2 Charts Show How Close The U.S. Is To Healthcare Collapse

Tyler Durden's picture

Submitted by Patrick Watson of Mauldin Economics

The first step to solving a problem is admitting you have one. Some of us are in denial, so here’s a hard fact: We Americans spend far more money on health care than any other developed nation, but we’re no healthier.

We’re even less healthy overall.

The chart below shows the bad news. The horizontal axis is years of life expectancy. The vertical axis is per capita healthcare spending. Ideally, you want to be in the lower right quadrant. That means your population has a relatively high life expectancy and relatively low healthcare spending.

France, Japan, Spain, Chile, and a bunch of others are clustered in that area. Their money buys more health than ours does.

The United States is in the upper right, which shows that our per-person healthcare spending is significantly higher than that of the other OECD countries. Switzerland is a distant second place. Our extra spending doesn’t help us live longer. We actually die a little earlier than our peers in Japan and most of Europe.

You can quibble over details in this data, but the broad facts are inescapable. We spend too much on healthcare relative to the health it buys us. As long as that is the case, no reform plan will work.

Did Obamacare cause this? No. It goes way back. Here’s another graphic showing the changes over time.

You can see that the United States began diverging from other developed countries back in the 1980s. The gap has only grown wider since then.

Stranger yet, we spend all this extra money yet still leave millions of low-income citizens with little or no access to healthcare. Kaiser Family Foundation says some 2.5 million working Americans make too much to qualify for Medicaid, but not enough to receive Obamacare tax credits.

Brace Yourself for the Death Spiral

I showed you that data to say this: Simply returning to pre-Obamacare conditions won’t solve the problem. Obamacare exists because the system wasn’t working and we needed something better.

Before 2014, people with preexisting conditions were simply out of luck. They couldn’t buy health insurance at any price, unless their employers offered group health, which many didn’t. This was hurting both those people and the economy at large.

Obamacare, for all its flaws, at least tried to solve the problem. It helped some people but hurt others—and now it’s reached its limits. Insurance works only if the risk pool includes enough low-spending people to offset those with expensive claims. That’s Obamacare’s core problem. The legal mandate to buy insurance hasn’t brought enough young and healthy people into the pool.

This is the “death spiral” you hear about. People with serious illnesses will buy insurance no matter what it costs. This drives up claim ratios, which then drives premiums yet higher and discourages young and healthy people from buying.

That can’t work indefinitely.

 

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
MillionDollarButter's picture

People don't understand that we could have Medicare for all for the low low price of a 1.6 Trillion dollar deficit.

JRobby's picture

We, of course, love sarcasm.

hedgeless_horseman's picture

 

2 Charts Show How Close The U.S. Is To Healthcare Collapse...

 ...Brace Yourself for the Death Spiral

Wondering how, exactly, to brace yourself?  

Come to the First ZH Symposium and Live Fight Club in beautiful Marfa, Tx, this June, and talk about how, exactly, one can brace for the death spiral by disintermediating the health insurers from your healthcare, and get some knowledge and tools to help you do it, among many other timely and interesting topics.

Healthcare: hedgeless_horseman,  Negotiating directly with physicians and hospitals

 

http://www.zerohedge.com/news/2017-01-10/time-has-come-first-zerohedge-s...

http://www.zerohedge.com/news/2017-02-12/why-zh-fight-club-matters-scarc...

http://www.zerohedge.com/news/2017-03-21/marfa-2017-project-mayhem-homew...

http://www.zerohedge.com/news/2017-03-04/its-crime-americans-freely-sell...

 

Or, feel free to wait, do nothing but complain, and rely on Big Government to fix things for you.

nuubee's picture

People don't understand that Medicare is the main source of the problem. You can't keep old people alive with government funding and expect costs for younger people to not skyrocket. You can't have a market with two prices for the same exact fucking thing. Government should either pay for all medical expenses or none of it. America was suffering under a half-socialist-system, and everyone seems to think it's the free-market's fault.

