IN SEARCH OF THE USA 9400: Memorializing a disappeared group!

FRIDAY, MARCH 17, 2017

Part 4—The single-paragraph project:
Has any group ever been disappeared more completely than the USA 9400?

The important group continues to languish in almost complete obscurity. You don't read about them in the New York Times or the Washington Post. Rachel Maddow would rather stop talking about herself than discuss this key group's existence.

In yesterday's report, we posted the simple, easily-memorized numbers which define this key group. Just for the record, let's gaze on those digits again:
Per capita spending, health care, 2015
United States: $9451
Canada: $4608
France: $4407
As you can see, the USA 9400 is arguably the USA Ninety-Five Hundred! That said, our basic point is clear:

On a per person basis, we spend massively more on health care than other developed nations. As compared with France, with its outstanding health system, about $5000 disappears into the American mist every single year!

Five thousand dollars per person!

Where does all that money go? You'd almost think that American journalists would want to figure that out.

Over Here, we liberals tend to have a few tiny answers to that basic question. We tend to blame the insurance industry, then demand "Medicare for all."

We don't seem to know that Medicare is a prime example of apparent over-spending. We don't seem to know that spending by the insurance industry, however useless, constitutes a fairly small part of this rather obvious problem.

Whatever! We have our scripts and we like to recite them. After that, we tend to praise ourselves for our brilliance, then drop off to sleep.

Where does all that money go? You'd almost think that American journalists would want to answer that question.

That missing money helps explain why so many people can't afford health care, even including some people who actually have health insurance. With health care lying at the heart of the American political debate, you'd almost think that big major orgs would want to dig into those spending numbers.

If you thought that, you were wrong. Simply put, the 9400 are never mentioned by the American press, a guild composed of lucky ducks who typically have good health care.

Off and on through the years, we've suggested that liberals and progressives might want to remember this thoroughly disappeared group. We might want to explain where all that extra money is going—a giant sum which hasn't even come close to providing decent health care for all.

Granted, we liberals don't always care if some gap-toothed yokel down in coal country succumbs without medical care. Our biggest stars call those people the baggers! Why would We in the finer class actually care about Them?

That said, you'd think our impressive Ivy League grads would want to pretend to do the reporting on such a basic matter. But since that isn't likely to happen, we want to suggest a way that you, the average American shlub, can memorialize this disappeared group.

Here's how that would go down:

Every time you encounter a health care discussion, you could insert a single paragraph about the USA 9400, even if just in your head. We think you'll see that the health care discussion take on an exciting new aspect.

Let's return to the New York Times editorial with which this award-winning series began. As you may recall, the editors were stressing the high cost of health insurance. You may recall the somewhat murky way they described this very large problem:
NEW YORK TIMES EDITORIAL (3/8/17): House Speaker Paul Ryan and Tom Price, the secretary of health and human services, have railed against high premiums and deductibles for plans sold on the health exchanges, but that problem would only worsen under their proposal because insurers would almost certainly raise their prices as the pool of the insured shrank. Republican lawmakers seem to think that people who can't afford insurance are simply irresponsible. Representative Jason Chaffetz of Utah, for instance, told CNN that people should invest in their health care, ''rather than getting that new iPhone.'' Word to Mr. Chaffetz: Health insurance costs more than $18,000 a year for an average family; an iPhone costs a few hundred dollars.
The editors were stressing an important fact. For families with average American incomes, health insurance is very expensive. Full freaking stop!

Here's our suggestion. Next time you encounter such a report, remember the USA 9400. Even if only in your mind, insert a single paragraph.

Take the single-paragraph challenge! Just insert the basic context which should be part of all such reports, but instead never appears:
NEW YORK TIMES EDITORIAL REWRITTEN: House Speaker Paul Ryan and Tom Price, the secretary of health and human services, have railed against high premiums and deductibles for plans sold on the health exchanges, but that problem would only worsen under their proposal because insurers would almost certainly raise their prices as the pool of the insured shrank. Republican lawmakers seem to think that people who can't afford insurance are simply irresponsible. Representative Jason Chaffetz of Utah, for instance, told CNN that people should invest in their health care, ''rather than getting that new iPhone.'' Word to Mr. Chaffetz: Health insurance costs more than $18,000 a year for an average family; an iPhone costs a few hundred dollars.

