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Guest Post: America's Hidden 8% Tax: Sickcare

Tyler Durden's picture


Submitted by Charles Hugh Smith from Of Two Minds

America's Hidden 8% Tax: Sickcare  

The bloated, inefficient sickcare ("healthcare") system in the U.S. is in effect an unofficial tax on the entire economy.

You may think only European countries have VAT (value-added taxes), but America has one, too--it's just hidden in the sprawling "healthcare" system, i.e. sickcare. A value-added tax (VAT) is a broad-based consumption tax designed to raise tax revenues from across the entire economy. Since it's in everything you buy, you can't escape paying it unless you go to another country without a VAT.

While the U.S. doesn't have an official VAT, it has an unofficial one that we all end up paying for indirectly: the 8% difference between what we pay for our bloated, fraud-ridden healthcare system and what our global competitors pay for their universal-care healthcare systems.

The U.S. spends 17% of its GDP (gross domestic product) on healthcare, while other advanced democracies spend between 6% and 9%. At a minimum, the U.S. pays a staggering 8% more of its $15 trillion GDP for a system that arguably leaves Americans less healthy than competing systems. (That is certainly the case in terms of life expectancy, natal care, body mass index, etc.)

We need to stipulate a few things right off the bat. One is that the inadequacies of U.S. sickcare are systemic; the system is so debilitating that it is an impediment to those individuals and caregivers working within the system.

Secondly, we need to dispense with the falsehood that our advanced-democracy competitors (Japan, Germany, France, Australia, etc.) have completely "socialized" healthcare systems. On the contrary, as this chart shows, private insurance and spending are integral parts of their healthcare. The difference is in the relative proportion of total spending that is private.

To take France as an example: individuals with the means to do so buy supplementary private insurance that offers coverage above and beyond what the state system provides.

Note that Japan provides care for its populace for a mere 36% of what the U.S. spends per person. Germany and France spend about half of what the U.S. spends per person.

The incredible disparity between what America spends and what other nations spend is easily seen in this chart:

Meanwhile, the U.S. outpaces the world in another category: body mass index (BMI), a broad measure of obesity. Yes, a few body-builders manage to have high BMIs based on bulked-up muscles, but for 99.9% of humanity a high BMI indicates a spectrum of obesity which is highly correlated with a range of chronic diseases.

American sickcare is sick for a number of reasons. One is that it is highly profitable to manage chronic lifestyle diseases such as heart disease and diabetes, while it is essentially profitless to encourage healthy lifestyles based on diet, fitness and positive mental health practices.

As a result, sickcare has zero interest (other than lip-service) in fostering (or emphasizing) prevention or in providing an integrated system of health which starts with what we do and eat every day.

This chart describes a few of the causal factors:

It's also highly profitable to turn people into couch-potato media addicts who are also hooked on sugary, fatty, salty snacks, fast food and packaged food. Convincing people a handful of pills is all they need to restore health is also highly profitable.

The U.S. has seemingly intractable lifestyle-related health issues that sickcare simply isn't dealing with effectively; it can even be argued that sickcare is actively making the problems worse in a multitude of structural ways. 86% of Workers Are Obese or Have Other Health Issue Just 1 in 7 U.S. workers is of normal weight without a chronic health problem.

If you don't think chronic ill-health and the 8% sickcare VAT is a threat to national security, please consider this slideshow map of the U.S. which depicts the obesity epidemic on a state-by-state basis:

Centers for Disease Control, U.S. Obesity Trends 1985-2007

Here's the key question: what else could we do with the $1 trillion that we currently squander every year on fraud, paper-pushing, duplicate/useless tests, highly addicitive prescription drugs, etc.? That $1 trillion is the 8% sickcare VAT. That's enough to reduce the Federal deficit to a manageable level.

The second question is: is there a more effective way to spend the other $1.5 trillion we spend on healthcare? Answer: obviously yes. We could start by understanding health is integrated with lifestyle, diet, fitness and our environment, and that relying on quasi-monopolistic cartels and Federal agencies to provide "solutions" is what got us in this quagmire in the first place.

Our national security and fiscal viability both depend on radically transforming sickcare before it brings down the nation.

I have covered these issues in depth for years:

Healthcare "Reform": the State and Plutocracy Stripmine the Middle Class (Again) (November 9, 2009)

The Simulacra of Change, the Propaganda of Hope (January 20, 2010)

Skyrocketing Health Care Costs Hamper U.S. Competitiveness

Improving Americans' Health, With or Without Health Care Reform

Is Fee-for-Service What Ails America's Health Care System?

Can Health Care Reform Possibly Control Costs? (April 10, 2011)


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Thu, 05/10/2012 - 13:34 | 2413744 JustObserving
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How about the not-so-hidden 15% or so Military Industrial Complex Tax since we spend about 50% of the world's spending on defense.  That is why we can afford $400 a gallon gas in Afghanistan.

Many get very rich for all our excess taxes on health and the military, and millions pay with their lives. Praise the lord and pass the ammunition and dollars.

Refuse to pay your health tax by refusing to fall sick.  80 million Americans have prediabetes.  You can cut your diabetes risk in half very easily:

Thu, 05/10/2012 - 17:38 | 2414778 gwiss
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To understand the US healthcare system, you have to understand the concept of iron triangles that is endemic to our political and governmental system.  An iron triangle is a relationship in which the regulatory, consumption, and funding entities for a particular activity all cooperate to enhance and solidify their ability to bilk the system for above average profits while preventing other market participants for being able to enter the field and through competition not only share in the profits but also in the process reduce costs.  The usual example given is our military industrial complex, in which members of congress ally with interest groups to steer contracts to congressional districts in exchange for votes, in the process coopting the bureaucratic bidding process to ensure that contracts are steered to the specific vendors who are part of the interest group.