Joe Davola's picture

Outta the way:

https://www.youtube.com/watch?v=oftjwYmlfoA

And the link toward the bottom of the article should read: 'it helped some, but fisted everyone else - ...'

FireBrander's picture

Looking at that chart, if we went with a hybrid of Spain, Italy and the Japanese system, we'd be better off with a system that is proven to work.

Ghordius's picture

oh, they don't really differ much from each other, so you don't even need an effort to hybridize them

the Japanese, if memory does not betray me, was copied from the German, which was copied from the French, while Italians and Spaniards copied the French directly. I might be wrong on the sequences, but there was a lot of... copying involved. as usual

everybody copies successful systems. except those who don't...

Decay is Constant's picture

The answer you always hear is to decrease payments to the "providers".

 

Who are those providers?  Well, the docs, nurses, technologists, technicians, therapists, janitors, cafeteria workers, etc.

 

Have you ever heard them say that we need to cut salaries of administrators, medical CEO's, insurance companies, pharmaceutical companies, device companies?

 

Typical, those who are doing the hands on work get their salaries/reimbursement cut.  Those who manage, see a nice bonus as a result of those cuts.

NiggaPleeze's picture

You hit the nail on the head:  the problem is labor costs, particularly, the US vision that every doctor should be a millionare with mansions, luxury cars, vacation homes and investment properties, and alternative methods of treatment are unacceptable.  This situation is driven by the monopolist doctor's union, the American Medical Association, the anti-free market bane of US health care.

If you take the ratio of doctor salsries (which impacts insurance companies, medical device providers, pharmaceutical companies, hospitals, etc., since they all must hire doctors at prevailing wages) in the US to doctor salaries in those other countries, you will end up pretty much with the ratio of total health care costs, since doctor salaries are at least 80% of the total.

In Germany, for example, which has an excellent health care system, doctors are unionzied and make a union salary of about $55,000 per year.  In the US, doctors are unionized (though the AMA, which is a union in all but name, but does all the things unions do, most notably, create massive artificial entries to barriers to prevent competition amongst doctors) and doctors make about $220,000 (some specialities, vastly more).  By cutting US doctor pay to German rates, health care costs would fall about 75%, and match those in Germany.

dgc0101's picture

Not quite. You really need to do an apple-to-apple comparison, where physicians in private practice are compared from both Germany and the US.

For example, see: https://gehaltsreporter.de/gehaelter-von-a-bis-z/aerzte/Arzt.html

A German general practitioner grosses $199,606

A German pediatrician grosses $206,011

A German opthmalogist grosses $236,966

A German internist grosses $423,763

A German surgeon grosses $215,617

A German radiologist grosses $429,100

Of course, union physicians also do have the range of salaries you indicated. Those salaries depend on seniority and where in Germany you practice. But they also are working anywhere from 40-60 hrs per week, meaning that their nominal salaries are even lower.

dgc0101's picture

Not quite. You really need to do an apple-to-apple comparison, where physicians in private practice are compared from both Germany and the US.

For example, see: https://gehaltsreporter.de/gehaelter-von-a-bis-z/aerzte/Arzt.html

A German general practitioner grosses $199,606

A German pediatrician grosses $206,011

A German opthmalogist grosses $236,966

A German internist grosses $423,763

A German surgeon grosses $215,617

A German radiologist grosses $429,100

Of course, union physicians also do have the range of salaries you indicated. Those salaries depend on seniority and where in Germany you practice. But they also are working anywhere from 40-60 hrs per week, meaning that their nominal salaries are even lower.

Let it Go's picture

Few Americans were fans of the recently deceased Cuban El Presidente Fidel Castro but he did leave one positive legacy and that is Cuba's quality healthcare system. The poor country of Cuba has managed to guarantee access to care for all segments of the population and obtain results similar to those of the most developed nations.

