High Healthcare Costs–Well, What Do You Expect?

Industry Insights from Paul Meade, M. Sc, MPH

We all know that the cost of providing healthcare has been steadily rising throughout the world over the last few decades. While there are many nations that have very little healthcare services, there are those with an over-abundance of such care delivery. People everywhere have begun to see healthcare as an entitlement, rather than a privilege. And why is this so?

After World War II, many governments quickly realized that a healthy workforce is a productive workforce, and as such, began to adopt various forms of subsidized healthcare to offer to their citizens. Most countries introduced a form of universal healthcare provided by a single payer, the government. These central governments for the most part decided what products and services they would offer to their people, based on what they could afford with their budgets. For some countries, this was very little, and only the privileged few, while other countries offered everyone some form of healthcare coverage. The United States was different. They rejected the notion of a government-organized healthcare system and opted for the privatization of healthcare. After all, the U.S. was founded as a free nation that broke the shackles of the British monarch. And besides, the medical profession did not want to be constrained by the tyranny of a controlling government to dictate terms of medical practice. The result of this private healthcare system was a fragmented, carved-out structure that led to too many intermediary players all taking their share of the profits. In an attempt to re-gain control of the runaway costs of healthcare, managed care was created to “manage” costs. The shift from a fee-for-service to a more controlled care management approach took several decades to accomplish its intended goals. But what are some of the unintended consequences of this fragmented healthcare delivery system in the U.S.?

Many Americans have a sense of entitlement for healthcare. But this entitlement goes beyond the mere expectation that they will have access to healthcare when they need it, but that they will receive the very best healthcare in the world, regardless of the cost. Sure, there are 48 million uninsured people living in America, but there are about 260 million who are insured and they expect the best. Whether or not people in the United States get the best healthcare in the world, they sure pay for it. And when they don’t get it, they bring a lawsuit against their providers. This has the unintended consequence of elevating malpractice insurance, which in turns creates a greater demand for higher salaries and fees. The demand for the best diagnostic tests, best surgical equipment, and best interventions also drives up the cost of healthcare. Expect the best; pay the most. It’s a simple equation. But are we really getting the best?

Typical measures of the health of a nation are infant mortality, life expectancy, health status, prevalence of diseases, and quality of life. One would expect that with the “best healthcare in the world” Americans would be at the top of these health parameters. But Americans are not at the top. In fact, they are far from it. In a ranking of healthcare systems published by the WHO, the U.S. ranked 37th (last published in 2000). The U.S. also ranked 72nd on health performance, and 24th on life expectancy. In a recent Time article,  it was stated that in a study conducted among seven industrialized nations (US, UK, Canada, Germany, Netherlands, New Zealand, and Australia), the U.S. ranked last. To be sure, one can argue that the parameters selected by the WHO to measure health performance are biased to reward uniformity of healthcare delivery by a centralized government, but there are some measures that are irrefutable.

Do other people in other countries have lower expectations for healthcare delivery? I really doubt it. Maybe their expectations are more realistic as to what their healthcare system can and cannot do for them.  There is nothing wrong with having high expectations, but when those expectations come with high costs and less than optimal quality, are they really worth it? Of course, the ideal formula is high quality at low costs. Shouldn’t that be the goal? Well, what do you expect?

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