Monthly Archives: June 2015

Cost of health Care (con’t)

2 e) Cost of health Care (con’t)

Let’s examine some of the issues that contribute to our current health care inefficiencies:

  • Insurance: I am not convinced that putting a middle man into providing health care makes much sense? If they can do it more efficiently it does make sense, but the facts are disturbing as you can see from the following:Nov. 3, 2009A significant portion of health insurance premiums go not for actual medical care but for private jets, generous CEO salaries and underwriters who decide when to drop patients who become too expensive, according to a Senate committee report. Such figures are known in insurance industry-speak as “medical loss ratios.” But when insurance companies balked, saying the information was confidential and proprietary, Rockefeller’s investigators went digging through public documents and found that much of policyholder premiums was going to nonmedical costs. That five-point difference represents billions of dollars. On average just 74 cents of every premium dollar for individual coverage goes to medical care.
  1. And when investigators broke down the information by insurance type, they found that people who buy individual insurance from those companies rather than being part of a small or large business, get the least bang for their buck.
  2. The insurance industry has long pointed to federal data that says about 87 percent of every dollar that people spend on premiums goes toward actual medical care, but Rockefeller’s investigators found the average for the top six insurance companies is closer to 82 cents on the dollar for medical care.
  3. Sen. John D. Rockefeller, D-W.Va., chairman of the Senate Committee on Commerce, Science and Transportation, wrote to 15 of the biggest health insurance companies in August, asking them to provide information on how much of policyholders’ monthly premiums was spent on medical care  versus the amount that went to administrative costs and company earnings.
  5. Health Care Premiums Also Used for Lavish Salaries, Luxury Items, Underwriters

Coventry Health Care had the lowest figure at 66 cents.

I suspect the Health Insurance Companies are excited by the affordable care plan now that all of us must have health insurance and we will be financially penalized if we refuse! A case could be made that we would be better off taking the middleman completely out of the process.

 Stay tuned, more to follow on this topic


Cost of Health care (con’t)

2 d) Cost of Health care (con’t)

Perry calculates that measured in the amount of time working at the average hourly wage to earn enough income to purchase a washer-dryer combination, the “time cost” of those two appliances together has fallen by 83%, from 181.8 hours in 1959 to only 31 hours today.

What if we applied this kind of analysis to health care? The results are quite interesting. In 1958, per capita health expenditures were $134. This may seem astonishingly small, but it actually includes everything, inclusive of care paid for by government or private health insurers. A worker earning the average wage in 1958 ($1.98) would have had to work 118 hours—nearly 15 days–to cover this expense. By 2012, per capita health spending had climbed to $8,953. At the average wage, a typical worker would have to work 467 hours—about 58 days.

In short, while time prices for other goods and services had shrunk to less than one quarter of their 1958 levels, time prices for health care had more than quadrupled!

See chart at 

Of course, health care in 2012 is vastly different and greatly improved compared to what was available in 1958. But the same can be said of other goods and services (Perry, for example, is comparing the cost of an iPod to 4-speed automatic record player).

The recent move to affordable health care is not the solution. Why is it that we are not willing to consider other health care models? I believe it has to do with the myth that everything American is always the best. The fact, however, is that we have been left behind in terms of affordable quality health.

Stay tuned, more to follow on this topic

The cost of Health Care

2 c) The cost of Health Care

What country spends the most on healthcare?

By Investopedia AAA |

The United States currently ranks highest in health care spending. Of the countries spending the most on health care, the U.S. spent a staggering $8,508 per capita. Norway had the second-highest health care budget, with expenditures at $5,699 per capita. This information comes from data released by the Organization for Economic Co-operation and Development (OECD) from 2013.

This year my Social Security payment went up by a few dollars, but the amount deducted for my portion of the Medicare premium plus the added premium for my supplemental care (items not covered by Medicare) was 4 times (4X) my pay increase.

In our country the increased cost of our health care has outpaced the  rate of inflation by a considerable amount. Since 1963 the overall CPI has increased by an average of 4.07%.

By comparison, the average rate of inflation for health care, over the same time frame has risen by at more than double the average increase for the CPI.

When considering buying power the cost for many items is actually decreasing over time, but the same is not true for health care as the following documents:

The Cost of Health Care: 1958 vs. 2012

Mark Perry has posted some interesting comparisons of how prices have plummeted between 1958 and 2012 when measured in terms of the hours of work required to purchase items. He concludes that today’s consumer working at the average wage of $19.19 would only have to work 26.6 hours (a little more than three days) to earn enough income ($511) to purchase a toaster, TV and iPod.  The equivalent products (in terms of their basic function, not their quality) would have required 4.64 weeks of work in 1958. In short, the “time cost” of these items has massively declined by 86% in less than 5 decades.

Stay tuned, more to follow on this topic