Take the Australian health care challenge!

FRIDAY, MAY 5, 2017

How often will you see this:
Last evening, Donald J. Trump got to talking to Malcolm Turnbull, the Australian prime minister.

That never works out well. Last night, Trump began with praise for his own health bill, then drove off the road:
TRUMP (5/4/17): It’s a very good bill right now. The premiums are going to come down very substantially. The deductibles are going to come down. It’s going to be fantastic health care. Right now, Obamacare is failing. We have a failing health care.

I shouldn’t say this to our great gentleman and my friend from Australia, because you have better health care than we do.
Everyone in the liberal world will take a crack at that. Your challenge, if you're prepared to accept it—see if anyone offers you these tremendously basic data:
Per person health care spending, 2015
United States: $9451
Australia: $4420
In many ways, the whole ball game is on display right there.

Think of health care as a car. Which would be easier? Supplying everyone with a car if cars cost $4400? Or supplying everyone with a car if cars cost five thousand dollars more than that?

For reasons which persistently go unexplored, health care is much more expensive in this country than it is anywhere else. If it cost only $4420 per person to supply Americans with health care, it would be a piece of cake to provide universal health care here.

Why does health care cost so much more in this country? The question is never answered, largely because it's never asked. The question is never asked largely because data like these are never published or broadcast.

(On our own "corporate liberal" channel, we have much too much mugging and clowning to do. There's no time for data like them.)

Go ahead—take the Australian health care challenge! We liberals will be regaled all day with talk about what Donald Trump said. Ask yourself two basic questions:

1) Did I ever see those data presented? Also:

2) Why the heck not?

Where does all that money go, that extra five thousands dollars?

By law, the question never gets answered, in large part because 1) the data never get cited and 2) for that reason, the question never gets asked.

We do get plenty of mugging and clowning. Could corporate laughter actually be the best medicine after all?


  1. Bob, you're right that it's very hard to get an answer to the question of why US healthcare costs so much. But you've been talking about this for a very long time, so I suspect you may have found some answers. Why don't you share them here? I may have missed the posts where you did, if you did, and I know this is outside your usual purview. But I actually want to know, and a fair amount of googling has turned up nothing definitive.

    1. This comment has been removed by the author.

    2. Please read this book on how we can lower US healthcare costs:


  2. It's not a difficult question. In most other countries, government controls the costs whereas in the US, all involved are allowed to charge whatever the market will bear (your money or your life). http://www.investopedia.com/articles/personal-finance/080615/6-reasons-healthcare-so-expensive-us.asp

  3. Do those annual dollar amounts include only services and procedures, or does it also involve total costs including middleman insurance company profits?

    I know it doesn't account for the whole differential between, say the U.S. and Australia but it could be a significant amount. I would think cutting out a middleman itself would save a lot of money.

    1. LINK

      NHE [National Health Expenditure] grew 5.8% to $3.2 trillion in 2015, or $9,990 per person, and accounted for 17.8% of Gross Domestic Product (GDP).

      Medicare spending grew 4.5% to $646.2 billion in 2015, or 20 percent of total NHE.

      Medicaid spending grew 9.7% to $545.1 billion in 2015, or 17 percent of total NHE.

      Health insurance spending grew 7.2% to $1,072.1 billion in 2015, or 33 percent of total NHE.

      Out of pocket spending grew 2.6% to $338.1 billion in 2015, or 11 percent of total NHE.

      Hospital expenditures grew 5.6% to $1,036.1 billion in 2015, faster than the 4.6% growth in 2014.

      Physician and clinical services expenditures grew 6.3% to $634.9 billion in 2015, a faster growth than the 4.8% in 2014.

      Prescription drug spending increased 9.0% to $324.6 billion in 2015, slower than the 12.4% growth in 2014.

      The largest shares of total health spending were sponsored by the federal government (28.7 percent) and the households (27.7 percent).

      The private business share of health spending accounted for 19.9 percent of total health care spending, state and local governments accounted for 17.1 percent, and other private revenues accounted for 6.7 percent.

      For further detail see NHE Tables in downloads below....
      [END QUOTE]

      Yes, total healthcare expenditures include monies spent on private insurance. I believe what you are asking is how much of that goes towards the marketing and administration costs plus the profits of health insurance companies as opposed to the total payments going to healthcare providers [LINK]:


      >>>According to the Kaiser Family Foundation, administrative costs in Medicare are only about 2 percent of operating expenditures. Defenders of the insurance industry estimate administrative costs as 17 percent of revenue.

      >>>Insurance industry-funded studies exclude private plans’ marketing costs and profits from their calculation of administrative costs. Even so, Medicare’s overhead is dramatically lower.

