Health Care

NO MORE PROFITS BEFORE PEOPLE

When I ask people the question, “What is the main issue with health care in the United States?” the predominant answer is either affordability or access. The Affordable Health Care Act tried to address those issues by

  1. Eliminating pre-existing condition exclusions
  2. Opening up state and federal exchanges to purchase insurance
  3. Providing subsidies for premiums based on income.

But what is the root cause of the health care crisis in America? The root cause is quite simple. Health care in the U.S. is motivated by profit maximization. While profit maximization is good for CEO pay, the rest of the country is drowning in medical debt. The Kaiser foundation reported that one in five Americans (WITH HEALTH INSURANCE) struggle to pay their medical bills. The United States has an average annual health care cost of $9400 for every person in the country. This figure is 2 ½ times the average of the rest of the western hemisphere countries. It equates to over $3 TRILLION annually.

Why does health care cost so much in the U.S.? It is estimated 1/3 of the total expenditure goes for salaries, benefits and administration. In other words, health care pays well. The top 20 pharmaceutical company CEOs were paid between $47.5 million and $14.9 million in 2015. The total CEO compensation for top publicly traded health insurance companies ranged from $22 million to $15.3 million. Hospitals are no slackers when it comes to rewarding their top executives either as 75% of the non-profits pay in excess of a million dollars annually with some outliers in the $5 to $10 million range. And consider this is just the CEO. Chief Financial Officers, senior vice-presidents, senior executives are all in on this gravy train. Bloomberg Company reports that health care executives were the best paid executives in 2016, bettering Technology, Energy, Financials, Retail, Industrials and Telecoms. In other words, health care is where the money is to be found. And in case you think they have suffered since the ACA was passed, think again.

With all these expenditures, a logical question is “Well the U.S. spends a lot of money on health care but isn’t our health care the best in the world as many politicians claim? The life expectancy ranking of theUnited States is now 31st versus the entire world. (Source: World Health Organization in case you want to claim this is “fake” news). Now, while you might not be surprised to see western countries like France, England and Germany with better life expectancies than the U.S., how about countries like Malta, Slovenia, Chile and Costa Rica. Hey, we do better than Cuba. They are ranked 33rd right ahead of Qatar, Croatia and Albania. That is the company we are in. And no, they don’t spend anywhere near what we spend.

The bottom line is costs are out of control and have to be reined in. A single payer system would help. Allowing people to “buy” into Medicare before age 65 would help. But these are just more band aids on the problem. The European Union is considering implementing shareholder voting requirements for executive pay as they are concerned about the negative impact on economic growth that occurs when companies make short term decisions to maximize pay at the expense of the long term performance of the company. The U.S. Dodd-Frank reforms aimed at cleaning up Wall Street, made an annual vote on pay mandatory for all public companies, although there was no enforcement or mandatory compliance, so you can imagine how much impact that had. And even with this meaningless “get tough” approach the GOP still wants to repeal Dodd-Frank. Here closer to home in Arizona (that bastion of liberalism) voters have collected signatures to place a referendum on the ballot to limit hospital CEO pay to $450,000 annually. And as expected, the hospitals are spitting nails over that possibility.

So where does Greg Walden stand on the cost of health care as an issue? With a combined contribution of $469,000 from the health care industry to his last campaign, I’ll let you formulate your own answer. My role as a member of congress will be to press for these types of reforms. Unlike Greg Walden, I probably will not get the annual PAC contribution from the health care industry. But there is a bright side. I will not have to waste my time on the phone begging for their contributions.