Posts Tagged ‘healthcare’

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One of the consequences of the unhealthy healthcare system in the United States (not to mention the obscene level of inequality) is a very high maternal mortality rate—higher than in all other OECD countries except Mexico.

According to the authors of a new study published in Obstetrics & Gynecology (pdf),

Despite the United Nations Millennium Development Goal for a 75% reduction in maternal mortality from 1990 to 2015, the reported (unadjusted) U.S. maternal mortality rate more than doubled from 2000 to 2014. As we have shown, most of the reported increase in maternal mortality rates from 2000 to 2014 was the result of improved ascertainment of maternal deaths. However, combined data for 48 states and the District of Columbia showed an increase in the estimated maternal mortality rate from 18.8 in 2000 to 23.8 in 2014, a 26.6% increase. Notably, the smaller increase seen in the adjusted data appears to be a result of earlier estimates of the U.S. national rate being substantially underreported. Clearly at a time when the World Health Organization reports that 157 of 183 countries studied had decreases in maternal mortality between 2000 and 2013, the U.S. maternal mortality rate is moving in the wrong direction. Among 31 Organization for Economic Cooperation and Development countries reporting maternal mortality data, the United States would rank 30th, ahead of only Mexico. . .

the maternal mortality rate for 48 states and Washington, DC, from 2000 to 2014 was higher than previously reported, is increasing, and places the United States far behind other industrialized nations. There is a need to redouble efforts to prevent maternal deaths and improve maternity care for the 4 million U.S. women giving birth each year.

The U.S. maternal mortality rate is clearly moving in the wrong direction—and it will continue to do so unless and until Americans do something to transform the healthcare system and solve the problem of inequality.

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There are, of course, many aspects of the U.S. healthcare system I have not had the opportunity to discuss over the course of this series on Unhealthy Healthcare. I am thinking of the growth of new, profitable medical centers (e.g., for out-patient surgery), plus biotechnology companies, diagnostic clinics, rehabilitation centers, and nursing homes. There are also all the nurses, orderlies, bookkeepers, and administrative staff, primary-care physicians and therapists in rehabilitation services, the hospital volunteers and the underpaid staff who provide care in nursing homes, the dedicated people who set up clinics for underserved populations, and many others who are forced to work under increasingly difficult conditions to provide decent healthcare to the American people.

But no matter how hard those healthcare workers labor, the current system of U.S healthcare is a failure. It provides less healthcare at a higher cost than in other rich countries. And it continues to leave large numbers of Americans, especially workers and the poor, without access to affordable, high-quality healthcare.

The U.S. healthcare system, as it is currently configured, only really works for those who make a profit—selling health insurance, pharmaceuticals, and in-patient and acute-care services in hospitals—and those who have the wherewithal to finance their own healthcare.

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As it turns out, the majority of Americans know this. According to the latest Gallup poll, 54 percent of respondents have a somewhat or very negative view of the healthcare industry. And 60 percent have only some, very little, and no confidence in the current medical system. On top of that, 82 percent worry (either a great deal or a fair amount) about the availability and affordability of healthcare in the United States.

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In fact, the majority of Americans (58 percent) say they would like to see the 2010 health care law, the Affordable Care Act, replaced with care for all—along the lines presented most recently by presidential candidate Bernie Sanders.

Obviously, workers and poor people in the United States need and want a healthier healthcare system. The question then is, what would should a system look like?

Here I’ll admit, I don’t have a detailed plan of what the U.S. healthcare system should be or how exactly it should be transformed. There are plenty of such plans out there (the best known of which is probably the single-payer program developed back in 1989 by the Physicians for a National Health Program). And I’m not about to develop and present a new one.

Instead, I am guided by a lesson I learned from an old friend (a veteran of more than three decades of working in the trade-union movement): formulate and win people over to the general goal and, once they’re committed to it, let policymakers and stakeholders negotiate and work out the details to reach that goal.

