What the Amish Can Teach You About Health Cares

With the shouting going on about America's healthcare crisis, many are probably finding it difficult to concentrate, not as understand the explanation for the issues confronting us. I find myself dismayed at the tone of the discussion (though I realize it---people are scared) along with bemused that anyone would presume themselves sufficiently qualified to understand how to best improve our healthcare system mainly because they've encountered it, when people who've spent entire careers studying it (and I don't mean politicians) aren't sure what direction to go themselves.

Albert Einstein is reputed to own said that when he had an hour or so to save lots of the planet he'd spend 55 minutes defining the situation and only 5 minutes solving it. Our healthcare system is far more complex than most who are offering solutions admit or recognize, and unless we focus nearly all of our efforts on defining its problems and thoroughly understanding their causes, any changes we make are simply likely to create them worse since they are better.

Though I've worked in the American healthcare system as a physician since 1992 and have seven year's worth of experience as an administrative director of primary care, I don't consider myself qualified to thoroughly evaluate the viability of most of the suggestions I've heard for improving our healthcare system. I actually do think, however, I will at the very least donate to the discussion by describing some of its troubles, taking reasonable guesses at their causes, and outlining some general principles that needs to be applied in attempting to solve them.

THE PROBLEM OF COST

No one disputes that healthcare spending in the U.S. has been rising dramatically. In line with the Centers for Medicare and Medicaid Services (CMS), healthcare spending is projected to attain $8,160 per person annually by the conclusion of 2009 set alongside the $356 per person annually it was in 1970. This increase occurred roughly 2.4% faster compared to increase in GDP over the exact same period. Though GDP varies from year-to-year and is therefore an imperfect method to assess a rise in healthcare costs when compared with other expenditures from one year to another location, we can still conclude from this data that over the last 40 years the percentage of our national income (personal, business, and governmental) we've allocated to healthcare has been rising.

Despite what most assume, this may or may not be bad. It all hangs on a few things: the reasons why spending on healthcare has been increasing relative to our GDP and just how much value we've been getting for every single dollar we spend.

WHY HAS HEALTH CARE BECOME SO COSTLY?

This is a harder question to answer than many would believe. The rise in the cost of healthcare (on average 8.1% annually from 1970 to 2009, calculated from the info above) has exceeded the rise in inflation (4.4% an average of over that same period), so we can't attribute the increased cost to inflation alone. Medical care expenditures are regarded as closely of a country's GDP (the wealthier the nation, the more it spends on health care), yet even in this the United States remains an outlier (figure 3).

Can it be as a result of spending on healthcare for individuals over age 75 (five times what we spend on people between the ages of 25 and 34)? In a phrase, no. Studies show this demographic trend explains only a small percentage of health expenditure growth.

Can it be as a result of monstrous profits the health insurance companies are raking in? Probably not. It's admittedly difficult to learn for several as not absolutely all insurance companies are publicly traded and therefore have balance sheets readily available for public review. But Aetna, among the largest publicly traded medical insurance companies in North America, reported a 2009 second quarter profit of $346.7 million, which, if projected out, predicts an annual profit of around $1.3 billion from the approximately 19 million people they insure. When we assume their profit margin is average for his or her industry (even if untrue, it's unlikely to be orders of magnitude different from the average), the total profit for several private medical insurance companies in America, which insured 202 million people (2nd bullet point) in 2007, would come to approximately $13 billion per year. Total healthcare expenditures in 2007 were $2.2 trillion (see Table 1, page 3), which yields a personal healthcare industry profit approximately 0.6% of total healthcare costs (though this analysis mixes data from different years, it could perhaps be permitted since the numbers aren't likely different by any order of magnitude).

Can it be as a result of healthcare fraud? Estimates of losses as a result of fraud range as high as 10% of most healthcare expenditures, but it's difficult to find hard data to back this up. Although some percentage of fraud most likely goes undetected, perhaps the simplest way to estimate how much money is lost as a result of fraud is by taking a look at just how much the government actually recovers. In 2006, this is $2.2 billion, only 0.1% of $2.1 trillion (see Table 1, page 3) as a whole healthcare expenditures for that year.

