The chimera

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For what was meant to be President Obama’s flagship legislative achievement, the implementation of the Affordable Care Act, or Obamacare, has proven to be a contentious political liability and personal headache for the president. But, like the little bill that could, it has weathered an appearance before the US Supreme Court, a government shutdown, a bumbling and glitchy digital rollout, uncooperative state governments, and innumerable attempts at repeal.

From all this contention, it does appear that it did eventually achieve drive a stake through the head of the beast that had terrorized tens of mil- lions of uninsured American citizens: the scandalous lack of health care in the richest nation on Earth. Yet for Mr Obama to celebrate this seeming vic- tory is to turn his back as the beast rears its head…its other head. While the issue of coverage may be settled – imperfectly settled though it may be – the issue of health care is not ‘fixed’ by the Affordable Care Act by any means; the simple fact of the matter is that the US and the American people still spend an extortionate amount on health care.

It may be surprising to know that the United States spends more tax money per capita on health care than other Western nations – more than Britain, Germany, Canada or Australia. What this means is that the 70% of Americans who do not subscribe to government-sponsored health programs, primarily the impoverished or the elderly, pay more taxes for health care than they would if they were German and, in return, receive no health care for it.

Factoring in the amount that Americans pay for private health care coverage – most Americans are privately insured – the amount Americans spend on health care relative to other nations transcends the inefficient into the absurd: other countries such as Japan and New Zealand spend one-third as much, whereas Switzerland and Norway spend two-thirds.

Ultimately, the US, given its economic size, spends upwards of 750 billion to one trillion dollars more than it should annually, and the most salient fact is that US health outcomes, despite all this spending, are “not notably superior” to that of other countries, according a non-partisan study enacted by the Commonwealth Foundation. The question is, then, where does all of this money go? The answer is, predictably, multifactorial and complex, but some myths deserve to be quelled. The first is that of public health: the United States is not a materially less healthy nation than others – that is, the health of the average American does not necessarily translate into significantly higher health care costs.

While the US is a fatter nation than most, it is relatively younger and has a lower proportion of smokers and heavy drinkers than western European nations – despite this, Americans pay much more. The second is that of utilisation: Americans do not go to their doctor more often than Europeans, and typically stay for much less time. In the United States, however, the cost of going to the doctor is higher and the cost of a hospital stay exceeds $18,000, whereas in Sweden, Germany and France it is less than $10,000. Where is this massive cost coming from?

There are many factors, but the predominant one is that in the American health care system, everything costs more – from drugs to inpatient and outpatient care. An MRI in the US runs about $1,100; in the Netherlands, its $319. A course of the drug Lipitor runs at $124; in New Zealand, it’s $6. A hip replace- ment in the US is upwards of $40,000 – and in Spain, its $7,700. Outpatient medical procedures, which include same-day visits and procedures, are nearly double what they should be given the wealth of the United States.

This can largely be accounted for by two factors: first, lack of bargaining power. In a single-payer system, prices set by health care providers and drug manufacturers are negotiated aggressively down by the collective centralised bargaining power of said system. Companies are incentivised to win the proposed massive government contract by providing the best care at the lowest price – otherwise, they don’t sell anything at all. In the United States, there is no such collective bargaining power because individuals negotiate with their private insurer, which means what is charged is what can be gotten away with. This brings us to our second factor: you can’t put a price on your health, and Americans know it.

Health care is an entirely inelastic service – if a drug or a procedure can save my life, I will find a way to pay for it, driving costs up further. Ultimately Obamacare, for all the political capital expended on its implementation, lacks the tenacity to kill the many-headed Chimera that is the American health care system.

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