In the US, health care organizations were once required to be nonprofit. Then President Nixon signed into law the Health Maintenance Organization Act of 1973, which permitted medical insurance companies, hospitals, clinics and doctors to begin functioning as for-profit business entities.
The inevitable consequence of that act was to dramatically increase the cost of health care, making it unaffordable for an ever-growing number of Americans. And though the Affordable Care Act (aka Obamacare) has helped, the cost of health care rose from an average of $355 per person in 1970 to $11,172 in 2019. Accounting for inflation, that’s an increase of roughly 6-fold!
Indeed, according to the Center for Medicare and Medicaid Services (CMS), US spending on health care reached $3.6 trillion in 2018 (the most recent year for which data is available) 17.7 percent of our GDP. And the earnings of health insurance companies exceeded $236 billion in 2018.
Perhaps the biggest winner in the health care industry is big Pharma. According to Statista, Americans spent $360.3 billion on pharmaceuticals in 2019 – up $15.8 billion from the previous year. And up a whopping $239.3 billion from 2000. That increase is reflected in the cost of most medications. A case in point: For asthma patients like me (of which there are nearly 20 million in the US), the annual cost of preventative medication is roughly $2,500 per year – almost double what it cost less than 10 years ago. Has the drug changed or improved over that period? No, only the price has changed. And, of course, the profits for the manufacturer and their distributors.
The increase in the cost of many other pharmaceuticals is even more dramatic.
Pharmaceutical companies justify the increases by claiming that the money is needed for research and development. Yet, you, the taxpayer, contribute roughly 30 percent of the cost of development of pharmaceuticals. Despite the increased costs and your contributions, there has been little increase in FDA approvals for drugs in recent years. That’s mostly due to the companies’ focus on acquisition and mergers. In other words, the companies are investing their profits in stock buyouts rather than research and development.
Since 1996, there have been 46 mergers and acquisitions of the world’s pharmaceutical giants. Over that same period, big Pharma has spent billions to lobby the US government. According to Statista, the industry spent $281.4 billion to lobby our government in 2019. And big Pharma is not alone. Organizations representing doctors, nurses, hospitals, clinics, medical equipment manufacturers and health insurers all spent billions on lobbying.
In total, the health care industry spent $711.3 billion on lobbying for 2019.
Is it any wonder then that our health care costs keep rising at rates far greater than inflation? Is it any wonder that we pay 4 times more per person for health care in the US than any other country in the world while experiencing steadily declining results?
Far too much of your health care expenditures are going to support the multi-million dollar salaries of executives, lobbyists and the profits of shareholders.
So, when political candidates are asked how they expect to pay for the cost of single-payer health care such as Medicare For All, the answer is simple. You’re already paying for it. But, instead of the money being used for medical care and the development of new technologies and treatments. It’s being used to line the pockets of executives and investors.
By moving to a single-payer health care system like most of the world’s advanced nations, you will pay more in taxes. Nevertheless, your savings should be significant. You and your employer will no longer have to pay for health insurance, deductibles, and co-pays. You will not be billed for seeing your doctor, for laboratory tests, for visiting the Emergency Room, for treatments or for needed stays in a hospital. As the single-payer, the government will also be able to negotiate the cost of pharmaceuticals saving you even more money. So your savings will continue to add up over your lifetime.
And no American will ever be denied health care again.
There’s yet another benefit that’s seldom mentioned: By removing the responsibility for providing health insurance from employers, there will be less incentive for employers to move jobs offshore. (Currently, the cost of an employee’s benefits is roughly equal to the cost of an employee’s salary.) Indeed, employers could use the savings to increase salaries and pay a more livable wage. That would not only provide a substantial boost to our economy. It would result in greater tax revenue that could be used to rebuild our crumbling infrastructure and create even more high-paying jobs.