Fixing health care

May 25, 2009

morici— Peter Morici is a professor at the Smith School of Business, University of Maryland School, and the former Chief Economist at the U.S. International Trade Commission. The views expressed are his own. —

American health care is broken.

At 16 percent, the United States spends a much larger share of GDP on health care than Western European economies. Yet the United States has about 45 million uninsured, while its peers do not.

Many Americans between 50 and 65 cling to jobs they don’t want simply to keep health benefits. Their European cohorts are not so constrained.

Simply, European systems ration and control prices more effectively than do U.S. private insurers.

Americans can see a specialist quicker than patients elsewhere; however, U.S. private insurers impose endless paperwork and multiple trips to tawdry, inconvenient locations for blood work, x-rays and other tests that should be conducted simultaneously and under one roof with the specialist.

After your internist finds blood in your urine, it takes many absences from work and visits to moribund waiting rooms to locate the kidney stones, and finally schedule surgery.

In Britain, the National Health Service just makes you wait—it’s cheaper.

Instead of formal rationing, U.S. insurance companies harass patients with processes reminiscent of queuing procedures for a Black Sea vacation in the old Soviet Union. They chisel down physician fees and hospitals stays and lavish the savings on insurance executives who become wealthy in the bargain.

Prescription drugs are another issues altogether—pharmaceutical companies set prices arbitrarily and well beyond the reach of even the tough guys at insurance companies.

President Obama has some good ideas and some bad ones. He proposes a government run program that uninsured Americans may join if they can afford; however, since most of the uninsured can’t pay full price for coverage, he plans to subsidize their membership with tax dollars. In addition, he wants to pay doctors to use computers and software, and establish a national data bank on best medical practices.

Hence, he aims to fix the system by creating a massive new entitlement, subsidizing doctors to buy technologies other businesses already purchase to increase efficiency and profitability, and compile information doctors and insurance companies already collect when they prescribe and approve treatments. Those will drive costs up more than lower them.

Republicans reflexively oppose another government health agency, and this is to the detriment of genuine reform. Medicare has proven more effective at providing doctor and hospital services to the elderly than private-managed-care alternatives.

My plan is simple. Establish an optional plan, similar to Medicare, for Americans between 50 and 65. Let those Americans subscribe, if they choose, by transferring their employers’ payments to that system or keep their existing coverage. That would create needed competition for private insurers and drive down prices, and permit statist Democrats to prove the government can do better or fail.

Require drug companies to charge Americans no more than they charge in the regulated markets of Canada, Britain, France and Germany. Drug prices would rise abroad as those systems would no longer be able to free ride on Americans paying for drug company research, but U.S. prices would fall to a lot less than current levels.

Finally, the government already pays for about 45 percent of U.S. health care. President Obama has promised to weed out waste. Fine—cap spending at its present share of GDP, and find the money there to pay for the uninsured with the savings.

Obama believes in international competition for business—let him show that U.S. government health care can be as efficient as government systems abroad in providing universal coverage.


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“…let him show that U.S. government health care can be as efficient as government systems abroad in providing universal coverage.”

This is probably the funniest thing I will read today. Probably better suited for the oddly enough section rather than the commentary, but seriously, thank you for making me laugh. I needed some levity to break up this monotonous day.

Posted by Matthew L. | Report as abusive

What the Heath care industry needs is to get rid of Insurers, who set the prices of just about everything, all so they can make the most money of course, why else would they go into insurance? If they wanted to help people they would have went into Med school.
You want a radical idea for reforming health care?
Nationalize Casinos, State Lotto’s go towards each states health program, and put Americas gambling vice to work keeping Americans healthy in a national “FREE” health plan. How many casinos launder money for gangs anyway? And where is all the states Lottery money going? Certainly not for schools, and try getting a state lottery audited, just try, i dare you.
The benefits:
1. More jobs in Casinos and the web of industries supporting those casinos like Spa’s, Food, Transport, ect. Who wouldn’t go to a casino more knowing even if you lose, your not really losing.
2. Without insurers in the loop, prices can be set for procedures that don’t gauge anyone.
3. Doctors pay wouldn’t be effected at all, and the free market will hold sway as better doctors would still get better pay based on performace.
4. Malpractice would be handled differently, saving much money for hospitals and doctors alike.
5. Jobs in the healthcare industry are projected to grow – this would ensure the money needed.
6. The ease of financial burden on families, rich and poor.
7. The small handful of people who would be upset over this, screw em.
No one should make money on the ill and sick except those who care for them- screw health insurers, they been screwing us for decades.
And Casinos have always been a hub for underworld activity, like Prostitution, drugs, and money laundering; besides, only Mafia types want to make money on the vices of their fellow human beings.

