The Problem: Big Insurance

Simply put, our health care system is broken and every day it gets worse. We spend more than any other nation, but get less. Some of the problems are due to our aging population and the rise of expensive new treatments, but most of the blame can be pinned squarely on health insurance corporations.

Health insurers encumber our health care system with a Byzantine bureaucracy that is most efficient at confusing consumers, hassling doctors, and driving up costs. Insurers have done little to improve customer satisfaction, healthcare accessibility, or the overall quality of our medical system; these things just aren't profitable.

Below are statistics that show the depth of the problem.

The Uninsured

Unacceptable numbers of Americans are uninsured, to say nothing of the many under-insured.

	Number of Americans without health insurance: 45,000,000 ^[9]
	Increase since 1990: 10,000,000 ^[2]
	Number of Children that lack health insurance: 10,000,000 ^[6]
	Number of Californians in 2003 that had no health insurance at all: 3,600,000 ^[¹¹^]
	Number of Californians in 2003 that lacked health insurance at some time: 6,000,000 ^[¹¹^]
	Number of Californians with no prescription coverage: 10,000,000 ^[¹¹^]
	Percent of people age 18-24 that lack insurance: 28.9^[6]
	Percent of the uninsured that work or belong to a working family: 66 ^[6]

Being Uninsured is Hazardous to your Health

The uninsured often cannot afford preventive care. They wait until their minor symptoms become serious before seeking care.

	Number of times the uninsured are more likely to postpone seeking care, leave prescriptions unfilled, or skip recommended treatment: 3 ^[1²^]
	Number of deaths each year caused by lack of insurance: 18,314 ^[10]
	Percent by which the death rate of the uninsured exceeds the insured: 25 ^[6]

Health Outcomes are Mediocre

Although it offers many cutting-edge treatments, the US health system has mediocre outcomes for patients when measured by standard indicators.

	Number of countries that have higher life expectancies for males than the US: 28 ^[13]
	Number of countries that have higher life expectancies for females than the US: 43 ^[¹³^]
	Infant mortality rate in US per 1,000 babies: 6.9 ^[1]
	Infant mortality rate in Sweden: 3.4 ^[1]
	Overall rank of US on a World Health Organization survey of healthcare systems: 37 ^[¹³^]
	Rank of Costa Rica: 36 ^[¹³^]
	Rank of France, which has a single-payer system: 1 ^[¹³^]

Unaffordable Costs

Our medical system drives staggering numbers of families to financial ruin. It is now commonplace to hear stories of families, co-workers, and churches holding fundraisers and garage sales to pay for medical bills.

	Number of bankruptcies in the US in 2001: 1,458,000 ^[7]
	Percent of these bankruptcies for which illness was a significant cause: 50^[7]
	Percent increase in bankruptcies between 1981 and 2001: 360^[7]
	Percent increase in medical bankruptcies between 1981 and 2001: 2,200^[7]
	Percent of medical bankruptcies in which the sick person was insured when they fell ill: 75.7^[7]
	Percent of these bankruptcies that happen to the middle class: 90 ^[4]
	Percent of terminally ill patients reporting that medical costs caused financial problems: 39^[7]
	Rank of “lapse in health insurance coverage during the two years” as a predictor of medical bankruptcy: 1 ^[7]
	Rank of US in fairness of financial contribution to health care: 55 ^[¹³^]
	Rank of Iraq: 56 ^[¹³^]

Skyrocketing Costs

Healthcare is getting more expensive by the minute.

	Dollars the average American spent in 2002 on medical expenditures: 5,440 ^[4]
	Increase in dollars from the previous year: 419 ^[4]
	Number of American families for whom health care consumes more than ¼ of their spending: 14,300,000 ^[4]
	Percent of US economic growth absorbed by healthcare costs: 24.1 ^[3]
	Percent increase of health care spending in US between 1980 and 2002: 410 ^[1]
	Percent increase in the average annual family premium between 2002 and 2004: 59 ^[2]

Hospitals Close their Doors

Because they cannot afford basic services, the uninsured often end up in hospitals needing expensive treatments that they cannot afford. The hospitals can only absorb these costs for so long before going out of business.

	Uncompensated health care in California in 2001: 540,000,000 ^[¹¹^]
	Number of California emergency rooms that have closed between 1990 and 2003 due to uncompensated health care: 60 ^[¹¹^]
	Percentage of California emergency rooms that have closed between 1990 and 2003 due to uncompensated health care: 15 ^[¹¹^]

Workers Bear Burden

As the cost of health insurance rises, more employers are shifting the burden to workers. The cost of medical insurance is now the most contentious sticking point in labor disputes.