Our healthcare system is also a vast example of an iron triangle.  At its heart lies a monopoly, the initial and original perversion of the free market, which is the requirement that in this country one cannot "practice medicine" without a license.  This is the first step, because now all activity in caring for the health of others is under the monopoly control of the medical boards, which prevents the spontaneous eruption of much cheaper alternatives which the free market would normally provide.

The numbers of these licenses are kept artificially low through the artifice that medical schools must get regulatory approval in order to be an accredited school, while this accreditation is of course under the control of the same people who benefit from the number of physicians being kept artificially low.  This is why we have so many MD foreign grads flooding into the country and diploma mills in the Caribbean, which is an attempt to sneak supply past the iron barriers set up to keep supply below demand.

The next level of coordinated market manipulation is the cooperation between physicians, insurance companies, and pharmaceutical companies.  Doctors are only cleared to perform "medically necessary" procedures by insurance companies.  Thus, doctors are actually in a sense agents of insurance companies, in that they are allocating insurance company funds to the clients of the insurance companies.  Now, doctors don't usually see it this way, because they are operating according to "standard of practice", which really means what everyone else is doing.  Thus, there is a herd mentality to medicine, in which you swim with the school or you risk not only malpractice suits if you have a bad outcome, but also possible censure by your state medical board and the loss of your monopoly license.  This "standard of practice" is of course heavily influenced by the scholarly aspect of medicine, which works closely with pharmacy and medical device companies in order to bring new products into the fold of "standard of practice", at which point these become reimbursed by the insurance companies with no questions asked as well.

Insurance companies, on their end, are not required to do anything particulary unethical, they are simply bean counters.  Just as banks borrow at one rate and lend at another and make their profit on the spread, so too insurance companies calculate incidence of payouts at one rate and charge for coverage of incidents at another and make their money on the spread.  They don't really care how the system works, and they could function just as well in a completely free market.  They really don't care when their payout rates increase or costs go up, because they simply pass these on to the consumer.


Pharmacy companies, on the other hand, are deeply intwined with the beast, in that they have to make cost/benefit decisions all the time which carry an immense amount of liability, such as what rate of catastrophic side effect is worth the supposed benefit of a new medication or device.  In the process, they need the stamp of approval of the FDA to limit liability, which the FDA provides in exchange for continued funding of a bloated bureaucracy which pretends to be something other than a rubber stamp for industry studies.  Deeply implicated in this process as well are those research centers who depend on either industry or federal grant money in order to provide the raw fodder of studies which feeds the whole pseudoscientific boondoggle, and who benefit as the chain of required R+D gets longer and exponentially more costly.  Of course, the products that these pharmacy companies produce can only be acquired through official dealerships, which are the doctors.  Any purchase outside of these dealers runs you into trouble with the muscle, which is the DEA and attorney generals.

Want to stop the whole thing?  End the monopoly doctors have on practicing medicine, and end the controlled substance and legend prescription nepotism which accompanies it,  and watch what happens.  Any reform less than this will either not work or will require the imposition of an additional monopoly (death panels) to counteract the distorting effects of these initial monopolies.

Thu, 05/10/2012 - 13:23 | 2413779 spondoolix
spondoolix's picture

I agree that fraud/waste in our system costs us money, and will stipulate to the 8%.  Of course, there is a better way (the free market, not the government).  Comparing the costs to other countries without comparing the services rendered, wait times, etc. tells only part of the story.  There are a wealth of medical services that I can get in the U.S. immediately.  I know that the same doesn't hold true for most of Europe and Canada.

Thu, 05/10/2012 - 13:42 | 2413850 lizzy36
lizzy36's picture

Comparing the outcomes is most relevant.

And on most metrics the US is worse than every other developed nation in the world.

Healthcare in the rest of the developed world may be rationed by waiting times. In the US it is rationed by cost.

So if you have a non emergent issue, you may wait in Canada. Friend of mine will wait 3 months to have her hemorrhoids tied off. When my dad had his heart attacks, he was in CCU within 60 mins of hitting the ER. Three days later 3 stents were placed in his left side and two days after that 2 stents were put in his right side.

No system is perfect. But right now the US system is the most imperfect of them all.

Thu, 05/10/2012 - 14:35 | 2414103 Buckaroo Banzai
Buckaroo Banzai's picture

You want "relevant"? Then don't compare two corrupt, inefficient, and stupid systems--Western European single-payer on one hand, and the US' two-headed Medicare/Medicaid + private insurance Frankenstein monster on the other hand. They are far more alike than they are different.

Instead, compare the US or Western-European system to a REAL free-market medical care system, as in Thailand... where you can get top-notch medical treatment for 1/10 to 1/4 the cost of western care.

I will say this using as few syllables as possible, in language that everyone here can understand: health care is NOT an insurable risk. Cash-for-service is the only viable economic model.

It doesn't matter who gets stuck paying the premiums-- government, corporations, or individuals-- it doesn't work. The only way that incentives can be properly aligned is cash-for-service.

Thu, 05/10/2012 - 14:39 | 2414123 odatruf
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Buck - I agree except for catastrophic coverage. If we can arrange coverage for the random destruction of homes and cars, then we can arrange for unforeseen accidents and curable disease. 