To me this is nothing but a win, win, win for the entirety of Americans, and the small amount of people who will be upset? Well, at least they’ll have health care.

Posted by C.D. Walker | Report as abusive

The problem is rationing. When people in the world need shoes, it is arrogant to the extreme to believe you can give away motorized wheelchairs and still be “competing” in the free market. Everyone drowns in a pool of unacceptable risk.

Posted by Reality Bites | Report as abusive

All entities created by man are imperfect. No where in the debate on health care is the issue of diet and exercise addressed. Europe and Japan spend considerably less on health care and much more for food. Monsanto’s GMOs have long been the target of complaints about nutritional deficiency. We are a fast food socoiety and when we cook at home we are more likely to eat a 16 oz. T-bone off the grill rather than Salmon or Tilapia.

Americans have been long identified as being the most obese society in the world. We spend a fortune watching other people exercise (sports) but do little of it our selves. Some Americans work to many hours or are financially constrained. Many employers mandate overtime rather than hire so as to save on employee health care costs. I don’t think I need to comment on the effects of over worked parents regarding family life.

Having any kind of health care system not paid for by employers would reap benefits. A 40 hour work week would be less costly to business should the government enforce it. Some hiring would follow relieving some of the burden on States to provide social safety net services. Revenues would at best remain neutral. Any improvement in employment now would assist government efforts to keep people at risk for foreclosure in their homes.

I think simply focusing on the delivery component of health care will yield only minimal results. As a nation we must choose a healthier all around life style. We just might mitigate some of societies ills in the long run.

Posted by Anubis | Report as abusive


People need shoes, give them shoes, what the hell are you talking about? If someone needs shoes, don’t give them a car! Your too funny pulling that weird analogy out of somewhere that has no real bearing on healthcare.

“I think simply focusing on the delivery component of health care will yield only minimal results”

Huh? You are trying to gloss over the main NEED in our healthcare- THE DELIVERY of that care to the people who need it. People who are sick NEED CARE, and NEED it DELIVERED, instead of having to search and wait and drive ridiculous distances to see specialists to help them get better. I question the Humanity, the ethical and moral foundation of any person who wishes to make money on the illnesses of humanity by sitting behind a desk and making life and death decision based on statistics(human patients, each with a soul) while keeping the large insurers bottom line and profits in mind. You want to make money on the sick, get your hands dirty and work with them. Working is American.

Posted by C. D. Walker | Report as abusive

Medical professionals have to step up to the plate and quit gouging the insurers, who in turn make up the difference with higher premiums. First hand experience has taught me to check medical bills…remember the ‘not your doctor’ who stuck his head in the door of your room, asked how you were doing, and left, never to be seen again? You can find him in the billings, to the tune of 150-250 bucks. That’s the tip of the iceberg. There’s a movement (from many medical professionals who actually care and are fed up with the corruption) towards the single payer system. Everyone pays into a pool, everyone gets quality health care…guess what?
That’s ‘government of the people, by the people, and for the people’…not ‘socialism’ which is the latest trendy tag used by the selfish and greedy for anything that might take one cent of the taxpayers money out of their pockets.

Posted by emunki | Report as abusive

Perhaps I was not clear C.D.. I believe a single payer system by taxation is the most cost effective way to deliver health care. I would support such a system. While that should make health care available to all citizens I still maintain we must eat healthier foods, exercise more and moderate alcohol consumption. Otherwise the general poor health of Americans will continue to be a drain on our economy. Should our old habits continue it is doubtful we will see significant savings in health care costs if any at all.

Posted by Anubis | Report as abusive

“I still maintain we must eat healthier foods, exercise more and moderate alcohol consumption.”

Absolutely right, completely agree. But the will of a person must WANT to do those things. Some people like to eat, and overeat, and not exercise. We can not make them. What we can do is help them, encourage them, help them to see the benefits of a healthier lifestyle. Provide the information needed. Get them with a nutritionist, a workout instructor, a program like the ones I see on Dr. Phil and such. But only if they want.

Posted by C.D. Walker | Report as abusive

Why the monstrous sucking up to private insurance companies?
Insurance companies don’t offer a genuine product.

