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									                                                                              Executive Summary

                          AMERICA’S HEALTHCARE CRISIS
                             The Facts and a Resolution

                                  EXECUTIVE SUMMARY

It is widely accepted that the public policies related to the American healthcare system have
left it falling into a complex and threatening crisis. How and why this is happening and a
proposed solution is the focus of this peer reviewed, statistical, economic and financial study
of the system. It is a current, comprehensive, multidisciplinary examination of American
healthcare and thereby reveals new dimensions and concepts.
In 2002, Americans spent 112% more for healthcare than the average of the next nine largest
industrialized democracies, our “comparison nations,” ranging from 205% more than Spain
to 81% more than Germany on a per capita basis. The major cause of the excess cost
indicated by the research herein is the inability of as many as 101.4 million people to access
primary and preventive care. Such citizens or residents, when they finally seek medical care,
are sicker with preventable or manageable conditions, which we have termed “care-denial
induced illness.” The extra cost of their treatment in 2002 was between $320 billion and $350
billion. In 2005 it was between $370 billion to $410 billion.
The prime evidence of this care-denial syndrome is data based on death certificates showing
the potential years of life lost before age 70 by disease group. The United States was 36%
higher in 2002 than the average of the comparison nations and 34% higher than the average
of all of the industrialized members of the OECD. The spread has increased from the U.S.
being 32% higher than the comparison nations in 1998. The costs of treating diseases are
much higher in the U.S. because of more and sicker patients, and the results are dramatically
worse than among all major economically developed international competitors. The
comparative data is from the Health Policy Unit of the OECD, The Organization for
Economic Cooperation and Development, a group of 30 nations sharing a commitment to
democratic government and a market economy.
For decades, American public policy on healthcare has been dominated by economic
interests, which have resisted the institution of universal healthcare to avoid its inherent
government regulation. There is regulation in the United States, but it is largely by insurance
and managed care companies, which impose cost-related interference in diagnostic and
treatment decisions by physicians and hospitals. The administrative costs of hospitals and
physicians’ offices are far higher than in the comparison nations by a midpoint of estimates
of $220 billion in 2005. Just as important, the interference has damaged the morale of
physicians who feel they have lost control of their practices and also their income, which is
falling as insurance companies cut fees and, in the view of many doctors, use the money for
their own purposes.
The entrance of plaintiff lawyers into medicine has raised professional liability premiums,
from two to tenfold in recent years, and created “defensive medicine” by which physicians
seek to protect themselves from legal attack by ordering extra tests as plaintiff lawyers often
allege missing data. Plaintiff lawyers have also threatened the pharmaceutical industry with
massive class action suits causing pharmaceutical companies to increase prices to build “war

America’s Healthcare Crisis

chests.” The costs of defensive medicine in 2005 were at an estimate midpoint of $102
billion. The comparison nations have little of this.
Paying the huge differential in costs took 14.7% of GDP in the U.S. in 2002 versus an
average of 8.9% in the comparison nations. Much of the cost in America falls on business,
which provides the private insurance to people before Medicare age after which there is
government regulation. In 2005 the excesses of American healthcare placed a “healthcare
cost tax” of 4% of GDP on the American economy versus international competitors.
Attracted by the growing cash flows of modern medicine, Wall Street interests entered
healthcare taking insurance companies from not-for-profit to for-profit entities, establishing
for-profit hospitals and financing hospital expansion. With the constant bickering with
insurance companies about what should be done for patients, the culture of medicine has
changed from a focus on patients to a focus on money, further disabling the morale of those
who entered the medical professions to provide medical services to those in need. Other
interests appeared such as “pharmaceutical benefit managers” tapping the expenditures of an
ever-expanding market for prescription drugs.
It has long been perceived that America could not afford universal healthcare. A detailed
model of the savings and new costs, however, shows the reverse is true. America cannot
sustain or survive the growth of its exploitative healthcare system. The Centers for Medicare
and Medicaid Services (CMS) projection of healthcare expenditure for 2011 is 17.6% of
GDP. The percent of GDP spent on healthcare can be lowered by eliminating the costs of
care-denial induced illness, by removing the insurance companies as comprehensive payers
with the costs of their interference in medical decisions and payment delays, and by
challenging plaintiff lawyers with scientific review of their claims against hospitals,
physicians, and pharmaceutical companies.
If the proposed program modeled in Chapter 7 had been started in 2005, a total healthcare
expenditure of 13.5% of GDP would have been projected in 2011, 4.1% less than the current
official projection. Further findings are that had this model of single payer universal
healthcare been in place in 2005, in its seventh year the savings would have been between
$650 and $700 billion and the cumulative savings between $1,200 and $1,300 billion.
The cost drivers of the higher American expenditures have been determined. The excess
costs of not having universal care are clear in the comparisons of cost both in the aggregate
and for each disease group, and for diet and obesity. The nations providing universal
healthcare know it is far less expensive to intervene early in chronic disease than to let it
manifest at its worst. They know acute disease is much less expensive to treat early.
Of the 25 industrialized democracies two have government run systems, three have multi-
payer systems requiring universal healthcare, and nineteen have single payer universal care.
Only the United States has not provided universal healthcare and is by far the least cost
efficient. Single payer countries have that policy and it costs less and prevents as much
human tragedy as possible. It also prevents exploitation of patients, which only the United
States allows. And, only in America does illness or injury lead to financial ruin or

