At least we have our health ... or do we?

A friend was recently recounting some challenges he's been facing, concluding with the observation that "at least I have my health." His challenges include a recent layoff, and I found myself wondering how secure this consolation would prove to be for him ... or for the nearly 50 million other Americans who do not have health insurance.

Although a lot of polls are being conducted to find out how people feel about different health care reform plans (and principles), I can't find any that ask how people feel about the relative importance of health. I imagine that most people would rate good health as one of their most important values - more important than even, say, a good job or a nice house. This is probably why every other industrialized nation provides universal health coverage for its citizens.

The 1948 United Nations' Universal Declaration of Human Rights - to which the United States is a signatory - includes a right to health care:

Article 25.

(1) Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.

And the 1966 U.N. International Covenant on Economic, Social and Cultural Rights - to which the U.S. is also a signatory - also specifies a right to physical and mental health:

Article 12

1. The States Parties to the present Covenant recognize the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.

2. The steps to be taken by the States Parties to the present Covenant to achieve the full realization of this right shall include those necessary for:

(a) The provision for the reduction of the stillbirth-rate and of infant mortality and for the healthy development of the child;

(b) The improvement of all aspects of environmental and industrial hygiene;

(c) The prevention, treatment and control of epidemic, endemic, occupational and other diseases;

(d) The creation of conditions which would assure to all medical service and medical attention in the event of sickness.

However, our government does not yet appear to consider a basic level of health care to be a right or entitlement (unless you're a senior citizen). Instead, we have the rights to life, liberty and the pursuit of private health insurance ... and private health insurance companies have the right (indeed, the obligation) to pursue profits.

Private health insurance companies produce profits when their income exceeds their expenditures. Revenue comes from health insurance premiums. Expenses include the salaries and bonuses they pay their employees and the medical procedures they pay to have performed for the people who have paid the premiums. Among the most effective ways for private health insurance companies to increase their profits are to increase premiums, deny coverage and/or rescind coverage for people with the highest expenses ... the very people who most need health care coverage.

The LA Times reports that

one Blue Cross employee earned a perfect score of "5" for "exceptional performance" on an evaluation that noted the employee's role in dropping thousands of policyholders and avoiding nearly $10 million worth of medical care.

Taunter Media provides a number of insights on the numbers underlying health insurance practices (and profits) in a blog post on "unconscionable math":

Half of the insured population uses virtually no health care at all.  The 80th percentile uses only $3,000 (2002 dollars, adjust a bit up for today).  You have to hit the 95th percentile to get anywhere interesting, and even there you have only $11,487 in costs.  It’s the 99th percentile, the people with over $35,000 of medical costs, who represent fully 22% of the entire nation’s medical costs.  These people have chronic, expensive conditions.  They are, to use a technical term, sick.

An individual adult insurance plan is roughly $7,000 (varies dramatically by age and somewhat by sex and location).

It should be fairly clear that the people who do not file insurance claims do not face rescission.  The insurance companies will happily deposit their checks.  Indeed, even for someone in the 95th percentile, it doesn’t make a lot of sense for the insurance company to take the nuclear option of blowing up the policy.  $11,487 in claims is less than two years’ premium; less than one if the individual has family coverage in the $12,000 price range.  But that top one percent, the folks responsible for more than $35,000 of costs – sometimes far, far more – well there, ladies and gentlemen, is where the money comes in.  Once an insurance company knows that Sally has breast cancer, it has already seen the goat; it knows it wants nothing to do with Sally.

If the top 5% is the absolute largest population for whom rescission would make sense, the probability of having your policy cancelled given that you have filed a claim is fully 10% (0.5% rescission/5.0% of the population).  If you take the LA Times estimate that $300mm was saved by abrogating 20,000 policies in California ($15,000/policy), you are somewhere in the 15% zone, depending on the convexity of the top section of population.  If, as I suspect, rescission is targeted toward the truly bankrupting cases – the top 1%, the folks with over $35,000 of annual claims who could never be profitable for the carrier – then the probability of having your policy torn up given a massively expensive condition is pushing 50%. One in two.  You have three times better odds playing Russian Roulette.

This all seems perfectly rational for a for-profit company: ration health care coverage in a way that is inversely proportional to the need (and expense). While some opponents of single payer health care decry rationing by government bureaucrats, I don't know why they would prefer rationing by private industry bureaucrats.

I've been tracking some other numbers related to health care lately.