Posted by SG | Report as abusive

I remain healthy most of the time with plenty of effort. Do not see why my money or the govt should support those who do not ‘want’ to be healthy. The vast majority may not need medicine, just more common sense! Remove all insurance and give us cheaper clinics and personnel.

Posted by Bharati | Report as abusive

While I agree, adults should be more responsible for their health and exercise more, as this would reduce health care costs. However, the cost of other government funded programs such as “Equality Care” (Wyomings’ version of Medicaid) could be greatly reduced if those programs would pay for visits to the local emergency room only if the treatment received is due to an emergency!! As an example, I heard a young single mother talking about how she had to take her child to the emergency room because they feel down and scraped their knee. After getting X-rays and who knows what other unnecessary treatment, at a cost of some $1200, the child was sent home with some anti-biotic ointment and and band-aid. If the mother had simple cleaned the wound and put OTC anti-biotic ointment and a band-aid on it at home, at a cost of less then $5, this blatant waste of taxpayer dollars could have been avoided. Perhaps it should be mandatory that everyone take at least a basic first aid class to qualify for tax payer funded health care programs and any visit to the emergency room which is not an emergency be paid for by the patient or in the case of minors by their parents!

Posted by Elaine | Report as abusive

The current trend of blaming the sick for being sick is wrongheaded and indicates the lack of education in basic medicine. What is considered a trendy and faddish “healthy lifestyle” today, maybe found to be a hazard 10 years from now. Out of your control environmental hazards may also ‘trigger’ chronic illness for which lifestyle choices provide zero protection. Do you want your care metered on choices you made with the best information available at the time you made them a decade earlier and judged as deserving of your troubles? Surely you could have done “something” yourself to mitigate it, right? Surely you shouldn’t have used that cellphone so much and should have kept up with the research regarding those EMFs messing with your brain….right?

Most of the comments here point to nutrition and exercise. While this is important in ones overall health picture, it isn’t a panacea against illness. Obesity causes are not all hand to mouth problems; some stem from side-effect of medications that are not optional, some stem from chronic diseases which are not linked to lifestyle choices. In physiology ones knows that the very act of aging is defined by body systems which do not perform optimally. Painful arthritis limits mobility and is determined by DNA, not lifestyle. Hormonal levels change and slow, leading to creeping weight gain no matter how little you put in your mouth because of declining BMRs.

The conversation regarding health care delivery sorely requires HANDS ON PROFESSIONALS, who are EDUCATED. Making pariahs of those who become ill challenges Mean Mr. Karma to exact his revenge on those who make uneducated judgments and speculate about others without experience or education as a guide.

The year over year double-digit increases in health care costs are also related to the market driven-profit driven outcomes. Sole source providers of durable equipment, medications, supplies suffer from near-monopolistic abuses. Ad hoc insurance billing/costs mean there are more billing agents per patient in hospitals than hands-on providers of the care. Without serious reforms in business, tort reform, insurance and a shift to a patient-centric care system vs a profit-centric one, healthy lifestyle choices will not provide the efficiencies or decline in costs that are anticipated. It puts the burden in the wrong places before addressing the more serious and egregious reasons for the unsustainable increasing costs and harsh metering of care.

Posted by NS | Report as abusive

America is still dominated by a deeply ingrained thinking – government is bad, everything it does is bad. It, the the liberal thinking associated with it, is the source of evil. Conservative America has spent a couple of decades trying to destroy government. They believe free enterprise solves all problems – and so the current health care ‘problem’ (and throw in the economic crisis) must be due to a conspiracy of the liberals to screw them. Much of America would rather die or go bankrupt rather than have the government run health care insurance and control prices and ‘liberty’. There is great satisfaction in dying and win ideologically.

Health care is just one brewing civil war that has inflicted America, marred in irreconcilable differences on just about all fronts. The country federal and most state governments are bankrupt, on the verge of destruction much to the satisfaction to those who entertain neocon thinking. The population is fractured and polarized to the extreme. Maybe it will take a real bloody civil war to clear out the decks.