                                                                              Executive Summary

There are perception myths propagated by those who profit from the present system. Over
treatment by American doctors and hospitals was not found versus the comparison nations.
No respectable evidence appeared that medical errors are a reason for high American costs.
No evidence that fraud is an important contributor could be located. The thesis that an excess
supply of medical practitioners and facilities causes over treatment is hard to prove when the
United States is fourth from the bottom in availability of physicians and hospitals beds
among the industrialized OECD member nations. In 2002, Americans had only 70% as many
physician consultations as citizens and residents of the comparison nations.
American healthcare costs cannot be lowered without instituting single payer universal
healthcare. In the proposed model the insurance companies would play the roles of their
counterparts in the comparison nations and will likely earn reasonable if not similar profits.
The burden of funding would be removed from employers and replaced by a progressive
healthcare tax directed to a trust fund. While insurance companies believe all should
purchase or be provided with insurance, the costs thereof are ruthlessly regressive.
Individuals pay the same regardless of income. Employers pay the same premiums for semi
skilled labor as they pay for management or technical professionals. All other industrialized
nations fund healthcare with progressive taxes, assuring all citizens have access to acute and
primary care. In America, increasing numbers of people cannot afford proper care. Many of
them become expensive patients who should instead be going about their normal lives.
The model also assures pharmaceutical companies of continued high profits and, with the
equipment and supply companies, protection from wanton legal attack. The same protection
is given to institutions and practitioners. Plaintiff lawyers would be effectively prevented
from causing further havoc and cost escalation in medicine.
Added in the model is an innovative computerization of medical records from which exciting
new benefits would accrue to further reduce administrative costs and improve diagnosis and
treatment. Total free choice of physicians and hospitals would reappear in America where it
is now restricted by insurance company polices. Americans would be motivated to get their
routine screenings and exams and to see their doctor when symptoms first appear.
The proposed model would also provide the tuitions for medical, osteopathic, nursing,
therapists and other practitioners to reduce the waiting times in the United States and provide
medical services to presently underserved areas. Physicians would remain in private practice
if not on staff. Hospitals would be under community control or owned by universities or
religious or other not-for-profit institutions, if not now owned by governments. Such is a
common practice in most other nations, which now provide more physicians and surgeons,
and, with healthier populations, lead the world in effective and efficient healthcare.
It is not common for the Unites States to look elsewhere for concepts of public policy.
Americans tend to believe that the institutions developed here are the best. Those who profit
from the present healthcare system try to sustain that public view. The American market-
driven healthcare system, however, is in crisis and is in an advanced stage of becoming an
economic and social disaster. The time has come for a thorough analysis and the
development of an alternative model. One that will take the best aspects performing well in
other nations, address particular American issues, and add special benefits of American
technology and industrial and business capability.


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