The high cost of insurance in this country derives from the remarkably large amount of money spent on health care each year. In the United States, an average of $9451 was spent, per person, on health care in 2015. In France, with its highly regarded health care system, only $4407 was spent per person that year. As is the case in many countries, the French system provides universal coverage, with health results equal to those in the U.S., at a much lower level of spending.
Go ahead! Imagine some such insertion! An insertion like that is highly relevant in almost all health care reports.

If that insertion appeared in every health care report, people might start to ask a key question:

Where the Sam Hill—where on Donald J. Trump's green earth—is all that extra money going? Why the Joe Hill does it cost so much to provide health care in this country, as opposed to everywhere else?

We liberals! We praise Obamacare, suggest Medicare for all. Then we take our naps.

In this way, we too disappear the 9400. Why do we keep doing that?

Concerning those two questions: In Part 1 of this award-winning series, we said the highlighted point in that editorial suggested two major questions:

Why does insurance cost so much?
Why does it cost so little?

Where does that second question come from? Thanks for asking! Here's where:

If we spend $9400 per person per year on health care, how is it possible to insure an average family for only $18,000? If we're talking about a family of four, won't it cost maybe $38,000 for their annual health care?

(According to our Arithmetical Computation Division, $9400 x 4 is almost $38,000.)

We assume we know the answer to that. Because we read the Times and watch MSNBC, we never see such questions or answers in print, or hear such discussions on cable.

CNN will discuss the Aghori sect, but it won't discuss the 9400. Do not discuss the 9400! Every good scribe knows the rule!


  1. Mayo Clinic’s chief executive made a startling announcement in a recent speech to employees: The Rochester-based health system will give preference to patients with private insurance over those with lower-paying Medicaid or Medicare coverage, if they seek care at the same time and have comparable conditions.

    1. capitalism sucks, right guys?

    2. "...capitlaism sucks, right guys?"

      Now you're finally getting it. Market solutions for the unique service of health care do not work. Originally the promise of capitalism was that it would deliver widespread prosperity and well being. Where there are failures to deliver on that promise ideologues have shown a religious like commitment to some basic notions about capitalism believing its results can not be assessed as failures- even in the face of clear evidence of those failures. (Beyond health care there are clear examples of capitalism failing society, for instance, in the matter of assigning the costs of externalities -like pollution- to the responsible parties or in allowing actual democracy [not a plutocratic oligarchy] to function in the age of modern telecommunications.)

  2. That extra $5000 provides jobs. The 9400 would disappear if only due to inflation. It would be nicer if health care were cheap but how can it be? And who wants to live in France? There are some cultural disadvantages.

    1. Obviously you can afford and already have good health insurance.

      For the millions of your fellow citizens who are not so fortunate, cheaper healthcare is very important. (Life and death important.) Not just "nicer", as you say.

  3. Why don't you tell us why we spend about $9450.00 per person per annum on health care? Some thoughts I have are: bloated salaries for executives, needless advertising, efforts to deny coverage, overcharging for services by hospitals. that's for starters.

    1. Absurdly favorable treatment for patent holders, kick-backs, artificial limits on the supply of doctors, shameless gouging in emergency situations (see ambulance services for example), prohibition on Medicare negotiating costs with pharma, excessive influence of specialists in setting Medicare's Doctor Fee Schedule which is therefore the entire industry's baseline, unnecessary procedures, labs, and prescriptions... there are dozens of fundamental problems at work here. See this dated, but still well worth reading article [LINK].


      Page 16 has a breakdown of wages in the healthcare field. They all make way more money than the average person. Fair enough but if we're going to cut spending by a third to half those are the people who are going to pay for it with paycuts and job losses. If we want a less expensive healthcare system we need 1) more risk of failure and accompanying tort reform which enables that 2) paying less in compensation, a prospect that few good leftists propose in regards to education 3) reduce or remove profit, rent seeking etc. what are the actual numbers on this? Remember if you soak the wealth of all the billionaires in the world it would only pay for USA's healthcare for 2 and a half years.

    3. Tort reform? Before Patent reform?
      Terrible idea. The courts (for now) are the only place where businesses are held accountable.
      Patent reform will free-up two of the groups Conservatives LOVE to make believe they care about (despite the reality), entrepreneurs and small business owners.
      The other area where you can cut costs is allowing doctors to be part of the globalized market. Let them compete vs. foreign doctors trained to our standards. If pitting textile workers against each other in a global market is worth it for $9 dress shirts, it's certainly worth the healthcare savings to have doctors compete for $75K annual salaries.