In case you are wondering, death is not unforeseen. See this website's tag line if that causes confusion. Neither are the consequences of an unhealthy lifestyle. So diabetes, some cancers and heart diseases would not be covered if I had my way.  At least not under a catastrophic policy.


Thu, 05/10/2012 - 14:53 | 2414177 Buckaroo Banzai
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Notice that I specifically used the term "health care", not "accidents". Accident coverage is the one area that might be considered insurable, as there are statistics that actuaries can use.

But the problem is, that's how the health insurance scam got started. Once the camel's nose got under the tent, it was just a matter of time before the insurance companies expanded the scope--and profitability-- of their product. Once the feds legitimized the idea of health care insurace via Medicare and Medicaid, it made it a legitimate industry for private insurers as well.

Anybody here think that happened by accident?

Thu, 05/10/2012 - 15:49 | 2414383 CrashisOptimistic
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Outcome measurement is an experiment with no control constant/variable.

US healthcare is called upon to take more difficult cases, often flying here from other developed nations because Sloan Kettering and Johns Hopkins and Mayo are here, not there.

There is also the obesity prevalance vs other places.  Outcome measured from those cases is destined to be poor, regardless of treatment.

Not saying US healthcare is superior.  It's just not well measured by an outcome metric.

The overall reason for the 8% gap is doctors and lawyers in the US make more money than elsewhere.  As was true during the big Obamacare debate, the arguments don't change.  If you want something to cost less, then someone presently making money on it has to make less.


Thu, 05/10/2012 - 18:07 | 2415009 FEARTHESHARK

Um, the article compared the costs AND the outcomes.  Like all conservatives, you come at this from the entirely self-centered position of considering the wealth of medical services available to YOU.  What about the 1 in 6 of your countrymen who have no insurance?  Would it not be better to have a truly universal system that provides insurance for everyone up to a basic level, while preserving your right to supplement that basic coverage with you more robust policy if you can afford one?  That's the French model, and it is a radically more effective, comprehensive, and affordable system. 

Thu, 05/10/2012 - 13:24 | 2413787 narnia
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If you bail out the risks of bad behavior, you get more bad behavior.  If you subsidize nutrionless crap, you get more nutritionless crap.  If you incentivize drug companies to have mandates, you'll have more mandates.  If you enforce prohibition, you get more people in jail.  If you involuntary demand an oil based system, you get an oil based foreign policy.  If you deliver anything like education or healh care through a pulbic system, you get a slow to change system with all of the special interests jockeying for a place on the teet.  If you create a bunch of phantom credit for all of this crap, you get inflation.  

Thu, 05/10/2012 - 13:28 | 2413800 TheAntiBen
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Don't you wonder what our healthcare system would have looked like if it was illegal for employers to provide health insurance as a benefit?  Wouldn't we have ended up with a health insurance solution more like auto or homeowners insurance, that is based even more on free markets?  Then we wouldn't be paying for health insurance of illegal immigrants, because they could pay for their own health insurance just like they do (or don't) now for auto insurance.   Then when people leave a job, they wouldn't loose their coverage or have to change plans entirely when getting re-hired.  Then the tax payer wouldn't be on the hook for stupid government decisions.

Thu, 05/10/2012 - 13:48 | 2413886 odatruf
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It's an accident - or unintended consequence - of history that heath care is largely employer organized.  During WWII, wage controls put in place to stem inflation had the effect of pushing employers to be more creative in the make up of their compensation packages.  So called fringe-benefits were not controlled and thus employers started adding health insurance and other things as a way to sweeten the pot for workers.

Since this benefit had the added attraction of not being taxed, for either the worker or the organization, it became a popular thing and we are where we are today because of it.

The best pro market and pro consumer policy change would decouple coverage from our jobs and would let individuals buy policies from any underwriter, regardless of in which state they reside.

Thu, 05/10/2012 - 14:18 | 2414012 TheAntiBen
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Doesn't that make you feel like the answer is actually so simple.  Instead of a 2700 pages of Obamacare, it could be done with ONE page of legislation and probably passed both senate and house in a few hours if all it said was "Health insurance can no longer be provided by employers, effective 24 months from this date."  Boom, done, I did it! I just fixed health insurance!!!


Of course, this will never fly, because that will mean the unemployement rate is increased as ten of thousands of corporate benefit coordinators lose their jobs since they are no longer needed.


My next order of business as President... Elimination of company sponsored retirement plans...  You want to retire comfortably, then invest your own f#()@in money in your own way and let the corporations do what they do best, make things and hire people!!!  Just wait until everyone realizes that the US is screwed, and the government has this MASSIVE untaxed 401k "saving account" they could tap into.  Won't that be a shocker when in 20 years people go to retire and they find out that the government bumped up the tax on 401k withdrawls equal to about 75% so that they could pay down debt.  Ouch...  All those post-tax investors will be smiling pretty nicely at that point.

Thu, 05/10/2012 - 14:49 | 2414154 odatruf
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The government won't have to take on the tax deferred savers head on like that.  No reason to rouse up the rabble when it is much easier and timely to CTRL-P today, gain the use of those funds now and inflate away the real value of those accounts tomorrow.

It's like present value calculation with no discount for them.  They win all day long doing this.


Thu, 05/10/2012 - 14:39 | 2414119 Buckaroo Banzai
Buckaroo Banzai's picture

Unintended consequence? Seems more intended to me. Our system of employer-organized health insurance-- backstopped by federal medicare/medicaid-- effectively creates a system of indentured servitude to both corporations AND the state.

