Health Care Fact, Not Fiction
This is a significantly updated and re-edited repost of an earlier document. It is somewhat detailed because it has to be. I endeavor to answer several questions and debunk some claims from entities which have heavily vested interests in the status quo.
The claim: “The NHS (UK National Health Service) costs half as much as the US health system, and cares for the whole population.”
Reality Check verdict: If you look at every penny spent on health by anyone in the country, then the UK spends about half as much, per capita, on health as the US does. But if you compare the amount spent on the NHS with the amount spent by the US government on public healthcare, the difference is smaller.
First thing to remember: If it does it at even ¾ the cost of the US it’s better by a lot!
President Trump has caused a stir by tweeting (what else?) his criticisms of the UK's universal healthcare, describing it as a system that is "going broke and not working". (And, if anyone would know about going broke…!!)
NHS England head, Simon Stevens responded that "Healthcare for everybody delivered at half the cost of the US healthcare system is something that people in this country are deeply and rightly committed to".
In the UK, healthcare is universal, while in the States there are 28 million people who are not covered by public or private insurance. Do these people just get left to die? Sometimes actually yes, but generally they are covered by Medicaid and far too frequently in extremis and at far greater cost when routine care might have prevented the crisis.
Understand this: The Emergency Medical Treatment and Active Labor Act (EMTALA) is an act of the United States Congress, passed in 1986 at the specific urging of, then President, Reagan as part of the Consolidated Omnibus Budget Reconciliation Act (COBRA). It requires hospital Emergency Departments that accept payments from Medicare to provide an appropriate medical screening examination (MSE) to anyone seeking treatment for a medical condition, regardless of citizenship, legal status, or ability to pay. In plainer terms, we (the US) provide emergency care for the uninsured, but it’s frequently far more expensive than reasonable preventive care would have it otherwise. The Ron Paul supporters chanting “Let ‘em die” were not only cruel and uncaring, but “ignorant” completed their trifecta
Second consideration: The US uninsured rate is rising again, and states who refused to expand Medicare are leading the field. Florida’s uninsured population, alone, has risen to almost 3 million. Overall, the total may be as high as 44 million uninsured. This increase is unusual in what Trump ballyhoos as a “great and wonderful economy,” and is especially troubling in the face of very low unemployment. (pre-Covid) This is not a “failure of the ACA” as some Republicans have ballyhooed, but a direct result of their efforts to weaken it.
Let’s take an objective look. Does the NHS really cost half as much per capita as the US system?
Looking at all healthcare spending, including treatment funded privately by individuals, the US spent 17.2% of its GDP on healthcare in 2016, compared with 9.7% in the UK, so the above statement is in the “half as much” ballpark by that metric.
In annual dollars per capita, that's $3722 on healthcare for every person in the UK and $9408 per person in the US. So, as a proportion of the value of the goods and services produced by all sectors of the economy, the UK spends a bit more than half what the US spends, and in spending per capita it's a bit less than half. In part I of this essay, my derived per-capita numbers, based on actual and valid average per person data are significantly smaller. A good portion of that is insurance profit and the fact that, from providers to hospitals to drug costs, the US system is based on profit, while the UK system is based on break even. Add to this, the fact that prescription drug costs in the US account for almost 20% of all healthcare spending, then look at the hugely inflated drug costs routinely incurred in hospital stays. By contrast, drug costs account for about 14% of NHS spending. One reason for this is the well-known discrepancy between US drug costs and the rest of the world. More on that later.
The difficulty is, when it comes to comparing healthcare in different countries, you're never exactly comparing “like for like.”
Almost all health care systems are a mixture of public and private - it's the ratio that varies. In the UK, the public health system can be accessed by all permanent residents, is mostly free at the point of use and is paid for through taxation. Americans are far more likely to rely on private (read “for profit”) insurance to fund their healthcare since accessing public healthcare is dependent on your income. The profit involved is one reason Americans spend more.