  4. I have looked it up, but this blog is about why the media hasn't reported it.
    A few hints: Physician's guild policies. Medical billing codes. Moral hazard.

  5. Bob, many of the baggers vote for people who want to take away their healthcare. Why should I respect them?


    Around 1970 the USA was on par with Germany and Canada relative to how much of the economy was spent on healthcare. Imagine if the USA had kept pace with those two countries and had similar percentage (11-12%) today? Would the other 6-7% have been spent elsewhere or spent at all? I suggest that it would have not been spent at all as it is mostly deficit spending. I believe our economy would be significant smaller, yet more efficient, if this would have occurred. As a result of this the political landscape would be much different in the last 50 years if the true malaise of our economy were felt without this deficit spending. I believe Pat Buchanan or Ross Perot would have had more success if so.

    To fix healthcare is to fix a great deal of the economy and that won't be done without toppling those who are in control. If this was a goal of yours, Trump was clearly more likely to do this than Hillary and would explain some of his voters better than most attempts do.

  7. That is a very good question: how can 18,000 in insurance costs cover 38K per person costs. I assume the answer is government spending (federal and state), including medicare, medicaid, and other smaller agencies. And another thing that we can infer: most spending occurs later in life.

    1. Years ago there was a classic comment on Marginal Revolution breaking down the cost per capita and per hour worked. It was in relation to low wage immigration and their effect on overall spending but it is worthwhile to keep in perspective just how much is spent on healthcare in this country:

      "Nope, but the math isn’t hard. Basically all you need is total hours worked and total health care outlays. The Conference Board publishes something called the Total Economy Database. It gives hours worked per year at 1,708 and employment at 143.823 million. That gives total hours at 245.65 billion. The Total Economy Database also directly reports total hours as 246 billion.

      The Economic Report of the President (EROP). Table B-35 gives total employment at 143.305 million. Table B-47 gives hours worked at 33.7 per week. A little math gives total hours at 251.127 billion. That’s rather close to the Conference Board data.

      National Health Expenditures appear to be in the $3 trillion range. Once source (“U.S. Healthcare Hits $3 Trillion”) specifically estimates the number at $3 trillion. However, there is some weirdness involving the accounting for the doc fix. Another estimate is $2.807 trillion. This is derived from a nominal GDP of $15.684 trillion from the BEA and health care spending at 17.9% of GDP.

      Another source gives much higher numbers. See “The hidden costs of U.S. health care: Consumer discretionary health care spending” from Deloitte. Their estimates are way over $3 trillion. However, some aspects of their methodology are suspect (including unpaid for care by family members). Note that Deloitte also suggests that large numbers of out-of-pocket health care dollars are not being captured in the standard estimates.

      If $3 trillion is the correct health care number, then $12 per hour is about right. You can tweak the number up and down a bit by changing your estimate of health care spending, but it’s going to be in that range.

      See also “2012 – The Year In Healthcare Charts” in Forbes for some more data."

    2. How about there's some apples and orange mixing here. Under Obamacare premiums (after subsidies) and total annual out of pocket costs are about the same for a household whether it has two children or twelve.

      Check out the calculator here [LINK].

    3. (And needless to say, in an insurance plan the premiums of people who end up receiving less than the average amount of benefits go to pay the costs for those who receive more than the average amount of medical benefits.)

    4. Thanks, Anon.
      CMike -- you're confusing apples and oranges. If you're buying insurance, you pay for every person that you're insuring. Whether government gives you subsidies, that's a separate question. However, it goes to validate what I was saying, namely that much of healthcare costs are absorbed by the government, or people who work for a living.
      As far your second post, that's how insurance is supposed to work.

    5. This comment has been removed by the author.

    6. BTW, families (or households) of four are less likely to have an elderly person among them. It's medical care for the elderly where the big per person bucks go.


    According to this about 2/3rds of a Hospital's budget is salaries and wages. From what I've seen from state budget reports for public hospitals, this is about right. You want to reduce healthcare spending? It means cutting good middle class jobs, one of the last remaining sectors in the country to do so.

