More Inconvenient Truth

     Along the lines of government's responsibility to act in the public interest, let's be frank regarding some areas where a capitalist model has frankly, failed. Health care is one such area. The reason, again, just the opinion of this individual, is that there are some things such as electricity, health care, clean water, safe foods and medicines, which every human in the nation needs to some extent. In areas of discretionary spending (cars, travel, vacations, entertainment, manufactured products, etc. etc.) capitalism generally delivers the best product at the lowest price, absent monopolies, cartels, and other things generally not allowed in this country, and for good reason. So how has capitalism worked in, say the health care and related industries?

     First of all the provision of basic human needs shouldn't be called an "industry." Again, just my opinion. The proof of the health care industry's failure in America can be subjective according to one's philosophy of our responsibility to our citizens. The inconvenient truth here is that some of the strongest support for unregulated capitalism (ergo astronomically high health care costs) in this nation comes from those most hurt by it -the poor, many of whom loudly profess their Christianity in public as did the Pharisees whom Jesus castigated for it. This continued phenomenon of persons voting against their own interests in the name of faith mystifies me, but Far Right politicians sussed it out decades ago.

   I have written at length here and elsewhere regarding the pitiful cost/benefit ratio in American medicine. To summarize briefly, No industrialized nation on earth, with the exception of Norway, spends even close to the Governmental per capita cost of health care in America, and that even includes those of us who have no health care at all, of course. Add personal costs to that, and Norway covers every single citizen for 1/4 LESS per capita than the US which has just under 40 million uninsured citizens. Until the last two years, this was higher, but the ACA has worked far better that predicted by those who want it to fail because of the dollars spent lobbying them by big Pharma, big insurance and the American Hospital Association. Norwegians don't get "free health care"; there are premiums and co-pays, but every single citizen participates. Private hospitals exist, but the national plan covers everybody.

The difference? Single payer. The administrative costs associated the current US system are horrendous, a monument to the commercialization of what should be a national initiative. And before you get all "yeah but they have to wait, .....yada yada yada" reflect on the fact that the US has the lowest health care consumer satisfaction of all the 35 economically developed European/Atlantic nations (grouped as the OECD) except Portugal and Mexico, and possibly Turkey. As a percentage of GDP, the US spends 17.6% on healthcare. No other nation spends more than 12%, most spend under 10%! Almost all have higher satisfaction among their citizens regarding services. 

     Don't believe me? Read this:  "A 2014 study by the private American foundation The Commonwealth Fund, found that although the U.S. health care system is the most expensive in the world, it ranks last on most dimensions of performance when compared with Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland and the United Kingdom. The study found that the United States failed to achieve better outcomes than other countries, and is last or near last in terms of access, efficiency and equity. Study date came from international surveys of patients and primary care physicians, as well as information on health care outcomes from The Commonwealth Fund, the World Health Organization, and the Organization for Economic Cooperation and Development. 

     The U.S. stands 50th in the world with a life expectancy of 78.49. The CIA World Factbook ranked the United States 174th worst (out of 222) – meaning 48th best – in the world for infant mortality rate (5.98/1,000 live births). 

A study found that between 1997 and 2003, preventable deaths declined more slowly in the United States than in 18 other industrialized nations. A 2008 study found that 101,000 people per year die in the U.S. that would not if the health care system were as effective as that of France, Japan, or Australia 

     It would be easy (and wrong) to blame all of this absolutely lousy (a technical Economics term) on the Healthcare Insurance industry. As it turns out, profit in the industry runs a relatively consistent 3.7% annually. The costs that limit this profit, however are lobbying and advertising an absurdly bloated high billing and administrative costs, all limited and minimal in single payer systems. One quick example: Canada administers its entire national health system with about the same number of employees as Blue Cross uses in Massachusetts, alone!     