It is positively diabolical. It may have been an accident at first, but it's undoubtedly been perpetuated on purpose.

Thu, 05/10/2012 - 14:44 | 2414139 odatruf
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Oh it's definitely been perpetuated on purpose, mostly by the unions and the insurance companies.  It is far easier for insurance companies to deal with one person or a small number of HR people at a company than to deal with all those employees one on one.  And keeping it employer based also makes it more likely that the policies can be paid with pre-tax dollars, which means Uncle Sam is picking up the tab for about a quarter of the premium cost.  The unions need to show their members that they are winning concessions for them from management and, although it is circular thinking, they know that premiums and the employer support for them can increase faster than they would be able to get wages increased.

Thu, 05/10/2012 - 16:01 | 2414427 TheAntiBen
TheAntiBen's picture

I know, so obvious that this is one of the biggest issues with insurance, and yet SOMEHOW our politicians can't see this.  I email my rep's and goveners on a regular basis asking them this question in hopes that one day the tiny little lightbulb will go off in their head.


I absolutely hate it when Obama keeps telling me I'll get more choice and competition from Obamacare.  What choice and competition.  I get Blue Cross and Blue Shield no matter WHAT he does, because that's the stupid system we've created.  There is no CHOICE when your employer makes all the decisions.

Thu, 05/10/2012 - 18:07 | 2415013 FEARTHESHARK

You understand that in a truly free market there would be no insurance written for preexisting condidtions, right?

Thu, 05/10/2012 - 13:32 | 2413809 Joe The Plumber
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Waste is common. Fraud is rare. We have some patients getting three mri tests in a year because they want it and dont have to pay. If doctors dont overtest in america the patient will leave the practice and find a doctor who is more " thorough" and " listens to me"

Since doctors are paid piecework and patients equate tests and procedures with quality care the doctor has no choice if he wants to make a living

Also u never let a patient leave the office without a prescription. If you dont give a prescription the patient will feel like it was a waste of time.

Thu, 05/10/2012 - 13:52 | 2413910 lizzy36
lizzy36's picture

What you are actually talking about is Tort Reform. 

Medical Malpractice liability costs the system about $60B a year. Most physicans are forced to practice defensive CYA medicine. Including unnecessary tests, procedures, and prescriptions. The "standard of care" doctrine at the heart of proving negligence is responsible for much of this useless medicine.

Over the course of the last 20 years, this type of CYA medicine has given rise to unrealistic patient expectations about what a visit to the "doctor" should be like. Patients also have massively unrealistic expectations about outcomes of medical care. But that is a conversation for another day.

Thu, 05/10/2012 - 14:00 | 2413943 odatruf
odatruf's picture

TeeVee shows like House and ER add to this problem as the fat boob tube watching American public thinks that everything can be cured, and that if only their doctor ran every obscure test out there that they will be able to waddle on out of the hospital good as new.

Thu, 05/10/2012 - 15:10 | 2414250 Isotope
Isotope's picture

I've seen studies that estimated the cost of defensive medicine at "only" 8-10% of the total. This is absurdly low. I'm sure their methodology was based on comparing what actually was done to the standard of care. The problem is that, in my opinion, defensive medicine has been baked into the standard of care for at least 20 years, grossly warping the baseline standard of care dramatically upward. It would not surprise me if the actual figure was more like 30%.

Thu, 05/10/2012 - 14:40 | 2414133 Buckaroo Banzai
Buckaroo Banzai's picture

"Waste is common. Fraud is common."

Fixed it for ya. Snap out of your trance there, buddy. Medicare fraud is a gigantic industry.

Thu, 05/10/2012 - 13:33 | 2413814 Mad Max
Mad Max's picture

This is all about FREEDOM.

The FREEDOM to go bankrupt from medical bills.  The FREEDOM to die of easily treatable disease if you can't pay for the treatment.  The FREEDOM to be a human science experiment from eating "food" made of materials that are not considered edible in the rest of civilized world.  The FREEDOM for an insurance company or HMO to make outsize profits.  The FREEDOM to spend money on lobbyists to subvert democracy.

And no, I do not support Obamacare, in part because it simply continues the horrible status quo while handing even more money to the corrupt side of the industry and destroying the socially beneficial side of useful, good-faith medical diagnosis and treatment.

Thu, 05/10/2012 - 13:35 | 2413824 Bearster
Bearster's picture

Charles: if you force the taxpayers to pay for everyone's healthcare, then you are faced with two grim alternatives:

1) rationing, aka "death panels"
2) bankrupting the taxpayer even faster

The choice of our current system vs. a marxist system is a false alternative.

Thu, 05/10/2012 - 18:12 | 2415036 FEARTHESHARK

As is the "two grim alternative" scenario that you claim if taxpayers pay for everyone's healthcare.  A guaranteed minimum level of health insurance, provided by the government, in lieu of employer-based health insurance (or the fantasy of the individual market) that is then supplemented, for those who can afford it, with private policies offering larger benefit packages, would cost the tax payers FAR less than what you currently pay (the whole point of this article, by the way).  There would be no more "rationing" under such a system than what currently takes place, unless you pretend that insurance companies do not depend on rationing coverage as part of their basic business practice.

Thu, 05/10/2012 - 13:36 | 2413832 CURWAR2012
CURWAR2012's picture

We are a country subsidizing all the other countries via our pharmacuetical and medical device payments. Pharma and medical deviec companies (including laboratory and DNA analysis companies) gouge us and other countries pay less to them. It will end badly.

