From the federal debt, falling life expectancy, and stagnant wages, most of American’s top concerns can be addressed in one fell swoop…if politicians are willing to take on vested interests in the healthcare industry. While I wouldn’t hold your breath, America’s healthcare crisis isn’t only about the millions of uninsured; our inability to control spiraling costs may be the single biggest issue weighing the county down.
Spending Too Much….Far Too Much.
By this point, it is almost common knowledge that America spends vastly more on healthcare than any other nation on the planet. This is not only true in gross dollar terms, it is also true in per capita terms (per person). At over $10,000 per person in 2018, America is spending far more per capita than any other nation; about double that of other developed nations. And yet, unlike the vast majority of other countries, America is not providing healthcare to a substantial portion of its citizens.
One might think that in spending twice as much on healthcare that Americans are living longer and healthier lives...but they are not. America’s healthcare system is not delivering the kind of results that it should. Life expectancy, one of the proxies for how well a healthcare system is working, shows America’s gains plateauing in 2010. Since 2014, life expectancy has been falling…while the rest of the world continues to rise. Even in terms of healthspan, which measures the number of “healthy” years one lives without a major chronic illness, American’s aren’t doing very well either, with an average healthspan of about 66 years.
A Spiraling Debt Crisis
Given that America spends far more on healthcare than any other nation, it should come as no surprise then that a disproportionate amount of government debt stems from the cost maintaining Medicare and Medicaid. In 2018, one of every four dollars spent by the United States government was spent on healthcare (not including Social Security and VA benefits). Healthcare’s proportion of the Federal budget is expected to increase in the coming years.
For every dollar the government spends on an MRI, that is one less dollar that can be used for infrastructure, lower taxes, or R&D subsidies. America’s infrastructure is in shambles, with bridges, tunnels, and airports that are overburdened, inefficient, and in dire need of repair or replacement. The state of infrastructure in America makes it difficult to manufacture goods in the US compared to countries like China that have the latest and best trains, ports, and airports.
Furthermore, companies operating in Europe, Japan, and China…etc also do not have to shoulder the cost of healthcare for their employees to the same extent that American companies do. American companies face a “triple tax", paying their portion of Medicare payroll taxes, paying their portion of employees’ health insurance coverage, and finally indirectly subsidizing the millions of uninsured individuals across America.
So while our politicians might bemoan about jobs lost overseas, and it is a common refrain that other countries “steal” these jobs using “cheap labor,” this is but a convenient way of scapegoating a deeper issue. The American government hasn’t constrained healthcare costs, leaving American infrastructure substandard and kneecapping American companies with expensive benefits packages.
In the past few decades, worker productivity in America has improved dramatically, with workers producing far greater output than ever before. Yet, unlike in the prior decades, employees have seen their wages stagnate. It might seem that the companies are absorbing the productivity gains for themselves and failing to return them to employees, but this is not entirely true.
Much of the gains that would have gone toward salary increases have been absorbed by the growing cost of employee benefits, with healthcare forming the lions share. Our failure to control healthcare prices have placed a hidden tax on Americans that are eating into our salaries. Until our politicians are willing to confront the healthcare lobby, expect that your wages will not keep up with inflation for generations to come.
America’s dysfunctional healthcare system is the focal point for many of the nation’s woes. There is no denying that America is bleeding to death…bleeding red ink that is leaving us with shorter, sicker lives, smaller paychecks, and fewer jobs. Our politicians needed to act, years, if not decades ago, to stop the bleeding. Now it is too late to apply the tourniquet, more drastic action is required.