In this case, the goal is universal, affordable, high-quality healthcare.

Such a system would provide high-quality healthcare (physical and mental, encompassing prevention, acute-care, substance-abuse, rehabilitation, and late-life) to all Americans (without exception, especially those who at the middle and bottom of the economic ladder) at an affordable price (since, as I see it, Americans are willing to pay for decent healthcare but it should be according to their ability to pay, which it currently is not).

That’s it. We shouldn’t care how they provide it. Just that they do so.* And if the key components of the current healthcare system stand in the way, because they’re making profits on how the system is currently organized and don’t want to see real change, they should be bypassed or nationalized (as the case requires). Then, the other private and public entities, the ones actually committed to the goal, can get on with the task of imagining and implementing the universal, affordable, high-quality healthcare system Americans deserve.

 

*Although, to my view, a healthier healthcare system right now probably involves some combination of single-payer (federal and state) financing and a network of non-profit, community, and cooperative healthcare providers.

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Last Wednesday, as part of my Unhealthy Healthcare series, I showed that the recent slowdown in U.S. healthcare costs has been invisible to American workers, because they have been forced to pay much higher premiums and deductibles in order to obtain access to healthcare for themselves and their families.

That conclusion has been confirmed by a recent Wall Street Journal article about the fact that workers are increasingly feeling the pain of paying for their healthcare.

Middle-class households are finding more of their health-care costs are coming out of their own pockets.

David Cutler, a Harvard health-care economist, said this may be “a story of three Americas.” One group, the rich, can afford health care easily. The poor can access public assistance. But for lower middle- to middle-income Americans, “the income struggles and the health-care struggles together are a really potent issue,” he said.

A June Brookings Institution study found middle-income households now devote the largest share of their spending to health care, 8.9%, a rise of more than three percentage points from 1984 to 2014.

By 2014, middle-income households’ health-care spending was 25% higher than what they were spending before the recession that began in 2007, even as spending fell for other “basic needs” such as food, housing, clothing and transportation, according to an analysis for The Wall Street Journal by Brookings senior fellow Diane Schanzenbach. These households cut back sharply on more discretionary categories like dining out and clothing.

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While middle-income households are spending 25 percent more on health care, their real incomes actually fell 6.5 percent between 2007 and 2014, from $57,357 to $53,657.

Clearly, American workers are increasingly being squeezed by their employers at both ends—while they’re at work (since they’re working less and less time for themselves and more for their employers) and while they’re away from work (since they’ve been forced to assume a larger and larger share of the costs of their healthcare)

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Much of the debate about the U.S. healthcare system is focused on the role of public financing (in terms of subsidies and, for some, the possibility of a public option or even a single-payer program). But no one seems to want to look at the other key part, the actual delivery of healthcare to American workers and others. And that, regardless of the system of financing, remains mostly in profit-oriented private hands (which, as I argued earlier this year, undermines patient-centered healthcare).

There are a few exceptions, such as the Veterans Health Administration and Indian Health Service, whereby the government directly employs nurses, physicians, and others to provide health services to targeted populations. But the rest of healthcare is provided by private  (profit and nominally nonprofit) individuals, groups, and corporations.

As I discussed on Friday, a significant sector of private healthcare is the increasingly concentrated and enormously profitable pharmaceutical industry. Hospitals (which I’ve commented on many times over the years) are, of course, another key sector (at close to $1 trillion in 2014). That’s where Americans receive most of their in-patient care, critical care (including many without health insurance in emergency rooms), and an increasing number of out-patient treatments. And while hospitals appear to be independent from and non-overlapping with physicians (whose services accounted for roughly $600 billion in 2014), that’s an optical illusion. Not only do they compete with one another (in surgery, imaging, and other ambulatory services), each is forced to work closely with the other: hospitals rely on physicians to admit patients to their facilities, refer to their specialists, and to use their lucrative diagnostic services (with, as it turns out, illegal kickbacks), while physicians tend to their own patients within hospitals and are contracted for “in-house” supervision. And, increasingly, hospitals are directly employing physicians (and other healthcare workers) as salaried and piece-rate workers.