Thu, 05/10/2012 - 13:38 | 2413837 FrankIvy
FrankIvy's picture


It's poor logic to assume that % of GDP spent on healthcare is somehow a reflection of the system of healthcare.  That's a red herring thrown out by statists who want national "free" health care.  Citing Japan is stupid - Japanese are generally very healthy people.  It's cultural.  They don't simply have a better system.

The right way to look at % of GDP Americans spend on health care is . . .


1. Americans are a lot less healthy on average than other countries.

2. Americans consume more health care than citizens of other countries.

Thu, 05/10/2012 - 13:41 | 2413854 Sabremesh
Sabremesh's picture

The US healthcare system is incredibly inefficient on a cost/benefit basis. The charts above prove that US government expends more per head of population on its federal health programmes (medicare and medicaid) than the UK government pays for the entire NHS.

Let's restate that - every man, woman and child in Britain gets free healthcare (at point of use) with a lower tax contribution than the average American. And most Americans still have to pay a fortune on top of their taxes for health insurance because they aren't covered by medicaid or medicare. It's insane.

Thu, 05/10/2012 - 13:55 | 2413923 Joe The Plumber
Joe The Plumber's picture

As long as patients equate " good care" with lots of tests and procedures we doctors have no choice because we have to make the patient happy or we lose the business

A twenty something female with palpitations visits a smart doctor. He listens to her heart and she has mitral valve problems. She is orherwise asymptomatic except for panic attacks. No family history of early heart disease. You can confidently reassure her it is simple mitral valve prolapse and her heart is fine. She will get mad. Tell everyone she knows you are a bad doctor and she will extol the virtues of the next doctor she sees who orders an ecg, holter monitor, and echocardiogram. After spending two thousand dollars of insurance money he will also tell the lady her heart is fine but she will recommend this doctor to all her friends because he was " thorough" and " really listens". He is a great doctor according to her and the first doctor " didnt listen" and " did a bad evaluation and didnt seem to care"

Thu, 05/10/2012 - 14:58 | 2414193 Isotope
Isotope's picture

Momma is 93. She gets really sick with something. You try to tell the family that this is likely just the way she was intended to die. Oh, no way. You can't let momma die! She was doing just fine last week (probably not; they just didn't notice the slow deterioration) Momma goes to the ICU, on the ventilator. If she is conscious, it's a horrifying and painful experience for her. Days pass, a week, maybe more. Finally the family is ready to let go. Except for that one daughter, likely the one who never visited momma. Finally she arrests, we break her ribs and mangle her a bit more before it's over. The cost: likely somewhere between 50 to 100 thousand, quite possibly more. But they don't have to pick up the tab.

Don't do this and you risk being sued for malpractice. In fact, I deposed on a case like this that went on for weeks before momma died. The attending physician still got sued by the daughter, who despite this extended ICU care thought he had euthanized her mother. No lawyer would take the case on contingency , but she found some "Right To Life" organization that provided money for a lawyer up front. He was acquitted in a jury trial, but it took a long time and it wasn't even a unanimous verdict.

Thu, 05/10/2012 - 16:12 | 2414453 Jena
Jena's picture

Daughters like those likely have some issues of their own that they haven't dealt with, like unresolved guilt due to their lack of contact or some old conflict.  Their punishment should be similar to what they insist Momma is put through.  

I don't generally wish ill on other people but to be so utterly unwilling to see with both eyes and comprehend what misery and torture one is dooming a relative to, I know there is karma coming down the road somewhere.

And this has nothing to do with 'death panels'.  This has everything to do with prolonging abject horror.

Thu, 05/10/2012 - 14:46 | 2414145 Buckaroo Banzai
Buckaroo Banzai's picture

The British get free healthcare... and it's worth exactly what they pay for it. Nothing.

"Americans would do well to ponder a recent admission by a former British minister in the Blair government. On March 2, the Guardian reported that the ex-minister, now Lord Warner, said that while spending on Britain’s National Health Service had increased by 60 percent under the Labour government, its output had decreased by 4 percent. No doubt the spending of a Soviet-style organization like the NHS is more easily measurable than its output, but the former minister’s remark certainly accords with the experiences of many citizens, who see no dramatic improvement in the service as a result of such vastly increased outlays. On the contrary, while the service has taken on 400,000 new staff members—that is to say, one-fifth of all new jobs created in Britain during the period—continuity of medical care has been all but extinguished. Nobody now expects to see the same doctor on successive occasions, in the hospital or anywhere else..."

Thu, 05/10/2012 - 16:15 | 2414464 Joe The Plumber
Joe The Plumber's picture

The nice thing about the british system is i dont have to give a shit what the patient thinks. I dont have to order a bunch of tests to make them happy because i would be on salary and not dependent on fee for service

Thu, 05/10/2012 - 18:15 | 2415052 FEARTHESHARK

Funny, but your view that the British healthcare system is worth nothing is a point of view shared by approximately zero percent of the British population.  How many Brits, Germans, French, Dutch, Swedes, or any other Europeans are clamoring for an American-style healthcare system? 

Thu, 05/10/2012 - 13:46 | 2413884 Sudden Debt
Sudden Debt's picture

It's not a tax! Just expenses....

Thu, 05/10/2012 - 13:52 | 2413908 AxiusAtlanta
AxiusAtlanta's picture

8% comparing apples to oranges..........

