When We Focus on Profit, People Lose

Photo of Morgan T. Sammons, PhD, ABPP, who wrote this article.

In last month’s column I noted that Big Health Care is one of the most profitable industries in America. And it is. As I write this, the stock value of UnitedHealthcare, the largest US insurer, is now approaching $300 per share, and others in the industry that accounts for approximately one fifth of our GDP are also doing well. This is great news for boardroom executives and shareholders. It is less positive for policy makers and those concerned about the health of our citizenry. Let’s dig a little deeper.

The Commonwealth Fund has published an analysis that is worthy of a deep dive. At the risk of repeating what we already know, in broad strokes there is in the US a tremendous disconnect between cost of health care, quality of services provided, and outcomes. Data in this column, unless otherwise cited, come from this report.

Author Notes: Data are from the Commonwealth report, but the interpretations are mine. The OECD (Organization for Economic Cooperation and Development) supplies the definitions and rankings of ‘wealthy’ countries used in the report.

In the current atmosphere of heightened political bickering, we are likely to hear a number of outrageously false claims being put forth by proponents of, say, the end of the Affordable Care Act on one hand or Universal Care on the other. Terms like “Obamacare” or “Universal Health Care” may be convenient sound bites, but no serious student of healthcare reform should pay the slightest amount of attention to them. Indeed, both parties do the American people a disservice by trying to politicize health care. There is one basic political question, and one only: Should health care be considered a right, and therefore the responsibility of the government, or a privilege, and therefore the responsibility of the individual? Most nations, particularly other wealthy nations, consider health care a right. Some form of government-sponsored health care is almost universal. In America we have avoided this fundamental question and our collective inability to answer it has led to a diminution of our nation’s standing, a tremendous misallocation of resources, and waste on a scale that would shake the soul of any reasonable person.

Myth: Universal Health Care exists and is a legitimate policy goal.

Fact: There is no such thing as Universal Health Care. Most people equate this, quite inaccurately, with single payer health care. Both Universal Health Care and Single-Payer Care are unicorns. Every wealthy country has a combination of government funding, insurance-based contributions, and out-of-pocket spending. The US differs both in overall magnitude and the relative burden placed on the individual. In the US, healthcare costs amount to more than $10,000 annually per citizen. Of this, approximately $5,000 is government funded: Medicare, Medicaid, and the like. $4,000 comes from enrollment in mostly for-profit health insurance plans, and $1,100 represents out-of-pocket expenses. In no country other than Switzerland ($2,100) are out-of-pocket expenses higher; most countries have out-of-pocket expenditures that are 1/3 to ½ of ours. In only two countries (Germany and Norway) is the proportion of direct government funding higher than the US. So this is an unpleasant surprise for those politicians concerned about a drift towards “socialism.” We already trounce countries mocked as being “socialist” in terms of the amount of government spending per person. It is true, however, that most other governments contribute a higher proportion of healthcare funding than does the US government, principally because no other countries are as reliant on for-profit health insurance plans as we are. Not counting out-of-pocket expenses, for every dollar the government spends on health care, Americans contribute 81 cents . The average ratio of private insurance to government spending in OECD countries is 7%. Our closest competitor, Canada, spends 21%, and Australia is next with 19%.

So it is firmly established that the US government spends far more on health care than so-called ‘socialist’ economies, and the individual citizen’s contribution in terms of insurance premiums and out-of-pocket expenses is the highest anywhere. Let’s now look at what we’re getting.

Myth: Our healthcare costs are so high because we have so many doctors compared to other wealthy countries.

Fact: Nothing could be further from the truth. There are 2.6 practicing physicians per capita in the US, compared with 4.8 for Norway, 4.3 for Switzerland, and an average of 3.5 across OECD nations. It is true that we pay our physicians comparatively more than other countries. But the shortage of physicians is a major factor in the number of chronic illnesses and poor health outcomes Americans must deal with. In mental health, the shortage of psychiatrists has been a persistent and well-documented problem for decades. Yet psychiatry’s guild interests have prevailed, and psychologists are unable in all but five states to help by prescribing psychotropic medications.