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U.S. hospitals are, as it turns out, remarkably profitable. And, according to a recent analysis by Ge Bai and Gerard F. Anderson (unfortunately gated), 7 of the 10 of the most profitable hospitals (each exceeding more than $163 million in total profits from patient care services) are officially non-profit institutions.

According to Anderson,

The system is broken when nonprofit hospitals are raking in such high profits. The most profitable hospitals should either lower their prices or put those profits into other services within the community. We need to develop incentives that allow all hospitals to make a fair profit while at the same time keeping prices reasonable.

It’s true, many other hospitals (56 percent in their sample of acute-care facilities) are not profitable strictly in terms of patient services (the median hospital lost $82 per adjusted patient discharge). However, as the authors explain,

the median overall net income from all activities per adjusted discharge was a profit of $353, because many hospitals earned substantial profits from nonoperating activities—primarily from investments, charitable contributions (in the case of nonprofit hospitals), tuition (in the case of teaching hospitals), parking fees, and space rental. It appears that nonoperating activities allowed many hospitals that were unprofitable on the basis of operating activities to become profitable overall.

The most important factors boosting hospital profitability were markups (especially for uninsured and out-of-network patients and casualty and workers’ compensation insurers who often pay the hospital’s full charge) and the combination of system affiliation and regional power.

In fact, 50 hospitals in the United States are charging uninsured consumers more than 10 times the actual cost of patient care. All but one of the facilities are owned by for-profit entities. Topping the list is North Okaloosa Medical Center, a 110-bed facility in the Florida Panhandle about an hour outside of Pensacola, where uninsured patients are charged 12.6 times the actual cost of patient care. Community Health Systems operates 25 of the hospitals on the list. Hospital Corporation of America operates 14 others.

Again according to Anderson:

They are price-gouging because they can. They are marking up the prices because no one is telling them they can’t. These are the hospitals that have the highest markup of all 5,000 hospitals in the United States. This means when it costs the hospital $100, they are going to charge you, on average, $1,000.

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It should come as no surprise, then, that, while the total number of hospitals has remained relatively constant over time, the number of those hospitals in health systems has continued to increase, thereby increasing regional power, markups, and profitability.

In another recent study, by Richard M. Scheffler et al., the authors found that the hospital markets in two states (California and New York) “were moderately to highly concentrated,” with mean Herfindahl-Hirschman indices of 2,259 and 3,708, respectively.* They also found that more concentrated hospital markets were associated with higher premium growth.

As expected, then, there is a continuing strong movement of hospital mergers and acquisitions—with at least 100 deals covering 178 hospitals, involving the takeover of profit and especially non-profit organizations, in 2014—leading to increased concentration in the hospital sector of the U.S. healthcare industry.

As Martin Gaynor explains,

There has been so much consolidation that most urban areas in the US are now dominated by one to three large hospital systems — examples include Boston (Partners), the Bay Area (Sutter), Pittsburgh (UPMC), and Cleveland (Cleveland Clinic, University Hospital). It is also now more likely that further consolidation will combine close competitors, given how many mergers have already occurred.

Clearly, the provision of healthcare through U.S. hospitals—both profit and, at least officially, non-profit—is generating enormous profits for their owners and top executives. But it’s Americans workers, who are both hospital employees and consumers of hospital services, who are paying the price.

 

*To remind readers, the Herfindahl-Hirschman Index is often used to evaluate the potential antitrust implications of acquisitions and mergers across many industries, including health care. It is calculated by summing the squares of the market shares of individual firms. Markets are then classified in one of three categories: (1) nonconcentrated, with an index below 1,500; (2) moderately concentrated, with an index between 1,500 and 2,500; and (3) highly concentrated, with an index above 2,500.

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