   This shouldn't be interpreted as suggesting that no one in our for-profit health care industry is making money. “Pharmaceutical companies, as a group, have a profit margin of 16.4 percent, seventh highest of the 215 industries that Morningstar tracks. and roughly eight times the profitability of the average US Corporation”

     All too frequently,  drug-makers say that they couldn’t possibly afford to lower prices on drugs—or that if they did, they wouldn’t be able to do research. The fact is that if drug-makers, and their shareholders, could be satisfied with margins of, say 8% or 9% they could, in fact, slice prices. And since roughly 16 percent of the $2.6 trillion that we spend on healthcare goes to the pharmaceutical industry, we are talking about significant savings. ( a savings of hundreds of billions of dollars in Medicare/Medicaid costs alone annually!  Just as an aside, all these costs might be lower if these industries spen less on paid lobbying efforts. (but they don't, as their lobbying cost are huge. The leader of all lobbying organizations in the world is big Pharma at 3.1 billion annually, second is Insurance at 2.1 billion annually, and Hospitals at 1.3 billion are seventh!)

     Industry spokespersons  usually say that drugs account for “just” 10% to 11% of the nation’s total health care bill. But that’s because they are only looking at the dollars spent, retail, buying prescription drugs in a pharmacy. Add in the cost of drugs administered in a hospital, a nursing home, or in a doctor’s office –plus the cost of the many medical devices that drug-makers now sell—you find that their share of the $2.6 trillion pie rises to 16%. And if anything, those devices—ranging from stents to artificial knees—are even more over-priced than the drugs. Remember, if these drugs had to command the US price to insure profits, why would they sell elsewhere for so much less? At a loss? I think not! 

       Prescription-drug makers are not the only companies turning a nice profit on our health care, other industries with profit margins well above the 2.2 percent median  for all U.S. industries include:  healthcare information (9.4 percent), home healthcare firms (8.5 percent), medical labs (8.2 percent), and generic drug-makers (6.5 percent). Remember, in an economy where average industrial profits run around 2-3 %, health care and related endeavors are far higher, and drugs lead the way, as the following clearly indicates: Here is a recent year's compilation of data from Capital IQ, a division of Standard & Poor’s,  showing net profit margins over the past 12 months for a number of well-known companies.  It includes the three largest firms in each of five different sectors: biotechnology, drug manufacturers, healthcare plans, healthcare services, and medical equipment. Some of these numbers should evoke outrage from  Americans who are making sacrifices to pay for healthcare or can't afford it at all.  

•    Amgen (biotech): Profit margin, 30.6% !!

•    Gilead Sciences (biotech): 37.6 %

•    Celgene Corp. (biotech): 11.9 %

•    Johnson & Johnson (drugs : 20.8 %

•    Pfizer (drugs): 16.3 %

•    GlaxoSmithKline (drugs) : 17.4 %

•    Unitedhealth Group (insurance): 4.1 %

•    WellPoint (insurance): 4 %

•    Aetna (insurance): 3.9 %

•    Express Scripts (health services): 3.7 %

•    Quest Diagnostics (health services): 8.7% 

•    Medtronic (med. equipment): 14.9 %

•    Baxter International (med.equipment): 17.5%  

•    Covidien (med. equipment): 12.3% 

     It is worthy of note that the least profitable of the drug/biotech corporations listed above earned a minimum of 5 times the average US corporate return profit margin, and the leading biotech firms, about 15 times as much. Still wonder why US healthcare cost are so high?  

     Finally, if you are tempted to think that it doesn't really affect you, think again. About 65% of all US healthcare spending is Federal, either Medicare or Medicaid, so every single taxpayer in America should be concerned with bloated admin costs and inflated drug corporation costs.    

    In summary, while we tout US healthcare as "the best," and certainly technologically that may be true, the actuality is that many other nations do it better, at significantly lower governmental and private costs, and with higher consumer satisfaction and better outcomes!      

     So, no, sometimes capitalism isn't the best way, in those instances where profit should be trumped by needs and the greater good.