Unlike one common misconception, many European countries, meanwhile, have a social insurance system where insurance contributions are mandatory. This doesn't fall under general taxation but is not dissimilar from paying National Insurance in the UK (or Medicare in the US) and means everyone can access healthcare.
But even if we examine only public funds spent on health, the US government's spending on healthcare still outstrips UK government spending, both in terms of the proportion of its GDP (the way we normally measure the size of a country's economy) and in terms of how much it spends per person. Almost half of US health spending still (and read this as “already”) comes from public money including general taxation - although we’re the only country of the G7 to pay publicly for less than 50% of all healthcare that's provided. Read that as “pay more get less!!”
I have a friend who, not so long ago, when we were “discussing” UK single payer health care, asked, “Then why does everyone there still pay for private insurance?” This was simply a question born out of sincere ignorance flavored by far-right propaganda. The simple answer is, “They (90%) don’t.” Only about one in ten UK health care consumers pay for private insurance.
Why? Well to begin with, and misunderstood by almost all Americans, there is no separate UK health care tax. It is simply paid for by a portion of income tax. For a simple example: take a family of four with one earner making £50,000 annually. The total income tax would be about £7499 or a gross tax of 15% of gross income minus deductions on an equivalent income of $64,500. Remember, this is total tax, which includes National Health care for all four family members, no pre-existing exclusions, and the actual health care portion of that is about 20%. Barring some drug copays that’s it. No out of pocket spending otherwise. The top marginal rate in the UK is 40% on incomes above £50,000 up to £150,000 and 45% above that. This is still about half of US rates in the 1960s and 70s.
UK private insurance: In 2015, an estimated 10.5 percent of the U.K. population had private voluntary health insurance, with 3.94 million policies held at the beginning of 2015. A family of four in good health with employer-sponsored coverage and earning $100,000 per year spends about another 12% of their income on health care. (this of course is as compares to the same US family spending ….(wait for it!!) “The total costs for a typical family of four insured by the most common health plan offered by employers will average $28,166 this year, according to the annual Milliman Medical Index.”
According to UK insurer’s source, a typical Private family premium – covering two adults in their 40s and two children under 10 – can vary from $900 (equivalent) to around $2300 USD annually for a family of four. Compare that to the US average coverage cost of private insurance listed above. UK “private" health care insurance is priced far more like a “supplement” than a primary carrier. It is also important to note that UK private insurance does not cover all conditions.
Chronic conditions such as heart disease, diabetes, high blood pressure and some incurable cancers will often be excluded from a policy. (because they are covered without exclusion by the NHS) And yes, private insurance may get one that “new” hip a bit sooner that the average 4 month NHS wait (varies widely from place to place). Of course, I, in the US with top shelf health care insurance (Medicare Advantage and Tricare) waited over 3 months to get mine, anyway. However, for emergency services there is relatively little US/UK difference.
Re: Medicare costs: I mention this because some of the most vociferous critics of single payer (because of what they’ve been told, vice the reality) seem stunned when reminded that they are already on “socialized” medicine with Medicare, Some will immediately retort, “Oh hell no, I’m on Medicare Advantage.” Boy, do I have news for you later.
As mentioned in part I when discussing “average per capita costs;” Average premiums and deductibles nationwide for unsubsidized shoppers (read this as “those without employer provided plans and not on Medicare") for individual coverage averaged $440 per month while premiums for family plans averaged $1,168 per month ($14,000 plus, annually family of four; $5280 annually per individual. However, in the 54-65 age range, individual plan costs are in the $790 (monthly) or $9480 annually out of pocket with no subsidy (employee contribution, etc.) by 2018, the family insurance cost was closer to $20,000 and will continue to escalate. Remember this is Insurance only, and excludes deductibles, drug and provider co-pays, etc. The actual nationwide estimated cost for a family of four, as I stated earlier, is in the $28,000 range, yep, more than 25% of income for the “average family.” Not to piss on your shoes, or anything, but the real (as of 2016) “average US family of four income was $59,039, so jack that percentage up to as much as 50%. Hurts, don’t it?
