Cheers! To Your Health . . .

During a recent holiday I was part of several toasts, many of which began or ended with the title of this article. For most of us over the age of forty or more our health and well-being take on increasing significance as we age. No longer so young that we realistically think of ourselves as invincible, we begin to see and appreciate the significance of taking better care of our body and mind. There is a connection between the two which I discuss in my book Late Call – Health Tennis for the Older Younger at Heart. More profound for many, though, is the state of health care access in the United States.

For those of us who are working and many who are not but are painfully too young for Medicare, we are aware that the employer/employee-based structure of healthcare in America needs a check-up. The Great Recession of 2007-2009 was a health care access pivot point of sorts. While a significant number of Baby Boom, Gen X and Y have to some degree financially recovered, many have not. For those employed full-time one’s employer likely picks up a significant though commonly diminishing portion of health insurance costs. Same for one half of an employee’s mandatory social security contribution. These are benefits often overlooked by an employee when expressing compensation.

For simplicity let’s look at a round number of $100K annual compensation. However, the math applies to most levels of a full-time pay scale. Bear in mind that as one goes down the pay scale the percentage becomes disproportional to the base. Above and beyond this annual ‘salary’ (it may be commission income, a combination thereof, bonus, etc.) the employer contributes $7.5K toward your social security obligation. Additionally, if the employee is one of a family of four the cost of health insurance, in this case about $20K annually, is largely, but not solely covered by one’s employer. Too, this cost amount is increasing every year significantly faster than the rate of inflation. Ergo, both parties are paying more. However, the percentage is shifting and not in the favor of the employee. That said, given this example the employee’s true annual compensation is about $127.5K.

Once the employee becomes unemployed due to down-sizing, reorganization, lay-off, etc., the worker is responsible for these employer-paid benefits (now COBRA [Congressional Office Budget Reconciliation Act] for healthcare) until it expires and the full 15% (self-employment tax [was social security]) on any income derived from one’s labor. Simply, the employee now needs to earn $135.K in real dollars just to equal her previous compensation. This does not include any employer reimbursed business expenses. The now self-employee is truly on her own. It’s a scary scenario faced by many in the course of a working career. Stress does impact one’s health.

Historically, the United States has had a challenging time delivering healthcare access in the manner of other developed democracies; that is full coverage for all the country’s citizens.

(1)Decisions that were made as early as World War I, we are now seeing the consequences today. The United States turns its face away from the idea of government involvement in provision of health insurance. Starting in World War I, we developed a very robust system of private insurance, but that was only for people with high-end jobs. So, union workers negotiated and got more coverage in the 1950s. Executives started getting private insurance as part of their employment package. So, insurance became more available, but at a high cost that left a lot of people out, and we’re still trying to figure out how to get the lost ones into the fold.

Here’s a link to an excellent radio interview on this historical perspective: https://www.wbur.org/hereandnow/2017/03/27/health-care-system-origins

As is the case in the current political climate healthcare access for all has taken on an entirely political dimension. While it can be shown that the intention behind The Affordable Care Act – also known as Obamacare – is inclusionary, the test of time has proven that the model as conceived and implemented isn’t sustainable for many Americans.

(2)Escalating premiums and deductibles, lack of insurance options, failing co-ops, the cost of expanded Medicare at the state level, etc. are just a few cause and effect issues. Exclusive of the legislation’s purview is the lack of primary care physicians and by extension increased wait times.

There’s little doubt that our current system is complex and costly. Arguably, the outcomes associated with this system are dubious. (3)In 2016, the U.S. spent 17.8 percent of its gross domestic product (GDP) on healthcare. Other countries’ spending ranged from a low of 9.6 percent of GDP in Australia to a high of 12.4 percent of GDP in Switzerland.

