New book: critical condition—how health care in America became big business & bad medicine

The U.S. spends more on health care than other countries. In 2003, it accounted for 15.3% of the gross domestic product, a greater percentage than Germany, France, Japan, Italy, Canada, and other developed countries spend to cover all their citizens. What we are getting in return is a second rate health care system, according to Donald L. Barlett and James B. Steele, investigative reporters, formerly at the Philadelphia Inquirer and now editors at large for Time magazine. What kind of a health care system, they ask, leaves 44 million people without health insurance and tens of millions more underinsured?

One of America's cherished myths is that uninsured people eventually get health care when necessary. Yes, if they are sick enough, say Barlett and Steele, but they will be discharged from the hospital sooner than insured people, often over their doctors' protests. Shockingly, hospitals typically charge non-insured people five to ten times what an insured person would pay for the same services. With people who don't earn enough to pay an astronomical bill, hospitals can play hardball. Non-profit and for-profit hospitals alike have been known to sue, garnish wages, and take away assets, such as a house. A catastrophic accident or illness can bankrupt even the insured. Almost no one knows what their health insurance pays until it's too late. Unlike citizens in countries with universal health care, insured Americans spend countless hours filling out forms and questioning incomprehensible bills.

For the last two decades, politicians have sold the American public on the idea that the free market system is the best way to deliver health care. But health care has always proven to be remarkably resistant to a free market system that thrives on selling more and more. That's the last thing a medical care system needs, wrote the authors, who see the goal as fewer hospitalizations, fewer consultations with specialists, fewer diagnostic tests, and fewer prescription drugs.

Managing health care as a business hasn't reined in costs. On the contrary, it rewards for overmedicating and overtesting. Government is widely perceived as inefficient, and information to the contrary rarely penetrates the public's consciousness. Medicare, for example, has an overhead that averages about 2% a year; whereas the administrative costs of private insurers is about 33%.

Quality control is practically non-existent in a health care system so fragmented. The 100,000 hospitalized patients who die each year of medical errors and the additional 106,000 who die of adverse drug reactions probably represent an undercount. No independent authority examines the records of hospitals, doctors, and drug companies to detect such deaths. Successful lawsuits often end in sealed documents under secrecy agreements, thereby ensuring the mistakes will be repeated.

Over the last few decades, American health care has changed radically from a system that was largely not-for-profit. Now, the profit motive and market forces affect every decision. Conflicts of interest are rampant. Fraud thrives in such a system, so much so that authors think the U.S. has not only the most expensive health care but also the most fraudulent.

Barlett and Steele have a remedy. It is the establishment of a taxpayer-supported independent agency that is loosely based on the Federal Reserve System. Like the FRS, the proposed health agency would be run by 14 board members appointed by the president with the consent of the Senate. It would set an overall policy for health care and influence its direction by controlling federal spending. This would encompasses everything from research grants to providing basic care for every American, as well as catastrophic care. It would be financed by a tax on the total earnings of all businesses and a flat tax like the Medicare tax on people's income, not just their wages. The proposed agency would radically reduce medical errors with the establishment of a single information technology system that links all hospitals, doctors' offices, pharmacies, and nursing homes.

Barlett and Steele believe that change is inevitable. More and more working Americans are dissatisfied with the ever-rising costs and U.S. companies are unable to compete in the global market with countries that have government-funded health care. The authors cite surveys of doctors, insurers, and other professionals that show a marked shift in opinion even among groups traditionally against government involvement in health care.