Home > Articles

Introduction to Overhauling America's Healthcare Machine

  • Print
  • + Share This
Douglas A. Perednia explains that improving the efficiency of the system might be the only way to prevent a meltdown of the larger economy and restore growth in the standard of living.
This chapter is from the book

Introduction

  • "Courage is what it takes to stand up and speak; courage is also what it takes to sit down and listen."
  • Winston Churchill

Have you ever wondered why everyone talks about spiraling healthcare costs and insurance premiums, but no one ever seems to explain or address their root causes?

Do your eyes glaze over when you hear news reports and politicians talking about healthcare because it seems to be so big and complex that no one could ever understand it?

Have you ever wondered how it's possible for the richest country in the world to spend more than $2.5 trillion on healthcare each year, but still not be able to provide coverage to more than 15% (50 million) of its citizens?

Are you concerned that the huge, complex, and open-ended 2010 healthcare reform law signed into law by President Obama didn't really solve anything, and is simply setting the stage for higher costs and more healthcare system upheaval down the road?

If so, this book is for you.

The good news is that while healthcare in America is dysfunctional and complex, its core problems and their solutions can be readily understood by anyone willing to read and make use of a little visual imagery. This is the big difference between the complexity of practicing medicine versus the complexity of the healthcare system. Understanding the practice of medicine requires a relatively detailed understanding of anatomy, biochemistry, pharmacology, physiology, pathophysiology, and a host of other specialized knowledge. In contrast, the healthcare system in the United States (as in any country) is simply a set of business relationships and regulations. Anyone who has purchased a product online is perfectly capable of understanding the process of ordering a laboratory test or submitting an insurance claim. The trick to understanding the whole thing is to not be intimidated and to resist being snowed by special interests who might want to assert that "their business requires special expertise" before it can become comprehensible.

But why should you or anyone else care about this slow-motion disaster and how to fix it? Two reasons: your money and your life.

America's existing healthcare strategy is financially unsustainable. Left unchecked, it will continue to consume ever larger amounts of government and personal income. But, it is also medically and socially unsustainable. Government policies are increasingly making medical decisions for both you and your doctor, often with little or no science behind them. Unless our healthcare machine is truly reformed and simplified, we can look forward to being poorer, less healthy, and more rigidly regulated in our personal lives than ever before.

As Figure 1.1 shows, we already pay more for our healthcare than the citizens of any other country in the world—both in absolute terms and on a per capita basis.

Figure 1.1

Figure 1.1 Healthcare Spending per Capita in the United States Compared with Other Developed Countries, 2007 (U.S. $ Purchasing Power Parity)

Providing medical care to just 85% of the population now costs more than $2.4 trillion annually. That's nearly 17% of our gross domestic product, or about $6,402 for every man, woman, and child—whether or not they're covered by health insurance. This is nearly double the amount spent on healthcare per capita in nearly every other developed country, and it's breaking our collective bank. As a nation, we now spend more on healthcare than any other aspect of living: more than defense ($2,901 per person), more than spending on all types of energy ($3,642 per capita in 2006.)1, more than on education (about $3,218 per capita), more than on housing (about $3,002 per capita), and almost ten times what we spend each year at Christmas (almost $800 per person). Even worse, the inflation rate for healthcare—about 9% in 2010—is rapidly outpacing growth in income and is more than twice the overall rate of inflation. The Center for Medicare and Medicaid Services estimates that total U.S. healthcare expenditures will continue to grow to more than $4.1 trillion, or $12,782 per resident, by 2016.

Who pays this tab? You do. Even children aren't immune. It's all a result of the wonderland of U.S. healthcare financing, where cost shifting is the rule rather than the exception.

If you're a typical working person, this escalating cost is making you poorer every year—even if you think that your employer is picking up the tab. If you're a businessman, the cost of healthcare is making you less competitive because you're less able to afford high-quality staff. If you're retired and on Medicare, current policies will probably force you to spend more out of pocket or reduce your access to doctors. And if you're a politician, there's a good chance that your political survival will depend heavily upon actions that you take on healthcare over the next few years.

But the greatest sin of the U.S. healthcare system is not that it is expensive, but that it's inefficient. It might not be so bad paying all that money if it meant that everyone was getting excellent access to top-quality care and better health outcomes than those paying less in other countries, but that's hardly the case. Instead, the system that we've created wastes money and resources at an astonishing rate of billions of dollars every day. Between one-third and one-half of what we spend does absolutely nothing to improve health or add value to the lives of patients. Or to put it another way, with the amount we're wasting on a lousy business model, we could pay for the entire annual cost of national defense and Christmas. If the current healthcare system was an employee, you would fire it. If it were a vendor, you'd choose another one. And if it were a patient, you'd prescribe immediate surgery to excise the diseased portions.

Unfortunately, the 2010 healthcare reform law does nothing to change any of this.

The Obama/congressional legislation is more than 2,400 pages of complex, special interest–friendly legislation that will implement 168 new federal committees, panels, programs, and Medicare benefit cuts, and cost the American taxpayer an additional trillion dollars over the next ten years. It is a top-down approach; one that inevitably creates more rules, complexity, and paperwork, and ultimately pits government regulators against healthcare providers, their patients, and you.

This book describes a different approach—one that it's not too late to take. What we and future generations need is a logical, comprehensive, and apolitical simplification of the existing healthcare system; one that could be implemented with roughly 200 pages of legislation instead of 2,000. A system that gives all healthcare providers and their patients more medical and financial security, enhances market-based competition, slashes administrative complexity and overhead costs, reduces the price of healthcare goods and services across the board, and requires no increases in federal funding. An approach that would save about $570 billion annually in national healthcare expenditures, while covering more people than ever before.

The urgency of fixing the healthcare system is best appreciated in the context of a single fact: Resources are finite, while people's wants are infinite. In a world characterized by a growing population, rising commodity prices, expensive energy, and an aging population in developed countries, the luxury of wasting close to a trillion dollars annually has clearly become unsustainable. For all practical purposes, it is an unlegislated tax of nearly $3,000 per American per year.

Improving the efficiency of the system might be the only way to prevent a meltdown of the larger economy and restore growth in the standard of living. And if the opportunity is large, so are the consequences of continuing on our current path.

  • + Share This
  • 🔖 Save To Your Account

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.

Overview


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information


To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.

Surveys

Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.

Newsletters

If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information


Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.

Security


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.

Children


This site is not directed to children under the age of 13.

Marketing


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information


If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.

Choice/Opt-out


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information


Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents


California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure


Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.

Links


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact


Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice


We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020