And now: So, what about “Medicare for all?”
Although “experts”, most of whom set out to discourage single payer systems, cite figures like $10,000 per person to fund single payer “Medicare for all,” actual statistical analysis, broken down by age group, shows that only one population sector – age 65 + actually costs that much, while the average annual healthcare cost per person, adjusted for portion of the population, is a much smaller, at $4299 per individual. Read it again: the $10,000 “annual cost” cited is more than twice as much as the real number. The real “rub” here is that the highest cost sector (65+) is already on single payer coverage – Medicare. Single payer, delivered on demand, rather than being paid for whether needed or not (health insurance) is a money saver. If the average American worker had employer provided premiums deducted as Health care coverage and sent directly to the single payer provider (Call it Medicare or whatever) they would, in most cases, spend less annually for the same care, especially considering they already are out of paycheck for family coverage if appropriate, and Medicare deductions. Remember, Medical Insurance and auto insurance have common factors, prime among which is, "Even if you don't use it, you still pay for it,"
Medicare “Advantage” or Medicare?
I place the word “advantage” in quotes for a reason – that being that there is plenty of justifiable cause to question the “advantage,” if any. First consider this question: “Why would private insurers create and push Medicare Advantage (MA) plans unless they were profitable?" They do because they are. Period. One reason is that Medicare advantage plan providers inflate probable costs to ensure profit and then negotiate payments to end providers (doctors) and drug companies down. Richard Kronick, former director of the Agency for Healthcare Research and Quality (AHRQ), in a February 2017 Health Affairs blog, warned that because the MA payment system over-rewards plans for the medical risks their enrollees face, “unless there is a further policy response, Medicare will substantially overpay MA plans over the coming decade—likely to the tune of hundreds of billions of dollars.” Make you feel better?
About 30 percent of Medicare beneficiaries choose MA plans. Their market share is forecast to become a rising percentage of a growth market, given the sustained surge of Americans turning 65 (“Boomers”) who no longer have employer coverage and are required by law to be covered by Medicare. It’s a sweet deal for insurers—they sell a legally required product that more and more people must have. Uncle Sam lays out most of the bucks while insurers reap as much money as they can under Medicare’s burdensome (but ultimately profitable) rules.
One common, and blatant, fallacy proliferated by those who profit from private health care is that “Since Medicare doesn’t pay doctors or hospitals (in most cases) what they charge for a procedure”, that Medicare For All would “harm” them. News flash. A) Doctors and hospitals routinely elevate stated charges to offset (check what was “billed” for Tylenol while in for a hip replacement) and B) MAs don’t pay the nominal charge either, so no harm, no foul, on that score
MA’s have some advantages, mostly to their own benefit, and some of which, to gain your attention, they advertise and “pass on” to you” as if from their own largesse. There are also disadvantages which vary from MA plan to plan. One such is a limited group of physicians to choose from with HMO plans. Another might be having to be referred from one provider to another, possibly not of the client’s choice. Another, and more serious, is that due to the regional nature of many MA plans it is possible to be in another part of the country, have an issue requiring a specialist and not be covered by insurance. This is not the case with Medicare anywhere in the US.
On the flip side, Basic Medicare doesn’t cover drugs and, while this coverage is not legally required, it is a practical necessity for most of us “seniors.” Such coverage is offered under Part D of Medicare, but recall – at full price, by law. While the Part D user won’t pay full price, taxpayer dollars will be used to make up the ”full price” balance. Many MA plans, by contrast, are offered with a Part D-compliant drug plan built in, as well as the clout to bargain lower drug costs, making them a more convenient way to shop for Medicare in the eyes of many consumers.
Many MA plans can afford to offer coverage superior to basic Medicare, in large measure because most MA plans use their own network of hospitals and doctors, while basic Medicare is a fee-for-service program that lets beneficiaries use whichever providers they wish, so long as the provider is licensed by the agency, which nearly all are.
