Need Some Extra Cash?
$285,888,128 dollars per hour. That’s the speed of U.S. healthcare spending. How do I know? I’m a health economist. I have a professional obligation to share this kind of trivia. If you’re like most people, you don’t run across many health economists.
You may not know what health economists do, exactly. My colleague explains what we do this way--we try to find better ways to finance healthcare. It’s short, sweet, and oh-so-relevant. What makes me different than most folks who talk healthcare is I’ve worked in the trenches of healthcare financing both in Portland and around the world. When people first learn of this they usually suggest we get together for a drink. There’s definitely something cool about taking your lunch break with King Tut at the Egyptian Museum or team building during a sail along the Nile River. However, the cool is mitigated by the risk when your road to work is lined with skull and crossbones signs to keep you out of that picturesque hamlet spiked with land mines, or your health ministry meeting is interrupted by an assassination bombing down the street. Along with the cool and the risk, I’ve learned up close and personal how other financing systems work and don’t work. I’ve been on the inside outsidethe U.S. Those experiences force me to look differently at our healthcare system.
We Americans spend around $2,500,000,000,000 per year on healthcare. All those zeros are trillions, thousands of billions, millions of millions. In current terms, it’s about three federal economic bailout packages per year. It’s a number so enormous, it’s meaningless. How can an average person relate to trillions? It’s a stretch even for our billionaire-to-the-north Mr. Gates. If you’re like most people, you feel powerless to affect trillions. Responsibility for that much money definitely belongs to someone else -- a much higher ranking and much better paid someone else.
However, it turns out those trillions amount to a little more than $8,000 for every man, woman, and child in the U.S., even though we know all American men, women, and children don’t get healthcare. And $8,000 is a number most of us can relate to. If your household is typical and includes your partner and a couple of kids, you already spend more on healthcare than housing, food, or clothing. You can look forward to your healthcare spending doubling in the next five years to more than $16,000 per person. Unfortunately, the probability your household’s income will double too is pretty slim. In 20 years, you’ll be spending close to half (40+ %) of the income from your shriveled 401K-pension-retirement remains on healthcare. You may feel powerless to affect the trillions. But make no mistake. The trillions affect you. Ultimately, every single one of those dollars comes from your pocket.
The truth is we could go to any other country in the world and get healthcare for no more than half of what we pay here. That’s right. At the very least we could save $1.25 trillion, about $4,000 each. I don’t know about you but I sure could use an extra $4,000 for each person in my household right now. And in many countries, especially the industrialized ones similar to the U.S., quality and safety would be just as good or better than what we get from our local providers. America’s healthcare performance is mixed at best. In fact, the more sophisticated the comparison technique used to adjust for differences between countries, the worse our performance looks. We lead the world at surviving breast and prostate cancers and lag at insuring our residents, protecting our babies from death, and immunizing our children. The sad truth is the U.S. has been overspending and underperforming relative to the rest of the world for years. We’ve talked about the need for reform, appointed and reappointed the same old reformers to new reform committees, and not reformed. We’ve been content not compelled.
Now the business of healthcare is on track to constitute two-fifths of our economy. Being healthy is a wonderful human condition, so wonderful you might think it’s impossible for a person to have too much health. Yet it’s definitely possible for an economy to have too much healthcare. Economists don’t know exactly how much is too much, but we know healthy people must have jobs creating something other than more healthy people for the economy to thrive. If it takes almost half of our nation’s resources just to produce healthcare -- no food, clothing, shelter, transportation, or education -- you can imagine how ineffective healthcare will be and how other necessary economic activities will be squeezed. Especially right now, during this first half of 2009, a time our children’s children likely will refer to as the Greatest Depression, we should have a renewed appreciation for a vibrant economy and the fact that we can really screw it up.
Compared to the rest of the world we have an obese healthcare system. There’s no need to whisper. The system knows it’s extra full-figured. It hasn’t seen its toes in years. The very same healthcare system that urges us to eat more servings of fresh fruits and vegetables, to put nonfat milk on our high-fiber sugar-free cereal, to substitute a deck-of-cards size piece of fish for a 16-ounce rib eye, to always skip desserts and never skip exercise has been leading a double life. Our healthcare system eats every bacon cheeseburger we pass up and adds fries, has never met a Voodoo donut or cupcake it doesn’t like, washes them all down with super-sized full-sugar sodas and always orders hot chocolate with extra whip. It never ever takes the stairs, wouldn’t fit on an exercise bike, and doesn’t own a single pedometer. I’m just not sure the system recognizes it’s morbidly obese. So if we want a leaner, meaner healthcare system, do we put it on a nice Mediterranean diet, schedule it for a gastric bypass and intensive therapy, or invite it over for all-you-can-eat barbecue ribs?
Next time: How the rest of the world stays so slim. There’ll be surprises.
Patrick White is a healthcare economist.