Ali’s blog

Mostly quant stuff with occasional digressions

Health care crisis

Posted by alifinmath on March 28, 2008

Well, we already know about this but I thought I’d paste excerpts from a good essay in Monthly Review:

Michael Moore’s film, Sicko, dramatically illustrated how problems in access to health care in the United States have escalated to the point of a crisis for all but the richest Americans. The problems include the fact that many citizens are uninsured, health care costs are increasing faster than inflation and wages, and more of those costs are being passed on from employers to employees. Many indices of health care effectiveness show that the United States fares very poorly in comparison to other developed capitalist countries. Almost all the other developed capitalist countries have universal health care. All their citizens are insured and their per capita costs are much lower.

Health care spending is currently 16 percent of the gross domestic product.11 It is projected to rise to 25 percent by 2030. In 2003, the United States spent $5,635 per person on health, more than twice the average within the Organisation for Economic Co-operation and Development (OECD), an association of developed capitalist countries.12 This was around ten times more than the lowest-spending countries within the OECD, Mexico and Turkey. These costs have doubled in the past seven years,13 and now the annual premium that a health insurer charges an employer for a health plan covering a family of four averages $12,106.

As for the benefits of this debt debacle, Americans get very little bang for their buck. Comparisons to other OECD countries are disastrous. The United States has one of the highest infant mortality rates in the OECD.22 If the U.S. rate were lowered, for example, to Canada’s, over 20,000 more babies would survive every year. U.S. life expectancy is twenty-second among the thirty OECD countries, forty-eighth among the top fifty countries in the world, tied with Denmark, where half as much is spent per capita and everyone is insured.

24 Much of the growth is due to higher drug costs. Brand-name drug prices in the United States rise over 6 percent a year.25 Most other OECD countries control spending by holding down drug prices. And the drug industry has for decades been the most profitable in this country. In addition, the administrative costs of health care in the United States are higher, because many OECD countries have government-administered health insurance while in the United States there are many private competing insurers. The profits of insurance companies and the relatively new entities called health care corporations have skyrocketed.

 The inequalities in U.S. health care exacerbate the already severe socioeconomic inequalities and injustices in the country….However, insurers and individuals spend vast sums on medications that are palliatives which assure high profits for pharmaceutical companies. These drugs, like cholesterol-lowering statins, often under-perform lifestyle changes. In the United States, over $250 billion is spent annually on drugs, realizing a 15.7 percent profit for the drug industry, as a percentage of its revenues.30 From the pharmaceuticals’ point of view, public health is the opposite of wealth. In Canada, such a degree of exploitation is against the law.

Capitalists who moan and groan about health care costs would find help in any universal plan. For years manufacturers like GM have spent more on health care than on steel, and retailers like Starbucks spend more money on health care than on coffee.42 Some capitalists, like Wilbur Ross, an investor in the steel and auto industries, realize that “Every country against which we compete has universal health care. That means we probably face a 15 percent cost disadvantage versus foreigners.”43 But in this age of interlocking directorates, manufacturers cannot just look out for their own narrow interests. For example, six of the eleven directors on GM’s board have or recently have had high positions in drug, insurance, or health care companies.44 The board protects those interests as well.


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