Myth: Healthcare costs are so high in America because we overuse health care services.

Fact: This is the ‘moral hazard’ argument, the essence of which is that people will overuse healthcare services if they can access them for free or at low cost. Even though some politicians continue to use this as justification to restrict funding for health care, this argument has been repeatedly debunked. The decision to access health care simply does not follow rules of supply and demand. Doctors are not widgets and patients are not Cheez Whiz. Americans tend to be relatively low users of healthcare services (four physician visits yearly, as compared to an OECD average of 6.8, with average length of stay for acute inpatient care of 5.5 days compared to 6.4 days). We do spend a great deal of money on expensive diagnostic tests like MRIs, many unnecessary, and that is an undeniable driver of health costs. We also replace more hips than most other countries (15.6 compared to OECD average 10.5), suggesting an overreliance on surgical interventions, an under reliance on preventive measures, and an ongoing problem with obesity in America.

The US boasts the highest mortality from conditions amenable to health care (translate: treatable conditions that go untreated) with more hospitalizations related to diabetes and hypertension than any country except Germany. Hands down, Americans are more obese than people in any wealthy country: 40% vs. an OECD average of 21%. More American adults have multiple chronic medical conditions (28%) than in other countries (OECD average 17.5%). Our life expectancy is lower than in other wealthy countries (78.6 years vs. 80.7 years). And sorrowfully, the scourge of suicide affects us more (13.9/100,000) than in other countries (average 11.5/100,000).

Not all is bleak. For all that we spend, we are doing a couple of things right. It will perhaps not surprise you that these positive trends are mostly related to preventive efforts. In large part due to women’s activism, the US aggressively screens for breast cancer, and we have the highest five-year survival rate for breast cancer of any OECD country (90% vs. an average of 85%). We do not do so well, however, where cervical cancer is concerned – 63% vs. OECD average 66% (this is another area where politicians have entered the preventive fray, making a controversy out of inoculation against human papilloma virus, a major cause of cervical cancer.) We have among the highest ratios of flu vaccinations (68% vs. 44%). Although we still have the highest mortality rates due to preventable conditions of any nation, we have over the past few decades lowered this from 149/100,000 to 112/100,000, still far higher than the next country in line (Germany at 86/100,000). Much of this decline is due to anti-smoking campaigns and more effective treatment for some infectious diseases like HIV.

On the other hand, we contribute less to prevention than any other wealthy country, and by neglecting prevention we ignore the effects of social determinants of health. I have addressed this issue repeatedly in the past, but its importance is lost in the political debates surrounding health care. This is not a trivial matter, as noted above the most direct and most tragic manifestation of our neglect is that the suicide rate in the US is very significantly higher than in any other wealthy country. And the data are increasingly clear that one single social determinant can be tied not only to poorer mental health outcomes but poorer physical health outcomes: Adverse Childhood Experiences (ACEs). Lippard and Nemeroff published an influential report in the American Journal of Psychiatry that underscores the role of ACE’s in determining future health and behavioral health outcomes. As psychologists we need to educate our patients. As citizens we must push legislators to address these inequities. Is it a coincidence that those states with the highest reported levels of childhood corporal punishment also report the highest rates of substance abuse?

There are glimmers of hope on the horizon. As Horwitz and colleagues note in the current issue of Health Affairs, it is in the financial interests of Accountable Care Organizations to invest in housing, education, employment, schooling and food security programs, and over the past several years they have spent several billion dollars in doing so. Thus, a free-market-based system (capitated health care) can indeed incentivize social responsibility on the part of ACOs. Those leading the political debates in these fractious times would do well to take heed. Psychologist-citizens can play a role in educating policy makers, legislators and voters and can steer the debate away from sound bites and back to essential facts. This is an obligation we should not shirk.

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