The “giant cash suck” of healthcare – part 1

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What do the great cathedrals of Europe, the Las Vegas “Strip” and an impressive new hospital in economically-challenged northern Michigan have in common? They all answer the question, “Who controls the big cashflow here?”

I have been struck in awe visiting many Old Europe cathedrals, but I also have been troubled by the “real history” of the stark contrast between the abject poverty of the Medieval populace and the wealth of the Church that built these grand edifices. And I seem to be missing the “gambling gene,” so my many business trips to Las Vegas usually had me “doing the math” of how much money must have been “left behind” in southern Nevada by its visitors in order to fund all the glitz. And yet most of my friends claim to have “broken even” financially during their visits. How is that so?

I recently visited my old family home in the Upper Peninsula of Michigan. When you drive through old mining towns like Ishpeming and Calumet, at one time large and prosperous, you will see block after block of near-empty, formerly-grand but ill-maintained stone downtown buildings frozen in the time of their heyday at the turn of the 20th century. With the mines now mostly closed, there is little evidence of new economic activity in the entire region except for two universities and the impressive multi-building complex of hospital facilities under near-constant construction over the last decade in the central U.P. city of Marquette.

I am heartened to see economic activity in this formerly tough iron port town. Where dirty ore loading facilities polluted the foot of its downtown during my youth, only the old ore dock itself remains, now surrounded by parkland and new, expensive lakeside condos. Well-maintained bike trails ring the Lake Superior shore and took over the old ore train rail line into town. The food and shopping choices are far better these days. But I also recognize that this cash came from somewhere in order to filter in large amounts through the healthcare system and then into the local economy.

Marquette Ore Dock

Unused Marquette ore dock viewed from new lakeside homes. Source: photo by the author

Likewise, in my new home of Gulf Coast Florida, healthcare is now a dominant industry, all for my personal benefit (and the rest of the old folks down here). Indeed, I recognize that I am “part of the problem” both as an “economic migrant” from places with troubled economies and as a regular recipient of healthcare services. However, my “accountant brain” sees a “giant cash suck” everywhere that funds these healthcare providers and the “hospital and medical service plans” (don’t call them “insurance companies”).

I remain a strong advocate of universal healthcare coverage for Americans, although I have noted in past posts that there are at least a dozen good options functioning elsewhere in the world on an economic continuum between the flawed and Republican-undermined implementation of the Affordable Care Act and the most extreme proposals for Medicare-for-all. I’m open to most of them, but I see some, such as Germany’s model, as closer to the current U.S. system while still providing lower costs and better coverage. Americans seem loath to learn from successful countries.

However, I hear few candidates or other politicians talk about the “top line” of healthcare costs in the United States, which is over twice the per-capita spending of most other countries that have more universal coverage and better outcomes than we get. Total healthcare costs have been rising in the 4% range annually, although annual increases in ACA and private plan premiums have typically been much higher, far outpacing average growth in household income.

This is the “giant cash suck” that somebody pays for in order to build these great new healthcare facilities and pay for a largely-unnecessary “insurance” system. [1]

Opponents of British-style universal coverage frequently point to facility shortages and wait times that often plague that system. But what would their experience be if they spent anywhere near the level of U.S. per-capita spending? Clearly, those problems would go away and their already-good outcomes would be even better.

When I had a medical issue while living in Upper Michigan, in the early 1970s, I had to travel 400 miles south across the Mackinac Bridge every few weeks to see a specialist. The good news is that the residents of Michigan’s Upper Peninsula now have a great care, though still often a long way from their struggling local communities (the U.P. is larger than the state of Maryland). The bad news is that we are all paying for this massive new healthcare spending annually.

New Marquette hospital

New Marquette hospital. Source: Sunny.fm

Stay tuned for Part 2 of this post, where I will break down what I see as the primary sources of the huge gap between top-line expenditures for healthcare in the United States as compared with countries that have done a much better job of providing universal coverage with equal-or-better health outcomes. You can subscribe to this blog by entering your email address in the box to the left or be notified of new posts by clicking on the Facebook or Twitter icons.


If you want to see Marquette, Michigan, at its film noir black-and-white, tough 1950s best, find the video of the great 1959 Otto Preminger film Anatomy of a Murder, starring Jimmy Stewart, Lee Remick, Ben Gazzara, George C. Scott, and Eve Arden. It is a courtroom drama based on an actual Marquette-area murder, and filmed pretty much where it happened. The language and story, involving an alleged rape, were very racy for its time. I once participated in a wedding set in the grand courtroom used in the film, a testament to the “old wealth” of 1900-era Marquette.


Notes:

  1. When everyone has equitable access to healthcare, “insurance” becomes redundant. This fear is the source for much of the opposition to healthcare reform.

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