OP-ED: What Everyone Gets Wrong About Healthcare

(Photo: Roosevelt Institute)

               The American healthcare system is sick.  Everyone, from bleeding-heart progressives to staunch supporters of the Freedom Caucus, agrees on this – and how could they not?  One only needs to give a cursory glance at the statistics, or spend five minutes in a crowded emergency room, to realize that there is something deeply broken about how we go about ministering the health of our nation.  According to a meta-analysis by the Commonwealth Fund of healthcare data from thirteen high-income countries, despite the fact that the United States spends the most per capita on healthcare, Americans have the lowest life expectancy and the highest infant mortality rate.  The real question, then, is, “What is to blame?”

               The Democrats’ answer is that an unscrupulous health insurance industry is the root cause of our dysfunction, a thesis deeply embedded in the provisions of the Affordable Care Act.  On the other hand, Republicans claim that Medicare and Medicaid are distorting the market, and providers are raising prices for the privately insured to compensate; thus, the draconian cuts proscribed in the failed American Health Care Act. 

               In a certain sense, both sides touch on real issues.  Yes, before the Obamacare regulations, the feedback loop between uninsured patients being unable to pay their bills and the rising costs of health services and coverage was growing out of control; and yes, Medicare and Medicaid are poorly designed, inefficient programs which distort the market and consume more than their fair share of the federal budget. 

               However, both approaches to healthcare reform are fatally flawed, in that they assign a single cause to a mind-bogglingly complex phenomenon.  It’s not even the case, as many centrists like to believe, that an effective solution lies somewhere in the middle of the two policies because, outside of a handful of experts, everyone misses the real causes of rising healthcare costs.  Now, it would be impossible for me to give a complete account of everything which ails us in a single column, but here are the two most significant factors, based on what I’ve gathered from the data:

1. America is the least healthy developed nation.

               According to the Commonwealth Fund study, a significant portion of our healthcare costs come from the general poor health of the U.S. population.  Despite the fact that, as of 2013, we had the third lowest incidence of daily smokers from the countries included in the study, we came first in both obesity (at 35.3% of the population) and the percentage of seniors with two or more chronic conditions.  (68%)  Treatment of chronic health problems is far more expensive than treating acute conditions, such that a 2012 investigation by PBS found that the 50% of the American population with one or more chronic condition accounted for 84% of all healthcare expenditures in 2010.

2. Consolidation is stifling competition.

               While patients on government programs have the advantage of consistent pricing set by federal regulators, a study from the Health Care Pricing Project found that the privately insured are subjected to wide variations in price.  For instance, the authors found that nationwide, the price of a lower-limb MRI can vary by a factor of twelve – that is, the most expensive hospital charges twelve times as much as the least expensive one. 

               This, the study claims, can largely be attributed to the recent trend of hospital mergers and provider consolidation, which has led to the formation of healthcare monopolies in many areas, allowing providers to charge much more for basic services than the market would otherwise allow. 

            Until we can solve these problems, any effort at reform, be it conservative or progressive, is doomed to failure.  My advice?  Eat your vegetables and stay healthy.  We may be waiting for a while.

Ford Mulligan Staff Reporter