hearts and minds

August 6, 2006

Cost, Quality, and Choice in Health Care in the U.S. (part 1)

Filed under: Class warfare,Health care crisis — Hearts & Minds @ 8:44 am

While legislators, judges and politicians and their families enjoy at no cost, for the rest of their lives, the finest comprehensive medical care benefits taxpayers can provide, one out of every six Americans has no medical care insurance. Over 30% of workers in agriculture, construction and household services are uninsured. One out of nine health care workers has no medical insurance. Two-thirds of all uninsured persons are employed workers and their families. Half of all bankruptcies in the United States involve illness or medical debt. The uninsured die at a 25% higher rate and thousands die yearly from lack of coverage.

During the booming nineties, health care costs skyrocketed while health care became a commodity (where the criterion for receiving care is ability to pay, rather than medical need) and the healing professions were being transformed into a profit seeking industry. In 1985 three-fourths of HMO members were in non-profit plans. By 1999 only one-third were enrolled in non-profit HMOs. While average premiums of investor owned and not-for-profit plans are virtually identical, medical insurance plans designed to make profits spend almost 50% more on administration and profits, and correspondingly less on actual patient care. The number of non-medical administrators in the increasingly profit oriented, market driven system has grown ten times as fast as the numbers of physicians, nurses and other clinical care givers. As much as half the health care dollar is never applied to health care. It’s consumed by administrative costs, marketing, profits, insurance brokers, disease management and utilization review companies, lawyers, business consultants, billing and collection agencies, information management firms, etc. Health insurance overhead alone takes one percent of U.S. GNP.

Not only did costs go through the roof, but the proportion of those costs that were paid directly by the employee doubled and tripled during the nineties. By 2000, elders in the U.S. were spending, on average, one-fourth of their total income just for medical care, due to deductibles, co-payments, non-covered items and premiums that have been tacked on to Medicare by politicians and legislators. Medicare currently pays for only about half of the medical expenses of the elderly.

Quality of care is lower when the providing institution is there to make a profit. For-profit HMOs calculate a “medical loss ratio” which is the percentage of their revenue which they have to actually spend on medical care. They seek to lower this ratio because their responsibility is to the shareholders, not the patients. When the “loss ratio” falls, their stock’s value on Wall Street and the CEO’s personal fortune typically rises. As a result, arbitrary rules and gatekeepers who are not your doctor or nurse, and are often not even medical professionals, determine whether to authorize procedures and treatments, even in emergencies. Employer sponsored plans that are managed for-profit view the employer, not the insured patient, as their customer. The HMO wins a contract by defining optimal care as that which minimizes costs. A doctor’s “productivity” is evaluated and financially rewarded based on how little time he spends with each patient and how little his recommended treatment costs the plan. Patient outcomes are not even a factor in these productivity evaluations. A study published in the Journal of American Medicine found that for-profit HMOs nationwide scored worse than non-profit HMOs on all fourteen quality-of-care indicators. The largest quality differences were in the care of seriously ill patients. If all American women were enrolled in for-profit HMOs, the annual death toll from breast cancer would rise by thousands. Because profit is the issue, not patient outcome, for-profit HMOs selectively refer heart surgery patients to the hospitals with the highest surgical death rates and the highest death rates are at for-profit hospitals.

One purported advantage of the U.S. system of health care is the smorgasbord of “choices” represented by the many insurance companies and agents, the lists of “preferred providers” (who prefers them, anyway, and why?), all those for-profit HMOs, and the various corporate predators gobbling up what remains of our old respected non-profit community medical institutions and then each other. The choices we face in health care for ourselves and our loved ones are at once mind boggling and frightening. We find ourselves one day, clutching a ream of insurance papers full of restrictive and exclusionary clauses, entering a hospital called something like “The Sisters of Mercy” that we suspect, with good reason, is owned by a group of investors expecting dividends for themselves of at least 20% per annum, whose chief executive is a ruthless corporate raider working to takeover all the hospitals within a five state target region for marketing advantage. How can we know whether the doctor, nurse or whatever is telling us everything they know, or whether she or he is telling us only what treatment, if any, the private insurer intends to allow?

But many Americans don’t have to suffer those confusing and distressing choices. The uninsured and underinsured usually have no difficulty weighing their options and choices. They have none. And four out of five employees in small firms and half the employees of large companies are offered the “choice” of only one plan, which usually restricts them to a doctor and clinic chosen by The Plan. A lot of privately insured Americans change plans, but only one out of ten change in order to get better care. Three out of every four who changed were forced to by a job change or because their employer switched plans. There is, however, one important choice many Americans will be making regarding health care. Four out of ten terminally ill patients or their families report that the personal financial costs of the illness are a moderate to severe problem. Too often, an American’s only substantial medical “choice” is between trying to live and regain health or saving their family money. Is there a better way?

Don’t miss Part II of this essay, and the good news. (See “Winning Less Expensive, Better Quality Health Care for the U.S.”)

(Also see: )

January, 2003


  1. healthcare in the state of WI is the most expensive in the NATION! we have MORE drs. per capita because of the doctor friendly environment, i.e., LOWEST MALPRACTISE INSURANCE RATES and HIGHEST MEDICAL BILLING RATES, the pay the least and recieve the most,plus WI offers a ‘no fault’ enviornment where it is nearly impossible to sue a doctor or hospital. They flock to our state from abroad and the most sickening thing of all is that FOREIGN DOCTORS DO NOT HAVE TO PAY INCOME TAXES ON THE FORTUNES THAT WE PAY THEM FOR SEVEN YEARS!!!!!!!!!!!!!!!!!!!!!!!

    These profits are funeled into ‘for profit’ business entities in Illinois, so their taxpayers, who consequently don’t have the burden of the highest medical billing rates in the nation that St. joe’s takes every advantage of, reap the rewards of the profits they have made off of the overbudened Wi resident! it is sickening, i’d go to see a Doctor but i can’t afford it!

    (Note from Clyde Winter on the preceding comment: The two part health care crisis essay itself was carefully checked for factual errors before it was published in the Ozaukee News-Graphic, and before it was featured in the national Health Letter published by Public Citizen, and presented in the web site of the well-respected Physicians for a National Health Program. No challenges regarding the factual accuracy of those essays have been made following publication. However, COMMENTS on these articles have NOT been checked for factual accuracy. I present this comment here as it was submitted, but I caution readers that I do not vouch for the accuracy of assertions made in the comment.)

    Comment by kaila o — September 24, 2006 @ 8:16 am | Reply

  2. i love that!

    Comment by rachael — January 19, 2007 @ 10:41 am | Reply

  3. […] info, legalized bribery — clydewinter @ 8:49 am The solution to the problems I outlined in Part I that confront Americans regarding our medical care system is simple and proven. We need Universal […]

    Pingback by Winning less expensive, better quality Health Care for the U.S. (part 2) « hearts and minds — May 29, 2008 @ 8:08 am | Reply

  4. […] These attacks on the public option plan have clearly shown a major mistake was made […]

    Pingback by A Government Takeover of Health Care, with Higher Costs, and even Worse Care?? « hearts and minds — October 26, 2009 @ 1:34 pm | Reply

  5. […] the growing health care crisis we have today, the simple, obvious, solution is to (belatedly) strengthen and expand Medicare and extend it, with […]

    Pingback by The Solution to the Health Care Crisis is Staring Us In The Face « hearts and minds — March 9, 2010 @ 5:06 pm | Reply

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    Comment by Bernie — July 18, 2013 @ 9:44 am | Reply

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