The Medical Minute: Medical care costs -- Are Americans getting their money's worth?

January 17, 2007

By John Messmer
Penn State Family and Community Medicine
Penn State Milton S. Hershey Medical Center
Penn State College of Medicine

Health care costs a lot in the United States -- somewhere around $6,000 for every person annually. That's what Americans as a nation paid in 2004 for everyone's medical care when it's all added together -- a total of just under $2 trillion in government and non-government spending. Compare that to the $15 billion NASA spent that year or the roughly $800 billion (depending on how it's counted) that the Department of Defense used.

What does all that money buy? About a third is for hospital-based services, and a fifth is for services provided by physicians and related health-care providers. Approximately one-tenth is for dental care, and another tenth buys pharmaceuticals. The remainder is divided among administration, home health, public health, investment and other costs. It's about 16 percent of the gross national product.

Approximately 42 million Americans have no health insurance. The $2 trillion we spend includes the cost of care for these uninsured who enter the health-care system with advanced medical problems. About a third of the $2 trillion is paid by the federal government (Americans' tax money); a third by private insurance companies (premiums paid by employers or by employees); and of the remainder, state and local government and out-of-pocket payments comprise the largest shares.

Are Americans getting their money's worth? It depends on how worth is measured and whether one is a benefactor of the system. Is longevity a measure of value? If so, life expectancy in the United States is 24th in a World Health Organization report. How about infant mortality rates? The United States is 14th among industrialized countries. In responsiveness, however, the United States ranks No. 1. That means someone needing a test or procedure will get it soonest in the United States. This latter point may be one of the reasons why health care is costing Americans so much.

Consider this: Someone experiencing chest pain in the middle of the night in most parts of the country can call 911 and have a team of EMTs arrive to provide life support while being transported to a hospital. Even mid-sized hospitals in smaller cities can perform advanced cardiac diagnosis and treatment. Everyone expects that kind of care, even though medical studies are questioning whether all the coronary procedures we do are necessary. Concern over lawsuits prevents physicians from suggesting otherwise.

If the person is insured, the bills will be paid. If not, the hospital and doctors absorb the cost, but eventually it is passed on to others, directly or indirectly.

That person still has coronary artery disease, even after a cardiac procedure, and more money will be spent on monitoring the disease and treating recurrences. For the most part, it will be paid for by Americans' insurance premiums or taxes. Yet, almost nothing is paid to prevent that person from ever developing heart disease in the first place. And nothing at all is done to give the patient any incentive to quit smoking, exercise, lose weight and use the prescribed medications that can keep the coronary arteries clean. The same applies to other advanced technologies -- everyone wants all the high-tech studies and treatments as long as they are covered by insurance, whether they are needed them or not. Americans are free to do whatever they want, because they are apparently still rich enough to pay for it -- for now.

Pundits and politicians point to various "causes" of the problem. But the nation's health-care delivery is a complex system with so many things out of balance, just about every part must be addressed in order to fix it, and everyone involved will be required to sacrifice something.

About one in four Americans smokes. People say it's their right to smoke. True, it is legal, but it is the greatest contributor to heart and vascular problems, lung disease and cancer. Smoking is responsible for about a quarter of the nation's health-care costs. Smokers want to smoke because of a tobacco addiction. The only enjoyment obtained is the relief of nicotine withdrawal. Every effort is needed to get smokers to quit and to stop people from starting to smoke.

Exercise is the next most important issue for prevention. People tell their physicians their jobs are too demanding to take time to exercise, but employees who do not exercise regularly cost employers more money in lost time and health-care costs. Every employer should insist their employees take time to exercise regularly and pay them to do it. Fitness for elementary school students should be a priority equal to academic subjects.

Once everyone is exercising, it will be easier to deal with the obesity epidemic. Obesity contributes to diabetes, high cholesterol and high blood pressure -- three major causes of illness and premature death. Learning to eat properly for life, exercising regularly and eliminating tobacco use could cut health-care bills in half even before addressing all the other contributors. But with the savings, there would be money to increase access for the poor, improve prenatal care, provide medication coverage and address the issues of care of our elderly.

If the causes of poor health are not addressed, costs will not be cut without reducing services and access to care. After improving administrative efficiency, reducing the cost of drugs and cutting reimbursements to doctors and hospitals, the diseases will still be there unless they are prevented. The problem cannot be fixed by legislators, physicians or health care consultants -- individuals alone have the power to do it. Do they have the will?

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Last Updated March 20, 2009