(4) The U.S. spends about twice what other high-income nations do on health care but has the lowest life expectancy and the highest infant mortality rates, a new study suggests. More doctor visits and hospital stays aren’t the problem. Americans use roughly the same amount of health services as people in other affluent nations, the study found. Instead, health spending may be higher in the U.S. because prices are steeper for drugs, medical devices, physician and nurse salaries and administrative costs to process medical claims, researchers report in JAMA.

Most of us paying through insurance for prescription medication see on the receipt the difference in the price between what we pay and what the company charges for the drug. Those without insurance feel the full impact of this pricing difference. Bear in mind that big PhRMA is a significant lobby recently (5)spending in excess of $25-million for their share of legislative voice. It’s been only recently that the executive branch of the government has had the political will to call-out the industry for the cost of drugs in the U.S. relative to other countries. Where this effort goes remains to be seen.

As the population ages the role of Medicare and Medicaid figure prominently. However, as a result of legislation passed during the George W. Bush administration these federal programs were not allowed to negotiate with drug companies. This provision as part of a Medicare overhaul bill was passed almost clandestinely in the overnight hours. (6) An editorial in the Washington Post summarized this chaotic conclusion to the debate on H.R. 1. For sheer political drama, it would be hard to beat the past few days on Capitol Hill. Between the normally apolitical hours of 3 and 6 on Saturday morning, the House voted, by the tiniest of margins, to pass a hugely controversial Medicare bill. 

Here’s breakdown of where health insurance coverage pays its bills . . .

As a veteran I’ve received care at both an active duty military hospital and a VA hospital. Both are operated by different organizations in the federal government – the Department of Defense and the Department of Veteran’s Affairs, respectively. I found the care I received excellent in both cases. Of course, with any large organization, public or private, there will be exceptions. My ageing parent, while in generally good health, is on Medicare. So, too, and ironically are my fellow free market, small government advocate acquaintances 65 years and older.

The framework of these existing systems can provide a blueprint for health care access by all U.S. citizens. Not to be meant as a rhetorical question, but is there an obvious difference to an average American between sending one’s money to a private for-profit insurer or sending it to the Federal government through higher taxes?

(7)It can be shown that putting all Americans on one insurer would create a large-enough pool to force private health-care providers to charge less, while eliminating private insurers’ spending on marketing and administrative overhead that do not improve health outcomes.

(8)On its current trajectory, [sic.] the United States is projected to spend $7.65 trillion annually on health care by 2031, according to a Mercatus study. That number would drop to $7.35 trillion if (Sanders’s) plan were implemented, the study found. Over time, that adds up to a net savings of about $2.1 trillion.

(9)“It’s a surprisingly positive view of Medicare for All from a very conservative research institute,” Larry Levitt, a health-care expert at the Kaiser Family Foundation, said of the Mercatus report. “According to the analysis, you could provide universal coverage with no patient cost-sharing and actually spend less on health care than we would under the status quo.”

It’s the prediction of this writer that momentum will build; not just by an ageing population but also by a financially challenged Millennial and Gen Z group. These smart, digitally adept Americans will seek action and accountability by elected officials. They remain social activists in a world far more dynamic than at any other time in American history. I look forward to the next chapter on health care access for all U.S. citizens being written. The future is now. Cheers! To your health . . .

Please feel free to enjoy the relevant music via this link while you read this blog post:

• (1) WBUR, Here and Now, The Origins of a Complex American Healthcare System
• (2) The Daily Wire, 11 Biggest Problems with Obamacare
• (3) Reuters, Health News, March 2018, Lisa Rapaport, S. health spending twice other countries’ with worse results
• (4) Ibid
• (5) Pharmaceutical Technology, January 2018, Ellen Daniel, US pharma lobbying spend surged to $25.m in 2017
• (6)U.S. Library of Medicine, National Institute of Health, Millbank Quarterly, Jone 2004
• (7)The Washington Post, Business, July 2018, Jeff Stein
• (8) Ibid
• (9) Ibid

Illustrations

Cover: HealhWorksCollective.com

(a) ScienceToProfits blog