Posted by The Real Deal | Report as abusive

As far as the general health of Americans – it all starts in childhood. Eating and exercise habits are formed when we are young. We need more physical education time for our kids in grades K-8. It should be daily, not just twice a week like it is in so many of our schools. Physical activity is critical to the health of our children. I imagine that the rate of ADHD and ADD would also decrease as a result. Another thing we need to do in our schools is provide healthy food in the cafeteria, not the starch laden offerings that we currently serve our future generation. Fresh vegetables are cheap, so why don’t we feed them to our kids? Moreover, healthy kids = smart kids. We need universal health care with caps on the prices drug companies can charge, PLUS health reform in our schools if we want to compete in the global economy.

Posted by LR | Report as abusive

Yes–healthcare is a major problem–I have been a physician 30 years and still am in a quanry regarding what to do–problem–lobbyists and special intersts hold sway over the all haealth care decisions–I trained in US, Canada and Australia and know the pros and cons of all the systems.–Of course, I could scream at my patients who are obese, smoke, drink and use illegal drugs and tell me it is their right to do so—after all the government has “to take care of me” However, let us ger real and come up with a solution.
First, I see the one payer insurance as the only solution overall-if it has to be funded by a special “Health tax (value added tax)–so be it. I am also a MBA and have studied revenues and costs in every major system–it is the only way to cover all–including all 40 million uninsured. As regarding Insurance companies(Also have Insurance license)—too much waste in commisssions and payments to executives to save money at any cost–Yes there has to be some controls and limits to care–yes, there has to be some agency that is responsible for making decisions on care and costs. We must control drug companies who in US pass on 90% of research to US and little to rest of world. It will take all of us to realize that a complete overall is necessary or a total collapse will occur–yes, I know of physicians and hospitals who overcharge–and ER that go crazy on simple cuts–and they have to be controlled–Yes, I know of illlegal aliens who use the ER as a first aid clinic and care little about the expense–Socialized medicine as in Canada will not work–it was a terrible experience for me–believe me they do control costs -but at a terrible price–death of patients. Dr. Morici’s plan is a start–but does not go far enough–and the plitical consequences of special interests will scream like banshees–with all looking out for their own intersts–not the interests of the American public–I do hope that eventually politics could be removed from this decision-but I doubt it–remember–“one can not feast on champagne on beer prices”

John Krempen, MD, MBA

Posted by john krempen | Report as abusive

I agree, single-payer system is likely the only way to properly/fairly fund health care. Its painfully obvious that business interests have trumped public interest. Of note in particular is way in which R&D is funded, and executed; leading to high expectations of returns/profits in this traders market environment. The next highly advertised drug is a killer app all too often, has led to distrust and noncompliance issues.

A strong, viable public health system that provides BASIC care would lessen the strains on hospitals, ERs, etc. Provision of basic care would decrease costs. Those who enter health care as a vocation rewards were reduced that couldn’t be measured in digits while stresses increased.

Currently, people distrust the medical system and rightfully so. You’ve seen as I have “health fads” come and go based on fuzzy research with large ad campaigns. The relationship between physician/nurse and patient disrupted by those self-interested creating the incentives of individuals to self-diagnose and treat.

Unrealistic goals and profit motivations in directives of the health benefits of particular foods, OTC remedies, etc that change, not limited to FDA and NIH incentives, have all contributed to this distrust. Under the current “guidance” of what constitute an overweight individuals and “unhealthy” even the Governor of California would be ‘classified’ as overweight and not healthy. We have more than one health crisis, one might ask why asthma has reached epidemic proportions among otherwise healthy children/adults not exposed to smoking!!

A hybrid system which allows public health to deliver basic/chronic care and highly reformed insurance industry with oversight to supply more extensive/private care beyond that. Clinics are no fun but do work if given the oxygen/funding. That public health system has a record of eradicating Polio and managing TB outbreaks some 50-60 years ago. Public health systems are a first line of defense in communicable disease and provision of data/vaccinations, common chronic disease monitoring, etc. Stripping out incentives and funding of research for profit-motivated expectations is mandatory, as it direct marketing of Rx mediations. Its time public interest, patient interest becomes the focus of health care reform.

No system will be perfect, every system will have those who abuse it. However, the abuses in this current system is highly lopsided and enabled to the negative in sane/responsible patient care. Finally, it isn’t efficient to further burden health care providers to include a degree in economics to exist and provide care or spend valuable time negotiating standard care for their patient vs what an insurance company will agree to pay.

HR676 written in 2007 with broad bipartisan support provides the best chance of success including est.annual $300B savings just merely by standardization of billing alone. It is disappointing the current Administration has ignored it.

Posted by NS | Report as abusive