    1. Doctors bill separately. People who work hospital jobs don't account for most of the medical spending. Here's where the core of overcharging occurs -- just as a guess -- (1) doctors (2) medical device manufacturers (2) pharmaceuticals (3) insurance overhead (4) general waste due to competition, e.g. too many MRI machines for, say, Portland, Oregon where I live.

    2. If doctors are separate then that increases the cost of labor dramatically. I would assume that most of their cost is labor as well, either themselves, medical or non-medical support staff. Either way you're looking at wages of people who do meaningful work, rather than the profits of billionaires, who would suffer from a drastic cut in healthcare spending.

  9. Bob Somerby says:

    [QUOTE] Over Here, we liberals tend to have a few tiny answers to that basic question. We tend to blame the insurance industry, then demand "Medicare for all."

    We don't seem to know that Medicare is a prime example of apparent over-spending. We don't seem to know that spending by the insurance industry, however useless, constitutes a fairly small part of this rather obvious problem.

    Whatever! We have our scripts and we like to recite them. After that, we tend to praise ourselves for our brilliance, then drop off to sleep.

    This is Somerby at his most frustrating. A whole lot of people who use the rallying cry "Medicare for all" know as much about health care issues as the staff at the Daily Howler. As a matter of fact, Somerby first started blogging about this per capita health care cost matter after a commenter here brought it up and left the link to an OECD webpage that he started to use.

    Instead of telling us "Medicare for all" is an insufficient prescription to recite as the way forward, how about Somerby writing out what, at a minimum, liberals/progressives should be saying every time they're asked "What's your plan as the alternative to Obamacare/Trumpcare/Ryancare?"

    Somerby might start taking some breaks from telling everyone else how they aren't making the case correctly and start showing us what is obviously the right and most effective things to say and points to make in the various media formats.

    (By the way, almost all pricing in the private market for doctor and hospital services are at multiples to the Medicare fee schedules which are supposedly cost plus reasonable return calculations. Medicare payments are at the baseline rate, the lowest in the industry, though in the matter of pharmaceuticals Medicare is an entirely passive -do with us as you will- purchaser.)


      According to this website the average spent per beneficiary of Medicare is $12,559. That's the wrong direction from the USA 9400 we're looking for.

    2. Yes, that's the wrong direction but older individuals on average use more medical services than the general population. The average medical costs for people from birth to age 65 is lower than $9400. If a private insurance company were paying for those same services they'd be paying more than that $12,559- let alone having their own in house for profit costs being higher than Medicare administration costs.

      Ryan's argument is that a 30 year old shouldn't have to pay a third as much as a 64 year old for insurance. Ryan wants the 64 year old to pay up to five times as much as the 30 year old's rate. That would be a good deal for the 30 year old if he was going to remain 30 throughout the coming decades.

      (BTW, Medicare Advantage plans tried to cherry pick from the 65 and older crowd by offering gym memberships and bicycling get-aways as sign up inducements. The insurance companies were trying thereby to attract people among the 65 and older demo who were healthy and would cost them less than the average beneficiary.)

      This goes back to when the insurance companies sided with LBJ and against the AMA when Johnson proposed Medicare. The insurance execs couldn't get the private insurance market to work at all if they had to cover the elderly by somehow spreading the costs among working age beneficiaries.

  10. As several commenters have pointed out, medicare (and medicaid) are not overpaying for its services. It is offering much less money per medical interaction. This is the reason many doctors and facilities refuse to treat medicare and medicaid patients.

    The reason costs are much lower in Canada is because there is no market for health care. The government is constantly forced to choose between controlling costs or raising taxes. If care is rationed - and it has to be rationed sometimes - non-emergency treatments are delayed. I had to wait several weeks to get cataract surgery, for example.

    I have always believed Obamacare would gradually evolve into single payer, but it will require decades. Otherwise the transition would be chaotic.

    In the meantime, single payer is impossible to sell politically no matter how many times $9400 is inserted into the conversation.

    The political fact is that 175 million Americans enjoy the best health care in the world and somebody else pays 70% of the costs. To Americans that is the definition of good insurance.

    The other point Somerby misses with his superficial obsession with this number surrounds his suggestion that the French enjoy the same quality of care for their money. That may be true when entire populations are compared but it is almost certainly not true when it is put into proper political context. In France the entire population gets more or less the same care. In the United States, the care is rationed by money with a large block of people getting little or no care. Does the average person in France have health outcomes as good as those 175 million people in the US who do have good insurance? Or is it more reasonable to decide that those getting little or no care make up a disproportional share of the poor outcomes in the United States?