By building a provider network within which it has leverage to bargain for favorable pricing, MA insurers can reduce costs. Read this as: “We, the MA, provide you, MDs, a stream of patients and you charge us less. So much for the “Doctors will be hurt” rumor.
What many Americans seem to erroneously believe about MAs is that, in a “No premium, just Give us Medicare part B” Advantage plan, somehow, magically, that $134.50 per month is you “paying for” the MA. Reality is, as usual, revelatory here. Medicare accepts “bids” from MA providers for each group of potential users. It might be by county, metropolitan statistical area, etc. These bids are the amount per person an MA provider will “take” and are adjusted by patient risk (age, pre-existing conditions, etc.). One such March 2018 report to Congress gives the example of an 84-year-old male in a certain county who’s not eligible for Medicaid. A capitated payment to a MA provider for his care would be $5,707. reports. For an otherwise equivalent man with diabetes the heightened risk score would turn that into $6,765. And what about one with vascular disease as well? The plan would get $9,796 for that gentleman’s care. Nationwide, the rate per person Medicare provides the MA Plan provider is in the $800 monthly range. In Sumter County Florida, where I reside, the monthly amount remitted by Medicare to the MA provider per beneficiary is $915. That means that “my” monthly Part B payment of about $144 is added to, by Medicare, to the tune of $915, so the MA plan provider actually gets $1,058 monthly! Yes, that’s per person, per month, or $12,696 annually. That also means that even if we believe the demonstrably bogus $10,000 per month figure Medicare Advantage plans make an average profit of several thousand per year per individual insured.
Consider it thus: If I am on regular Medicare, I use only the services I need and pay a rather small monthly deduction from my Social Security. Yes, I will pay copays, but I would on Medicare Advantage as well. In an average year, the average client will have doctor visits and probably some prescription drugs. As far as Medicare, I pay only for what I use. Medicare Advantage is paid much more for every patient regardless of use. ($915 monthly plus my "part B" payment. for me)
In the past 8 months, Emily and I have each had one "Zoom" Dr. visit, and one "in person," both routine quarterly visits. The rate per visit is about $100. The lab work for the second, another couple of hundred (my high estimate). Over that period, the MA provider was paid $8464! On the two of us, they made 1410% profit. Not bad, huh? See why Providers line up at the trough? MA providers make significant profit from these generous estimates. Should healthcare be “for profit?” What Medicare pays MAs for seniors is more than double the real spending figures for the entire spectrum of the population!
This, by the way, is one source for the inflated “$10,000 per person for Medicare for all” totally bullshit canard being leveled at Liz Warren and others.
Admin costs: Proliferation of providers added to the multiple steps between service rendered and fees paid, adds up to absurdly high non- medical costs. This can best be shown by the “no co-pay” we (Emily and I) experienced before our family practice providers’ corporate geniuses decided that they would only accept MA plans. Since we really liked our family physician, we changed to a MA plan. Suddenly we had office visit co-pays! Why? Because with Medicare and Tricare, both government programs, with access to the same data bases, the co-pay billing was automatically sent to Tricare and we never saw a bill. As an MA provider the practice now was faced with billing the MA, and separately billing Tricare, which they initially declined to do since it “increased their admin workload. We had a “one-way conversation” and fixed the issue (for us) but multiply that by 25,000 military retirees in our metropolitan statistical area alone, many of whom just "do as they're told", and you get the picture. The same issue exists, at least potentially, for any and all supplement plans.
A recent article in The Guardian was critical of the NHS for their 14% admin costs (of all NHS spending 14% was spent on management and administration. Overall US Healthcare administrative costs, however, are in the 33% range, at well over $1 trillion annually. Meanwhile, Medicare
overhead was 2.2 percent and private insurance overhead costs ran 12.4 percent in
2017. Private insurers spend about 6 times as much on admin as Medicare; private insurers' salaries and profit drive this closer to the above 33% figure.
The next time the subject of single payer arises, this should provide some ammunition with which to begin a sane and rational discussion.