      >>>Medicare administrative cost figures include the collection of Medicare taxes, fraud and abuse controls, [sic] and building costs. [END QUOTE]

      There's another sum of money that private insurance diverts away from patient care. Hospitals and doctors have to devote a significant fraction of their own revenues to private insurance claims processing- if I recall correctly something on the order of 3-5% provider revenues. Medicare claims processing is much less expensive.

      Maintaining the private insurance market, therefore, ends up wasting at least 6% of the entire health care system's total costs on expenses that have nothing to do with the care the system provides the patient and ends up causing both unnecessary aggravation patients and providers and dangerous delays.

  4. Speaking of Down Under, here's an Aussie, explaining something Bob Somerby doesn't seem to quite get about the media. Highly paid infotainers do not misinform the public because they are out-of-touch, they misinform the public because that is what they are highly paid to do [LINK]:

    [QUOTE] I am going to keep hammering and hammering on this point until I see that it has taken root in American consciousness: the single best way to take down the oligarchy is by aggressively and relentlessly attacking its propaganda engine....

    Since all mass media is owned by the same few people, the oligarchs can create the illusion of consensus whenever they need to advance an important agenda. The same singular narrative gets picked up and spouted from all outlets in an extremely confident-sounding and authoritative tone, as we saw them do with the “Saddam has WMDs and wants to inflict another 9/11 on America” psy-op we saw with Iraq.

    This creates the illusion that a completely unsubstantiated claim is an established fact, and at that point anyone suggesting otherwise will be scoffed at and dismissed at best or condemned and demonized at worst....

    These predators use their trusted, ubiquitous presence in the lives of the public to convince them that everything else that’s happening is normal, too. It’s perfectly normal for a few extremely wealthy people and their cronies to take all new income for themselves and control your government while you struggle to feed your family.

    It’s normal for your country to be bombing sovereign nations every single day and have hundreds of military bases all over the world. It’s normal for Americans to pay more in healthcare-related taxes than anyone else on earth but still be the only major country without healthcare as a right.

    It’s normal that all these politicians seem to do pretty much the same things once elected despite campaigning on very different platforms. It’s normal for elected officials to lie. It’s normal for your government to have the ability to spy on you. This is all normal.

    We need to snap mainstream America out of this lullaby of normalcy. We need to be the caring friend who tells them that it’s not normal for their boyfriend to be violent and controlling. We need to keep coming up with new and innovative ways to let everyone know that none of this is normal and it needs to stop.... [END QUOTE]

  5. Well, for one thing... how many TV ads do you see for medical insurance companies? How much do you think it costs to make and air all those ads? How many different competing medical insurance company buildings have you seen perched around your city, and how big are the workforces you think they contain? — muliplied by the ratio of your metro area's population to the national population? What would it save in costs if there didn't have to be any TV ads or competing buildings, due to a single-payer system, and profits weren't getting sucked out by investors because that system was publicly owned? Something like "Medicare for All" (with the ability to bargain better prices on prescriptions etc.)? Just a thought....

  6. There are many places the money goes, including to insurance companies (which some of the other countries don't have at all) and high physician compensation. But it is obvious what has to be done to attack all of these things - give up the idea that a "free-market" for-profit system is best and give more control to the government. A huge and very feasible step in this country would be to have Medicare for all. We already have it for seniors and it is very popular. This is less mysterious than Bob (and a lot of others) make out. A lot of the arguing ignores the evidence about what kind of systems work and what kind (the kind that the US has) doesn't.

  7. Here's a paradox: It would seem that government health care would save money, by excluding the cost of insurance companies. OTOH we have seen in area after area that private industry generally does things cheaper than government. And, defense appears to be filled with wasteful spending.

    1. > “... private industry generally does things cheaper than government. And, defense appears to be filled with wasteful spending.”

      Excuse me, but doesn’t that “wasteful spending” generally occur when buying overpriced products from private contractors, rather than making them in-house (governmentally)?

    2. private industry generally does things cheaper than government

      So true. Just look how efficiently the Kushner family is selling Visas. I'm sure the gubmint could never pull something like that off. Only half a million a pop.
      Free enterprise.

      Nicole Kushner Meyer, the sister of White House adviser and President Trump's son-in-law Jared Kushner, spoke at an event in Beijing on Saturday. She was marketing a Kushner-owned property in New Jersey -- invest in the development and get into the United States on a so-called EB-5 visa.

      The EB-5 visa allows immigrants a path to a green card if they invest more than $500,000 in a project that creates jobs in the United States.

      An ad for the event, held at a Ritz-Carlton hotel, said "Invest $500,000 and immigrate to the United States."

    3. Dave the Guitar PlayerMay 9, 2017 at 12:45 PM

      David: You apparently missed the earlier comment that stated that according to the Kaiser Family Foundation, administrative costs in Medicare are only about 2 percent of operating expenditures. Defenders of the insurance industry estimate private industry administrative costs as 17 percent of revenue. Private industry may provide some things cheaper than governments, but health care isn't one of them.

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