	Percent increase in the costs of employer health plans in 2004: 11.2 ^[2]
	Percent increase in 2003: 13.9 ^[2]
	Percent of employer’s insurance premium paid by California workers in 2003: 30 ^[2]
	Percent increase in workers' contributions since 2002: 4 ^[2]
	Days in 2004 California grocery workers went on strike over health care benefits: 139 ^[2]

Corporate Profiteering

While medical bankruptcies skyrocket and coverage erodes, the profits of health insurance corporations are ballooning and their executives are taking home 8-figure salaries. In browsing the financial listings, I did not find a single health insurance company whose profits decreased any year since 2002.

	`2003 Salary of Wellpoint CEO Leonard Schaeffer: 11,895,355 ^[8]`
	`2003 Salary of Wellpoint CFO David Colby: 21,360,790 ^[8]`
	`Gross Profit of Wellpoint in 2003: 4,930,928,000 ^[8]`
	`Increase in profits over 2002.9: 803,478,000 ^[8]`
	`Gross profits of United Health Group Inc in 2004: 10,218,000,000 ^[8]`
	`Increase since 2003.9. 2,109,000,000 ^[8]`

Bloated Bureaucracy

Insurance costs are so high because the insurance system has grown into a bloated bureaucracy whose purpose is not to serve consumers better or make health care more accessible, but to maximize profits. These bureaucracies function to confuse consumers, restrict coverage, and reject doctors’ claims.

	Percent change in health care employment between 1970 and 1998: 149 ^[6]
	Percent change in employment of health care administrators in the same time: 2,348 ^[6]
	Minimum cost in dollars of medical bureaucracy and paperwork per year: 294,300,000,000^[6]
	Minimum cost in dollars of medical bureaucracy per capita in the US: 1,059 ^[9]
	Cost per capita in Canada’s single payer system: 307 ^[9]
	Percent of medical spending in US that pays for paperwork and bureaucracy: 31 ^[9]
	Percent of medical spending eaten up by waste, fraud, and excessive prices: 50 ^[3]
	Approximate percent of insurance claims from doctors that insurers will reject: 30 ^[5]

Lack of Competition

Free market health insurance was supposed to lead to competitive rates and better service, but because policies are tied to jobs, the opposite has happened.

	Percent of Americans who change plans because they want better care: 9 ^[6]
	Percent who change health plans because employer changes: 74 ^[6]
	Percent who live in areas so sparsely populated that HMOs cannot be competitive: 36 ^[6]

References

[1] Barlett, Donald L. And James B. Steele. 2004. Critical Condition. How Health Care in America Became Big Business and Bad for Medicine. Doubleday.

[2] Colliver, Victoria. 10/11/04. In Critical Condition: Health Care in America. San Francisco Chronicle.

[3] Colliver, Victoria. 3/9/05. Excessive Medical Expenses: Study Finds that Half of Health Care Dollars are Wasted. San Francisco Chronicle.

[4] Frosch, Dan. 2/3/05. Your Money or Your Life. The Nation.

[5] Gawande, Atul. 4/4/05. Piecework: Medicine’s Money Problem. The New Yorker.

[6] Himmelstein, David, Steffie Woolhandler, and Ida Hellander. 2001. Bleeding the Patient: The Consequences of Corporate Health Care. Common Courage Press.

[7] Himmelstein, David, Elizabeth Warren, Deborah Thorne, and Steffie Woolhandler. 2/2/05. MarketWatch: Illness And Injury As Contributors To Bankruptcy. Health Affairs.

[8] Lexis Nexis Online. Company Financial Reports.

[9] Woolhandler, Steffie. 8/20/03. New England Journal of Medicine Study Shows U.S. Health Care Paperwork Cost $294.3 Billion in 1999. Harvard Medical School Office of Public Affairs.

[10] Sternberg, Steve. 5/22/02. 18,000 Deaths Blamed on Lack of Insurance. USA Today.

[11] Kuehl, Sheila. Text of 2004 California Senate State Bill 921.

[12] Krugman, Paul. 4/22/04. Passing the Buck. The New York Times.

[13] The World Health Organization. 2000. The World Health Report: Health Systems: Improving Performance. The United Nations.