Reply #24: For-profit insurance profit margins, and other depressing stats...

[warren pease]

Not sure about margins, largely because there are so many write-offs for the rest of the money they squander on paper pushing, shareholder return, benefits verification, advertising, executive salaries and other elements of the managed care bureaucracy – none of which do a single thing to provide actual health care.

And that's a significant sum of money; according to industry figures and analyst estimates, all that useless garbage (at least to patients whose bills aren't being paid) adds up to at least 25 percent of the insurance industry's per capita gross income, and some estimates range as high as 40 percent. In 2005, the last year I've seen comprehensive and audited numbers for, the American health care machine was a $2 TRILLION business, or $6,697 per capita -- by far the most expensive system in the world. Which means that at least $500 billion, and as much as $800 billion, was wasted in 2005 on non-medical items. I would bet all those dollar figures are somewhat higher now.

As to individual companies' profits, according to a recent article on Alternet, "last year, the top six health insurance companies had combined profits of more than $10 billion. What's amazing is that they netted so much after spending prodigious amounts on marketing and administration. In 2006 Wellpoint alone burned up nearly $9 billion in such costs -- nearly one quarter of what it paid out in actual benefits." Full article here: http://www.alternet.org/story/48371/?page=1

In any case, $800 billion would go a long way toward covering everybody in the country through a low-overhead, single-payer, universal-access system such as those found in every single other industrialized country on the planet -- and a bunch more with no practical claim to industrialization.

The consequences of the US system are predictably hideous. The World Health Organization's monumental 2000 study comparing the health care systems of 191 countries ranks the US 37th in a compilation of key indices that include average life span, average disease-free life span, average birth weight, infant mortality rate, access to necessary health care services, cost of those services, and so forth. 37th. Which puts us among such famous bastions of medical superiority as Slovenia (#38) and Domenica (#35), whatever the hell Domenica is. And I think it's safe to speculate that the US has fallen further in those rankings in the past seven years because of growing inequity of access and per capita costs.

This is from the WHO news release announcing the study, and nicely illustrates our situation:

"For the first time, the WHO has calculated healthy life expectancy for babies born in 1999 based upon an indicator developed by WHO scientists, Disability Adjusted Life Expectancy (DALE). DALE summarizes the expected number of years to be lived in what might be termed the equivalent of "full health." To calculate DALE, the years of ill-health are weighted according to severity and subtracted from the expected overall life expectancy to give the equivalent years of healthy life.

"The United States rated 24th under this system, or an average of 70.0 years of healthy life for babies born in 1999. The WHO also breaks down life expectancy by sex for each country. Under this system, U.S. female babies could expect 72.6 years of healthy life, versus just 67.5 years for male babies.

"'The position of the United States is one of the major surprises of the new rating system,' says Christopher Murray, M.D., Ph.D., Director of WHO's Global Programme on Evidence for Health Policy. 'Basically, you die earlier and spend more time disabled if you’re an American rather than a member of most other advanced countries.'"

And it's sucking the country dry. The U.S. health care system spends a higher portion of its gross domestic product (13 percent in 2000; 16 percent in 2007) than any other country but gets lousy outcomes compared to universal-access countries. The United Kingdom, which spent just 6 percent of its 2000 GDP on health services, ranked 18th. Several small countries – San Marino, Andorra, Malta and Singapore -- were rated close behind second-ranked Italy.

You can read through the news release and download the full report by following various links here:

http://www.who.int/whr/2000/media_centre/press_release/en/index.html


I hate to ramble on, but this stuff is so important and it's completely ignored by the usual status quo cheer-leaders in mass media.

Best advice I've ever heard on dealing with the US health care system: Don't get sick.


wp