Universal healthcare: the Rationing myth

Socialized medicine was rolled out in countries that had not developed the entrenched commercial medical system America has. "Free" health insurance in socialist countries was better than being uninsured, and few people had been privately insured long enough to develop entrenched expectations.

America is different. We all have government health insurance - emergency room care might ruin your credit, but you can use it if you have to. Medicaid (for the poor) helps the very poor - and if someone gets very, very sick, they become poor enough to qualify as soon as they're too disabled to work. Medicare (for the elderly) covers everybody during those critically expensive senior years. Most of us have private health insurance, where we receive emergency care, serious illness care, and preventive care and we only pay a relatively low deductible and relatively low cost-share/copay expenses.

We expect a high level of care. If Grandma gets sick, we expect doctors to pull out all the stops - even if it only adds six months to her lifespan. If little Timmy does something stupid and hurts himself, we expect him to be treated despite his stupidity. If little Sally develops a congenital disease, we expect doctors to provide - and insurers to pay for - all the treatment necessary to give her as close to a normal life as she can have with her condition.

Here are some interesting items that shed a tiny little bit of light on the different healthcare expectations in the U.S. versus the U.K.:

America: Health Insurer to Be Charged With Teen's Murder - ABC News: "The family of a California teenager who died awaiting a liver transplant said they would sue the insurer whom they blame for their daughter's death."

United Kingdom: Treatment for teenager denied liver transplant - Health News, Health & Families - The Independent: "A critically ill teenager who was denied a liver transplant because his condition was drink-related is to be flown to a specialist unit for treatment."

United Kingdom: NHS Blog Doctor: "Poor people get worse medical care than rich people. It's a universal truth throughout the world." The blog is an interesting read, and there are aspects of care that seem exceptional by American standards (housecalls) and aspects where the penny pinching would set Americans marching on Congress demanding that the penny-pinching stop NOW.

No rationing + full care = it doesn't add up

A lot of people get very sick right before they die. It might be terminal illness, acute illness that goes really bad really fast (lethal flu), or a serious accident. They're all costly. Cancer treatment can run a quarter million or more. In Sacramento, a college student recently died from a grisly attack by his roommate; his family received the bill for 5 minutes at the hospital, trying to save the boy's life, and the bill was $29,000. It would have been much higher if the boy had survived - days in ICU, months of rehab, multiple surgeries, pain management, possible infection. Dying is expensive (but it beats the alternative) and cheating or postponing death is expensive.

Wikipedia puts median household income in the U.S. at about $50,000. That's for a household; median annual personal income for all adults is $25k. A person earning $25k pays about $5,000 in social security and federal income tax. Assuming 40 years in the workforce, the median American pays about $200,000 in total federal taxes. That money goes to fund social security, medicare, medicaid, the military, all federal agencies, all federal entitlement programs, etc. In actuality, the federal government only collects $3,600 in income tax per citizen; which works out to $144,000 over 40 working/taxpaying years (a lifetime), but we're going to pay for $30, 60, 90, 500 thousand dollar medical expenses - for a single accident or illness - without rationing?

Right now, American medical spending averages over $7,000 per person. (Washington thinks they're going to cover 40 Million uninsured for $2,500 each.)

5% of Medicare beneficiaries cost an average of $63,000 a year, each. Complications from diabetes can add $47,000 (over a lifetime) in costs for a single patient. ~8% of Americans have diabetes. Lifetime costs for treating diabetes (for a woman) run $233,000 per patient - that's just for the diabetes. Or $423,000 for cardiovascular disease. Remember that these patients can still break bones, fall down wells, catch pneumonia, etc. There is a reason that medical insurance plans often have a lifetime limit of $1 Million per patient - because, sometimes, some people cost more than $1 Million in lifetime healthcare expenses.

Put another way:

• The entire country spends approx. $2.5 Trillion on health care costs.
• For fiscal year 2008, the federal government spent $2.98 Trillion in "cash" expenditures. (Wikipedia)
• For FY2008, the federal government took in $2.52 Trillion in tax income. (Wikipedia) (Roughly equal to our total healthcare spending.)
• We spent almost half a billion dollars more than we took in - in a household, that's called going eyeball-deep into debt. That half a trillion is 16.666 percent of total income. That's like a family earning $50k running up another $8,333 in credit card debt. On top of our existing debt...
• Federal debt is about $12 Trillion right now. Which is 4.8 times as much as we took in this year. That is like a family that earns $50k/year and owns their house outright, having $240,000 in credit card debt to keep up with the Joneses (except the government is keeping up with the Jones' votes by promising them everything under the sun, even though we can't afford it.) Keep in mind - our median family example is not paying that $240k debt down, they're increasing it about $8k every year.
• Anybody who has ever borrowed money knows that you have to pay it back, plus interest. The interest on that debt is food out of our mouths until we pay it off. The U.S. pays almost $400 Billion per year in interest on the national debt. If they were a median family earning $50,000, that family would be paying $8,000 in interest payments - without reducing the debt one dollar.
• We also have a $59 Trillion "unfunded liability." If the government "borrows" money, it's debt. If they sign contracts or pass laws promising to pay money, it is not debt, it is "unfunded liability." To put this in household terms, the $50k/year family has promised all of their 6 kids that mom and dad will put them through Oxford - without scholarships. How does our $50k family plan to pay for $1.18 Million in college costs? If mom and dad spent every penny of their income on college, it would take 24 years to pay off that college "unfunded liability." But they might want to eat. If Mom and Dad devote 50% of their total income to paying for college, it will take them 48 years to pay it off.
• Some moms and dads completely give up on getting out of debt. So when Johnny asks them to put his health insurance on their credit card, they shrug and hand over the card. If you were mom and dad's friend, knowing they have $240,000 in debt, knowing they've signed a million dollar contract with the university, knowing their debt grows $8,000 a year because they are living way too high on the hog for a family earning $50,000, would you advise your friends to pay Johnny's healthcare? Or would you advise them to break the debt addiction?
• Mom and Dad have only one shot at surviving - they have to increase their income. If mom and dad are the IRS and social security, they can increase their income - by raising taxes. A lot.