  11. One very expensive problem that inflates health care costs for everyone is emergency room treatment of chronic health problems in the mentally ill, drug dependent and homeless populations. People come in with uncontrolled diabetes, asthma and other chronic problems in crisis, they are stabilized and released to go back to the street or their drug-based lifestyle where they do not take their medications and are noncompliant with their treatment plans. Then they are in crisis again, required ICU care, are stabilized but their condition is worse and they are released again and the cycle repeats until they are sick enough for nursing home care, again at public expense. They can go through multiple admissions in a series of weeks, each very costly and ultimately futile. Eventually they die. Because they have no money, the hospital absorbs the costs and passes them along by inflating the bills of paying patients and their insurance, since the government does not cover the full cost.

    In those socialist democracies, someone who is mentally ill is not permitted to refuse medication. They are given a living stipend and are monitored to make sure they comply with treatment of both their mental illness and any other health conditions. Because they are not living on the streets or taking recreational drugs, they maintain better overall health. They also stay out of jail, are less subjected to harsh weather, are not victims of crime, eat regularly, and so on. This diagnosis comes at the cost of some civil rights, such as the ability to seek employment and to refuse treatment.

    We have decided as a society not to force mentally ill people to comply with medical treatment. Only children are protected from irrational decisions about lifestyle and health choices (and only incompletely). As a result, we subsidize a large segment of the poor who actually have medical problems causing their poverty, not necessarily resulting from it. Among these are drug abusers and veterans with untreated PTSD and other service-related emotional problems, and long time alcoholics. We let these people fend for themselves until their health deteriorates to the point that they reach the emergency room.

    Another large segment of people visiting the emergency room and people abusing prescription drugs, mostly pain medication and sedatives. Ignoring the impact of the heroin drug problem on health care is wilfull blindness. Doctors spend a huge amount of time pretending to diagnose people who have no other problem than a drug habit, but who pretend symptoms and manufacture injuries or illnesses to get drugs. This is an abuse of the system that perhaps doesn't exist to the same extent in Europe or isn't handled by the system in the same way.

    And Somerby has the nerve to ask why we pay more!!! It angers me every time he raises this incredibly stupid issue. And then people all chime in calling for doctors to cut their pay. Who would want to spend a shift in an emergency room dealing with the people who come in with addiction, violence, and untreated complications of homelessness for the kind of money you could make as a computer programmer? Doctors have science and math training. The MCAT includes a section on Physics. Why would anyone with a science background who could go into any technical field be willing to go into medicine if it treated practitioners like dirt and underpaid them just so Somerby could see his favorite number go down? They will find other jobs. There is already a high burnout rate among doctors -- nearly 70% leave the field within 10 years. Once those massive student loans are paid off, many decide it isn't worth it, as it is, and that would get much worse. Because practicing medicine in the US isn't the same as in other countries because our society and culture are not the same.

    1. Who would want to spend a shift in an emergency room dealing with the people who come in with addiction, violence, and untreated complications of homelessness for the kind of money you could make as a computer programmer?

      Apparently, a near endless supply of well trained English speaking doctors from abroad.

    2. Nine of America's ten top paid jobs are doctors LINK

      The print was quite small on their bar graph so thanks for clearing it up as what to the other highest income profession in America is @12:51 AM.

  12. I went on to Medicare five years ago and my doctor recommended I undergo several procedures to establish baseline data for my ongoing treatment. I was shocked when the bills came in because the amount billed was substantially higher than the amount accepted. All of my medical practitioners were accepting what Medicare paid as payment in full, even though I had supplement coverage which could have been billed.

    I wondered who the heck was paying full pop for these things or were these billings like the rack rates in hotels, purely for accounting purposes? I assume that if one has ordinary insurance, the full charge gets paid, because the insurance companies have no incentive to argue down costs as they are just passing those through to whoever is paying for the insurance. Since out cost of living has been suppressed so that it is not not far different from the rest of the affluent worlds, I have to assume that the health care industry is the one siphoning off those "extra" funds because ... American Exceptionalism.

  13. Bob, I'd be happy to cut and paste your suggested additional paragraph if you would provide a link to its source. Is it OECD data?
    And, I believe the costs in Japan are only a third of what we pay. You might add that to the other three.

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