ROW gets a free ride on the USA R&D expenditures

And your going to argue that the level of care and service is BETTER in these gov't run systems ?  i bet no.




Thu, 05/10/2012 - 13:56 | 2413932 odatruf
odatruf's picture

While I agree with much of the author's premise in regards to the shittyness of the US health care system, it is not a hidden tax.  It's not the government getting the money, which is a key component of a tax.  Private individuals and organizations are the end recipient of the consumer and patient dollars.  While the government clearly plays big role in regulating the system, they are not the only actor shaping the status quo.  As the author points out, the fat fucks and dumb pill seeking sheep drive costs up in a way that doesn't exist to such a degree elsewhere.

Calling it a hidden tax only serves to obscure ultimate accountability.

Thu, 05/10/2012 - 14:19 | 2414029 TheMuppet
TheMuppet's picture

Tax in private hands == a not hiddern RENT.

Thu, 05/10/2012 - 14:02 | 2413954 Joe Davola
Joe Davola's picture

Not like laws will be written that mandate healthcare costs be the rate of inflation + X% per year.  No, not our congress/administration.

Thu, 05/10/2012 - 14:03 | 2413962 kralizec
kralizec's picture

Nothing trumps the Democrat-Media Complex tax, absolutely nothing!

Thu, 05/10/2012 - 14:11 | 2413990 Stuck on Zero
Stuck on Zero's picture

Get government out of medical care altogether and it will become affordable again.  Break up the AMA.  Eliminate the FDA.  That's all it takes to get things under control again.

Thu, 05/10/2012 - 14:18 | 2414020 TheMuppet
TheMuppet's picture

That Global BMI chart has to be wrong on Egypt:

But note that, putting asige the special (likely genetic) case of the off the scale Polynesian islands, the U.S. is in the group that includes 1) its immediate North Amarican neighbors and, interestingly 2) a group of well-known Arab Middle Eastern countries.  Go figure..


Thu, 05/10/2012 - 14:19 | 2414027 DRT RD
DRT RD's picture

"Meanwhile, the U.S. outpaces the world in another category: body mass index (BMI),"


This has nothing to do with healthcare and everythong to do with welfare money chasing cheap calories.  McDonalds is the culprit here, not healthcare delivery. 

Thu, 05/10/2012 - 14:28 | 2414072 Apocalicious
Apocalicious's picture

Except fresh, unprocessed food from the grocery store is far cheaper and more calorie rich than McDonalds. FAIL.


Fatness is about people being too lazy to monitor the quality and quantity of what they eat. McDonald's isn't the cheapest. It's relatively cheap, and EXTREMELY quick and easy.

Thu, 05/10/2012 - 21:25 | 2415813 TBT or not TBT
TBT or not TBT's picture

No, it is not the cheap calories, it is the cheap carbohydrates:  The one molecule that signals a fat cell to store fat is insulin, which gets pumped out when people eat carbs, and otherwise, doesn't.

The worst carbs appear to be cane sugar(50% fructose/50% glucose) and "high fructose" corn syrup, which are barely worse at 55/45, and a tad cheaper.  

So McDonalds is a problem insomuch as the starch in the fries, the fructose and glucose and lactose in the drinks, and the starch in the bun, hit the bloodstream like a sugar/insulin hammer.

Thu, 05/10/2012 - 14:19 | 2414031 Flocking swans
Flocking swans's picture



Thu, 05/10/2012 - 14:22 | 2414045 Dr. Acula
Dr. Acula's picture

What Soviet Medicine Teaches Us

"In order to receive minimal attention by doctors and nursing personnel, patients had to pay bribes. I even witnessed a case of a "nonpaying" patient who died trying to reach a lavatory at the end of the long corridor after brain surgery. Anesthesia was usually "not available" for abortions or minor ear, nose, throat, and skin surgeries. This was used as a means of extortion by unscrupulous medical bureaucrats.

To improve the statistics concerning the numbers of people dying within the system, patients were routinely shoved out the door before taking their last breath."

Thu, 05/10/2012 - 14:29 | 2414071 sessinpo
sessinpo's picture

The  government is involved in just about everything, the better. single payer down.

Thu, 05/10/2012 - 14:58 | 2414196 odatruf
odatruf's picture

Flocking - do you realize that single payer is simply a replacement administrative construct and is not in any way beneficial to the delivery of actual health care? There is a case for single payer, but it is vastly more complicated than just doing that. You also need to massively upend the health care system itself - not just the insurance and remittance organizations.

For example, just because all the doctor, hospital, drug company and other health bills would be paid by your single payer as opposed a myriad of insurance companies, unless you also force the doctors et al to accept less for their service, you've at best realized some administrative efficiency. And that's at best. In exchange, you welcome the host of disadvantages that all monopolies carry. It may be that the efficiency gains outweigh the monopoly losses, but in no way will this ever come close to solving the problem.

My real point is: your comment is a bumper sticker, not a solution. Capital letters notwithstanding.

Thu, 05/10/2012 - 15:27 | 2414304 Dr. Acula
Dr. Acula's picture

>It may be that the efficiency gains outweigh the monopoly losses

If it's true that there are efficiency gains to be had in "economies of scale", there will be a profit motive encouraging insurance companies to join up. There's no need to establish a monopoly by edict.

But there are plenty of natural problems that overly large companies face. One is a loss of ability to plan or act rationally due to the lack of market price information for internally exchanged goods and services. This is the same problem with socialism. An inability to perform economic calculation ends up destroying wealth and will ultimately lead to liquidation.


