so many other industries. Why did they flop so resoundingly in this one? In other words, why did Reaganomics succeed so well in the airline and telecommunications industries, for example, but fail so abysmally in the healthcare industry?

The answer lies in the illusive quality of free choice. In a fair marketplace, both buyers and sellers possess variable degrees of choice. As the consumer's desire to buy and the producer's desire to sell change, prices fluctuate accordingly. When need replaces want in the pricing equation, however, the dynamics of supply and demand become moot. Marketplace conditions are immaterial when the choice is between sickness and health or between life and death. A hungry person may pay more for a sandwich than a sated one, but a staving person will pay anything.

Notwithstanding elective procedures, the provision of medical goods and services differs profoundly from most other human endeavors, such as air travel and telecommunications, because the buyer's choice is effectively eliminated from the purchasing decision. People may say, "It looks like a slow weekend. I think I'll call Aunt Martha. Better yet, I think I'll fly out to see her," but nobody says, "It looks like a slow weekend. I think I'll go get an appendectomy." The consumption of medical goods and sevices is based upon need, not desire, which eliminates the efficiencies inherent in fair market capitalism.

So what's Uncle Sam to do? Perhaps our elected representatives should hearken back to our founding document, the Declaration of Independence, for a clue. According to Jefferson, the only valid rationale for the very existence of government is to protect the "inalienable rights" of its citizenry, and that among these rights, are life, liberty and the pusuit of happiness. As the first of Jefferson's enumerated rights, life and health are the most fundamental of our natural rights. Contemporary civilized societies may choose to help educate the ignorant, clothe the naked or feed the hungry, but they must help cure the sick. It is the ultimate human entitlement.

Imagine for a moment that the federal government treated the second of Jefferson's "inalienable rights", the right to liberty, as cavalierly as it treats the first. Our armed forces protect our collective liberty from foreign conquest and our police forces protect our individual liberty from criminal exploitation. Why shouldn't the federal government disband our military and police forces and rely on the private marketplace to provide these services for us? After all, a large standing army and a federal police force are relatively recent developments in American history, and they're very expensive. Why don't the acolytes of Reaganomics contend that we should be as free to choose our own soldiers and policemen as we are to choose our own doctors and pharmacists? We could go back to receiving our collective protection from the armies of feudal lords and our individual protection from roving bands of gunslingers. What price would we be willing to pay these private providers to protect our liberties when foreign conquerors or local criminals threatened them? We would pay them pretty much the same amount as when injury or disease threatens our lives or the lives of our loved ones: anything they ask.

The days of pharmaceutical drug pushers and samurai surgeons selling their goods and services only to those who can afford to pay their exorbitant and collusive prices must end. Our elected representatives must honor their most fundamental obigation: to protect the lives of their constituents, not the bank accounts of their contributors.

The next time you're at the pharmacy or your doctor's office and peel off a hundred to pay the tab, it might help to ease your financial pain a bit to look down at the picture of the man whose face adorns the bill and recall the words he wrote 270 years ago:

"Necessity never made a good bargain."
Posted by Chuck Hanrahan at June 6, 2005 4:39 PM