The Failure of the American Insurance System

Everyone has an insurance story. They were refused coverage or denied care, or someone they know was, they got a surprise bill in the thousands, and they had to fight through reams of paperwork and repeated submissions of the same thing to different places. During my partner’s illness, I was astounded at the constant barrage of forms, approvals and requirements. If you weren’t sick, you would be just keeping up with it all. Often, the person taking care of the sick person dies first from the stress.

The murder of the CEO of United Health Care has unleashed the fury of Americans, a viral song on the internet, and even an admission from United HealthCare Group’s CEO Andrew Witty that the system does not “work as well as it should.” He admitted no one would design a system like this – it just evolved. United Health Care denies a third of all claims, the highest in the industry. They and others use algorithms to make decisions based on profit, not delivering promised care to the insured person. In one example, a Congressional hearing found that United Health Care denied critical nursing care to stroke patients using their algorithm.

United Health Group is the fourth largest company in the U.S. by revenue. Let that sink in. Your illness creates the fourth largest revenue for a private company. It is to their benefit for you to be sick. That is why our health system is focused on illness, not wellness. In 2023, they had $371 billion in total revenue and kept $22 billion in profits, which came to $25 per share. They only gave their shareholders $7.29 per share, so they are screwing them too.

Michael Moore chronicled this issue in his Oscar-nominated movie “Sicko” about the profit, not people-driven health care system. If you haven’t seen it, do. The U.S. has the most expensive health care system, spending thousands of dollars more per person than comparable countries, yet our life expectancy ranks in the 60s among 195 countries. One-third of health care dollars go for administration, i.e., to insurance. The Congressional Budget Office found that today of $100 spent on health care, $16 goes to private insurance companies and $16 to hospitals to cover administration. $68 goes toward medical care. The CBO estimated that under a single-payer system, the administration would be $1.60, hospitals would need $11.80 and $86.60 would go to medical care.

The U.S. is the only industrialized country without national health insurance.

When I lived in Russia, I had to go to the eye doctor. I was very pleased to see she had the exact same equipment my eye doctor in the U.S. had and used it the same way. It cost me nothing. When I was in Hungary, I had an Afib incident, and my assistant insisted I go to the hospital, which I didn’t want to do. Again, I was pleased to see they had all the same equipment we do and were just as adept at using it. The doctor apologized, saying I’m sorry we don’t have as fancy a hospital as you do in the U.S. I corrected his misinformation and told him we used exactly the same equipment. I didn’t tell him the difference was our hospitals had brightly painted walls with prints of nature and fake flowers, cozy bathrooms, and comfortable chairs to wait on while the hospital in Hungary was very plain and uniform gray and green. But looks are not “care.” The “care” was just as good and maybe better because the doctor cared.

In Algeria, I broke my wrist, and they asked me if I wanted to fly home to have it set. I said absolutely not. I couldn’t even imagine what that would cost not to mention the mess of travel with a broken wrist. I didn’t know they were going to set it without any pain killers, or I might have decided differently! My assistant was with me every minute because I couldn’t speak Arabic or French and the doctor asked if he could get the class of doctors and nurses in to watch. I said sure. I was laying on the bed with my assistant on my left side. The doctor was manipulating my right arm and wrist and then suddenly snapped it forcefully into place. I came off the bed in pain!

He said I’m done but kept wobbling my arm. I said, “I wonder why I don’t believe you.” He did it again but not quite so violently. That was it. He had a student put on the cast and gave my assistant the prescription for pain killers. We went downstairs to check out. I had brought all my cash as I figured I would have to pay. The clerk apologized to me for charging me but said, “I have to charge you because you are not a citizen.”

I said, “I understand. I haven’t paid taxes here, so I have no right to free service.” Taxes are the price we pay for living in a civilized society. That’s why I brought all my money hoping I would have enough.

He looked up at me with an apologetic smile, gave me the amount, and said, “I hope it’s okay. Can you handle it?”

It was $7.28. I said, “Yes I can handle it,” and thought about how it would have been 100 times that in the States. At the pharmacy, the pain pills were another $4.00. I could handle that too. None of those countries are considered high income countries.