Thu, 05/10/2012 - 15:36 | 2414346 odatruf
odatruf's picture

Dr. A - I agree with everything you've written. My comment was intended to provide the up-thread poster the extension of their logic. There is a case to make for single payer - anyone who says otherwise missed the point - but it isn't what they probably think it is and it isn't, so far as I can see, very compelling given the drawbacks and alternatives, as you've point out.


Thu, 05/10/2012 - 18:20 | 2415083 FEARTHESHARK

"you've at best realized some administrative efficiency"

That's a lot, by the way.  And upending the most inefficient and costly healthcare system in the industrialized world is absolutely a solution.  That the details of said solution do not fit onto a bumper sticker is immaterial.  "Let the free market work" is the libertarian version--except unlike "single payer now", there is no "free market" healthcare system in the world that delivers the quality and cost-effectivenes of a single-payer system....

Thu, 05/10/2012 - 14:21 | 2414037 Dr. Acula
Dr. Acula's picture

Socialist propaganda


Thu, 05/10/2012 - 14:30 | 2414078 sessinpo
sessinpo's picture

You got that right. And all those saying so and getting thumbs down, you know we have quite a few socialists at ZH.

Thu, 05/10/2012 - 14:25 | 2414060 Apocalicious
Apocalicious's picture

It's not a value added tax, it's a value siphoning tax.

Thu, 05/10/2012 - 14:29 | 2414080 lolmao500
lolmao500's picture

That's because the pharma industry owns the FDA, the doctors, the universities and the government.

Thu, 05/10/2012 - 14:57 | 2414091 Mercury
Mercury's picture

How fat Americans are doesn't have anything to do with the quality level of available healthcare.  If anything it's an indicator of the high quality of American medical care since you can be a walking blob of lard in this country and still make it to ~79.

The test case would be to export a group of American fat-asses over to your favorite foreign medical system and see how long they live.

Infant mortality stats aren't always apples-to-apples either. In countries other than the US the clock doesn't start ticking on a "live birth" until well after the baby has left the womb. Also, "still-births" aren't categorized the same way in all locales.

In the US, affordable/free pre-natal care is well funded and under-utilized especially by poorer and at-risk women. So, universal coverage probably wouldn't move the needle much in that area.

Thu, 05/10/2012 - 14:39 | 2414125 RWR
Thu, 05/10/2012 - 14:56 | 2414184 bourbondave
bourbondave's picture

This is a great example of why this topic is always a waste of time to discuss.  What does the population's BMI have to do with an accusation that the US overspends on healthcare?  If you have a bunch of fatass, unhealthy people doesn't that instead provide one reason for why you'd spend more on their healthcare?

Thu, 05/10/2012 - 15:02 | 2414210 MoneyMagician
MoneyMagician's picture

Problem with US healthcare is not enough competition, too many people use healthcare for everything healthcare other than a headache probably. Doctors don't compete for patients with low prices as one of their attractive attributes, it's the patient who competes for the doctor, because he likes him for some reason. There is not market competition in healthcare, everybody simply wants insurance to cover everything, & don't care about the expenses until afterwards. In emergency situations, this type of behavior is well justified, but for most cases, this is not the case. So you don't have a competitive field at all, doctors don't compete with other doctors in price attraction, nor does the field compete with other goods in the economy that are non-medical. So Obamacare is there to ration care, which is the only way government can lower costs, also by price controls, but doesn't produce more wealth in the field, or large supply, but cheap, for example, no waiting times, but affordable. Government simply can't do that.


The tax code is responsible for this, as well as government subsidies, & regulations like community rating. The tax code doesn't tax health care benefits as if it was income, this is a loophole that has a perverse effect in the system, ie, too much coverage in insurance with "I don't care how much it costs attitude". Community rating prevents insurance from delivering cheaper policies to certain healthier demographs, & really supports the risk prone groups more, and the sick more than a economizing policy. Another unfortunate thing is the high cost of patent laws, which is basically a monopoly law prevents a market from competing in delivering low cost equipment & medicine, and innovation of existing technologies. College tuition prices also has a impact on this in my view as well, with tuition prices going skyhigh, the incentive is there to raise prices.


US health care system is really perverse field. There is no strong market forces in the field at all. In a free economy, all things being equal in terms of even playing field, consumers bid down, or bid up prices of the same goods, but also against goods that are not of the same class.  Patients seem to complain about their insurance not covering all the expenses, than actually criticizing the actual prices of the medical care itself, which is ironic. The US consumer doesn't really get to choose the best economizing policy for themselves. Most consumers has a employer's employee plan, or government, not much individual plans that caters to the individual stark contrast to to other types of insurance out there.

Thu, 05/10/2012 - 15:01 | 2414212 Oldwood
Oldwood's picture

 Why are so many desparate to reform the one part of the private economy that still is hiring? I just don't understand why, at a time when we are sinking, that so much energy has been put into destroying the two parts of our economy that have a substantial part of the private employment, healthcare and oil/gas. There is little doubt that both need attention but really, now? Lets focus on why the economy sucks. If we all had jobs that paid anything, i bet healthcare costs would be a lot further down the list.

Thu, 05/10/2012 - 15:20 | 2414264 Dr. Acula
Dr. Acula's picture

>Why are so many desparate to reform the one part of the private economy that still is hiring?

They are looking for additional ways to fuck up the economy with their socialist planning.