Can it be as a result of pharmaceutical costs? In 2006, total expenditures on prescription drugs was approximately $216 billion (see Table 2, page 4). Though this amounted to 10% of the $2.1 trillion (see Table 1, page 3) as a whole healthcare expenditures for that year and must therefore be looked at significant, it still remains only a small percentage of total healthcare costs.

Can it be from administrative costs? In 1999, total administrative costs were estimated to be $294 billion, the full 25% of the $1.2 trillion (Table 1) as a whole healthcare expenditures that year. This is a substantial percentage in 1999 and it's hard to assume it's shrunk to any significant degree since then.

How Did How to Health Cares Become the Best? Find Out.

First, let's get a little historical perspective on American health care. To do that, let's turn to the American civil war era. In that war, dated tactics and the carnage inflicted by modern weapons of the era combined to cause terrible results. The majority of the deaths on both sides of this war were not the result of actual combat but to what happened following a battlefield wound was inflicted. To begin with, evacuation of the wounded moved at a snail's pace in most instances causing severe delays in treatment of the wounded. Secondly, most wounds were subjected to wound related surgeries and amputations and this often led to massive infection. So you might survive a struggle wound only to die at the hands of medical care providers whose good intentioned interventions were often quite lethal. High death tolls can be ascribed to everyday sicknesses and diseases in an occasion when no antibiotics existed. Altogether something such as 600,000 deaths occurred from all causes, over 2% of the U.S. population during the time!

Let's skip to the first half the 20th century for many additional perspective and to create us around more contemporary times. After the civil war there were steady improvements in American medicine in the understanding and treatment of certain diseases, new surgical techniques and in physician education and training. But also for the absolute most part the best that doctors could offer their patients was a "wait and see" approach. Medicine could handle bone fractures and perform risky surgeries and the like (now increasingly practiced in sterile surgical environments) but medicines were not yet available to deal with serious illnesses. Many deaths remained the result of untreatable conditions such as for instance tuberculosis, pneumonia, scarlet fever and measles and/or related complications. Doctors were increasingly conscious of heart and vascular conditions, and cancer but they had next to nothing with which to take care of these conditions.

This very basic knowledge of American medical history helps us to understand that until quite recently (around the 1950's) we had almost no technologies with which to take care of serious or even minor ailments. Nothing to take care of you with ensures that visits to the doctor whenever were relegated to emergencies so because scenario costs were obviously minuscule. Another factor that has changed into a key driver of today's healthcare costs is that medical treatments that have been provided were paid for out-of-pocket. There is no medical insurance and certainly not medical insurance paid by somebody else as an employer. Costs were the responsibility of the in-patient and perhaps a few charities that among other activities supported charity hospitals for the poor and destitute.

What does healthcare insurance have regarding healthcare costs? Its effect on healthcare costs is enormous. When medical insurance for individuals and families emerged as a means for corporations to escape wage freezes and to attract and retain employees after World War II, almost overnight there is a good pool of money readily available for health care. Money, as a result of the accessibility to billions of dollars from medical insurance pools, encouraged an innovative America to increase medical research efforts. As more and more Americans became insured not just through private, employer sponsored medical insurance but through increased government funding that created Medicare, Medicaid and expanded veteran healthcare benefits, finding a cure for just about anything is becoming very lucrative. This really is also the principal reason for the vast variety of treatments we have available today. I do not wish to convey that this can be a bad thing. Think of the tens of countless lives which were saved, extended and made more productive as a result. But with a funding source grown to its current magnitude (hundreds of billions of dollars annually) upward pressure on healthcare costs are inevitable. Doctor's offer and the majority of us demand and get access to the most recent available healthcare technology, pharmaceuticals and surgical interventions. So there is more healthcare to pay our money on and until very recently the majority of us were insured and the expense were largely included in a third-party (government, employers). This is actually the "perfect storm" for higher and higher healthcare costs and by and large, the storm is intensifying.

At this point, let's turn to an integral question. Is the current trajectory of U.S. healthcare spending sustainable? Can America maintain its world competitiveness when 16%, heading for 20% of our gross national product is being allocated to healthcare? What're the other industrialized countries spending on healthcare and could it be even near to these numbers? Add politics and an election year and the complete issue gets badly muddled and misrepresented.