When I returned, the wrist was still stiff, so I went to physical therapy and when they x-rayed it the doctor here said whoever set it did a great job. He was stunned when I told him how the doctor did it.

A high school friend of mine was returning from a vacation in France when some illness hit her. Air France took her off the plane she was already on and sent her to the hospital. Several days later when she left, they had rebooked her reservation, and all was ready to go. She went to check out with fear in her heart wondering how many thousands this was going to cost her that she didn’t have. She worried that her credit card limits weren’t high enough. They checked her out. No charge. The clerk said, “This isn’t the United States. We are civilized here.”

In spite of all the costs, Americans are sicker than other Organization for Economic Cooperation and Development (OECD) residents. U.S. residents have higher rates of obesity, diabetes, and heart disease, and a larger share of the population with multiple chronic conditions. And we are the fattest. Recent research has explored the extent to which the U.S. spends relatively less on prevention and public health and more on medical care, and the extent to which this leads to poorer population health – but more money for private companies.

The political rallying cry is “universal health care.” Universal health care is defined as universal access to high quality services that do not put people at risk of financial harm. Single payer systems are one method but only two countries in the world have true single payer systems: Canada and Taiwan.

Some countries have what are called insurance mandates – requirements that everyone must purchase insurance from private or public insurers with minimum coverage, subsidies for low-income people but no for-profit companies. You’ll recognize that ObamaCare or ACA has some facets of that structure. Countries with this system include Germany, Japan, the Netherlands and Switzerland. Of the insurance mandate countries, health care spending in Germany in 2014 was 11.2% of GDP and Switzerland was 11% of GDP.

The hybrid system combines single payer with private mandates. The government provides a standard of care and citizens have the option to supplement with private insurance. Countries with that system are Australia, France, Singapore, Sweden, and the UK as well as U.S. traditional Medicare in which those of us on Medicare then also buy a supplement.

Of the hybrid systems, in the UK private insurance is available to pay for more rapid access and elective hospital procedures. 10% of the population has private health insurance. UK cost was 9.9% of GDP. Singapore has a Medisave (mandatory savings); MediShield (automatic enrollment in catastrophic coverage); and Medifund to supplement the poor. Private, for-profit insurance can be purchased. Unlike here, government requires private insurers to keep costs near those of the public. Total spending was 4.7% of GDP.

The Canadian system is single payer with private doctors allowed to bill only for what is not covered under the system. Most Canadians have supplemental coverage provided by an employer or a union that covers specific things. In 2016, total health care cost was 11% of GDP.

Taiwan has a system structured on U.S. Medicare but like Canada, private services can cover only things the public service does not cover. Hospitals are privately run but are non-profit by law. In 2014, total health cost was 6.2% of GDP.

The U.S. system is the only country that allows people to be uninsured and where employment determines your health care. As of 2015, 90.9% of Americans had health insurance, with 55.7% receiving coverage through their employer, 16.3% through direct purchase, 16.3% through Medicare, 19.6% through Medicaid, and 4.7% through the military. The ACA is an insurance mandate structure, and the VA is socialized medicine with the government owning the equipment and services.

70% of U.S. hospitals are non-profit, 15% are for-profit, and 15% are government-owned. In the U.S. and nowhere else, medical bills are the major cause of or at least a significant contributor to bankruptcy. In 2015, U.S. total health care spending was 17.8% of GDP much higher than any other country.

Allegedly patients in the UK and Canada face longer wait times for care, particularly “elective” care, than those in the U.S. However, that is only if you can afford the care in the first place, and second if you can find a doctor or get an appointment at all. One person told a story of being put on a waiting list for months for mental health care – obviously of zero value. A friend had a heart issue and was told the earliest appointment was in 2 months – no help there. Another couldn’t walk across the room without trouble breathing and was told to come in three weeks. Three weeks without breathing doesn’t work. The result is the more expensive emergency room.