Or they are parasites who simply want votes or to steal free handouts from you.


"The poet who wrote, "Only God can make a tree," was merely acknowledging a common faith. Know-it-alls are never heard trying to refute this; everyone takes it for granted. Yet, if it be asserted that "only God can make a violin" — portions of nature with human creativity as an added ingredient — the person unaware of how little he knows will have no more hesitancy in subjecting violin production to his masterminding than he has in socializing the airlines, or power and light, or the postal service, or whatever."

Thu, 05/10/2012 - 18:02 | 2414984 FEARTHESHARK

What an unmitigated load of horseshit.  People are desperate to reform this part of the economy because it is the least efficient healthcare system in the industrialized world, and the only one in which you stand a very real chance of being forced into bankruptcy simply by having the nerve to get sick.  But, please, let's return to your fear-mongering bullshit and deny the problem.

Thu, 05/10/2012 - 16:25 | 2414500 lasvegaspersona
lasvegaspersona's picture

Once the federal government takes over an industry or part of one the that industry is dead in the private sector. No one can compete with the feds free money. Like a drunk at an accident scene the feds said, schtand back, I got this covered. They then took over all health insurance for those over 65. Look at what they have done: there is no other insurance available for those over 65 now and they (the feds) can no longer 'afford' to keep the system going. Medicare is on the rocks. Thanks Mr. Fed, you drunken braggard. What are you going to fix this time? The whole system!!!

Thu, 05/10/2012 - 17:23 | 2414766 GernB
GernB's picture

The federal government did take over health care... only right now we've managed to limit it to just the elderly. And what has it caused. Cost shifting to the rest of us. Then use of the higher costs medicare created to justify a further government takeover. Much of what is wrong with healthcare in the US can be traced to medicare and medicade, the employer insurance model, limits on how many doctors our educational systems produce, and the expense created by government regulation of the drug industry. Then all the problems these things create are used to point out how inefficient and expensive the system is as an excuse to take it over further.

The way our government has organized and managed the economy is on the verge of causing an epic financial meltdown that is going devistate our country and what do you want to bet that meltdown will be used to demand more government.

Thu, 05/10/2012 - 17:40 | 2414849 GreatUncle
GreatUncle's picture

Being a european socialist, just kidding on the latter part.

The problem is any cost healthcare, education, you name it if it is provided by a society it is a tax burden.

Any country that incurs these costs globally can be undercut, you just cannot incorporate the cost on doing anything if another does not.

On that point free trade is an illusion and would be better to be called free exploitation. If you can undercut another nation on productivity costs you are able to sell your unemployed like a debt into other nations.

You could almost argue, cut the lot, everything. If you want it then you pay for it and tax rates become next to nothing while you save or maybe you don't for the future possibilities and day of reckoning.

At that point the politicians everywhere have no control because they offer none of the biggest vote catchers called healthcare, education and welfare.

They also don't get the nice little earner of taxpayer benefits and that is their motive for promising it.

You fall into a free for all, no more rules, anything goes if you need it take it.

Game over one day, if not today in the future unless the leaders of all nations get their act together before it all falls down.

Thu, 05/10/2012 - 17:53 | 2414925 American Sucker
American Sucker's picture

The American system is not a free market, nor anything remotely resembling it.  It's an interlocking series of state-backed, state-subsidized cartels free to profit without limit.  It's another model of socialized costs, privatized profits that Republicans worship and Democrats decry as "free market", though it has nothing to do with freedom.

We should either move to a well-run universal system such as France's or Japan's or strip down to a real free market in medical services.  The corporatist cartel is the worst of both.

Thu, 05/10/2012 - 19:41 | 2415440 pitz
pitz's picture

What about the 'tax' that employers essentially impose upon themselves by treating their employees so poorly, causing stress leaves, extra sick days, extra healthcare costs associated with anti-depressants and other psychotropic drugs. 

Thu, 05/10/2012 - 19:42 | 2415444 malek
malek's picture

But, but... the real VAT in Germany is currently 19%.

If "other advanced democracies spend between 6% and 9%" [of GDP], and we say Germany is on the lower end of that range, then 6 + 19 = 25% of GDP!
Compared to the US rate of 17% GDP spending on healthcare, the Germans are spending 50% more!!!


Thu, 05/10/2012 - 20:29 | 2415616 dolph9
dolph9's picture

Well there's a larger point here, and it's that nobody can live forever.  Which sort of makes all of "healthcare" ultimately a losing battle.

Living forever and making a trillion fiat bucks...that's all humans have left to do now.  The world is full up and explored, the resources are being drained.

Welcome to the Matrix.

Fri, 05/11/2012 - 09:46 | 2415896 Pizza man
Pizza man's picture

frist time in a while where the comments are much more thoughtful than the original article. You missed it this time, Tyler. comparing "outcomes" between Europe and America is a sham. For instance, we have more car accidents, plus we have more black people who experience higher infant mortality than non-blacks (across all socio economic levels) . In other words, the comp data is apples to oranges.

We also pay for about 50% of the new technology in the market place with our HC dollars.

YES, we must have tort reform, cross border insurance comp and price discovery, but lets include all the facts Mr. Durden, before you make the spurious claim that they do it right in Europe and we pay more for less.

I wonder where Durden would rather reciece care if he had cancer or was hit by a bus? Especially if he was over 70 years old?

Fri, 05/11/2012 - 00:08 | 2416215 dognamedabu
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  Guest Post: America's Hidden 8% Tax: Sickcare

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