The truth is being a doctor is not as fun as you might think and it does not guarantee you respect and instant riches. The article below delves into ways we can fix our broken healthcare system and avoid a huge shortage of physicians in coming years.

 http://brucewilds.blogspot.com/2017/01/healthcare-answers-available-in-cuba.html

Forbes's picture

>"France, Japan, Spain, Chile, and a bunch of others are clustered in that area. Their money buys more health than ours does."

 

>"Have you ever heard them say that we need to cut salaries of..." doctors and administrators?

I guarantee that US doctors receive wages that are a multiple of those in Europe. Administrators? Don't even start...

FringeImaginigs's picture

But what they all copied was a single payer government sponsored and controlled health care system. Those pinko commie socialist marxist lenninst commie bastard. Why don't they just get with the free market programme and then they can spend as much as US.

Nemontel's picture

US Healthcare expenditure would be far lower if we hadn't imported tens of millions of third worlders now forming our underclass.

http://www.truthjustice.net/politics/the-us-would-be-running-budget-surp...

Jack's Raging Bile Duct's picture

When I was in healthcare, I put the figure of state involvment to be about 75%. When the ACA came into effect, I changed that figure to 90%. There is nothing remotely free market about healthcare in the USA.

hedgeless_horseman's picture

 

There is nothing remotely free market about healthcare in the USA.

You are essentially correct.

However, with knowledge and tools, you can change that.

I will show exactly how this June in Marfa.

We can and should negotiate the care and repair of our car, home, and teeth.  The same holds true for our body.

Bwana's picture

Being what is considered an old person there are some parts of Obamacare that are downright wrong. In four years I will hit the magical age of 75. At that point in my life I will be denied any and all treatment for cancer. That denial is so deeply wrong that even if I opted to pay the entire bill I will be denied treatment in the United States due to my age. Even though I still work and pay more taxes than most people have income at 75 years old I am considered a "USELESS EATER". I not only cannot get treatment even if I pay for it, thanks to the big opiate abuse problem I won't be able to get pain meds if I get cancer. That really bothers me because I live on the West Coast and where I live has received a great deal of radioactive particles from Fukushima.

Decay is Constant's picture

I feel your pain, though not as much.  I'm a decade behind you.  I've worked (and continue to work) in healthcare since I was 16 and have seen changes come and go.  I've urged all three of my children to NOT enter healthcare.  Fortunately, all of them listened to me for once.

 

With respect to Fukushima, cheer up.  The little amount you get from there might actually be beneficial to you.  See this.  I've done a fair amount of research on this topic and the findings go way back to the early 1900's.  Further, the west coast has slightly more background radiation than the rest of the country (but nowhere near as high as some places in the world).  You may actually be in the "sweet spot".

 

At 75, some might consider you a "useless eater".  Others see a person of maturity and experience.  Old age and experience wins out over youth and enthusiasm every single time.

peippe's picture

bwana, i have relatives heading toward 80 who receive full-blast chemo treatments, (up to three rounds, after that the body just can't take it, plus 

there is the 'Red Devil' chemo treatment, you can only take so much of that over the duration of your life) Yes, some of these & the MRIs run to 

$700-800 out of pocket, but at the Golden Time of life, it seems fate gives some retirees a cruel new job, fighting to live. Life is not kind. 

TheRealDrBill's picture

"Government should either pay for all medical expenses or none of it. "

Several of the countries in that chart have mixed systems.

dot_bust's picture

I like the idea of ditching the middleman -- that is, the insurer.

ObamaCare simply gave us the following:

"Narrator: It's called a changeover. The movie goes on, and nobody in the audience has any idea."
Fight Club, the Movie 

Stuck on Zero's picture

95% of the money goes to administration, profits, CEO salaries, and bureaucracy.  How can you call that healthcare?

Rubicon727's picture

Specific criminals:

BIG INSURANCE

BIG PHARMA

Powerful medical assocations

Take a look at how much these giants spend on D.C./state lobbying efforts. It's monstrous!

idea_hamster's picture

"Did Obamacare cause this? No."