Wait times in the U.S. keep going up. In 2022, a survey by AMN Healthcare found that the average wait time for a new patient appointment with a physician was 26 days in 15 major cities. This is an increase of 5 days since 2004 and 2 days since 2017. “According to that report, which was covered by Becker’s Hospital Review, the average wait for the third next available appointment was 38 days versus an unofficial industry benchmark of 14 days. (According to the authors, the third next available appointment is a common metric for patient access that reduces the effect of late cancellations and other anomalies.)” Waits ranged from 70 days in Boston to 27 days in Houston. Longer waits cause more serious health problems especially for chronic conditions, delays in screenings lead to later diagnosis and more serious treatment needs, flare ups of a disease occur, not to mention psychological stress and continued pain for the waiting patient.

One of the drivers for the high cost in the U.S. is that providers are better paid. Another driver is that administrative costs for insurance are 30%. Prescription drug prices are 2-3 times more than other OECD countries. Yet the U.S. government passed a law to prohibit Medicare, the largest purchaser of drugs, from negotiating with drug companies for lower prices. That law has now been partially repealed. Then they made it illegal for Americans to get cheaper drugs from Canada or Mexico by mail. In both AZ and WI, buses are chartered to take elders for in person drug shopping in those countries. Clearly the government believes in the free market only when it comes to business profits not competition.

In the U.S. we spend nearly twice as much as other wealthy countries, yet we do not use more services. For example, the Peterson-Kaiser Health System Tracker notes that the United States has shorter hospital stays, fewer angioplasty surgeries, and more knee replacements than comparable countries, yet the prices for each are higher in the United States. In some situations, people save money by flying to another country and staying even a month for the surgery and rehab and it’s still cheaper – it’s called surgery shopping. The tracker suggests the reason is consolidation of hospitals and health care conglomerates resulting in lack of competition. Often health care conglomerates are owned not by doctors but by venture (vulture) capitalists who strip the value from them and then dump them. My heart doctor who helped start a new company because they were sick to death of the insurance companies telling them how to do medicine had to leave it years later when it was bought by a venture capitalist and they started cutting services immediately, telling him how long he could talk to a patient, and demanding more patients per hour. He left there for another humane office and I hope that lasts.

The tracker also cites the inefficiencies and administrative waste from the ridiculous complexity of the system. The U.S. spends over $1,000 per person on administrative costs — almost five times more than the average of other wealthy countries and more than it spends on long-term healthcare ($973).

However, despite higher healthcare spending, America’s health outcomes are worse than those in other developed countries.We are the worst in life expectancy, infant mortality, unmanaged diabetes, and safety during childbirth. We are 9^th of 13 in unmanaged asthma and 11^th of 13 in heart attack mortality. https://www.pgpf.org/article/how-does-the-us-healthcare-system-compare-to-other-countries/

The plethora of drug ads on television, a horrible idea to begin with, has driven up the price of drugs because 1) companies must pay for that advertising; 2) consumers demand brand-name drugs rather than cheaper generics; and 3) consumers demand drugs they don’t need dreaming they will solve all their problems as they pretend walk in the mythical woods.

While many Americans cringe at the idea of a government bureaucrat checking up on you if you use too much care that is precisely what the insurance company is doing to deny you coverage. We used to make snide remarks about 12-year-olds making medical decisions for insurance company denials, but now it’s not even a person making those decisions but an algorithm.

After the Civil War the U.S. passed laws requiring physical education in public schools to prepare future generations for war. In WWI, more than one-third of those called up were physically unfit for combat. More legislation was passed to improve the health of our citizens. Since then, our corporate food system has added more and more sugar, and our culture has eliminated more and more movement. Today we recognize that a poor health care system with high costs negatively impacts the long-term fiscal and economic well-being of the country. The problem is that the CEOs of these companies do not care about the citizens or the country – only how to line their own pockets.

Unfortunately, the incoming administration wants to eliminate Medicare, Medicaid, and ACA to force Americans to either buy for-profit insurance coverage or have none at all further turning our country into a third-world country. This is a fight for all of us – those retired and counting on Medicare, those having children and counting on maternity care, those low income who have chronic diseases caused by our abysmal American diet. We already have a hybrid system i.e. traditional Medicare. United Health owns Medicare Advantage so if you are in that, get out. One of the rallying cries has been “Medicare for All.” That would be the simplest and fastest solution since it’s already in place – for now.