• In The Trenches

    The Economics of Our Health Care System Are Horrifying

    "And I scream from the top of my lungs, 'What's going on?' … I said, 'Hey, what's going on?'"
    -- 4 Non Blondes

    20933719 - hiker with backpack crossing valley with ash towards active volcano

    Happy New Year! I hope each of you had a great holiday season and that you were able to slow down, unwind and connect with family and friends. I had a great break, although I must confess that watching LSU hang 63 points on my beloved Oklahoma Sooners in the college football playoffs was not what I would call a perfect Saturday evening.

    Now let's talk health care and politics. As the calendar rolls into the 2020s, we find ourselves in familiar territory. It's another election year in which health care is a top priority for voters, and the fragility of our health care system is on full display.

    We are 27 days from the Iowa caucuses (Feb. 3), 35 days from the New Hampshire primary (Feb. 11), 56 days from Super Tuesday (March 3) and 301 days from Election Day 2020 (Nov. 3). This year's news cycle will be consumed by politics, and the politics of health care will be front and center for the next 300 days. Numerous polls, including a Fox News poll, show that health care is a top issue for all voters, regardless of party. The health care debate is intensified by the recent ruling by the U.S. Court of Appeals for the Fifth Circuit that throws the constitutionality of the Patient Protection and Affordable Care Act into doubt, again. The ACA case will undoubtedly be heard by the Supreme Court in 2020.

    In my last post of 2019, I focused on the health care issues that impacted family medicine and our health care system during the past decade. In that post, I noted that "health care policy in the coming decade likely will be defined by how we allocate/distribute health care services, as well as by accelerated efforts to control health care costs." I would like to explore that a little more in this post.

    In my view, health care policy is a constant push and pull between humanitarianism and economics. Put differently, it is doing all we can for people within the boundaries of available resources. In 2017, Atul Gawande, M.D., M.P.H., wrote a compelling article for The New Yorker that asked, "Is Health Care A Right?" Dr. Gawande opened the article by pointing out that "the United States remains the only developed country in the world unable to come to an agreement on an answer" to that question.

    The AAFP Congress of Delegates answered this question for our organization in 2017 when it adopted policy stating that "health is a basic human right for every person and that the right to health includes universal access to timely, acceptable and affordable health care of appropriate quality."

    Health care debates in the modern political era are highly partisan, but the challenges facing individuals, families, businesses and our health care system are growing urgent, and it is time to set aside legacy partisan baggage and get serious about creating a health care delivery and financing structure that can meet the needs of an increasingly unhealthy, aging and cash-strapped population.

    Our current health care debate is driven by three issues: an unhealthy population, a health care cost-shift and the economic fragility of the population. Let me explain.

    Unhealthy Population

    This will not come as a surprise to family physicians, but we are an unhealthy society. Unfortunately, we aren't getting healthier, either. This trend has been well documented by numerous researchers, including the CDC, which noted that six in 10 adults have one chronic condition and four in 10 adults have two or more. The CDC also estimates that 90% of the nation's $3.5 trillion in annual health care expenditures are for people with chronic and mental health conditions.  

    Here are a few examples of the prevalence of disease and the economic impact of these ailments:

    Health Care Cost-shift

    According to the Kaiser Family Foundation 2019 Employer Benefit Survey, the average cost of an employer-sponsored health plan for a family of four in 2009 was $13,375, with employee contributions accounting for $3,515 of that cost. In 2019, the cost was $20,576, with employee contributions accounting for $6,015. This represents a greater than 50% increase in the total cost of insurance over a 10-year period. As a result, employers are engaging in a massive cost-shift, pushing more of the financial burden onto their employees.

    Here are three key statistics demonstrating this fact:

    • The average employee contribution for family coverage has increased 71% since 2009.
    • On average, employees now directly pay for 30% of the cost of their employer-sponsored health insurance. (This is much higher in smaller companies.)
    • The average annual deductible has increased 100% during the last 10 years.

    And this key statistic should cause concern: During the past decade, the average worker's contributions in the form of premiums, deductibles and other out-of-pocket costs has increased 56%, yet wages have, on average, increased only 26%. This employer to employee cost-shift is placing more and more economic burden on individuals and families, and there are consequences.

    Economic Fragility

    The environment that contributed to our last major health care debate in 2010 was different than today's, but the foundational economic elements for individuals and families are quite similar. In 2010, approximately 46.5 million non-elderly people were uninsured, and the focus of the debate surrounding the ACA was on expanding coverage. The ACA significantly reduced the number of uninsured from an estimated 50 million people in 2009 to a low of 26.7 million people in 2016, but that trend is changing. Today, there are an estimated 30 million people who lack insurance coverage.

    The core issue then, as now, was the economic impact of obtaining health care coverage and using that coverage in a timely and effective manner. The economic fragility of the American family, combined with the increasing individual costs of health care, are placing tremendous downward pressure on individuals and families. As a result, Americans' utilization of physician services is changing, and we should be concerned.

    In 2010, unemployment was about 10%. Today, unemployment is at or near record lows, hovering around 3.5%. Despite this, 38.1 million Americans live in poverty, according to a Census Bureau report titled Income and Poverty in the United States: 2018.

    Equally concerning is the simple fact that despite low unemployment and growing wages, most Americans continue to live paycheck to paycheck. In fact, according to a Harris Poll, 78% of workers are living paycheck to paycheck, an astonishing 25% report that they have not been able to make ends meet every month in the past year, and 20% have missed payments on some smaller bills. Seventy-one percent report being in debt, and 56% say they will always be in debt.

    Now, juxtapose these facts against the trends in health and health insurance I outlined in the previous two sections and you see a volcano ready to erupt. The signs of an impending explosion are clearly visible:

    • According to a recent Gallup survey, Americans borrowed an estimated $88 billion in the past 12 months to pay for health care, and 65 million adults had a health issue during the past 12 months but did not seek treatment because of cost.
    • A report from The Commonwealth Fund titled Losing Ground: How the Loss of Adequate Health Insurance Is Burdening Working Families found that in 2007, two-thirds of U.S. adults under age 65, or 116 million people, had medical bill problems or debt, went without needed care because of the cost, were uninsured for a time or were underinsured -- that is, whatever coverage they had was not providing adequate protection from high medical expenses.
    • According to the Consumer Finance Protection Bureau, one in five credit reports includes medical collections or unpaid debt.

    The economics of our health care system are horrifying. Sara Collins, Ph.D., vice president for health care coverage and access at The Commonwealth Fund, summarized our current environment well when she stated, "We are seeing a perfect storm of negative economic trends threatening working families in the United States. While gas and food prices are increasing and home values are declining, the rise in health care costs is surpassing income growth and fewer people have adequate insurance. As a result, working people are struggling to pay their bills and accruing medical debt."

    These are the facts that will shape our political debates during the next 10 months, and they are also the problems that need solutions. In my next few posts, I am going to share my vision and thoughts on how comprehensive, coordinated and continuous family medicine can solve these problems and set our health care system and our population on a physically and financially healthier trajectory.


    The opinions and views expressed here are those of the authors and do not necessarily represent or reflect the opinions and views of the American Academy of Family Physicians. This blog is not intended to provide medical, financial, or legal advice. All comments are moderated and will be removed if they violate our Terms of Use.