Blasphemy! You'll smoke a turd in hell for that!

Richard Chesler's picture

Corrupt POS Obozocare certainly didn't help.

 

nmewn's picture

Personally I'm sick & fucking tired of talking about "health care". Obama and the dimz "fixed it" didn't they?

So we're done.

panhead20's picture

A great bargain, where do I sign up. The US spend $3.35 trillion on healthcare in 2016.

JRobby's picture

The fact that many, many have not accessed the healthcare system for years, shows the costs are unsustainable.

No Time for Fishing's picture

Maybe the problem shown in the chart has nothing to do with money. The American poplulation used to look genetically very similiar to those countries looking better than the US in the chart. The US has rapidly been moving to a population with genetics from Africa and South America since the 70's; might have something to do with it?

JRobby's picture

Since the many, many that are not accessing the healthcare system are healthy, take care of themselves and earn money, they will "tax" them through the ACA.

I am Jobe's picture

Americans are the healthiest folks. Look at the fast food joints opening up everyday. The lines are long and Moms and Dads can lose some weight. Drive Thru for Funeral Homes soon . 

JRobby's picture

Without a drive through, they are excluding 30% of their customer base that cant walk 30 ft across the parking lot.

FireBrander's picture

I was at the post office recently....400lb lady parks her car right in front of the door...walks maybe 35' and is breathing heavily leaning on a counter...then walks another 20' to mail her package and is completely out of breath...how the hell can a person live like that?

Years back, I was in a government office, my presence required a landwhale to get up from her chair and walk 20' to help me...again, breathing hard from the journey.

 

Dr. Engali's picture

Don't bother me with facts. Obama fixed the healthcare problem damn it!

A. Boaty's picture

Shrub fixed health care too. Remeber Medicare part D?

TheABaum's picture

Never really understood why Bush was so reviled by the left. They Bush machine is statist and globalist-in other words, good lefties. 

No Time for Fishing's picture

And Trump broke it the minute he was innaugaurated. Shame.

Iconoclast421's picture

Overlay a chart of corn syrup and PUFA consumption.

JRobby's picture

"Come on Guys! What? Do you need a refresher course? It's all corn syrup now!

2ndamendment's picture

Much of this is lifestyle. Obesity, over consumption of drugs (illicit and legal), and bad lifestyle choices all play a part in this as well. 

GunnerySgtHartman's picture

And these are the same people who are demanding that the rest of us pay for their health care.

Personal responsibility has to come into play at some point, but these folks will never have it.

Ghordius's picture

let me guess: that "personal responsibility"... involves that someone has to die in the gutters, doesn't it?

as a reminder, there are countries around on this planet where if they find you bleeding in the gutters, first they fix you, in a hospital, and later, when you are well, they might or might not ask you if you have any insurance and who is going to pay

there is even a Parable around that theme: that of the Good Samaritan. a guy called Jesus told that story. good thing that the Roman occupation force crucified that dangerous radical, then he was really getting on the nerves of the local established hierarchy, and this kind of nonsense has a tendency to spread

JRobby's picture

It's not so much the dying in the gutter as the number of people that walk by without so much as a concern or a thought of responsibility to notify "someone" about it.

When the chamber of commerce starts screaming about "unsightliness" then it seems that something happens.

Ghordius's picture

I have to admit you completely lost me, there. my main point is further below, btw

the only thing I can add is that "those countries" I was mentioning, well, there are nine examples of countries in that graph that just do it better... and more cheaply

except for Switzerland, they all are "single payer" "universal care" "British NHS"-like affairs. in all of them, there is no talk of this "personal responsibility" thing which seems to obsess some Americans. they all have systems that work better (not well, just better then the US), and screw that "it's socialist!". you seem to have so damn many exceptional reasons... which escape me. but also the whole rest of the world

JRobby's picture

That is a compliment. Thank you.