• A January 2004 report by the Institute of Medicine at the National Academies found that "Lack of health insurance causes roughly 18,000 unnecessary deaths every year in the United States".
• Four years later (January 2008), a Commonwealth Fund study found that the U.S. has the highest rate of amenable mortality - "deaths from certain causes before age 75 that are potentially preventable with timely and effective health care" - among 19 industrialized countries, and estimated that 75,000 to 100,000 people would have been saved if the U.S. had a health care system comparable to the top 3 countries (France, Japan and Australia)
• The 2007 United Nations Human Development Report shows thatt he U.S. spends over $6000 per capita on health care; more than any other country ... and twice as much as France, Japan and Australia.
• Another study estimates that 31% of health care expenditures in the U.S. are spent on administrative overhead, compared with 1% to 4% of administrative overhead associated with public insurance plans in other industrialized countries (and 3% for the U.S. Medicare plan).
• The 2007 U.S. Census estimates that 45.7 million Americans were uninsured as of 2007, when unemployment was below 5% (the current unemployment rate is approaching 10%).
• Another Commonwealth Fund study reports that an additional 25 million were underinsured
• A Families USA study reported that 86.7 million Americans - one third of the population under age 65 - were uninsured at some point in 2007 and/or 2008 (75% of them were uninsured for at least 6 months).
• A Harris Interactive poll in April - when the unemployment rate was "only" 8.3% - indicated that 47% of American workers are concerned about losing their jobs (which, in the U.S., means the loss of health insurance) ... so, while the majority of Americans may currently have health insurance, an increasing number of Americans either have no health insurance or can more easily envision themselves having no health insurance.
• All of this may help explain why most Americans in most polls support a single payer health care system.

A few more numbers, shared in a comment by Andrew on a blog post in American Spectator that simply echoes inaccurate claims made by another blogger attributed to an unspecified report by a U.S. private insurance industry-funded think tank that purportedly contains incredible claims about the British and Canadian health care systems (e.g., prostate cancer has a 57% mortality rate in the U.K.):

The average American spends more than 2.8 times as much as the average Briton on healthcare. Yet despite this, said average American gets poorer healthcare provision and dies younger.

Yes, that's right, there's a longer average life span in the UK than in the US – this is true even on the CIA World factbook which puts the US higher up the world rankings than most other sources. And the UK is ranked 18th in the world for its standard or healthcare by the World Health Organization. Not that great I'll admit but an awful lot better than the US which comes in 37th!

America is great country with a truly awful health system.

And the cost...

US:

Total cost of Medicare and Medicaid: $602bn.
Total US population: 294m.
Number served by Medicare and Medicaid: 94m.

Annual cost of Medicare/Medicaid divided by total US population: $2047

Total annual cost of US healthcare, including private spending, divided by total US population: $7900

UK:

Total cost of NHS: $167bn.
Total UK population: 61m.
Number served by NHS: 61m.

Annual cost of NHS divided by UK population: $2740

Total annual spend on private healthcare in the UK: $569m*

Total annual healthcare spend in UK divided by total UK population: $2750

*People in the UK are free to buy healthcare privately and many can afford
to do so. The fact that this figure is so low, less than $10 per citizen, is
testament to the popularity of the NHS. Even the wealthy rarely bother to go
private in spite of being both free and able to make the choice.

...

I admire America in many ways. But it is a mystery to the rest of the World why Americans put up with being bilked over healthcare when all the get in return is a second class service and an early grave.

You could spend half the money and do so much better.

Yes, we could do so much better. One way we could do so much better would be to adopt The United States National Health Care Act (H.R. 676). Although most of our congressional leaders - many of whom benefited from the $167.7 million in campaign contributions made by the health care industry during the 2008 election cycle - dismiss a public health care plan as unfeasible in the current political climate, that climate can change.

President Obama, who received $18.8 million in health care industry contributions during his 2008 election campaign, appears unwilling to promote a national health insurance system, and I wouldn't be surprised if he is willing to compromise on his requirement (recommendation?) of a "public option", which I never thought was a good idea to begin with. [Update, 2009-08-17: Obama's Secretary of Health and Human Services, Kathleen Sebelius, conceded that a public health care option is "not the essential element" to health care reform, but did express distrust in the current system: "I think there will be a competitor to private insurers," Sebelius said. "That's really the essential part, is you don't turn over the whole new marketplace to private insurance companies and trust them to do the right thing." If one does not trust the private insurers with insuring one of our most important values - our health - it seems to me that the public health care option is the only rational alternative.]

I don't know how a health reform bill that allows for-profit health insurance companies to continue as our primary source of health care coverage can ever extend coverage to those who need it the most. I suppose if the insurance companies were prevented from denying coverage for pre-existing conditions, rescinding coverage except in cases of provably intentional fraud, and restricted to a reasonable cap on premiums, some progress might be made. But for anyone who can imagine losing their job, or contracting a chronic or debilitating illness, or suffering a serious injury, it seems to me that the only rational choice is a single payer health care system ... that is, if we all truly want to be able to say, with confidence, "at least we have our health".